I. Farscape cancelled: What the Frell?
On the night of September 6, 2002, in an online chat with David Kemper, Ricky Manning, and Ben Browder, Scapers learned that Farscape had been cancelled. We learned that the Sci Fi Channel had exercised an “out clause” in its 2-year renewal contract, thereby reneging on its promise to broadcast a full 22-episode fifth season of Farscape. Farscape fans everywhere were left wondering, “What the FRELL happened?” That night the Save Farscape campaign was born.
On the following Monday, September 9, the Sci Fi Channel released a statement confirming that Farscape had been cancelled, citing Farscape’s inability “to grow beyond its core fan base” and “the extreme and growing cost of production” as the reasons for the cancellation. Disappointing ratings and rising costs are the usual reasons that networks give when they announce the cancellation of series. These reasons usually satisfy the news media since the facts are difficult if not impossible to check. To check ratings data requires access to Nielsen’s data which is unavailable without a subscription. To check production costs requires access to a production company’s books, and companies usually don’t let reporters see their books. The news media seemed to accept the Sci Fi Channel’s statement at face value. Scapers didn’t; Scapers wanted answers.
On October 1, 2001, Bonnie Hammer, the President of the Sci Fi Channel had announced the unprecedented 2-year renewal of Farscape: “We are excited to renew our commitment to this smart, sexy, intelligent and fun series that rewrites the book on sci-fi entertainment. Farscape is not only the most ambitious original series on basic cable, we think it’s one of the best-written shows on television, period. It’s no wonder that it’s the top-rated series on SCI FI for three years running.” How could things have gotten so bad, in less then a year, to justify Farscape’s cancellation, ESPECIALLY when the Sci Fi Channel had published a press release on August 28 crediting its Sci Friday lineup of Stargate SG-1 AND Farscape with “leading the charge” to their best summer ever? When Scapers began checking their own sources of information against the Sci Fi Channel’s cancellation press release, it appeared that the Sci Fi Channel was being disingenuous. How could they claim that Farscape was unable to grow beyond its core fan base if its ratings had increased? The ratings average for Farscape’s 11 fourth season episodes at 10 pm was identical to the ratings average for the 12 third season episodes that aired at 9 pm during the summer of 2001, an average of 1.3; however, according to Scapers with access to Nielsen’s ratings data, the combined ratings average for Farscape’s 10 pm and midnight showings was 16-17% HIGHER then the combined ratings average for the previous summer’s 9 pm and midnight showings. A ratings increase, even an unpublicized ratings increase, is NOT a failure to grow an audience. Furthermore, how could the Sci Fi Channel claim that Farscape’s production costs were extreme and growing when they had a signed contract that gave them a fixed price per episode for Farscape’s fourth AND fifth seasons. A fixed cost CANNOT be called a growing cost. On Friday September 13, 2002, the Sci Fi Channel posted a FAQ (frequently asked questions) about the cancellation on their own Farscape web page in response to Scapers’ many questions. In their FAQ the Sci Fi Channel claimed that Farscape’s ratings had declined from a 1.4 average for new episodes in 2001 to a 1.2 average for Farscape’s season 4 episodes. To get these numbers, the Sci Fi Channel had to use a non-standard method for comparing ratings. Within the television industry, it has been known for decades that ratings fluctuate with the seasons. Therefore, it has been an established industry practice to compare ratings for any given time period to the same time period in the previous year, a “year ago” comparison (YAG). To get that 1.4 ratings average, the Sci Fi Channel either combined all 22 first run Farscape episodes shown in 2001, including the final 4 episodes from season 2 shown in January 2001 OR they combined the first 6 season 3 episodes shown in March and April 2001 with the 12 season 3 episodes shown in June through August. To get the 1.2 ratings average for Farscape’s season 4 episodes, the Sci Fi Channel either combined the final 4 episodes of season 3 shown in April 2002, or they dropped the rating for “Unrealized Realities” from their computation and only used the first 10 season 4 episodes’ ratings averages. A proper YAG comparison of Farscape’s season 4 episodes would have compared it to whatever shows were airing at 10 pm on Friday during the summer of 2001; however, the Sci Fi Channel was insisting on comparing Farscape’s 10 pm ratings to its 9 pm ratings from the previous summer. When Farscape’s 11 season 4 episodes are compared to the 11 season 3 episodes that aired at 9 pm on Fridays (Farscape had one episode air on Saturday July 14, 2001), Farscape’s ratings average remained unchanged at 1.3 for both summers. There was NO decline in Farscape’s ratings for season 4. One could argue that Farscape suffered a decline in ratings averages from a high of 1.6 for the first 6 episodes of season 3 shown in March and April 2001 to a low of 1.2 for the final 4 episodes of season 3 shown in April 2002; however, that does not help the Sci Fi Channel’s argument in support of Farscape’s cancellation since Farscape’s summer average for 2001 had “declined” to 1.3 BEFORE they renewed Farscape for an unprecedented fourth and fifth seasons. On the subject of Farscape’s costs, the Sci Fi Channel FAQ admitted that there were no rising costs between Farscape’s seasons 4 and 5. Instead the FAQ claimed that there was a very steep rise in cost between season 3 and 4. From the FAQ: “At that time, the cost-benefit ratio was far more equitable - Farscape was the highest rated original series on the Channel and it consistently performed well. In light of the fact that the ratings failed to maintain, and actually suffered a decline during season 4, the overall high cost to produce Farscape became an issue. We were faced with a show that was costing considerably more than it had during its first three seasons, while attracting a smaller audience. Farscape was failing to meet its advertising estimates and its continuation for a full 22-episode fifth season no longer made financial sense.” There was no ratings decline for Farscape’s season 4 in any industry accepted sense. In fact Farscape’s ratings average of 1.3 represented approximately 882,000 households in the summer of 2001 and 958,000 households in the summer of 2002 for an increase of approximately 76,000 households for season 4. Additionally, Farscape’s combined ratings average (i.e. the ratings average MOST likely to be used to set advertising rates) was 16-17% higher in the summer of 2002 then in the summer of 2001. Clearly Farscape had reached a larger audience in season 4 NOT a smaller audience. Furthermore, according to Juliet Blake, the President of Jim Henson, TV, the price of Farscape’s episodes had increased primarily because the Sci Fi Channel had asked for additional airing rights, NOT because of any rising production costs. The Sci Fi Channel’s FAQ, rather then clarifying the Farscape’s cancellation, had made matters more confused. Why HAD the Sci Fi Channel cancelled Farscape, and why were they being less then honest about it? It took many months and a lot of patient research by a lot of individual Scapers, but eventually a coherent picture began to emerge of the circumstances surrounding Farscape’s cancellation. It could be called a case of REALLY bad timing. II. Farscape and the case of really bad timing The following reconstruction of events is based solely on my interpretation of public sources of information collected on the internet. I am not a television or advertising industry insider; I do not know any of the principals involved; and I have had no access to secret information. At the end of this analysis you can check out my sources by following the links provided. If you have an alternate interpretation, then stop by the In the News -- Network News subforum and post it in a new thread; I'd be very interested in reading and discussing your take on these events. The Sci Fi Channel's behavior looked fahrbot (Farscape slang for crazy). First they trumpeted their unprecedented 2-year renewal of Farscape. Next they bragged that Farscape helped SG-1 "lead the charge" to Sci Fi's best summer ever. And then nine days later they cancelled Farscape. If Scapers were feeling confused by these actions, we were not alone. Shari Anne Brill, director of communications and programming services at media buyer Carat USA was quoted in CableWorld saying she was "really surprised" by Farscape's cancellation since it "did reasonably OK". TV Guide called the cancellation "a shocking move" in their Entertainment News section. What the frell was going on? When Bonnie Hammer announced Farscape's 2-year renewal on October 1, 2001, the Sci Fi Channel, along with its sister channel USA Network, was owned by Barry Diller's USA Interactive, and reruns of Farscape had been airing at 8 pm on Monday thru Thursday since the end of August 2001. Stephen Chao was the president of USA Cable, in charge of both the Sci Fi Channel and USA Network, and Bonnie Hammer's boss. Both Hammer and Chao were said to be strong supporters of Farscape. On November 5, 2001, Stephen Chao resigned as the president of USA Cable. Chao was replaced by a British television executive named Michael Jackson. Jackson was hired by Barry Diller as the president and CEO of the newly created USA Entertainment Group. Bonnie Hammer reported to Jackson as her new boss. Jackson was not reported to be a Farscape supporter. According to Juliet Blake, in an interview with BBC Cult, "I think that when Michael Jackson, fellow Brit, came in and was overseeing the whole of the Sci Fi network with Bonnie Hammer underneath him, even though Bonnie and all her team were huge fans of the show, I think he wanted to broaden the show out to be something that you just couldn’t do that with it." And according to David Kemper in a March 2003 article in SFX magazine, despite the 2-year renewal, "It was rancorous from the beginning, to a degree. . . They were saying, if we could make it more like Stargate, everyone would love it. . . We were getting, 'Make it more like South Park'. . . In the end we said to them, 'What do you want?' and they said they wanted a bigger audience." Stargate and South Park were big ratings winners for Michael Jackson at his previous job as head of Britain's Channel 4. On December 17, 2001, Vivendi Universal (VU) acquired the entertainment assets of Barry Diller's USAI, including the Sci Fi Channel, creating Vivendi Universal Entertainment (VUE). Meanwhile, the Sci Fi Channel continued to air Farscape reruns at 8 pm Monday thru Thursday until the end of December. Farscape disappeared from the Sci Fi Channel's schedule until one week before the final 4 episodes of season 3 aired in April 2002. According to their own FAQ, the Sci Fi Channel performed cost-benefit analyses for Farscape seasons. Presumably, the Sci Fi Channel used the higher cost per episode for Farscape's 4th and 5th seasons, along with the ratings analyses from Farscape's 3rd season episodes and its 8 pm reruns from August thru December to perform cost-benefit analyses for Farscape 4th and 5th seasons; and still the Sci Fi Channel signed a 2-year contract for Farscape in January 2002. It was reported that the Sci Fi Channel agreed to pay a large penalty fee if it exercised the contract's "out" clause for Farscape's 5th season. On March 27, 2002 Thomas Vitale, the Sci Fi Channel's VP in charge of programming, gave a telephone interview with Mary Wood, the Assistant Webmaster for FarscapeWorld.com; this interview was transcribed and posted at FarscapeWorld.com. During that interview Vitale said, "With Farscape, we had always wanted to do more than one season at a time and there were certain business reasons why we were doing one season at a time. And this year we had the opportunity to do two seasons and to really lock the show in. And everyone on both sides wanted to do that. We wanted to know that we'd continue to have the show for two more years; they wanted to know that they could continue to make the show for two years. So when both sides of the negotiations have the same goal, it makes the negotiation easier." At about this time, Thomas Vitale wrote for the June 2002 issue of Sci Fi Magazine that the Sci Fi Channel could afford to keep buying Farscape because it had always performed strongly in the ratings for them; Vitale's column was posted online in April 2002, before the magazine hit the newsstands. When Tom Vitale said and wrote these things, nothing had changed for Farscape, not its ratings and not its costs. And the Sci Fi Channel seemed happy with both. The April 29, 2002 issue of Business Week reported that Jean-Marie Messier, the French CEO of Vivendi Universal, ". . . terrified shareholders with sudden, big-ticket bids, and caused an uproar inside his company with his highhanded treatment of managers. The $13 billion asset writedown that Vivendi announced on Mar. 5 was a stunner that led Wall Street to fear that more nasty surprises could emerge from Messier's creation." Messier's creation was Vivendi Universal Entertainment. On May 7, 2002, Vivendi Universal completed the purchase of the Sci Fi Channel and USA Network by borrowing $1.6 billion in a short term loan; the loan was due in November 2002. By the end of May, the newly created Vivendi Universal Entertainment was in financial difficulties. VUE issued a press release on May 30, 2002, about its cash position and its deteriorating credit rating. At some unknown date, perhaps as early as the beginning of June, the Sci Fi Channel entered into talks with EM.TV to renegotiate the contract for Farscape's 5th season; EM.TV was the German company that owned the Jim Henson Company and with Jim Henson, owned Farscape. On July 3, 2002, Messier stepped down as the CEO of VUE and was replaced by Jean-Rene Fourtou. Fourtou began cost cutting measures and selling assets in an effort to reduce Vivendi's crippling $30 billion debt. On July 8, 2002, VUE issued a press release mentioning its short term liquidity concerns. On July 10, 2002, Fourtou announced an unsecured loan facility to address VUE's liquidity concerns and that VUE would be working with its bank lenders to put in place the necessary refinancing requirements. In mid-August rumors circulated online that the Sci Fi Channel wanted to reduce Farscape's 5th season from a 22 episode season to a 13 episode season. On August 28, 2002, the Sci Fi Channel published a press release bragging that it had just wrapped its best-ever summer. "Leading the charge was SCI FI Friday, a two-hour block of original series that included the original series Stargate SG-1 and Farscape. The block set a summer record for the channel, averaging a 1.4 rating (1.1 million households). That represented a 27 percent ratings increase over last summer's ratings average for the time period and a 46 percent increase in household delivery over last year." Nine days later, on September 6, 2002, David Kemper, along with Ricky Manning and Ben Browder, announced that Farscape had been cancelled in an online chat. On November 15, 2002, the New York Times reported that Barry Diller, beginning in July, "had been focused on squeezing as much extra cash as possible out of the movie and television assets" of Vivendi Universal. Since Fourtou was preoccupied with shoring up Vivendi's finances by securing emergency loans from banks and selling assets, Diller was assigned a greater role in controlling Vivendi's entertainment assets. According to this New York Times article, "Diller has already had an effect on the movie and television businesses. . . On the television side, one executive said Diller was involved in a negotiation regarding licensing fees." Could this have been Farscape's license fees? According to the September 15, 2002 issue of the FarscapeWeekly ezine, "The unofficial word says that SCI FI wanted to reduce the amount it pays for each episode for Season 5. EMTV (Henson's parent company) refused to lower its price, and SCI FI walked." In April 2003, Rockne O'Bannon wrote an article for Farscape Magazine called "Reflections on Farscape." Rockne's comments about Farscape's cancellation in that article support the "unofficial word" cited by FarscapeWeekly. Rockne explained, "The problem came down to this. They asked for only 13 episodes. They wanted to cut back to 13 episodes for the fifth season, which left open the possibility that if numbers picked up somehow or whatever, we'd get picked up for the back nine of season five and could continue on after that. The other variable was that EMTV, the Germans who own the Henson Company, were in tremendous financial turmoil and not looking for, but certainly didn't mind getting their hands on, an opportunity to bow out of producing a fifth season of the series.
"As I understand it, the SCI FI Channel kind of rattled their sabres as a negotiation ploy, and said, 'Okay, then officially we're not picking you up for the fifth season at all.' hoping to come to terms on some financial points, which were very close on anyway. EM got this letter from SCI FI/USA Studios saying 'We are officially not picking you up,' and even though Brian (Henson) and Business Affairs here and obviously the contingent down in Australia knew that this was a ploy, EM seized on it and said, 'Terrific, we've got out!' So it was a foolish gesture on the part of SCI FI, which then opened the door for EM to take this opportunity." In my opinion, we have enough information to explain the Sci Fi Channel's fahrbot behavior. The Sci Fi Channel wanted to keep Farscape in its schedule. That's why the Sci Fi Channel signed a 2-year renewal contract and that's why they agreed to pay a higher price per episode; the Sci Fi Channel wanted to increase the number of times it could air each Farscape episode. Shortly after announcing Farscape's 2-year renewal in October 2001, a change in the upper management in the Sci Fi Channel's parent company cost Farscape the support it had previously enjoyed under Stephen Chao when Michael Jackson took charge of the Sci Fi Channel and USA Network. However, left to itself, without any interference from upper management, the Sci Fi Channel was happy with Farscape and publicly said so. In the chat announcing Farscape's cancellation, David Kemper told Scapers NOT to blame Bonnie Hammer for the cancellation; Kemper said he was not angry at Bonnie, that she had always been a fan of Farscape. When the purchase of the Sci Fi Channel and its sister cable channel, USA Network, was completed in May 2002, it triggered an immediate liquidity crisis for the Sci Fi Channel's new parent company, Vivendi Universal Entertainment (VUE). To avoid bankruptcy, VUE needed cash and lots of it in a very short period of time -- the short term loan to purchase the USA Network and the Sci Fi Channel was due that November. Barry Diller started squeezing VUE's entertainment assets for as much cash as possible. The Sci Fi Channel was a VUE entertainment asset. I believe Michael Jackson, Barry Diller's hand picked man, ordered the Sci Fi Channel to cut its costs for Farscape's season 5. We do not know the precise date when the Sci Fi Channel and EMTV began renegotiating Farscape's 5th season; however, I believe it was very close to the beginning of June and may have started BEFORE the Farscape's 4th season episodes debuted. We also do not know the details of the renegotiation, just that it involved replacing a 22 episode season 5 with a 13 episode season 5. I believe that Barry Diller became involved in Farscape's season 5 renegotiation. I believe that Michael Jackson, who was no fan of Farscape and was in charge of the Sci Fi Channel at a level above Bonnie Hammer, took Diller's involvement as an incentive to do some saber rattling. He ordered the Sci Fi Channel to send a letter to EMTV canceling Farscape as an aggressive negotiating ploy. EMTV accepted the cancellation and the penalty fee that the Sci Fi Channel had to pay for canceling Farscape's 5th season; I don't believe that EMTV ever seriously looked back on that decision. Despite a desire to keep Farscape on their schedule, the Sci Fi Channel had lost Farscape due to the reckless interference of upper management, ie Barry Diller and Michael Jackson, in my opinion. Once the deed was done, the Sci Fi Channel had to act as if the cancellation was the result of ordinary business practices. Since Farscape's cancellation was the result of anything but ordinary business practices, the Sci Fi Channel's statements and behavior looked fahrbot. If the cancellation letter to EMTV was just a negotiating ploy, as I believe it was, then what was the dollar price for Farscape's cancellation? Can we determine the dollar amount that Barry Diller needed to squeeze out of Farscape and still keep it on the Sci Fi Channel for a 13 episode season5? We cannot determine the exact amount that Diller needed from Farscape; however, I believe we can establish plausible upper and lower bounds on the amount Diller was trying to squeeze out. For example, it was reported by John Dempsey in the July 29, 1999 issue of Variety that the Sci Fi Channel paid "only $400,000 or so per episode in license fees" for Farscape's first season. On September 9, 2002, John Dempsey reported on Variety.com that Farscape "cost only about $1.5 million an episode" and that the Sci Fi Channel "pays about half of the production cost in license fees." If the Sci Fi Channel paid half of Farscape's production costs, then they paid approximately $750,000 an episode in license fees for Farscape's 4th season. In the Sci Fi Channel's FAQ, they wrote that Farscape had a very steep rise in cost between seasons 3 and 4, and that Farscape was costing considerably more in its 4th season then it had during its first three seasons. These statements imply that the license fees the Sci Fi Channel paid for Farscape's first three seasons were close enough to be lumped together when compared to Farscape's 4th season license fees. For the purpose of finding our lower bound, let's assume that the Sci Fi Channel paid the same license fee for Farscape's first three seasons, i.e. $400,000 per episode. At $400,000 per episode, the Sci Fi Channel's lowest cost for a 22 episode season of Farscape would have been $8.8 million. At $750,000 per episode, the Sci Fi Channel's cost for Farscape's 22 episode 4th season would have been $16.5 million. Presumably, Barry Diller was trying to squeeze cash from the Sci Fi Channel, and the Sci Fi Channel tried to raise that cash by lowering the cost for Farscape's 5th season from a high of $16.5 million to some publicly undisclosed amount. However, we have a hint from the reports that the Sci Fi Channel wanted to reduce Farscape's 5th season from 22 episodes to 13 episodes. At $750,000 per episode, a 13 episode 5th season would have cost the Sci Fi Channel $9.75 million, for a savings of $6.75 million over the cost of a 22 episode season. We can assume that the Sci Fi Channel's best renegotiated deal would be to purchase Farscape's 5th season, all 22 episodes, with the increased airing rights, for the price of Farscape's first 3 seasons. Assuming that the lowest license fee that the Sci Fi Channel paid per episode of Farscape was $400,000, then the lowest price that the Sci Fi Channel would pay for a 22 episode 5th season would have been $8.8 million, for a savings of about $7.7 million over the cost of Farscape's 4th season. According to Rockne O'Bannon, in an interview published in the February 2003 issue of Starlog magazine, the Sci Fi Channel and EMTV came very close to a deal for a 13 episode 5th season in early September 2002. Rockne said, "Early in September, when all was coming to ahead, I heard from David. They were essentially working out the press release, [saying] that they were picking up 13 fifth season episodes, and then it all blew up." Since EMTV had agreed to a 13 episode deal for Farscape's 5th season, we can assume that their best renegotiated deal would have been for the Sci Fi Channel to purchase those 13 episodes at the price paid for Farscape's season 4 episodes, i.e. for the Sci Fi Channel to pay $9.75 million for those 13 episodes. Using the Sci Fi Channel's best deal and EMTV's best deal, we can establish a probable price range for a 13 episode 5th season of Farscape within which the renegotiation proceeded. Based on our assumptions, which are based only on figures available in public sources, the price range fought over by the Sci Fi Channel and EMTV was probably $8.8 - $9.75 million, a range of only $950,000. Was this the price of Farscape's cancellation? Was it the inability of both parties to agree on how to split the difference that cost Farscape its 5th season? Rockne said, "They were essentially working out the press release, [saying] that they were picking up 13 fifth season episodes, and then it all blew up." Presumably it all blew up because the Sci Fi Channel sent a letter to EMTV canceling Farscape. I believe that the Sci Fi Channel sent that cancellation letter because Michael Jackson hoped to squeeze a little more cash out of the deal for Barry Diller; and because Michael Jackson had no love for Farscape, he was willing to risk losing Farscape. And he did. Based on the statements issued by the Sci Fi Channel prior to Farscape's cancellation, I believe that the Sci Fi Channel, if it had been left alone by Vivendi, would not have tried to renegotiate Farscape's 5th season. I believe that the renegotiation was entirely the result of Vivendi's liquidity crisis. I believe that the Sci Fi Channel was a supporter of Farscape, but that the management above the Sci Fi Channel in 2002 was not. After the cancellation, the Sci Fi Channel had to follow the VUE company line that Farscape's ratings had fallen and that its cost had risen, no matter how little that line conformed to the facts. Farscape was the innocent victim of Vivendi's bad finances, in my humble opinion. References: (in no particular order) I was unable to find a copy of Tom Vitale's June 2002 column about Farscape and its ratings online; therefore, I scanned my copy of the article into my computer and posted a copy of the resulting jpeg at Image Shack. You can read the column by following this link |
