NBC shares 'Apprentice' wealth. With integrations still bountiful, net takes its slice
December 5, 2007 (Hollywood Reporter) Despite sliding ratings for NBC's "The Apprentice," advertisers are still paying integration fees as high as the $2 million per episode garnered at the height of its popularity. But in a sign of the reality show's diminishing clout, NBC is sharing in that revenue for the first time...
...The brands that have signed up for integrations on "Celebrity Apprentice" this season are Kodak, Crocs, Dial Yogurt Body Wash, Quiznos, QVC, Nederlander, Pedigree and Serta by Vera Wang.
"We have a lot of really good sponsors, and traditionally 'The Apprentice' has been a tremendous show for selling products," said Donald Trump, the show's star and executive producer. "Everybody that's been on 'The Apprentice' has said it was their most successful launch of a product, so we've literally turned down many, many people."
Trump said the integration fees, which up until this season were split 50-50 between himself and executive producer Mark Burnett, will now be shared three ways, with NBC joining in the mix for the first time since "The Apprentice" launched in 2004.
"The fact that Burnett is sharing the revenue with NBC is self-explanatory," said a major media buyer who declined to be named. "The show is not what it was. When 'The Apprentice' was a top 10 show, Burnett held all the cards."
A few years back, Burnett was believed to be the only producer who maintained full ownership and control of integration revenue. And with the enormous success of "Apprentice" on the heels of "Survivor" -- in both ratings and the creation of extremely effective marketing platforms for brands -- Burnett was able to command fees that ranged as high as $2 million-$3 million per episode.
Burnett denied that his agreement to share that revenue with NBC for the first time had anything to do with his own diminished clout as a producer following disappointing ratings performances of such shows as "Apprentice," "The Contender" and "Rock Star" in the past couple of seasons and said it had more to do with NBC co-chairman Marc Graboff's negotiating skills as well as the current business climate.
"The share in advertising is because Marc Graboff is a great negotiator," Burnett said. "Believe me, Donald and I would very happily not have given them anything, except in the negotiation, Marc Graboff made it make sense for us. Now we're working together with NBC ad sales, and the pie should get much bigger for everybody by working together as a team."
Burnett said that by sharing the revenue with NBC and getting its cooperation on granting creative approvals, his team was able to avoid losing any deals and orchestrate integrations in six, or half, of the upcoming "Apprentice" episodes in the less than two months since new NBC co-chairman Ben Silverman came on board and greenlighted the show after it initially was canceled by his predecessor Kevin Reilly.
"Any producers who think they want to keep all the money and not allow the networks to make money in the current climate are lunatics," Burnett said. "You need to be completely nutty to think you can just go out there and make ruthless deals and not allow the networks to make money in the current climate. It doesn't make any sense."
Wait, isn't that what Burnett did in the past with several of his shows?
His response: "A different business climate. It's about the right timing of things."
Industry experts said the three-way integration split, coupled with the possibility of a writers strike, helped convince Silverman that he should the flailing show back on the air with a celebrity spin.
"NBC doesn't have to pay production costs, and they're getting ad time plus integration fees as well. They're making great revenue for the show," said Aaron Gordon, CEO of entertainment marketing firm Infusion Entertainment.
Burnett acknowledged the revenue share could have been a factor in getting the show back on the air but noted that as a result of his improved, more cooperative relationship with NBC, "Apprentice" got its coveted Thursday 9 p.m. time slot back. "For us to be back on Thursday is a great coup for Donald and for me."
In its first season, "Apprentice" was a smash hit for NBC, averaging 20.7 million viewers and a 10.1 rating/25 share among adults 18-49 on Thursday, making it the second-highest-rated series of the season in the demo behind "American Idol."
The reality competition has declined in the ratings ever since, with the sixth and most recent installment on Sunday last season drawing just 7.5 million viewers and a 3.1/7 share in the 18-49 demo.
Despite the show's weak ratings last season, Burnett and Trump were still able to command fees in the $2 million range, according to sources involved in the integration deals. "The fees are about the same as they've always been -- more than $2 million per show and in some cases $3 million," one high-placed source said.
But many media agency execs said their clients "have been there and done that" and were not particularly interested in another go at the "Apprentice," nor could they believe that brands were still willing to pay such exorbitant fees. Depending on the level of integration, some advertisers are believed to have paid closer to $1 million.
"We've been off the air for a year; we come back and immediately step into big deals," Burnett said. "There's a rational logic of why 'Apprentice' has been so successful with integrations. It's a known quantity, it works for the advertisers and it's got an upscale demo."
Several of the advertisers integrated into "Celebrity Apprentice" said the show offered such a strong marketing platform that it was worth the high-priced fees, even taking the lackluster ratings into account.
"I think plus or minus a couple of ratings points that this will be an extremely effective way of communicating the Pedigree brand idea and of helping dogs in need find loving homes," said Rob Leibowitz, vp marketing for Pedigree dog food and all of parent company Mars' pet care brands. "It was such a perfect marriage that even if the ratings suffered, we'd still be better off as a business and dogs will be better off because of what we're doing."
Pedigree's integration revolves around the contestants creating an ad and raising awareness of its pet adoption drive.
With no end in sight to the writers strike, the "Celebrity Apprentice" brand partners are hoping to see the show make a comeback in the ratings, which would transform their integrations into much more valuable deals.
"With the writers strike, this could be Christmas in the first quarter for us," said Steve Provost, chief marketing officer at Quiznos.
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