Industry Reacts to 4As Production Report

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According to the American Association of Advertising Agencies' (4As) 2000 Television Production Cost Survey, which was released yesterday, the average cost of producing a 30-second spot declined by three percent in calendar year 2000. The average :30 cost $332,000, compared to $343,000 in 1999. The decline is the first since 1997 and stands in stark contrast to the 19 percent climb in production costs in 1999.

"We all expected costs to go down because of the strike," says David Perry, VP-Head of Broadcast at Saatchi & Saatchi and head of the 4A's Broadcast Production Committee, which compiles the annual report from a survey of 20 agencies. "I thought it would go down more, but it's no real surprise that it went down a little bit. Last year was such an aberration I don't think you can draw any conclusions. The crashing of the dot-coms and the actors' strike skewed the survey a little. My prediction is that this year [2001] will turn out to be more normal when it's over with."

On the production company side, producers agree that budgets have been getting tighter. "I think the budgets have come down a lot in reaction to the market," says Phillip Detchmendy, managing director at Tool of North America. "And a lot of those budgets have moved north to Canada, so I think budgets have been getting tighter." In addition to a drop in overall costs, the 4As' survey found that directors' fees slumped by five percent. "2000 was difficult because it was the year of the SAG strike," says Bill Sandwick, executive producer at production company HSI. "But clients have been squeezing costs for about three years. In order to maintain our level of production, you basically try and find out how much money there is and try to make it great. That's what our job is these days. 2000 was hard, but 2001 has probably been one of the most difficult years in terms of production costs for us, because we still have to deliver a great job and we have less money to do it."

But how seriously should surveys like this be taken? Not very seriously says Frank Scherma, executive producer at Radical Media/Santa Monica. "You can't take a shoot in Arizona, plus a shoot in NY, divide it in two and get an average," he says. "You can't mix them all up like that." Scherma says the $332,000 the report cites as the average cost of a :30 is way too low, creating a false impression of what production is really worth, which could place further downward pressure on prices. "This report gives advertisers a false view of what commercials cost," he says. "It misrepresents the cost of production." Or, as Chelsea Pictures executive producer Steve Wax suggests, "Now we got them where they want us." (Contributing: Ann-Christine Diaz, Gabi Horn)

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