AOL: Reverse Financing TV Shows

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Pity the poor television networks. First, the writers’ strike clobbers them. Then social networks sneak up and steal precious teenage viewing time. Well, if you can’t beat ‘em, join ‘em. Time Warner’s AOL, which is buying social networking site Bebo for $850 million, extolled a novel way to fund TV shows at this week’s EconSM Conference in Los Angeles.

Call it Sunset Boulevard meets Madison Avenue. Bebo has been commissioning original shows to premiere on its site, which claims 40 million users worldwide. But unlike TV networks, including Time Warner’s own HBO, the shows don’t get the green light for production unless they have lined up enough sponsors and advertisers to ensure profitability, according to AOL President Ron Grant and Bebo President Joanna Shields. It’s the other way around with traditional TV shows, where networks must first create pilots to gauge viewer ratings before selling spots to advertisers.

One of Bebo’s shows is called ‘The Gap Year,’ featuring six high school graduates who spend six months exploring the world before heading off to college. After each episode, Bebo users get to vote on where to send these globe-trotting teens next. ‘It’s the first global reality show to broadcast on a social network,’ Shields said. Bebo’s other online show, ‘Sofia’s Diary,’ has been turned into a regular TV show in Britain. Let’s see if Bebo can now turn AOL, which said today that its first-quarter revenue fell 21%, into a hit.

-- Alex Pham and Joseph Menn