Acquired
02:20:05 · David Rosenthal, Ben Gilbert
[02:20:05] S1: You know? 80% ish of whatever that number is. [02:20:08] S0: Not a lot of money. So let's look at season two, for example, 12 episodes. That probably costs somewhere in the 5 to $6,000,000 to produce, which means that somewhere in the million dollars for NBC to buy. It's actually, like, kind of a small thing. But those 12 episodes, when they're sold later in syndication, can fetch huge sums of money, especially if it runs for a long time because the rights can be sold over and over and over again. And the most important thing is that group, David, that you were pointing out, that sort of cap table of who owns the show, it's a totally different split from who makes the money the first time around. The first time around, there's all these people you're paying on salary, especially the actors. The second time around, the people who are participating in all the syndication, it's that whole waterfall of who actually owns the show. [02:21:02] S1: Yep. And this is back to why Larry and Jerry got the most valuable deal in television history because they got huge amounts for creators in that back end waterfall. Yep. And then that back end waterfall would be billions and billions of dollars. And this is where it all starts. [02:21:21] S0: At least reportedly. Again, this is like a funny thing about doing this versus covering public companies is, like, we're relying on some reporting done by a few news outlets over the years, but I think we have to take that at face value.
02:21:21 · Ben Gilbert, David Rosenthal
[02:21:21] S0: At least reportedly. Again, this is like a funny thing about doing this versus covering public companies is, like, we're relying on some reporting done by a few news outlets over the years, but I think we have to take that at face value. [02:21:31] S1: Yes. But assuredly, billions of dollars have gone through this waterfall. So, yeah, we we sort of joked about Sony slash Columbia earning their keep in this first syndication cycle, which is just for local broadcast affiliates. They can't take it to cable yet. Sony sells the show to a record 224 local TV stations across America. [02:21:58] S0: Out of the thousand TV stations total. So, basically, one station in every market of the country taking the exclusive local rights. And that generated an aggregate sum of $500,000,000 in revenue.
02:21:58 · Ben Gilbert, David Rosenthal
[02:21:58] S0: Out of the thousand TV stations total. So, basically, one station in every market of the country taking the exclusive local rights. And that generated an aggregate sum of $500,000,000 in revenue. [02:22:12] S1: Actually, over $500,000,000 in revenue in a single event here in 1995, and that was just for the first five year syndication window and only on local TV affiliates, not even on cable yet. Yeah. And it turned out that those local affiliate stations that were paying all that money for Seinfeld actually were getting a pretty good deal. Because all of a sudden, reports start popping up as Seinfeld enters into syndication where stations that would run Seinfeld reruns would end up winning the time slot in their local market. They would beat live programming on other stations at the same time. So, like, let's say you're, you know, local affiliate TV station in Buffalo, New York. You decide that you're gonna run Seinfeld reruns during a particular time slot when the other stations in town are running local news. Seinfeld beats the local news. [02:23:15] S0: It's the audience of people who never got to watch it on network, cause it only ever aired twice. Like, you missed a big episode. Let's say you missed the contest. You were working the first night, and then you weren't around because you were doing summer travel or whatever. The only chance to catch it is in syndication, and that's a thing that everyone talked about. That could be a marketing event if you were a local TV station Right. Trying to drive a bunch of attention. We're gonna air that episode.
02:23:15 · Ben Gilbert, David Rosenthal
[02:23:15] S0: It's the audience of people who never got to watch it on network, cause it only ever aired twice. Like, you missed a big episode. Let's say you missed the contest. You were working the first night, and then you weren't around because you were doing summer travel or whatever. The only chance to catch it is in syndication, and that's a thing that everyone talked about. That could be a marketing event if you were a local TV station Right. Trying to drive a bunch of attention. We're gonna air that episode. [02:23:41] S1: Right. You could market that you are gonna be running the contest on Yes. Tuesday night at eleven or something like that. I mean, that sounds way more compelling than local news to me. [02:23:51] S0: Or whatever other local programming. I mean, I think, Wheel of Fortune... There were a lot of, like, game shows Yep. That would be... I think the phrase is first run syndication that would skip the network altogether and be produced directly to sell to the local affiliates. Actually, Oprah was this. [02:24:06] S1: Yes. We talked about this on our Oprah episode. Yep. And just to make it even more fitting, that same year in 1995 when Seinfeld hits syndication is when Fin Sin gets repealed. Yeah. So the door is now slammed that no other shows are gonna have these dynamics because the networks now are gonna own their own shows. And this is gonna play out over broadcast television a little bit, and it's gonna play out big time in the streaming era.
02:24:06 · David Rosenthal, Ben Gilbert
[02:24:06] S1: Yes. We talked about this on our Oprah episode. Yep. And just to make it even more fitting, that same year in 1995 when Seinfeld hits syndication is when Fin Sin gets repealed. Yeah. So the door is now slammed that no other shows are gonna have these dynamics because the networks now are gonna own their own shows. And this is gonna play out over broadcast television a little bit, and it's gonna play out big time in the streaming era. [02:24:38] S0: Which if you're Castle Rock, it's a good time to cash in your chips because you have this super valuable library, which you own. You actually own it, and it's guaranteed to make all this money in the future. And the regulation that was in place that let you make future shows, you have no idea if you're gonna be able to sell the next hit show to NBC. They probably should make it in house themselves. So this is a very good time to, sell the company. [02:25:04] S1: Yep. So Castle Rock sells itself to Ted Turner and TBS here as this is all going down. It's a [02:25:13] S0: little earlier, December ninety three by the same [02:25:14] S1: But it was when when it was announced that the Finsen rules were gonna get repealed even though it went into effect in 1995. Castle Rock sells to Turner.
02:25:14 · David Rosenthal, Ben Gilbert
[02:25:14] S1: But it was when when it was announced that the Finsen rules were gonna get repealed even though it went into effect in 1995. Castle Rock sells to Turner. [02:25:21] S0: It was a $100,000,000 in cash for Castle Rock's owners, plus another 300,000,000 or so in paying off the outstanding debt. So the total out of pocket that Turner paid for Castle Rock, which owns that huge share of Seinfeld's profits and a bunch of other great stuff, was about 400,000,000. What an unbelievable steal to get the Castle Rock library for that. [02:25:46] S1: And, of course, that happened before the actual sales of the first syndication cycle for Seinfeld. Right. Right. Oh. Also, isn't there a wild story that Steve Bannon was an investment banker on that deal and took some of his commission in equity on the Seinfeld Waterfall? [02:26:05] S0: The details are a little bit murky on this, but I have seen it reported that Steve Bannon still gets royalties from Seinfeld syndication. [02:26:14] S1: Yeah. Because of because of this deal. Wow. Wow. So Turner and TBS buys Castle Rock, and then they turn around and sell to Time Warner in all this consolidation that's happening. The net of which is that Castle Rock and the largest ownership slug of the Seinfeld Waterfall ends up in the Warner Brothers library. Alright. So, Ben, you said now is a great time to sell. In the moment, yes, for Castle Rock. But, actually, even if they had no viable future business [02:26:56] S0: From Finson ending.