Writers on Strike: Which Side Will Blink First?

The issues in the continuing strike by the Writers Guild of America against television studios and networks are reasonably clear: writers want a share of revenues generated by the digital extensions and expansions of the network programming they work on; and they are claiming rights to a share of revenues within the same economic construct from new digital content the studios and networks produce.

The challenges are formidable and the only likely scenario will be an agreement by both sides to put a band-aid on the festering issue for another three years until the business realities of digital output are more clearly defined. As I put forward last week, advertisers have the opportunity to step in and underwrite a three year commitment to writers by creating a pool of funds to be distributed to writers, actors and directors until a more permanent solution can be put in place. Essentially, I'm proposing a short-term tax on TV advertising in scripted programming that falls under the Writers Guild purview. Unfortunately, although this could be the best case model for developing a practical solution, it's extremely unlikely to happen.

The strike needs to be resolved no later than mid-January or the traditional timetable for network concept development, script writing and pilot production will unravel. Perhaps there is a silver lining. The fall television season evolved in the earliest days of television when networks produced original series to run from September, when school returned to session and cold weather brought people indoors, to May, when available audiences declined. Summer was a time almost exclusively reserved for primetime repeats. The auto industry conformed its annual new model introduction period to September and October, when interest in new television series was peaked.

While September remains an important month, the number of original episodes produced for major series has declined from 39 annually in the 1950s and 1960s to 22 and, for many series, as few as eight or twelve episodes. In the days when a broadcast network primetime series was required to deliver ratings as high as 30% of the U.S. market, the need to concentrate programming launches during peak viewing seasons was a relevant strategy. Today, when a successful series might generate less than a 4.0 rating among adults 18 to 49, seasonal variations are largely meaningless. In fact, the very concept of launching dozens of new series on multiple networks within a four to six week period is increasingly being viewed as absurd and self-destructive.

If the writers' strike continues, and ultimately causes the collapse of the traditional TV development, pilot, Upfront and fall season continuum, it would not necessarily be a bad thing for the industry.

Similarly, the network television Upfront selling period is a vestige of a business model that no longer exists. In the 1950s, every primetime network television series, including the nightly news, was sponsored. The Upfront was established for networks to present new series to advertisers, who would select programs they would sponsor. Unsponsored programs were not produced. When ABC was not able to generate full funding for their minimal number of primetime hours, they shifted several series to multiple advertiser participation. Within a few years, the business was transformed from sponsorship to a scattershot reach-based advertising model. Over the years, the Upfront has retained its relevance more because it serves the best interests of networks and buying agencies than for logistical value. If the Upfront were to disappear, it might return next year, but my guess is that both networks and agencies will discover its loss did not materially affect their businesses.

In the meantime, cable and syndication are well positioned to capitalize on the strike. Digital video revenues, ironically, will be accelerated. Print, radio, place-based and out-of-home media, and alternative media options will all benefit. The challenge of broadcast network erosion promises to be a major issue this year strike or not, so realities of viewing patterns are going to be highlighted in negotiations and discussions between network buyers and sellers.

The writers' strike, if not settled very quickly, is a catalyst that will impact the television business for decades ahead, pushing forward the agenda of many in the industry who have sought changes to traditional business models they consider outdated and irrelevant. Strikes often come down to which side has the least to gain and the most to lose – in this case it's really tough to figure that out. Add your comments and observations on which side is right, wrong and most likely to blink first.