Faced with declining ad revenues and stiff competition from kids cablers, NBC and Fox are both exiting the Saturday morning kids TV business. NBC announced last month that it has leased its Saturday morning tNBC block to Discovery Networks, which plans to air its own kids programming on the peacock net starting this fall. And according to published reports from late last month, Fox was fielding numerous offers for its Saturday morning slot from companies including Nelvana, Nick and DIC.

To many industry observers, the NBC-Discovery agreement symbolizes the degree to which the seven-days-a-week kids cable net has eaten into broadcasters’ once-mighty Saturday morning blocks. ‘One misgiving we had about this daypart is that we didn’t have the Monday-to-Friday presence to promote the block to teens,’ says Scott Sassa, president of NBC West Coast. ‘Our highest-rated teen vehicle is Friends, which is hardly a good platform from which to promote our Saturday morning block.’

From last August to December, tNBC’s season-to-date share of the 12- to 17-year-old audience had fallen from 9% to 6%. For the same period, Fox’s share of the two to 11 demo had dipped from 11% to 9%, which is well behind industry leader Nickelodeon’s 21% share.*

Under the terms of the new deal, Discovery will pay NBC an estimated US$18 million over three years, and will also relieve the peacock net from having to produce shows that fulfill its FCC educon requirements.

Discovery will sell all of the commercial time around the 2.5-hour block (which could be extended to three hours should NBC decide not to re-up its deal for the kid-targeted NBA Inside Stuff, produced by NBA Entertainment), as well as retaining 100% of the revenues.

In addition to providing it with another carrot with which to attract potential advertisers, the deal gives Discovery the opportunity to promote its digital kids service, Discovery Kids Channel, to new subscribers by nesting shows from the net in the block.

Marjorie Kaplan, senior VP of Discovery Kids programming and products, will oversee programming for the co-branded block, which, in addition to Discovery Kids fare, will be stocked with kid-friendly shows culled from Discovery’s other nets. At press time, Kaplan had yet to decide the fate of existing or developing tNBC shows.

Like NBC, Fox has also seen rapidly diminishing returns for its Saturday Morning Fox Kids block–a situation that has become more pronounced since it sold Fox Family Worldwide to Disney last year. With the sale of the Fox Family library went easy access to flagship shows such as Power Rangers and Digimon, which means after this season, Fox will have to pay costly license fees to secure the broadcast rights.

While renting out their kids blocks allows the nets to pocket guaranteed revenue (not to mention sparing them the burden of producing low-rated kids educon fare), for TV producers trying to navigate in already slumping TV market, the advent of such arrangements is serving to ratchet up their risk factor. Not only are prodcos responsible for creating winning shows, now they’re also on the hook for selling the ad time around them.

Says one producer who requested anonymity: ‘The [broadcast] landscape is changing so dramatically that it puts producers in the position where you have to count on audience and share, and sometimes those things are out of your control. But if you’re committed to producing new shows and getting them on the air, you’ve got to do whatever it takes.’

*Analysis of Nielsen Media Research data courtesy of Initiative Media

With files from Mike Connell