Speaker 1: H M. Welcome to Strictly Business Varieties weekly podcast featuring
Speaker 1: conversations with industry leaders about the business of media and entertainment.
Speaker 1: I'm Cynthia Littleton, business editor for Variety Today. My guests
Speaker 1: in New York are Mort Marcus and Ira Bernstein, co
Speaker 1: presidents of Debmar Mercury. Debmar Mercury is now Lionsgate Syndication.
Speaker 1: Arm Mort and Ira are industry veterans who know the
Speaker 1: content licensing business inside and out. They've been partners since
Speaker 1: two thousand three, when they were brought together by the
Speaker 1: mission to sell South Park into broadcast syndication. Debmar Mercury
Speaker 1: today is active in first run syndication as the home
Speaker 1: of daytime TV staples, including The Wendy Williams Show and
Speaker 1: Family Feud. This fall, they're taking two big swings with
Speaker 1: the launch of a daily talk show hosted by Nick
Speaker 1: Cannon and a magazine show, Central Avenue from producer Will Packer.
Speaker 1: As always with and Ira, it's a lively discussion about
Speaker 1: the business of selling television shows and taking the pulse
Speaker 1: of the podcast TV landscape in big cities and the heartland.
Speaker 1: It's a fun and candid conversation from the leaders of
Speaker 1: one of the most successful TV startup businesses of the
Speaker 1: past fifteen years. Mart Marcus and Ira Bernstein of deb
Speaker 1: Mark Mercury, thank you so much for taking the time
Speaker 1: to speak with us. See here, this is a big
Speaker 1: year for deb Mark Mercury. You're taking two big swings
Speaker 1: in the fall in First Run Syndication. You've got a
Speaker 1: talk show with Nick Cannon, who is pretty much all
Speaker 1: over the airwaves these days, and you also have an
Speaker 1: interesting magazine type show called Central Avenue from producer Will Packer.
Speaker 1: Let's talk about what it is about this particular year
Speaker 1: that you see this coming fall, that you see opportunity.
Speaker 1: And let's talk about the First Run syndication marketplace, because
Speaker 1: it's been kind of a sleepy environment for the last
Speaker 1: couple of years, but you and other companies in the
Speaker 1: past twelve months have started to really bring some big
Speaker 1: name and some big talents out. What is it that
Speaker 1: you're seeing in First Run these days? Oh, you know,
Speaker 1: I it is a big year for us, but it's
Speaker 1: not We didn't time it to be. In other words,
Speaker 1: I think we're a little bit like sometimes if you
Speaker 1: have the right show, then you bring it out. So
Speaker 1: in this case, we we're lucky enough to find Nick
Speaker 1: Um and then we've been working on stuff with Will Packer,
Speaker 1: So it just it just coincides with the fact that
Speaker 1: they're coming out at the same time. Whenn't we We
Speaker 1: weren't saying, oh, let's put two shows on UM in
Speaker 1: the fall of twenty but look, we're just we're excited
Speaker 1: to have Nick. From a standpoint that a lot of
Speaker 1: times people do talk shows. Not everybody, but a lot
Speaker 1: of times they do. When you get some of the
Speaker 1: big names, they'll do talk shows when they're on the
Speaker 1: the downside of their career. Maybe they can no longer
Speaker 1: get a movie as often or a TV roll as often,
Speaker 1: and they kind of want to then come into the marketplace.
Speaker 1: I've always wanted to do a talk show. We're getting Nick,
Speaker 1: he's on the up in his career, so we're really
Speaker 1: excited about it. I think the issue is it's all
Speaker 1: kind of I mean, the bigger question is it was
Speaker 1: content driven, and we're developing stuff all the time. So
Speaker 1: I think when Nick substituted for Wendy, which was a
Speaker 1: year ago now, we were always developing shows, but we
Speaker 1: literally saw him do the show and we kind of
Speaker 1: looked at each other and said, oh my god, he
Speaker 1: looks like he's been doing this for twenty years. It's
Speaker 1: like it's natural. He's not nervous, he's fun, he's exciting.
Speaker 1: You want to listen to him, you want to see
Speaker 1: him again tomorrow. And so that's what started that conversation.
Speaker 1: It wasn't we got to have a new talk show
Speaker 1: for a fall twenty And then in the case of
Speaker 1: Central Avenue, we've been working with Will for a couple
Speaker 1: of years developing a number of different things. This one
Speaker 1: sort of bubbled to the top at this moment. We
Speaker 1: tested it with Fox. It did really well, but that
Speaker 1: was an example of the market actually was a little
Speaker 1: bit crowded, which is why we moved to do a
Speaker 1: weekend hour. So we kind of backed into the distribution
Speaker 1: form of that show because the market was crowded. But again,
Speaker 1: it was driven by the content that we happened to
Speaker 1: have created at that moment in time, not by we know,
Speaker 1: we need a show for Saturday night at eleven or
Speaker 1: seven o'clock. It was driven by the content and well,
Speaker 1: Nick is a call it alive. It may not be live,
Speaker 1: but a lot effectively alive. Daily UM one hour talk
Speaker 1: show Central Avenue was driven by what Iver said. We
Speaker 1: had a lot of it, spent a lot of time
Speaker 1: Will Packer trying to come up with ideas they wanted
Speaker 1: to do something with him, and we kind of looked
Speaker 1: at two things. One because there's no or so few
Speaker 1: sitcom's coming off the off of the network that stations
Speaker 1: can run. Most of the station was certainly the Fox,
Speaker 1: CW and mind Us stations make most of their money
Speaker 1: selling airing older sitcoms from six to eight o'clock at night,
Speaker 1: like Friends or Two a Man or something like that.
Speaker 1: That's the sweet spot for advertising and the most amount
Speaker 1: of money that you can make and when most people
Speaker 1: are watching TV, and those stations make a huge percentage
Speaker 1: of their profit from sixtight o'clock at night, and they're
Speaker 1: just aren't any new sitcoms to buy. So it's waning,
Speaker 1: has been waning for years. The hits are farther and
Speaker 1: farther between, and so what's happened is you start to
Speaker 1: look out into the two years not twenty two years away,
Speaker 1: but there's there's even less and so plus with the
Speaker 1: streaming services taking Friends in the Office and those things,
Speaker 1: and not even sure if they're gonna let them be on,
Speaker 1: or maybe they will, but the ratings will be lower.
Speaker 1: What are these stations going to run? And so when
Speaker 1: you start looking at availably from six to eight o'clock,
Speaker 1: we believe that the stations are going to be much
Speaker 1: more in the business of looking at brand new, original,
Speaker 1: first run productions for those time periods. Central Avenue was
Speaker 1: made on the theory that Entertainment Tonight and Inside Edition
Speaker 1: have gotten really old and and and and honestly too
Speaker 1: white as a as a business. Too white. Because the
Speaker 1: marketplace and that's watching TV, is a much more multicultural viewer.
Speaker 1: So we set out to and will sent out to
Speaker 1: make something that would address the needs of the Entertainment
Speaker 1: Tonight Inside Editions address those people who want to watch that,
Speaker 1: but take a little more multicultural point of view. Aimed
Speaker 1: to air from six to eight o'clock. We just thought
Speaker 1: it was a little too crowded in twenty and that's
Speaker 1: why we're going to do it as a once a
Speaker 1: week show and hopefully we'll work and then we'll bring
Speaker 1: it out as a five day run show later. And
Speaker 1: then one of the show we're doing, which we haven't mentioned,
Speaker 1: but we're bringing out. We've already sold it. His Ship's Creek,
Speaker 1: and that's not first run, the rerun rights to rerun
Speaker 1: rights to that, that's sort of all that's and that's
Speaker 1: in those in those same spots, and we've already we
Speaker 1: had already sold that. But but that's kind of an
Speaker 1: interesting show that has gotten ridiculous number of awards and
Speaker 1: accolades all over the place. They keep getting them in
Speaker 1: their sixth season, and we're really excited about that one too.
Speaker 1: And that's you know, on Fox stations and clear throughout
Speaker 1: the country. That's a show that kind of came to
Speaker 1: prominence in its third season off of Netflix, meaning it
Speaker 1: was running on Pop, the cable network, and it's produced
Speaker 1: out of Canada, and all of a sudden, the show
Speaker 1: became this hot thing. A few years ago we acquired
Speaker 1: the rights, and now it's in its sixth season, going
Speaker 1: into its sixth season, and we're all living in this
Speaker 1: world where the TV business is changing so much, so
Speaker 1: nobody really knows. There's not there's very few shows that
Speaker 1: have been sold coming off of a streaming plat form
Speaker 1: into a free platform. We we're actually the only ones
Speaker 1: who've ever sold a original streaming show um and on Netflix,
Speaker 1: which was bo Jack bo Jack Horseman. We sold it
Speaker 1: to Comedy Central this one. While it's it's there's been
Speaker 1: shows sold off cable, which is what Pop is. But
Speaker 1: Pop is such a small network that almost nobody watched
Speaker 1: it on Pop and they all watched it on Netflix.
Speaker 1: And so now we're going to syndicate this it's coming
Speaker 1: off Pop, but really it's kind of coming off Netflix.
Speaker 1: So the question is it's coming off to be aware
Speaker 1: of by Netflix? Right? So, and by the way, I mean,
Speaker 1: you know, we're we're realist about this. We think Ship's
Speaker 1: Creek is absolutely hysterically an amazing show. You think it's
Speaker 1: the kind of show that should have legs in syndications.
Speaker 1: It's a little quirky. I mean, it's a little quirky,
Speaker 1: then say it to enough manners. It's not quite a
Speaker 1: straight down the middle shot, but it's legit funny. But
Speaker 1: it's coming off Netflix, so is that our people are
Speaker 1: just finding out about it. So we're hoping it catches fire.
Speaker 1: But you know, like I said, I think we're all
Speaker 1: living at a different time these days that if this
Speaker 1: was you know, thirty years ago and Ship's Creek was
Speaker 1: coming off of CBS and it's as good as it is,
Speaker 1: this would be a huge deal. But because it's Pop
Speaker 1: to Neflix, I mean, we don't know the stations that
Speaker 1: nobody really knows what the value of the proposition is.
Speaker 1: But we're all going to try it. You're gonna find
Speaker 1: out interesting when you sit and talk to a station
Speaker 1: manager or a station group buyer and you talk about,
Speaker 1: you know, well, this is coming off of Netflix, or
Speaker 1: this is coming like, what kind of questions do they
Speaker 1: ask you because this it seems like this is all
Speaker 1: such a world of unknowns. Let me go back to
Speaker 1: our roots, which is we started the company with with
Speaker 1: South Park. And so the only thing you can say,
Speaker 1: because this isn't coming off of it's not an ABC
Speaker 1: sitcom that you can say, God if it breaks at
Speaker 1: one point seven rating and it does that for three years,
Speaker 1: it's going to do this in syndication. This is coming
Speaker 1: off a Pop which has really low ratings, but it's
Speaker 1: the highest rated show that they have by a wide margin.
Speaker 1: Just like fifteen years ago or eighteen years ago whatever.
Speaker 1: With South Park. We were sitting there saying, I still
Speaker 1: remember the presentation because that's how we started the company.
Speaker 1: It was a three hundred and sixty five percent index
Speaker 1: to the regular rating on Comedy Central. So when something
Speaker 1: outperforms whatever its environment is, to that great an extent,
Speaker 1: we just think you have something. It just means that
Speaker 1: three and a half times the amount of people that
Speaker 1: normally watched watch of this. You know, people come to
Speaker 1: the right come to find it. So so I think
Speaker 1: we know that it has that ability to it. But
Speaker 1: it is also on Netflix, so not exclusively, so you
Speaker 1: can say, yeah, I'm just gonna watch them and watch
Speaker 1: them all tonight. I don't mean but but people watch
Speaker 1: TV differently, you know. So the people that are watching
Speaker 1: Channel five or Channel eleven, um, you know in this
Speaker 1: mark it in New York are are watching TV passively.
Speaker 1: They're not choosing two on. They may say tonight, after dinner,
Speaker 1: my wife and I are gonna sit down and we're
Speaker 1: gonna put Netflix on and watch. Um I'm sure they're
Speaker 1: gonna watch right, But right now I'm home and I'm
Speaker 1: flicking around the channels and I've stopped at you know,
Speaker 1: TMZ or I'm watching Ship's Creeker. I'm and that's how
Speaker 1: they watch. So it's so hopefully they'll they'll watch naturally
Speaker 1: like that. The people to watch TV watch that way
Speaker 1: and hopefully it will coincide nicely. Even though it's on Netflix.
Speaker 1: By the way, Friends has been on Netflix, it's been
Speaker 1: on broadcast, So it is it a different viewer. I mean, no,
Speaker 1: nobody knows, nobody, There could be all kinds of research.
Speaker 1: No one really knows what's going on. There's a there's
Speaker 1: a teutonic shift in what's happening, and yet most the
Speaker 1: money that's being made is still in the old version
Speaker 1: and the old live linear. Yeah. I mean, so everything's
Speaker 1: up in the air. But we're all, you know, trying
Speaker 1: to figure out how to stay in business. And there's
Speaker 1: plenty of business and um, but I do think we're
Speaker 1: at a time where there's just so many things changing. Um,
Speaker 1: you gotta keep your hand the ball. What is the
Speaker 1: mood when you talk to people? I always think of stations.
Speaker 1: Are the retail level of television in the local markets?
Speaker 1: When you when you talk to people in local markets,
Speaker 1: especially outside of the top five markets, UM, what do
Speaker 1: you hear? Do you hear concerned? Do you hear handwringing
Speaker 1: about all of what we've been talking about, or do
Speaker 1: you feel like there's still that that there is still
Speaker 1: people still feel very positive about broadcast television. I think
Speaker 1: the issue is they're all very challenged. Everybody's challenged, but
Speaker 1: the broadcast TV business operates that depending on what group
Speaker 1: you're looking at, between you know, A thirty five and
Speaker 1: its profit margin. So yes, they're all being squeezed because
Speaker 1: they're most of these are owned by public companies. So
Speaker 1: if you're making a billion dollars and you'r the X
Speaker 1: y Z big, one of the big groups, you know,
Speaker 1: your whole goal is to make a billion and fifty
Speaker 1: next year. So it's really hard to make the billion,
Speaker 1: and it's even harder in what is basically an amazing
Speaker 1: business but relatively flat slight growth that extra fifties really
Speaker 1: hard that if you ask them what was the five
Speaker 1: year plan on your business plan revenue, most of them
Speaker 1: would tell you that it's at least flat that they
Speaker 1: made They at least made it. Yeah, that continue that
Speaker 1: not their profit, but that their revenue should be around
Speaker 1: flat like the and they don't think it's going down.
Speaker 1: It is soft. There's just so Here's the other thing
Speaker 1: is that advertising. You know, with all these streaming services,
Speaker 1: advertiser needs places to go. So the local TV station
Speaker 1: is still a great you self. I mean, the reason
Speaker 1: people buy ads on the local TV stations, They've been
Speaker 1: around a long time now, these local TV stations. The
Speaker 1: reason people are buying ads is it sells their product.
Speaker 1: If you want to sell the Toyota on Saturday, there's
Speaker 1: a lot of things you can do. But even want
Speaker 1: to actually pile you know, eight thousand people in your
Speaker 1: local Toyota dealership, You're gonna take some broadcast ads out
Speaker 1: because that's on Thursday and Friday. It's right. And by
Speaker 1: the way, why do the why do the candidates spend
Speaker 1: so much money on the local team? They want their Toyota.
Speaker 1: People are watching it and you're reaching a person in
Speaker 1: a city. And and again I don't know how far
Speaker 1: tangent you want to go, but like, what's really happening
Speaker 1: here is is that on a big picture basis, we
Speaker 1: all have heard of cord cutting. Well, what what's happened
Speaker 1: is is that I don't know the year that it
Speaker 1: was the peak, but let's say that the top cable networks,
Speaker 1: it was probably maybe ten years ago. If I had
Speaker 1: to get I'm not looking at it thing, so I
Speaker 1: called it ten years ago, they were probably all around
Speaker 1: a hundred million homes full distribution to it was about
Speaker 1: eight years ago, I believe about a hundred million homes.
Speaker 1: Those now are about millions and drop heading to and
Speaker 1: so when the cable network, if the guy who had
Speaker 1: a hundred million homes has now eight dropping frat fast
Speaker 1: can probably in the seventies as we're speaking, um going
Speaker 1: to most of them think it's going to fifty. So
Speaker 1: what happens is those cable there's other than Fox News
Speaker 1: or CNN or ESPN. Maybe if you're just a general
Speaker 1: Comedy Central, USA, T and T whatever, they can't get
Speaker 1: in front of more homes. There's no other option for them.
Speaker 1: So for the most part, when they're getting cord cut,
Speaker 1: they're losing. And yes there's some services that are having
Speaker 1: skinny bundles they're getting some of back, but for the
Speaker 1: most part, their footprints going from a hundred going down
Speaker 1: to fifty. So if you're on a TV station, there's
Speaker 1: good and bad news. The good news the bad news.
Speaker 1: The bad news is your cable universe is a little
Speaker 1: smaller because the cable operator has less subscribers, and your
Speaker 1: commend that the good news is right now there's twenty
Speaker 1: two million of people. Don't even I can't believe people
Speaker 1: talk about this. There are twenty two million homes in
Speaker 1: the United States then watch their television on an antenna,
Speaker 1: old fashioned over the air in the back of the TV.
Speaker 1: It's really so much. It's more like an Apple device's antenna.
Speaker 1: But when they say antenna, they also have it's not
Speaker 1: like the old guy or the you know, the guy
Speaker 1: I ate TV, but I'll just do the antenna. It's
Speaker 1: the younger demographic. Actually, that's the cord cutters. So they
Speaker 1: might be watching this. Two constituents of antennas. One is
Speaker 1: the older and that's a bit of what we're thinking
Speaker 1: about when you think about who watches on antenna, But
Speaker 1: the majority of it are younger people, you know, eighteen
Speaker 1: to thirty four, who are cord cutters, who say, I
Speaker 1: don't want to do a deal with you know, Time,
Speaker 1: Warner Cable or Cox Cable whatever. I will do my
Speaker 1: antenna and then I'm gonna buy Netflix. I'm gonna buy Apple, Hulu,
Speaker 1: um and three other services. By the way, these this
Speaker 1: is a growing business. And think about this. Your little
Speaker 1: Fox station gets a much higher rating in the antenna
Speaker 1: home than it ever did in the cable and there's
Speaker 1: not an opportunity ative more than you think. And then again,
Speaker 1: I don't we don't want to get to Front of
Speaker 1: the Week. But you obviously have the digit nets, so
Speaker 1: the multi cast channel. So if you stick your antenna,
Speaker 1: you do have like thirty five forty channels, but you
Speaker 1: don't have a hundred, fifty or thousand when you get cable.
Speaker 1: And really some of the digit nets are relatively entertaining,
Speaker 1: and they're decent, they're not as good. They're not spending
Speaker 1: the kind of money USA or T and T or
Speaker 1: COMBEDT cential word yet, so the product is older generally,
Speaker 1: some of the movie prints are a little acting exactly so.
Speaker 1: But my point is, so if you're a TV station,
Speaker 1: you're getting some of the people the cord cut are
Speaker 1: going to an antenna, and not all of them. And
Speaker 1: then but almost all of them that go to a
Speaker 1: skinny bundle get a broadcaster. So as we sit in
Speaker 1: the universe that we are right now, broadcast stations are
Speaker 1: still covered in the United States where the cable nets
Speaker 1: are getting down to So if you're an advertiser, again,
Speaker 1: where are you gonna go? You got less places to go. Yes,
Speaker 1: there's there's a lot of a V O D and
Speaker 1: things like that, But at the same time, networks are
Speaker 1: fully covered and stations are fully covered. And as the
Speaker 1: cable net was dropped further, that spread gets even bigger
Speaker 1: between antennas skinny bundling. I think the broadcast broadcast business
Speaker 1: is not going anywhere anytime soon. Well, I think when
Speaker 1: you look at the upfronts, that's really the most illustrative
Speaker 1: at this point because every year since I did my
Speaker 1: first presentation, I think it was like six on how
Speaker 1: the networks were declining and how could this check demand.
Speaker 1: It's the same exact thing, you know, thirty four years
Speaker 1: later because what's happening, and it's even more exacerbated today
Speaker 1: because of all these other things. So you have a
Speaker 1: decline in rating. It's not huge, but it's a slight
Speaker 1: you know, the chip keeps chipping away. But because the
Speaker 1: advertisers have to place that money, the increase in the
Speaker 1: cost per thousand or the cost per point locally is
Speaker 1: outpacing the decline in the available for some years. Overall,
Speaker 1: if you look at ten years net net, you're probably
Speaker 1: up a little bit. As a broadcast Sometimes that sometimes
Speaker 1: that networks are flat in revenue, but because their rating
Speaker 1: drops about the same. In general, if you look at
Speaker 1: a ten year trend, they're all up as all the stations.
Speaker 1: If you look ten years ago to today, there's blips,
Speaker 1: but you're getting more for their a way of with
Speaker 1: the smaller rating, right or they're getting more per point,
Speaker 1: so they're offsetting the decrease with a higher higher cost
Speaker 1: per point even though the ratings are lower. And the
Speaker 1: same thing with the syndicated shows, you know, are all
Speaker 1: of the shows are getting lower ratings than they used
Speaker 1: to get for the same reasons, but they're getting higher
Speaker 1: CPMs which offset some of that um default. Let's talk
Speaker 1: about Let's talk about your company, Denmark Mercury, because I
Speaker 1: love your story. You guys came together. You both had
Speaker 1: long careers in syndication and in advertising more you worked
Speaker 1: for Disney IRA, you worked for Reischer, and you worked
Speaker 1: in advertising for many years and through the vagaries of
Speaker 1: of you know, consolidation and changes in the business, you
Speaker 1: guys both wound up. You had your own companies late
Speaker 1: nineties early two thousand's. You came together in two thousand
Speaker 1: three for a specific project by comedy Central to come
Speaker 1: in and help them monetize south Park, which was racking
Speaker 1: up episodes, had become an institution for them. But and
Speaker 1: somebody realized, hey, there might be and yet another afterlife
Speaker 1: for this that could come that could bring in a
Speaker 1: couple of bucks. Um. And you never intended to build
Speaker 1: Devmar into the you know, to quite the shop that
Speaker 1: it is today. Well, we never actually did a business
Speaker 1: plan that we never did a power point, and we
Speaker 1: never did any of those things. We just don't. We
Speaker 1: still don't. We literally just you know, it's the old
Speaker 1: fashioned you know, how did you make all this money?
Speaker 1: Is that? Well, we bought stuff for a dollar and
Speaker 1: we sold it for two dollars. It's kind of a
Speaker 1: version of that. And on south Park, mort was acquiring
Speaker 1: it asked me to join him. I was actually a
Speaker 1: Lionsgate had a worldwide TV at that point, but I
Speaker 1: had Mercury because this was early days of Lionsgate. It
Speaker 1: wasn't the you know, eight billion dollar company it was today.
Speaker 1: It was, you know, a few hundred million making some
Speaker 1: movies and some TV shows here and there. And I
Speaker 1: had started their international distribution. There wasn't even domestic, wasn't
Speaker 1: a need for domestic. So I had kept Mercury as
Speaker 1: a separate company and my deal with them, and this
Speaker 1: was a couple of years into it, and more approached
Speaker 1: me and it just seemed like a fun thing to do.
Speaker 1: I was allowed to do it. I went back to
Speaker 1: John Feldheimer and basically it became so much more fun.
Speaker 1: I said, I'm gonna quit because this is what I
Speaker 1: really want to do, but I'll take care of you.
Speaker 1: And I basically made an exit deal with him and
Speaker 1: hired my replacement and went off and parted with Morton.
Speaker 1: It was turned out to be a really smart thing,
Speaker 1: and you know, we have had a good time. I
Speaker 1: will tell this is a really quick story. I told
Speaker 1: it at the Irish Wards, which was that yes, we
Speaker 1: acquired south Park in two thousand three, but you got
Speaker 1: to go back five years to get the actual story.
Speaker 1: It's pretty brief. But I'm working at Disney and President
Speaker 1: when it was a television running overseeing all syndication. Yeah,
Speaker 1: for Disney, this show called south Park comes on the
Speaker 1: air and it's like the most amazing thing I've ever seen.
Speaker 1: So I called Doug Herzog, who's the press of Comedy Central,
Speaker 1: and said, I'll tell you, what if you get to
Speaker 1: a hundred episodes, I'll pay twenty million dollars and have
Speaker 1: the syndication rights for Disney will syndicated in sharing the
Speaker 1: money with you, and we'll all make a bunch of money.
Speaker 1: And Doug wanted to do the deal. And but he's
Speaker 1: much wiser than me. He realized I was a little
Speaker 1: rogue out there as the I was president. I was
Speaker 1: the president of the division. But it is the Walt
Speaker 1: Disney company. So he said more, I respect you a lot,
Speaker 1: but honestly, I need I just need you to make
Speaker 1: sure it is the Walt Disney South Park. Can you
Speaker 1: least ask your boss, if at the time was Steve Burke,
Speaker 1: if if you can actually make this deal? Because here
Speaker 1: I am offering twenty million dollars and I didn't even
Speaker 1: ask anybody. So I got probably a good idea. So
Speaker 1: so I called Steve Burke. He hadn't seen it. I
Speaker 1: sent him a couple of episodes, and a couple of
Speaker 1: days later I get a response from him saying, Okay,
Speaker 1: that is the funniest show I've ever seen in my
Speaker 1: entire life. And there's not a one percent chance you're
Speaker 1: doing this for the Walt Disney Company and that was
Speaker 1: the end of that. Five years later, they had yet
Speaker 1: to sell Comedy Central indsyndication and it was still available.
Speaker 1: So and so and so South Park is sold. It's
Speaker 1: a it's a success. You you and I remember at
Speaker 1: the time there was like, who's gonna buy this? It's
Speaker 1: on Comedy Central all day and night. Yeah, we kind
Speaker 1: of built the company on doing things that any sane
Speaker 1: person had said, like, there's no chance, not that you
Speaker 1: wouldn't really succeed at it. You can't even get on
Speaker 1: the air, forget about it. I remember somebody who still
Speaker 1: go nameless was like, you're not even You're just not
Speaker 1: gonna sell it. You're gonna have to realize you're not
Speaker 1: gonna sell it. And then it looked like we got
Speaker 1: some trashally what you might sell it, but you're never
Speaker 1: gonna get cash. And then we started getting cash when
Speaker 1: they said, what you might get a little cash, but
Speaker 1: it's not gonna be like a regular sitcom. You're gonna
Speaker 1: get like a year or two, and so lo and behold.
Speaker 1: We sold it for five years cash plus bar the
Speaker 1: whole thing, and that's how the company was started. And
Speaker 1: then we the next big thing. It was actually Tyler Perry.
Speaker 1: But wait, wait, in between, there must have been a
Speaker 1: point when you looked at Chather and said, let's keep
Speaker 1: this going. But one of the things that's interesting in
Speaker 1: South Park was that time. So we're in the deal,
Speaker 1: there was a clause that said, if we don't do
Speaker 1: that well with it, they were actually nervous about it.
Speaker 1: So there if we don't sell it so deep they
Speaker 1: even wanted to buy it back because they were concerned
Speaker 1: it was gonna hurt. Even though they wanted to do it,
Speaker 1: they were concerned. They kind of had both sides and
Speaker 1: they were actually nervous. So it finally goes on the air,
Speaker 1: and at that so in two thousand three, Duggers I
Speaker 1: wasn't the president of Comic Central. It was a man
Speaker 1: named Larry Divney, was a great guy. Divney left and
Speaker 1: by the time it aired in two thousand five, Duggers
Speaker 1: was back Central again. As the world turns up by it,
Speaker 1: and he calls up and he says, I am really
Speaker 1: really concerned that this is going to kill South Park?
Speaker 1: Are you you really have to do that? That we've
Speaker 1: sold it percent of the United stage fifty stations. It
Speaker 1: is done it's on. He was really nervous about it.
Speaker 1: So that was like early September. It goes on the air,
Speaker 1: six weeks later, were gonna call from Doug. He goes,
Speaker 1: oh my god, it's helping me. It's helping the ratings
Speaker 1: because I didn't realize that a lot of people didn't
Speaker 1: even know that it was on the air, and they're
Speaker 1: finding it in syndication and they're watching the originals on
Speaker 1: Comedy Central and so he goes keep it going. So
Speaker 1: he didn't even realize that. So they're even back to
Speaker 1: the same thing with kind of what's probably happened with
Speaker 1: Pop and Ship's Creek, and we're hoping the same thing
Speaker 1: will happen with Ship's Creek because still so many people
Speaker 1: have haven't discovered it yet. But that's what happened. So
Speaker 1: the broadcasters they're running at the same time, they weren't
Speaker 1: hurting each other, they're actually helping each other. And is
Speaker 1: it still because I know that it is going to
Speaker 1: HBO Max, so it's no longer in syndication, So so
Speaker 1: for us that had happened. And I know you're asking
Speaker 1: the other question, like when did we decide we got
Speaker 1: to really do this kind of didn't. I still, you know,
Speaker 1: we were doing South for the Revolution and we got
Speaker 1: Revolution movie from Joe Rock. But the next big thing
Speaker 1: we we then decided, you know, well Tyler Perry was
Speaker 1: coming up. But in between that and and that time,
Speaker 1: that was a couple of years. So at this point
Speaker 1: we're like, I'm selling stock and we're using savings and
Speaker 1: we're living. There's no money. I mean, you don't you know,
Speaker 1: you sell a show, you don't get money for a
Speaker 1: couple of years later. So it was a classic small business.
Speaker 1: We then incorporate. We did join because we had to
Speaker 1: get a loan. So when we had all the receivables
Speaker 1: from South Park, we said, well, oh my god, we
Speaker 1: have you know, call it, you know, fifty sixty million
Speaker 1: of cash receivables. We can actually bank that and take
Speaker 1: out a loan to actually do this company. So I'll
Speaker 1: never forget being like I'm in my car driving here
Speaker 1: and Mort's in l A and the lawyers on the
Speaker 1: phone and they have to file the papers in order
Speaker 1: to be a company in order to then file for
Speaker 1: the loan. And the guy says, well, okay, I have
Speaker 1: a couple of questions, Like, first of all, what's the
Speaker 1: name of the company. And we said, well, you know,
Speaker 1: we've talked about this. We agree on pretty much everything.
Speaker 1: We argue about everything, but we ultimately agree and everything.
Speaker 1: We can't agree on the name of the company. So
Speaker 1: he's Debmar Mercury. It's called Debmar Mercury. Everybody said, well,
Speaker 1: that's a silly name, okay, but that's what it. Just
Speaker 1: write it down, write it down for the paper. And
Speaker 1: then he says and secondly like, who are you guys said, well,
Speaker 1: we're partners, so no, no, no no, you need a title.
Speaker 1: I have to fill out this form and said, well,
Speaker 1: it's just we have this one show. I mean, chairman's
Speaker 1: kind of pretentious. We're presidents, but we're both presidents, so
Speaker 1: we're co president. Fine, we'll be co presidents. What else
Speaker 1: you got? And that's how we filed the paper. We
Speaker 1: then go to get the loan and the bank says,
Speaker 1: it's really impressive. You got it's just the two of
Speaker 1: you guys. Is really great. By the way, we're gonna
Speaker 1: need your houses to give you the loan. So we
Speaker 1: literally put our houses as collateral to get the loan.
Speaker 1: And then as we do working together more, it's thinking, well, Okay,
Speaker 1: now that our entire lives are on the line, not
Speaker 1: that they weren't before, but now they really are. What
Speaker 1: happens if the show doesn't go for more there's like
Speaker 1: a hundreds of episodes they're in a vault goes well,
Speaker 1: what if the volt goes on fire? So we started
Speaker 1: looking into all of that. It had its own set
Speaker 1: of problems that had content issues that we the stations
Speaker 1: were nervous about. And if something really bad happened, maybe
Speaker 1: advertisers wouldn't be in it, you know, so all your
Speaker 1: projections could be wrong and had a lot of it
Speaker 1: had hurdles in its way. We you know, I think
Speaker 1: we did a really good job, you know. We we
Speaker 1: we put up we had we created a board from
Speaker 1: stations who bought it and ran the edits by them.
Speaker 1: So when we had episodes that we were trying to
Speaker 1: clean up a little bit, um, we'd say what about
Speaker 1: this scene? What about that scene? And they was hacking
Speaker 1: live with that. I can't live with that. We had
Speaker 1: we had sec attorneys, um, so we really really went
Speaker 1: out of our way because the stations understood what they
Speaker 1: were bying. They really liked the idea of it, but
Speaker 1: they also were concerned about it because it is they're
Speaker 1: pretty rough, pretty It sounds like all this based on
Speaker 1: your years of knowledge of what your customer would want,
Speaker 1: what kind of TLC they would want in a situation
Speaker 1: where they were be some concerns. By the way, did
Speaker 1: two things. It made them more vested in the show,
Speaker 1: but it also um allowed us to with confidence to
Speaker 1: know that we were editing it the way that our
Speaker 1: clients needed it. At the end of the day, by
Speaker 1: the way, we had a hundred and fifty episodes, I
Speaker 1: think we only three, only lost three. We couldn't air
Speaker 1: the one one of our favorite, the Ship seven times.
Speaker 1: You wouldn't have been able to edit that because I've
Speaker 1: ever seen the ship where they have a counter. Yeah,
Speaker 1: So that's definitely the next evolution in the company. The
Speaker 1: biggest thing was being as Tyler And this is now
Speaker 1: a year and a half later, and Tyler had come
Speaker 1: to us through marketing and Wayne Morris because he was frustrated,
Speaker 1: as we talked about earlier, with the creative process. He
Speaker 1: was in that process of trying to sell shows shows
Speaker 1: and could you put a blonde girl next door and
Speaker 1: you could make his best friend a little redheaded boy,
Speaker 1: and he was just like, I'm not doing that. If
Speaker 1: I fail, I want to fail my way. So, long
Speaker 1: story short, we we got a business with Tyler. We
Speaker 1: fund all the marketing. We're still writing our own personal
Speaker 1: checks to Nielsen kind of thing, which is painful thing
Speaker 1: to do. And we're now have the Tyler shows and
Speaker 1: we're sitting there and we had the classic small business
Speaker 1: because this is now a six in business three years,
Speaker 1: we have a we have a you know, call it
Speaker 1: a five six million dollar line. We've paid half of
Speaker 1: it down because the cash flow is coming in, and
Speaker 1: yet we're looking at the projection saying, you know, in
Speaker 1: six months, we're gonna be out of money, even though
Speaker 1: we have way more money coming in down the line.
Speaker 1: And so that's when we decide we got to do something.
Speaker 1: And then we looked at more new Michael Eisner, we
Speaker 1: talked to him, we talked to a lot of other
Speaker 1: people about selling, and then ultimately worked it out with Lionsgate.
Speaker 1: Lion Skate came in, sold the company to lions Gate,
Speaker 1: and fourteen years now and we've done three deals. Because
Speaker 1: each time you do a deal to do an employment agreement,
Speaker 1: that agreement comes to an end and basically we re
Speaker 1: up three time. Some they have been great partners and
Speaker 1: clearly you have reached the finish each other sentences stage. Yeah, ago, exactly, Yeah,
Speaker 1: that's true. Is there a certain yin and yang as
Speaker 1: I mean, I get the sense you're both very analytical,
Speaker 1: but is there like, is there a division of labor
Speaker 1: at all or do you kind of both do do
Speaker 1: a little bit of everything and here's a little more
Speaker 1: sales than me. But for the most part, we just
Speaker 1: any big decision, we're just we just we just basically
Speaker 1: roll play it out. We make the decision quickly, but
Speaker 1: we don't always look at it the same way, obviously,
Speaker 1: and but we try to. It's rare that we really
Speaker 1: really really can't come to the same place. It's been
Speaker 1: pretty good. It's a great business success story, entrepreneurial success story,
Speaker 1: and you know, be very interested to see what we
Speaker 1: what is to come this fall from Nick Cannon and
Speaker 1: Central Avenue. And thank you so much for taking the
Speaker 1: time to sit and talk with us about the business.
Speaker 1: Thank you. And by the way, by the way, I
Speaker 1: will say, you know a lot of people think that,
Speaker 1: you know, the TV business is mature, and it is,
Speaker 1: but we're still bullish on it. We still think there's
Speaker 1: a real business out there and your end of the
Speaker 1: distribution is where the rubber meets the road for monetization.
Speaker 1: So hopefully, thank you, thank you, m thanks for listening.
Speaker 1: Be sure to tune in next week for another episode
Speaker 1: of Strictly Business.