Will soap make for frothy TV?

Daniel Jeffreys on Proctor & Gamble's plans to make good, clean programmes

Three billion dollars buys plenty of influence. That's the size of Procter & Gamble's worldwide advertising budget. The manufacturer of Tide and more than 200 other cleansing products spends 90 per cent of that money on TV commercials. Its budget for US television is more than $1bn, which makes Procter & Gamble the fourth-largest space buyer in America.

But the company is not happy. "We've seen network ratings decline," says Greg Rossiter from Procter & Gamble's headquarters in Cincinnati, Ohio. "Frankly, we feel there's been a slippage. Plus the networks now have more competition from new cable channels. It's becoming more difficult to get our message to a broad audience. There are good shows, but there are too many that have either poor ratings or are of poor quality. We can't stand by and watch broadcast television decline."

In the US, more than 95 per cent of television is paid for by advertising. Audience ratings are watched with extreme care. To sell space on a show, TV networks have to promise a given share of the audience. If they don't deliver, they must return part of the fee to the advertiser or offer free space on a subsequent show. It's brutal. A new series that doesn't make it can be taken off the air even before it finishes its first season.

But Procter & Gamble has decided even that kind of influence isn't enough. This year it has reserved one-tenth of its advertising budget for TV production. The company has formed an alliance with Paramount Television Group to develop shows that it hopes will be more effective vehicles for its commercials. "We have to protect our ability to deliver our message to a broad audience of consumers," Mr Rossiter says. "The best way to do that is to have some influence over the creative process. In the end we always pay for what the studios produce anyway - so we might as well be involved from the start."

Paramount says it is delighted. The deal means less worry about whether advertisers will back a show because a big space buyer is already locked in. "This is groundbreaking," says John Wentworth, a Paramount spokesman. "It changes the equation in terms of risk and reward for this studio."

With production becoming more expensive, that's crucial. Paramount's new partner will pick up 50 per cent of the production costs for all its new syndicated programming and at least 10 network series. In a world of 100-plus channels,Procter & Gamble believes this kind of deal was inescapable. "Sure, channel-surfing is a problem," says Mr Rossiter. "But our key belief is that content drives the interest of viewers. If we can be associated with strong content, it will preserve our ability to deliver information about our brands. If you are watching a good show you don't flip for too long."

Procter & Gamble believes its venture into TV production must be supplemented by better commercials. "There's been too little creativity in US commercials," says Mr Rossiter. "We've combined this new venture with an initiative to make our TV spots more appealing."

The first Paramount show to receive direct funding from Procter & Gamble is Entertainment Tonight, a show business news programme that often wins the biggest audience in its time slot. ET features unchallenging segments about the stars. It's a bit like a TV version of Hello! magazine. The two companies are also co-producing a German edition of ET and would like to do the same for Britain. "We need more of ET's kind of show," Mr Rossiter says. "From its launch it has attracted a large female audience aged between 25 and 50. Our focus groups show that people feel good about themselves when they watch the show. That's what we want them to feel about our product."

Of course, "soap operas" are called that for a reason. Procter & Gamble has been co-producing two of America's longest-running soaps for more than 40 years. There's nothing new about the idea behind this deal; it's the scope that's unusual. "We will see more of this kind of project," says Dennis McAlpine at Josepthal, Lyon and Ross in New York, a broker specialising in media stocks. "It will mean less challenging programmes. Few advertisers want to shock. You can't imagine a soap company offering to co-produce NYPD Blue."

No, you can't. And he who pays the piper calls the tune. Companies with multi-million-dollar advertising budgets are no longer content for Hollywood's TV brat pack to tell them what to watch. They want more light gossip, romance and sport: the enforced feel-good factor. The advertising managers have arrived in the cutting room - and they carry some very sharp scissors.