Is The End Near For Deficit-Financing?

TV execs at NATPE think so

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%%STORYIMAGE_RIGHT%% If one had to boil down the prevailing theme for the players gathered at this week's 41st Annual National Association of Television Program Executives confab in Las Vegas, it would certainly be cast with an undertone of uncertainty and impending disaster.

In a panel at the beginning of NATPE titled "Outlook 2004: Boom, Gloom or Doom?," a diverse group of execs stressed that old business models, specifically the perennial deficit-financing model of TV, must be discarded if hard times are to be averted. Naturally, one alternative-financing source that is expected to grow in primacy are advertisers in a back-to-the-future scenario that could see advertisers getting increasingly involved in content creation.

"Deficit-financing as a long-term model can't hold," said Caryn Mandabach, partner at Carsey-Werner-Mandabach, one of the most successful independent production companies over the years in creating scripted network TV hits. "It'll crap out."

A prominent Madison Avenue executive agreed. "The ratio of success-to-failure is heading the wrong way. Cost of failure has gone up," said Irwin Gotlieb, Worldwide CEO at WPP Group's GroupM, the umbrella company for MindShare and Mediaedge:cia. "So deficit-financing still doesn't allow you to dig yourself out of your hole."

%%PULLQUOTE_LEFT%% Another area of concern for Gotlieb is the rising cost structure of reality TV. "We've become good at creating reality programs at scripted-program prices," said Gotlieb. Mark Burnett, creator of "Survivor" and "The Apprentice," is well known for the high production values he employs in his shows, but of course, Burnett's shows more often than not are very successful and generate fat returns, which, sadly for most reality producers, is not the case.

And even when you're lucky enough to score a hit, it's on a smaller scale than in the past as a result of the ongoing media fragmentation and the proliferation of consumer viewing choices. As a case in point, Tony Vinciquerra, president-CEO of Fox Networks Group, reminded the audience that Fox's recent hit "The O.C." only garnered a 10 Nielsen share.

Because of the brutal realities facing network TV, even a successful scripted producer like Mandabach is more open to advertiser involvement. "We've been a wee bit more involved with advertising. It doesn't offend my sensibility."

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