Columbia TV on a Spending Binge for Talent : Television: The highly profitable division wants to shed its conservative image. It’s paying big bucks for producers to develop hit network shows.

At a posh Burbank restaurant Gary Lieberthal, chairman of Columbia Pictures Television, was lunching with Jerry Katzman, head of the TV division at the William Morris Agency and Ricky Schroeder’s agent, the squeaky-clean adolescent star from “Silver Spoons.”

Just as the waiter served the appetizers, Lieberthal reached into his breast pocket and pulled out a million-dollar check made out to Schroeder.

“Here,” Lieberthal announced as he presented the check to Katzman in a tone that suggested a rich uncle giving a quarter to his favorite nephew for a lollipop, “is a little something for your client to enjoy himself with.”

Lieberthal was not being gratuitously generous. “Silver Spoons” ran for four years on NBC and raked in $139 million in rerun sales for Columbia. The TV executive was simply advancing Schroeder a piece of his net proceeds in the show ahead of schedule, a tactic to ensure that the star would remain at the studio and help develop another hit on the order of “Silver Spoons.”

Schroeder stayed at Columbia.

That scene has been played out countless times during the past 18 months in lawyers’ and agents’ offices around Hollywood as Lieberthal has led the stampede in bidding up the fees paid to writers and producers of television programs. Hollywood in the 1990s resembles Wall Street in the 1980s, and for many Columbia is behaving like any number of the big investment banks of that period that went on hiring binges, lavished huge salaries on executives and spent millions simply to renovate offices for their star recruits.

Columbia Pictures in recent years has consistently ranked at the bottom among the major Hollywood studios in box-office success. But the highly publicized difficulties with its two motion picture divisions have tended to overshadow Columbia Pictures Television, an extremely profitable operation that is attempting to break out of its conservative mold.

Lieberthal, with the apparent blessing of Columbia Co-Chairmen Peter Guber and Jon Peters, has embarked upon the biggest spending spree in the history of the television business, dispensing buckets of money on “hot” writers and producers who are perceived to have the magical touch, or the clout, to develop hit network shows.

Columbia’s producers and writers--in TV, the jobs are basically the same--include many of the biggest names in the TV comedy business: Norman Lear (“All in the Family”), Ed. Weinberger (“The Cosby Show”), Hugh Wilson (“WKRP in Cincinnati”) James L. Brooks (“Mary Tyler More Show”), Norman Steinberg (“Doctor, Doctor”) and the teams of Ron Leavitt and Michael Moye (“Married With Children”) and Blake Hunter and Marty Cohan (“Who’s the Boss”).

More recently, Columbia has begun to recruit producers who specialize in less lucrative one-hour dramas as well, such as Bruce Paltrow, John Tinker and Tom Fontanta (“St. Elsewhere”), David Milch (“Hill Street Blues”), Frank Lupo (“A-Team,” “Hunter”) and Michael Landon (“Highway to Heaven”).

Columbia will not reveal how much it’s spending on so-called creative talent. But an executive at a rival studio, who has bid on many of the same deals pitched by agents, estimates that writers and producers are costing the studio $30 million to $35 million annually in overhead.

Since most of the deals are for a minimum of three years, Columbia is committed to spend about $100 million simply on writers and producers.

“They’ve put a lot of money to work,” observes Gary Cosay, a partner in Leading Artists Agency who negotiated a $33-million renewal deal at Columbia on behalf of the comedy writers Leavitt and Moye. “Columbia has got more name people than any other studio at this time.”

Yet some “A list” producers recruited by Lieberthal to Columbia admit that the studio may be doing little more than what any large corporation with deep pockets would do when it wants to expand aggressively: buy up market share.

“It’s a very conservative approach and also one of a well-funded company,” acknowledges drama producer David Milch, who nonetheless doesn’t see talented but unknown TV writers getting crowded out among all the heavyweights. “Guys like Jim Brooks always have half an eye peeled for newcomers.”

For many, however, Columbia is Exhibit A in explaining why Hollywood’s costs are spiraling out of control. Although rival Walt Disney Co. has also pushed up the fees paid to TV producers, Columbia’s deals have come to represent the high-stakes poker game at its most aggressive.

Scott Siegler, president of Columbia Pictures TV, defends the strategy. “Like it or not, the marketplace determines the value of these people. You can either be on the sidelines and watch or go to the forefront and say: ‘If that’s the game, I intend to win.’ ”

So far, Columbia has failed to score. It ranks last among the six major studios in shows sold to the networks.

“Baby Talk,” originally slated on ABC this fall, has been embroiled in lawsuits and pushed back until next year, and plans for a CBS series from Norman Lear, “Jody Gordon and the News,” were abandoned after Lear decided he wanted to devote his time to a pet project, “Sunday Dinner.”

“We didn’t have the best year,” admits Siegler, who expresses unswerving faith in Columbia’s strategy. “If you have good people and are doing good work, eventually the marketplace will reward you.”

Financing for Columbia’s NASA-scale program to develop TV shows comes from the syndication revenues provided by Columbia’s program library, perhaps the most valuable catalogue of its kind in Hollywood.

The cash cow at Columbia right now is “Who’s the Boss,” (originally produced by Embassy), which has run on ABC for seven years and generated $417 million so far in syndication revenue, the second-highest grossing show in history behind “The Cosby Show.”

Because of contracts that commit local TV stations to buy additional episodes at 10% higher fees, Columbia reaps $62 million for every year after the fifth season that “Who’s the Boss” stays on ABC.

Columbia has another syndication gusher on its hands in the raunchy Fox comedy “Married with Children.” Despite the criticism leveled at “Married with Children” by sponsors and educators, it is likely to become the third-highest grossing TV show in history, earning Columbia more than $200 million. Again, for each additional year after the fifth season, Columbia will earn another $40 million in license fees alone.

“If you took away those two shows, we would be making a hell of a lot less money and we couldn’t operate on the basis that we’ve been operating,” Lieberthal admits.

The syndication business, however, is volatile, and past successes are no guarantee for the future. How much local TV stations can pay for the reruns of old shows depends on unpredictable factors such as the advertising climate and supply and demand of syndicated “product.”

“Stations are finding they need fewer sitcoms,” warns Matt Shapiro, a vice president at MMT Sales in New York, which advises local TV stations on which shows to buy. “That’s because the older ones like “Night Court” and “Cheers” have lasted longer than expected and stations can’t absorb all the newer ones. “

So far, a recent downturn in the syndication market has not seemed to hurt Columbia or its ability to achieve record prices for shows. Despite new markets for reruns--cable, foreign broadcasters and others--Columbia still earns more than 80% of its syndication revenue from local TV stations.

“In the past, we looked to a handful of customers for a majority of our dollars,” explains Barry Thurston, the pixieish president of the studio’s syndication division. “Now we are spreading our customer base. Cable is picking up the slack where syndication used to be strong.”

Because of the money flowing from its library of network half-hour comedies, most of which was acquired in Columbia’s 1985 purchase of Norman Lear’s Embassy Communications, there has been little incentive to expand beyond the studio’s core business of producing prime-time network TV shows. (Embassy-developed series have earned $500 million in syndication during the past five years.)

Although studios such as Paramount, Universal and Warner Bros. moved successfully and aggressively into producing TV shows for syndication and cable, Columbia stubbornly clung to turning out formula shows--mostly half-hour comedies--a practice that earned it the derisive nickname among some producers as “Clonenumbia.”

But Alan Levine, the guarded entertainment lawyer brought in last year as chief operating officer for the studio, says current management will push Columbia into new markets, such as first-run syndication, made-for-TV movies, miniseries, basic and pay cable, and international co-ventures.

“The philosophy of the company has changed,” he states. “All genres (of programs) that make sense will be developed and produced.” One new idea: an hourlong drama series developed by Milch and internationally co-financed and produced with General Motors as a major backer. Another is a late-night soap opera, possibly for syndication.

Columbia, since it is owned by a foreign company, is prohibited from buying more than a 20% stake in TV stations, although theoretically it could still own a broadcast network. That leaves the studio to concentrate on making shows. “When I got into this business, there were five channels to watch. Now there are 90. It’s going to be software,” Lieberthal proclaims.

Columbia believes its strategy of recruiting brand-name talent will pay off because there is a good chance that at least one of the writer-producers will create another hit on the order of “Who’s the Boss.” But Lieberthal says it will take three years to tell.

And if there are no hits?

Lieberthal mulls that question for a moment. Then, nodding his head toward the window, he laughs. “There will be a lot of expensive parking spaces down there.”