No, Dorothy, We’re Not in Bloomingdale’s Anymore

I’m sorry there are no pictures on today’s posts. Tagaroo — the WordPress plugin we use on this site for pictures — is acting up. We’ll try to fix it ASAP. In the meantime, I just couldn’t delay this wonderful post from Norman any longer. — AWO

by Norman Horowitz

It’s 115 degrees in the shade, and there’s no shade. A man lost in the desert for three days without food or water has almost given up hope of living to see another sunset. He crawls to the top of a sand dune and for a moment believes that he’s saved when he sees a man wearing a suit-and-tie sitting under a huge umbrella next to a table piled high with ties.

Our dying man staggers over to the man with the ties and notices a sign, “Ties for Sale: $750”. With his last bit of strength he groans, “Water, water, please I must have water.”

The man with the ties tells him, “I don’t have any water, but would you be interested in buying a tie for $750 dollars?” Seeing the devastated look on the dying man’s face, the tie salesman adds, “There’s a restaurant fifty yards ahead where you can get water.”

Our dying man crawls over the next sand dune and arrives in front of a big restaurant. He is about ready to go in when he sees a sign over the front door, “ABSOLUTELY NO SERVICE WITHOUT A TIE!”  

Films, unlike items sold in department stores, do not come with price tags. Films are not sold in Bloomingdale’s. The question is invariably asked by bankers, studio executives, film salesman and others: “What is a particular picture worth?” For over forty years, I’ve been suggesting that it’s only worth what someone is willing to pay for it — no more, no less. The marketplace answer is the only answer that really counts.

A few examples:

In the early ’60s, Screen Gems was selling its feature films to television in Argentina for $2,000 dollars each. The Otto Preminger movie The Cardinal (a mediocre movie at best) became available, and I sent a cable to the station that was playing our movies asking for $27,500 dollars for this superior Catholic film that was to be available in this very Catholic country. I received a reply offering $2,750 dollars along with an indication that I had perhaps lost my mind. After taking care of some niceties with buyer number one, I offered The Cardinal to buyer number two for $27,500 and closed a deal for $25,000\.

In 1970, CBS Enterprises was being spun off from CBS into Viacom. I made a deal to acquire the distribution rights to the ABC series Dan August from Quinn Martin. This made a statement that Viacom was serious about continuing in the business. A couple of days after making the deal, I ran into my old boss from Screen Gems at the Beverly Hills Hotel having breakfast at the Polo Lounge when he loudly announced, for all to hear, “Good God, Norman! You really over paid for Dan August. I thought you would have known better.” (He was incapable of saying “Good job, Norman.” It was an ego thing. He needed to “protect himself.”)

In the late ’70s, while at Columbia Pictures, I wanted to buy the distribution rights to the ABC comedy Soap. I absolutely loved the two pilots (starring Billy Crystal, among others) and sent them to New York to my company president, saying that I was going to need a lot of money to buy the syndication rights to the series. My president called the next day and said, “Look Norman, we produced eleven network pilots this year and sold none, and I have a board meeting next week. If I don’t do something significant in television, I’ll get killed. I want you to do a deal for this series, and I don’t care what you have to pay for it. If you screw around and lose it, I’ll be very upset, so don’t be cute and don’t try to cut the best deal in the world. Just make a deal.” I did indeed make a deal which probably cost Columbia a couple million dollars more than it might otherwise have cost, but it was well worth it to everyone, particularly my president.

Twenty-five years ago, I was involved in the sale of a large group of features in Australia for $8 million. A few years ago, the buyer said to me that his boss considered him a hero because he had been authorized to pay as much as $10 million. He laughed when I told him that I had been authorized to accept $6 million.

As a seller, I never made a deal that I believed was as good as it could have been, and I’m sure that there are many producers out there from whom I have bought many programs who would say in retrospect that they would have “taken less,” as well as countless station people who would say that they would have “paid more.”

Was a tie worth $750 dollars to the man dying of thirst? Absolutely.

Was The Cardinal worth $25,000 to buyer number two? Absolutely.

Was Dan August a worthwhile deal for Viacom? Absolutely.

Was Soap worth an extra couple million dollars to my president? Absolutely.

Were the movies worth $6 million in Australia? Absolutely.

I cite these examples not to say how smart I am, but rather how elusive pricing is in the television business. It’s because of these experiences that I was able to write the following, ten years ago:

When it was announced that ABC paid $70 million for the first Harry Potter movie, all of the knowledgeable and unknowledgeable pundits had something to say about the deal. Many said ABC paid too much, and many others (like me) said that they wanted it and they went out and got it. I admired them for stepping up, big time.

I cannot conceive of a more valuable or durable film than Harry Potter. Other than the general benefits that would accrue to ABC from this purchase, I would expect that ABC (and its affiliated companies) will generate huge ratings for this film during its ten-year exhibition term.

Having said that, what I think about the film and its ability to perform doesn’t matter, nor does it matter what anyone else thinks. All that matters is that ABC was a willing buyer and Warner Bros. a willing seller.

ABC can better utilize Harry Potter than their competing networks. They will play it on the Disney Channel, the former Fox Family Channel, and will probably at some point figure out a way to play it on ESPN. Additionally, I believe that Disney will use their ownership of Harry Potter to deal with the cable carriage issues during its licensed term.

Now the real unanswered $70 million question: Why did AOL/ Time-Warner, a company purportedly dedicated to developing incredible levels of synergy, “”let the really, really, really BIG ONE get away”? This is truly proof that AOL/Time-Warner was by far the worst media deal ever concluded.