MEDIAWEEK -- NOVEMBER 21, 2007

This article was sent to me by my favorite CAA agent. It punches some very realistic holes in the networks "We don't need no stinkin' new shows" attitude. Worth the read. Pass it on.

Strike Has Cash-Back Clock Ticking

By John Consoli Media buyers, in light of the Writers Guild of America strike, say they might be a month away from asking the broadcast networks to renegotiate their upfront packages or give them cash back. “The situation may not become a major problem until after the February sweeps, but we have to start thinking about how we are going to deal with things for the remainder of the season now,” said one major media buyer, who did not want to speak for attribution. “In the next three weeks, if there is no settlement in the writers’ strike, and prime-time ratings continue to fall, we will start looking for serious adjustments and even for cash back. That’s going to be awkward and hard for the networks to deal with.” Broadcast network sales executives, none of whom would speak for attribution, believe that their networks have enough fresh episodes of scripted shows to take them through the February sweeps (along with the liberal dose of repeats that are traditionally run in December and January), and enough reality programming to take them through the rest of the season. But buyers, likening that attitude to Nero fiddling while Rome burned, believe the networks are wrong if they think viewers will be retained with repeats and some new reality programming. Instead, they believe viewers will begin defecting to cable, which, because of its different cycles, can offer first-run programming in some instances and also repeat full arcs of their hit scripted series that many regular broadcast network viewers have yet to see. At an Advertising Club panel sponsored by Discovery Networks last week, Rino Scanzoni, chief investment officer for media agency conglomerate GroupM, said, “During the first four weeks of this season, when all of the broadcast networks were airing original episodes and their new shows, the ratings erosion from last season was about 12 percent. That’s quite unnerving, particularly since these ratings declines were with all first-run programming.” Scanzoni said it can’t get better once all the fresh episodes are used up. “Cable can be an alternative to broadcast if the strike continues,” he said. “Over the past several seasons, cable ratings in the aggregate have increased by about 5 percent in nonsweeps months,” said Steve Sternberg, executive vp of audience analysis at Magna Global USA. Sternberg projects that if the strike continues through the end February, the broadcast networks will lose an additional 5 percent of its prime-time ratings, on top of the minus 12 percent it is currently averaging. That number will grow to 8 percent in March (down 20 percent compared to last season), by 12 percent in April (-24 percent) and by 13 percent in May (-25 percent). That level of audience defection from broadcast prime time will surely leave the networks with virtually no way to meet their promised upfront guarantees and would likely prompt a large number of advertisers to ask for cash back. It would also create chaos for the 2008-09 upfront in May. Buyers said the broadcast networks assumed a 7 percent ratings decline for this season when doing their upfront deals and put aside makegoods for those levels of underdelivery. With current ratings 5 percent lower than that, the networks can still manage handing out makegoods without reaching an imperative cash-back situation. But one buyer said, “If a large majority of the original reality shows the networks plan to put on during the strike don’t hit a chord with viewers, the entire ratings and makegoods situation could spiral out of control.” Another media buyer added, “We need to know what we are going to do right now. Even if a strike doesn’t last until second quarter, it will impact second quarter. We need to know that the programming packages our clients have in second quarter resemble what they bought in the upfront. If there is no first-run Heroes or Grey’s Anatomy, what programs that resemble those shows’ audiences are our clients going to be put in to?” One buyer said that Fox’s announcement that it will not air drama 24 (because all the episodes have not been completed) is a problem for some clients: “Even if Fox offers them units in American Idol, it might not be the same target audience they are looking for. And putting them in a House repeat is not the same as a first-run House.” Andy Jung, senior director, advertising and media, Kellogg’s Co., and chairman of the American Advertising Federation, said if viewers begin abandoning broadcast prime time for cable, the advertisers will follow. “If the eyeballs move,” he said, “we will move our money.” Cable networks, particularly the larger, more general audience services like TNT, TBS, Discovery Networks and USA, along with the cable news networks in prime time, will probably see the bulk of shifted dollars. But media buyers warn that if they get greedy and ask for exorbitant rates, the agencies will balk and look to syndication, print or online. One cable network sales executive said he recognizes the opportunity the strike has provided his sales team and would strive to not mishandle the situation. “While we would ask for rates that are a little higher than we are getting right now, we would make sure we didn’t try to gouge the clients. But we do have enough inventory available to take advantage and to give each advertiser what they need.”

WHO IS DAVID YOUNG? WHY DOES BIG MEDIA THINK HE'S THE STUMBLING BLOCK TO A SWIFT COMPROMISE? ARE THEY RIGHT OR JUST AFRAID OF A GUY WITH BALLS?

Here's what the WGA press release issued in 2004 says about David Young: A seasoned union professional with more than 15 years of successful experience directing private-sector organizing campaigns. Young graduated magna cum laude from San Diego University with a BA in economics and has devoted his professional career to the labor movement. He served as assistant director of organization at the Laborers’ California Organizing Fund since 1999, where he successfully signed dozens of new construction industry employers to work agreements. Young also served as director of organizing for the Southern California-Nevada Regional Council of Carpenters, where he planned and supervised winning campaigns covering nearly 1,000 workers.Prior to that, Young was supervisor of the International Brotherhood of Teamsters’ Southern California Construction Organizing Project, spear-heading a joint organizing project of Teamsters International and Local 952. From 1991 to 1997, Young served as assistant national director of organizing for the Union of Needle Trades, Industrial, and Textile Employees (UNITE), where he planned and directed major campaigns resulting in thousands of employees receiving union benefits for the first time. Excerpts from The Hollywood Reporter, Janurary 12, 2007: The Hollywood Reporter: You have said that the WGA would be willing to begin negotiations for a new film and TV contract no earlier than next summer. Can we pin that down to a month? David Young: We would be prepared to go in on that as early as July and have communicated that. We are likely to do better via traditional deadline bargaining. The companies save a lot of money via early negotiations by avoiding an unnecessary inventory buildup -- what's called a speed-up. Most of what's produced during that speed-up period isn't used and amounts to wasted capital. So we would need an appropriate incentive to go in early. THR: Management negotiators already are predicting acrimony in the next round of contract talks and claim the WGA has the most militant leadership currently. How do you feel about being cast in the role of a Hollywood labor-community tough guy? Young: It's our job to represent our members' vital interests, and that's what we intend to do. And if folks want to cast that in another light, that's just done for propaganda purposes. THR: You mentioned a couple of months back that you were in negotiations for your personal employment contract. Have you concluded that process? Young: Yes. THR: Any chance of getting details, which ultimately will be disclosed anyway? Young: You'll have to wait. THR: Back on the subject of film and TV contract talks, what represents a bigger priority -- establishing rich residuals for Internet reuse or improving the formula for DVD residuals? Young: Well, that is a question for the membership to decide, when we ask them to weigh in on our contract demands. I would say anecdotally right now people are more concerned about the future, which tends to put more emphasis on Internet downloads than DVD. But DVD is still a very significant concern. THR: OK, give us your prediction. One year from now, what will people saying about negotiations between the WGA and the production companies? Young: That depends on the companies. If they want to make a fair deal that gives writers a fair share of what they create and respects the right to organize, I'm sure we'll be fine. I've been positively impressed with the people I've met on the management side. My prediction would be that we will have an agreement in hand a year from today. -- -- -- That would be January 12, 2008. Let's hope his prediction comes true. I recently had the opportunity to talk with a network executive at a social event. I can't say who, but he's far up the food chain. He felt Young was a non-writer with a personal agenda. A guy looking for an impressive win to move himself on to his next bigger and better gig. Basically that our chief negotiator was more interested in his own career than securing a fair deal for writers. I'll be honest, I had no idea who Young was until recently (I admitted my union ignorance in the previous post). The little hairs on the back of my neck stood up when I realized the guy controlling our negotiations was not a writer, but a professional labor troubleshooter. I know he's just the mouthpiece and that the board and the members make the decisions, but is it wise to let a guy who's never even opened a final draft file, lead our charge? I honestly don't know. Most people I've spoken to inside the WGA think it's the best idea. Obviously that's why they're spending our hard earned dues on this guy (I would like to know how much we're paying him). They feel Young can focus on the issues without being steeped in our historical baggage. He's obviously made a career of successfully negotiating on labor's behalf. A friend on the negotiating committee commented that the companies are griping about Young because he scares the shit out of them. The way a powerful defense attorney scares a DA. The way a pitbull scares a mailman. The way GW scares rationality... You get the point. I'll say it again. We need to continue to encourage our leaders to approach these resumed talks with a fair and open mind. We want the best deal we can get. We want a deal that protects our future revenue. We want a deal that gets us back to work. None of that will be possible without a civil and humble attitude. We're the hero in this narrative. And the hero never shoots first. The cool hero never shoots at all. The coolest hero doesn't even own a gun.

A FAIR DEAL TO BE MADE

I've spoken to several writers since the "going back to the table" announcement. Most of them feel we will come out of this with a fair deal. I've gotten two emails from studio execs expressing the same sentiment. Not sure if it's just wishful thinking, but I'll gladly throw myself into that positive category. I too, think we will come out of this with a deal that a majority of the guild will agree upon. I don't think it will be an easy negotiation, but I do think it will be a productive process. As you can tell by my "bully pulpit", (as someone in a recent email has delightfully deemed my blog) I've been disheartened by all the rhetoric spouting and pseudo-McCarthyism that has been fueled by the guild's need to "condemn the man". I worry about that being the glue that holds our union together. Glue composed of cheers and fears loses it's stickiness very quickly. As I said in the previous post, trust builds unity. The reason I believe we'll move forward in these upcoming talks is because I think everyone has had enough of the spin. Both sides are getting tired of the shit-slinging and muckspackling. Whatever happened in those chats at the Lourd's house inspired some humility and willingness. I believe that spirit will continue as we move forward. For the record, I'm the worst kind of union member. I pay my dues, that's it. I rarely ever vote or even pay attention to WGA business. Every time I get the magazine and I'm not on the cover, I throw it away. Yet when they do something I don't like, I'm the first one to open my big fucking mouth and complain. So, to rectify that, I've made a commitment to follow up my passive, opinionated blogs with action. Meaning I will be an active participant in the WGA after the strike. Volunteer for service, etc.