NBC, Paramount at Impasse Over ‘Frasier’ Renewal

NBC Inc. faces paying one of the highest fees in television history or losing the rights to its hit comedy “Frasier,” as the network squares off in a bitter renewal negotiation with the show’s producer, Paramount Television.

Paramount is looking for almost $8 million per episode, dismissing NBC’s offer, which is less than the $5 million it is now paying, according to agents and network executives familiar with the ongoing negotiations.

The impasse has spurred speculation that ABC and Paramount’s sister network CBS, which is also owned by Viacom, are preparing rival bids. “Frasier” star Kelsey Grammer had dinner with CBS Television President and Chief Executive Leslie Moonves and his entertainment chief Nancy Tellem three weeks ago, but sources said the meeting was to discuss projects Grammer is developing under his Grammnet Productions banner.

An exclusive negotiating period between NBC and Paramount protects the network until March. NBC’s rights to the show expire next September.

A scant few television shows are popular enough to command such rich payments. NBC is paying Warner Bros. a record-high $13 million per episode for the hourlong drama “ER.” “Frasier” is one of the most popular shows on NBC even in its eighth year on the air.

The studio and the “Frasier” creative team were furious when the network moved the show this year from its coveted Thursday night time period to a less desirable slot on Tuesday, worried that ratings would suffer. The show proved to be bulletproof and became the highest-rated Tuesday night show on any network.

“They didn’t believe in the long-term viability of the show,” said one Paramount executive. “We will make an effort to keep the show where it is. But if we have to do it, we think the viewers will travel with us. They followed us back to Tuesdays, and it’s not too much to expect that they would follow the show to another network.”

Showdowns like this are becoming increasingly rare as the balance of power has shifted in favor of the broadcasters. “This is one of the last times we’ll see a situation like this because of the precautions taken by the broadcast networks,” said one agent who requested anonymity.

Today, networks own all or part of most of the shows on their schedules. A sweeping deregulation of the television business in the mid-1990s allowed networks to profit from shows on their air for the first time.

Networks began producing programs in-house and extracting ownership in shows from outside suppliers in exchange for air times. Today, every network but NBC is owned by a major studio. Generally, shows they own get the best time slots.

The ownership positions are designed to prevent a situation like “ER.” Sources said that Warner Bros. was able to extract $13 million per episode from NBC because of a little-known CBS offer for $12 million per episode.

Paramount is playing a similar game with “Frasier,” which NBC does not own any part of. Sources close to the talks say NBC is trying to finish the deal before its exclusive 30-day negotiating period, beginning Feb. 1. NBC spokeswoman Shirley Powell acknowledged that the two companies are in negotiations.

People close to the negotiations say NBC may have lost an edge in the talks by passing up the right to renew the contract last spring. Paramount Television Group Chairman Kerry McCluggage gave NBC the opportunity to renew the program when the network made the switch to Tuesday, giving NBC-owned “Will & Grace” the coveted Thursday night slot.

Television executives say NBC West Coast chief Scott Sassa figured the move would hurt the ratings of “Frasier” and allow him to renew it inexpensively.

Paramount’s sister company CBS seems to be the most likely new home for “Frasier” if NBC passes. Several producers and writers have sued production companies for giving such preferential treatment.

Actor David Duchovny, the star of Fox’s “The X-Files,” sued 20th Century Fox, charging that he was shortchanged millions of dollars because the studio sold reruns of the show at a discount to sister companies.

But an industry source with experience in blockbuster renewals said networks would be foolish to rely solely on their sister studios for shows.

“You need compatible programming to come from competitive studios in order to keep your schedule afloat. Paramount is not going to be able to supply all the programs to CBS,” he said.

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Staff writer Paul Brownfield contributed to this report.