Strike's End Marks Fresh Start for Forever-Changed TV Market

Expect Fewer New Shows, More Reality Fare and Staggered Launches

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NEW YORK (AdAge.com) -- The end of the writers strike may come in time to salvage this year's TV season, but the ripple effects could be felt for months, even years.
As Ad Age went to press, the Writers Guild of America was set to meet over the weekend to vote on a deal to end the strike. But even if this work stoppage, which began Nov. 5, does get resolved this week, media buyers and analysts believe it has already changed the way broadcast TV operates and permanently altered advertisers' relationship with the medium.

"Once the strike ends, the aftermath sort of begins," said Chris Boothe, a president at Publicis Groupe's Starcom USA. "We think repercussions will be felt for a long time."

Among the predictions: more reality TV, fewer programs overall and a staggered series of show launches that could move away from the fall and more toward the fourth quarter. And there will be plenty of other questions, including whether networks can get enough big-audience blockbusters on the air to allay concerns about ratings shortfalls during the strike. Even after all that, there's still the question of whether those shortfalls will mean networks are on the hook for "make-goods" -- ad time owed to marketers for failing to deliver promised ratings points -- at the end of this season. Below, Ad Age looks at some of the new trends and how marketers could be affected by them:

Smaller audiences
Ratings have been on the wane at broadcast networks since the summer, but the strike may have accelerated the phenomenon. Live prime-time audiences between the ages of 18 and 49 had dipped 11% through Jan. 27, according to Bernstein analyst Michael Nathanson, with CBS off 19.6%, ABC off 15.2% and NBC off 13.8%. Only Fox, which boasts the popular "American Idol," was able to goose those ratings, and only by 3.7%.

The numbers look alarming, and they are. But the networks have been insulated somewhat by a tight market for scatter inventory, which allows them to charge a significant premium over ad prices locked in during the upfront. Even so, Bernstein's Mr. Nathanson said in a recent research note that cable networks have seen their 18-to-49 ratings grow, and a continuing trend could narrow the cost-per-thousand-viewers price gap that broadcast enjoys over cable.

There's also a chance some of that audience might not come back, particularly those viewers who don't have digital video recorders. "People are watching less TV," Mr. Boothe said; the lack of original fare hasn't done much to reverse that dynamic.

The reality crutch
Networks found success with unscripted programs such as NBC's "American Gladiators" and Fox's "Moment of Truth." Those shows are cheaper than scripted dramas, don't require unionized writers and can get on the air much more quickly -- so you can expect to see more of them.

That's not necessarily the best development for marketers, according to Rino Scanzoni, chief investment officer at WPP Group's Group M. "As you put more and more of these things on the air and there's less diversity, the more likely we are going to continue to see audience declines," he said.

New finances
During the strike, networks cut out many special production deals and have been ordering fewer pilots. There's more to come, said Mr. Boothe: "The situation has made all the networks completely recalibrate the creative and development process."

By Mr. Scanzoni's estimate, a scripted hour-long drama can cost a network $1.3 million to $1.5 million in licensing fees per episode; a comedy might cost $800,000. Getting shows back on the air will take four to eight weeks, and networks aren't looking to ramp up production on programs that weren't performing well before the strike began.

Many producers would be able to get only three to five more episodes of dramas on air before the season ends in May. Comedies such as "Two and Half Men," "Samantha Who?" and "The Office" likely will be able to ramp up faster, while serialized shows such as "24" and "Heroes" may end up waiting until the fall or later.

Less product
If Coca-Cola had developed 10 different kinds of soda, chances are it would launch them at different times of the year, not all in the autumn. That way, each product could get the attention it deserved. For decades, however, TV has launched the bulk of its new programs in the fall, only to see more than 75% of them fail.

"The fall season as we once knew it, I think that could clearly be history," said Mr. Scanzoni. Instead, he expects the networks to roll out new shows through the fourth quarter into next year.

Pressure on upfront
Does the ad industry still require a glitzy May presentation to hear about the networks' fall programming slate? Not when the networks have few programs to hype. If development is crimped due to the strike, chances are TV ad-sales execs would have less to flaunt come spring.
Rino Scanzoni, chief investment officer at WPP Group's Group M, says relying on reality television will contribute to a decline in viewership.
Rino Scanzoni, chief investment officer at WPP Group's Group M, says relying on reality television will contribute to a decline in viewership.
While the networks have been careful to distinguish that the only part of the upfront that they are considering giving up is the song and dance in May, and not the actual upfront sales period, there's no denying the strike has changed how the networks are approaching how they develop and roll out programming. The idea of rolling out new shows year-round no longer seems like such a strange concept when such plans are being weighed by the likes of the CW, which is deciding whether to extend its teen hit "Gossip Girl" through this summer once more episodes are produced.

What's really at stake here is whether advertisers need to commit the bulk of their TV dollars -- last year it was $9.2 billion -- all at once tied to the fall season. Networks may have to recognize that they'll have less leverage in the marketplace going forward. For marketers, the idea that their product launches and marketing initiatives will dictate their spending is a welcome one.

A series of launches over the course of a season or a year may finally do what marketers have longed for, to gain more control over how and when they buy TV.
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