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Published: November 16, 2007 at 06:43 AM GMT
Last Updated: November 17, 2007 at 06:43 AM GMT
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.
Having said that, media owners have been going to see clients directly forever and a day. Generally, if there’s a trusting, strong relationship between client and agency the client picks up the phone to the agency as soon as the meeting is finished, and together agency and client agree on a course of action – maybe doing the deal direct might benefit the client more, which is something most agencies have no problem with. After all they get paid just the same and have to do less to close the deal. Of course sometimes agencies of all shapes and sizes do have a problem with the direct sell as such deals can mess up agency deals based on total volumes. These are deals constructed to benefit the agency as the rebates generated occasionally have been known not to find their way back to the client.Read More
Outside of House of Cards’ nine Emmy nominations, a television network’s biggest fear is cord cutting. And there are no candidates with the scissors dangling as perilously close to the wire as OTT homes. Once they have comfortably settled into their Netflix streaming queue and Amazon Prime options, what is to keep them paying those monthly cable/satellite/telco bills? Apparently there is plenty. According to research firm GfK, the main driver in U.S. households cutting the cord last year was financial pressure. The need to save money outweighed any provider dissatisfaction or lack of necessity. It is quite possible that the plethora of OTT options has made it easier on households to cut the cord, but as David Tice, senior vice president of media and entertainment of GfK, said in a blog post, “I continue to wait for the economy to really gain traction and pick up, which will be the real test if people maintain their broadcast-only status even as economic concerns lessen. That’s when I’ll decide if I’ll pull my toe out and jump in the deep end of the cord-cutting pool.”Read More