Writers Strike Takes a $300 Million Hostage

All Eyes Are on Oscar After Writers Strike Scotched Gold Globes Broadcast

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LOS ANGELES (AdAge.com) -- The writers-strike takedown of the Golden Globes last week has those who participate in the $300 million-Oscar economy shaking in their red-soled Louboutins.
Illustration: Joe Zeff Design Inc.

All eyes are on the Academy of Motion Picture Arts and Sciences' much bigger annual award ceremony, set to air on Walt Disney Co.'s ABC on Feb. 24.

Writer's Strike Fallout:

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Broadcast TV Ratings Start to Strain
Late Night's Back, as Is Plenty of Reality, but Not the 18-to-49 Crowd

The continuing action by the Writers Guild of America helped scotch the always-bawdy Golden Globes ceremony broadcast on NBC, because the Globes producer, the Hollywood Foreign Press Association, couldn't negotiate an interim deal with the striking scribes. That could end up costing the network some $10 million to $15 million if Golden Globes advertisers ask for cash back -- the event brought in some $27 million in revenue last year, according to TNS Media Intelligence.

Now all eyes are on the Academy of Motion Picture Arts and Sciences' much bigger annual award ceremony, set to air on Walt Disney Co.'s ABC on Feb. 24.

It's not just because the event is second only to the Super Bowl in terms of live broadcast-TV ratings extravaganzas, last year reaching 40.2 million viewers. It's also because the Oscars generate nearly $210 million in advertising and other revenue for ABC and the city of Los Angeles -- not to mention an estimated $100 million worth of publicity and potential revenue for fashion houses and designers, who get broad recognition when celebrities parade on the red carpet.

'Very nervous'
Like the Super Bowl, the Oscars telecast and brouhaha bring in so many consumers that advertisers spend months planning ads and maneuvers for the event. "If you're in the Oscars now, you're getting very, very nervous," said Tim Calkins, clinical professor of marketing at Northwestern University's Kellogg School of Management.

The movie-awards ceremony brought ABC nearly $80 million in ad revenue in 2007, according to TNS Media Intelligence. The ceremony itself is worth around $130 million to the Los Angeles economy, said Jack Kyser, chief economist for the Los Angeles Economic Development Corp.; that includes everything from $54 million in Oscar-oriented ad campaigns to $51 for the production of the event to $2.5 million spent by out-of-town media on hotels.

Not everything is hard dollars and cents. A red-carpet turn by a famous celebrity in a particularly stunning outfit can spark an estimated $1 million worth of publicity, said Marshal Cohen, chief analyst at NPD Group, a Port Washington, N.Y., market-research firm. The Oscars can notch $100 million in PR and potential revenue for designers and fashion companies.

Magazines, of course, provide much of that publicity. For People, the Oscars move newsstand and ad sales. Each year People raises its guaranteed paid circulation for its Oscars double issue -- last year promising a paid and verified circulation of 3.7 million, 250,000 copies higher than the normal. In the end, the issue delivered 4 million, with newsstand sales 17% above the firsthalf average, according to the Audit Bureau of Circulations What's more, the issue carried 103 ad pages, way above the first-quarter average of 68 pages. Online, People hosts a "Red Carpet" section every year: Revenue from display ads reached $3.5 million last February, compared with $2.5 million in December, according to TNS Media Intelligence. Paul Caine, president of the Time Inc. Entertainment Group, said his titles were now seeing some dollars previously allocated to TV.

Vanity Fair party
Vanity Fair's behemoth Oscars party has grown into the most prominent magazine event all year, generating oceans of coverage in gossip columns, on entertainment shows and online. A televised ceremony may not actually be required to go ahead with traditional Oscar business. "Magazines will use it as an opportunity to promote even if there's not an event, because the stars need to be celebrated," said David Adler, CEO, BizBash Media. "That's not crossing the picket lines. When you think about it, the Vanity Fair party would get more important." A Vanity Fair spokeswoman declined to discuss the unpleasant possibility of a year without Oscars: "At this point, we're cautiously optimistic and going forward as planned."

For now, the Academy and ABC are operating on the premise that the show will go on, with nominations set to be announced Jan. 22. Still, media buyers report ABC has made early contact with some marketers to discuss potential "what-if" scenarios. While nothing is finalized, some early ideas include pushing the Oscars broadcast back or running a diminished event. "There are no contingency plans at this point, and it's premature to discuss that," said an ABC spokesperson. An Academy spokeswoman said it is "moving forward."

NBC has begun to offer some advertisers the cash-back option, Ad Age revealed online last week, which could end up costing as much as $10 million to $15 million. Both Screenvision and Landmark Theaters confirmed receiving calls from Globes advertisers seeking to spend their dollars in cinema. Similarly, Mike DiFranza, chairman of the Out-of-Home Video Ad Bureau, reported categories such as automotive, travel and financial services shifting dollars.

Now some Oscar marketers are taking steps in case of emergency, though they aren't putting those plans in the open. "We are proceeding under the assumption that the Academy Awards will run and are hopeful the writer's strike will be settled. We do have contingency plans in place in the event that the show does not air," said Mike Boylson, chief marketing officer of JC Penney, in a statement. MasterCard planned to advertise in the Oscars, but a spokesman said the spots could run in other venues without trouble. Procter & Gamble and General Motors are both running Oscar ads; spokeswomen for the two said each would work with ABC to determine the best option possible in case the strike affects the program. A spokeswoman for Coca-Cola, also advertising in the Oscars, said the beverage giant is "monitoring the situation."

And the Potential Losers Are ...

Jack Kyser, chief economist, Los Angeles Economic Development Corp., said the Oscars are worth $130M to L.A.'s economy -- and that's just the start.


According to NPD Group, a red-carpet turn by a celebrity in a particularly stunning gown can spark an estimated $1 million worth of PR, meaning the Oscars can notch $100 million in potential publicity for companies such as jeweler Harry Winston and shoe designer Christian Louboutin.


The amount spent on competing for the Oscar: radio, TV, print and outdoor campaigns. Walter Parkes, producer of films such as "Sweeney Todd" and "The Kite Runner," said the cancellation of the awards could have a "significant" effect on the performance of certain films, because the exposure on three hours of network TV is "invaluable."


The amount Mr. Kyser estimates spent on the main broadcast production, use of the Kodak theater, the annual nominees' lunch, and the famous governor's ball. If that ends up being toast, Mr. Kyser said, it will be "a huge and disproportionate impact on L.A. Latino community. They are the valet parkers, hotel and banquet staff."


Everything else related to Oscar, including limos, security personnel, gift bags for nominees, baskets for winners. And then there's what Mr. Kyser says is spent in salons and on other procedures, such as Botox injections and fake tans.


Parties, minimum $200,000, maximum $800,000. Who knew ice sculpting paid so well?


The media spend $1.5M to cover Oscar, and $2.5M on hotels. It gets $1.5M in congratulatory trade ads.

Oscar Odds

Want to bet the Oscars go down in flames? Wagering on the Oscars, of course, is illegal in Las Vegas, but that won't stop office pools all over America from being formed. Jay Kornegay, executive director-race and sports at the Las Vegas Hilton's Sportsbook, sets the odds of the Oscars happening at 2 to 3, because of the amount of time left to make a deal. "You'd need to risk more to win less," he said, "because the odds are that they still -- might -- happen." (Leslie Unger, a spokesman for the Academy, wouldn't address the Oscar odds, saying only, "We're moving forward. We're doing all the things we normally do.") Still, key Hollywood players remain decidedly skeptical. Marc Norman, a member of the WGA's negotiating committee and himself an Oscar winner for "Shakespeare in Love," isn't optimistic. "There'll be pressure to grant a waiver, and I'm not sure it'll be granted," he said. "Because I'm not sure there'll be universal ill-will [if the Oscars are canceled]."
-- Claude Brodesser-Akner

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Contributing: Andrew Hampp
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