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Strike-Bitten TV Sellers Fear Coughing Up Cash

If Dispute Isn't Settled by Q1, Buyers Will Look for More Than Make-Goods

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When TV sellers underdeliver, advertisers normally get extra spots as compensation, but media buyers are considering a radical request should the two sides in the continuing writers strike not come to terms: They could ask for their money back.

Such an unorthodox move would not be considered until the first quarter of next year. And representatives of the Writers Guild of America and the Alliance of Motion Picture and Television Producers are slated to meet anew today, with everyone hoping they can avert such a doomsday scenario. But that such a thing is being contemplated shows how worried advertisers are about the declining power of network TV to pull in ratings in the event of a protracted strike.

"We are not panicking yet, but we are warning [clients] there may be potential situations where we may need to have conversations about taking money off the table with networks and finding places to spend that money that can be effective for their brand," said Kris Magel, senior VP-account director at Zenith Media.

Little wiggle room
A strike is bad enough, but networks find themselves in a particularly tough position this season. Traditionally, when ratings fall below guarantees made during the upfront sales period, marketers are content to take "make-goods," or additional ad time that helps build the promised viewership reach. But this season, the market has been extremely tight, as live ratings dip due to increased penetration of DVRs. As of Nov. 6, the live audience between the ages of 18 and 49 watching the broadcast networks had declined 11%, according to Interpublic Group of Cos.' Magna Global. If original episodes of consumer favorites disappear from the airwaves, ratings are expected to decline. Networks also have pushed many make-goods off until next quarter, which means the tight market won't be getting any looser anytime soon.

But giving back money is not something networks do lightly. "I can't think of a single example when a network came back to us and said, 'Here, take the money. We don't have any time to give you.' Unprecedented is probably not true but certainly incredibly rare, and disastrous for a seasonal advertiser or someone who wants to introduce a new campaign," said Gene DeWitt, a veteran media-buying executive who heads DeWitt Media Strategies. Other buyers report that networks are talking to agencies about inventory on other channels, such as cable and online, that they can give them to make up for the shortfalls.

With many late-night perennials in repeats, however, buyers are already privately talking about whether they will need to sit down with network sales executives and hammer out agreements that take into account current conditions. "There may come a point when networks need to work with buyers to agree to some form of money coming off the table or what they can and can't deliver," said Zenith's Mr. Magel. "It's too early in terms of the strike to start having those discussions."

Reality substitution
Already buyers are gearing up for fewer dramas and comedies and more reality programs. NBC, for example, will launch a new "Celebrity Apprentice," a version of the Donald Trump staple featuring people with varying levels of fame, starting Jan. 3 at 9 p.m. That's the same starting time once reserved for hit comedy "The Office," which has ceased production because of the strike.

Other media stand at the ready to take ad dollars that could be switched from TV to other venues. Weekly newspaper magazines such as Parade and USA Weekend, whose total audience generally accumulates within just one day, may be in the best position to benefit, said Jack Hanrahan, president of Hanrahan Media Services. "Mass weekly magazines are more likely than other media forms to be the advertising 'supplement' that marketers use to make up for ratings shortfalls that may be a byproduct of the writers' strike," he said. "They deliver the core of what network-TV advertisers are after: rapidly built national reach."

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Contributing: Nat Ives
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