News Corp's FX Network Signs Charlie Sheen For 90 More Episodes

By Will Ashworth | September 04, 2012 AAA
FX Network President John Landgraf announced August 29 that it is picking up another 90 episodes of "Anger Management," the half-hour sitcom starring Charlie Sheen. The network plans to have all 90 episodes produced within two years. Why the hurry? So it can sell them into syndication where the real money is. News Corp's (Nasdaq:NWS) gain appears to be CBS' (NYSE:CBS) loss. I'll explain why.

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I'll be the first to admit that I watched the first two episodes of Charlie Sheen's show and wasn't that impressed. As some critics have suggested, he's playing a very similar character from the one portrayed in "Two And A Half Men." Alas, there's one big reason FX Network isn't making a colossal mistake - Charlie Sheen. Say what you want about the man but his old show isn't half as good with Ashton Kutcher. For whatever reason, just like his dad, who'll make the occasional appearance, the audience can't get enough of him. He's got comedic timing that's hard to match. Just as a sports team builds a roster around the best player, "Anger Management" is built around Sheen. If FX can get to the finish line on this one, it's going to have CBS second guessing their decision to oust its star.

What Does This Mean?
So what does this mean for FX, and by extension, News Corp? Well, a lot. "Anger Management" garnered an average of 4.5 million viewers in its 10 opening episodes in 2012, including 2.5 million viewers in the coveted 18 to 49 age bracket. The show's opening episode on June 28 got 5.6 million viewers setting a record for a scripted comedy series premiere on a cable network. There was never really any doubt that the series would be picked up given the advertising potential of its audience. Although the 90 shows will be filmed by September 2014, it's likely they will run at a slightly slower pace and should make a significant amount of money while the shows 90 episodes run in prime time.

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However, the syndication rights are what it's all about these days and there's no better example to explain why than "Seinfeld," the most successful sitcom in television history. Time Warner (NYSE:TWX) went on record in 2010 that "Seinfeld" made $2.7 billion in 12 years (1998-2010) of syndication or $14 million an episode. In 2011, when the Charlie Sheen firing occurred, Brad Adgate of Horizon Media suggested that "Two And A Half Men" will generate $600 million in syndication fees. Let's assume "Anger Management" generates half that; we're talking about $300 million in revenue for a cable network that is estimated to have hit a total revenue of $1 billion just last year. This is a significant boost to the network and the parent company. News Corp shareholders should be licking their chops.

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The Bottom Line
I had no idea the FX Network even existed until I watched the first season of "Justified" on Netflix (Nasdaq:NFLX) this summer. Now, I'm a convert to both that show and many of its other ones. I don't know if I'll be able to stomach 90 episodes of Charlie Sheen but there are plenty of people who will and that's money in the bank.

At the time of writing, Will Ashworth did not own shares in any of the companies mentioned in this article.

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