Media Wonk

Cartman gets the better of Cruise - August 27, 2007

I’m sure it didn’t come up in the negotiations but there’s a certain irony in seeing a division of Viacom agree to what amounts to a revenue-sharing and development deal with the creators of “South Park. It was Viacom, after all, that recently severed its relationship with Tom Cruise ostensibly because his revenue-sharing and development deal no longer made economic sense for the conglom.

Comedy Central’s ad-sharing deal with Matt Stone and Trey Parker could turn out to be a watershed deal for the economics of television production, on par with the time when movie talent started getting front-end participation instead of back-end points. At first limited only to the top-most tier of the A-list, deals involving points off the top inevitably spread more widely laid waste to the studios’ traditional recoupment formula.

The creation of SouthParkStudios.com as an “incubator” of new applications for Cartman and the boys as well as new comedy concepts, is essentially a development deal in which Viacom puts up all of the capital but revenue resulting from any project the new studio hatches is shared.

Why are Stone and Parker worth that kind of deal and not Tom Cruise?

As a practical matter, the two deals probably had nothing to do with each other. I doubt anyone negotiating the “South Park” deal was evening thinking about Paramount and Tom Cruise.

But the different outcomes do reflect—however coincidentally—real differences in the evolution of the economics of TV and movies, and in particular the impact of the Web. TV content like “South Park” is much closer to becoming a real business on the Web—either through advertising or other monetization strategies—than is long-form content like movies. So there was an incentive for both sides in the “South Park” deal to find a formula that would allow creators and distributor to exploit the opportunity.

Movies, in contrast, are yet to find a viable business model on the Web. While markets like cable-delivered VOD are growing, the vast bulk of movie revenues is still derived from DVD sales and box office receipts. Paramount’s deal with Cruise, in other words, amounted largely to divvying up existing revenue streams without any obvious model for growth. No wonder it began to look a bit rich to Viacom.

LEAVE A COMMENT