Primetime: The price is fright

Will suites get real about tube's troubles?

It turns out rumors regarding the death of network television as we’ve known it have not been greatly exaggerated.

If anyone doubts how bad things are about to get for broadcasters, they need only look at what happened this fall.

As they have for decades, the Big Six shelled out hundreds of millions of dollars to produce and market nearly three dozen new primetime series. Some of the biggest names in the business — Jerry Bruckheimer, David E. Kelley, Dick Wolf, Danny DeVito, Darren Star — were behind the frosh efforts.

The result of all this blood, sweat and moolah? Overall viewership is down 8% among adults 18-49, nearly a dozen shows already have been killed, pulled or pushed — and, perhaps most disturbingly, not a single new series launched since September has emerged as a bona fide breakout hit.

One senior network programming exec not known for overstatement calls the fall launch nothing short of apocalyptic. “No business can support a half-billion dollars in devastation over such a short amount of time,” the suit says. “You’ve got an industry that’s in some serious trouble.”

Or, as Fox topper Sandy Grushow bluntly puts it: “Anybody who says or believes that the network television business isn’t under siege has their head stuck firmly in the sand.”

There will be more woes in the coming years, as cable nets grow more powerful and digital video recorders rewrite the rules of advertising income. Digital broadcast TV eventually will become a reality, giving auds even more choices.

And the networks’ problems eventually will trickle down throughout the industry.

With ratings dropping and profits still sketchy at several webs, the money’s not there anymore to make pricey overall deals or blind pilot commitments. That already has hit studios and agencies where it matters most: their pocketbooks. The declining international marketplace and the weak off-net syndie landscape also have dealt a blow to profit participants.

This season’s events should come as no surprise to anyone who’s been paying attention to network TV over the past decade.

The real news: After years of talk, webheads finally seem ready to actually make real changes to their business in order to save it.

It’s never easy to carry out major adjustments in the TV business. Execs are slaves to well-established development cycles and, increasingly, the relentless pressure for immediate results that comes from their numbers-crunching conglom masters.

But continued audience erosion — and the nagging suspicion that advertisers won’t continue to pay more for less — makes it likely that network TV is headed for its most radical makeover since the introduction of color.

Among the pending shifts:

  • The fall season as we’ve known it is dead. Ditto the insanity known as “sweeps.”

“We’re at a watershed time in network television in terms of the way we market, launch and schedule shows,” says NBC Entertainment prexy Jeff Zucker, arguing it’s “probably a mistake to premiere six or seven new shows every fall.”

The Peacock has decided to bow at least one new show each month, even during sweeps periods and the summer. ABC is launching its high-profile Rod Lurie drama “Line of Fire” in December in order to avoid the traditional fall and winter crush of premieres.

Fox, however, has taken a leadership role in developing and launching shows on a year-round basis.

It hopes to greenlight all of its drama pilots by year’s end — nearly two months ahead of other webs. And, encouraged by the smashing success it found by launching sudser “The OC” in summer, Fox could bow a huge chunk of its 2004-05 sked before Labor Day.

As for sweeps, webs have been denouncing the thrice-annual ratings frames for years. But with Nielsen stepping up efforts to get local peoplemeters installed in the top 10 markets — thus making market-specific demo info available on a daily basis — the end of a much-maligned network tradition may be at hand.

“Within two years, sweeps aren’t going to exist,” Zucker predicts. “When you’re doing (year-round programming), it just doesn’t make sense to save all your big programming for three four-week periods.”

  • Broadcasters are getting serious about finding another revenue stream besides advertising. Get ready for more DVDs and around-the-clock access to your favorite network shows.

    While webs sell ad time at a much higher rate than cablers, wired outlets make up the difference via billions in subscriber fees. Broadcasters get ad coin — and that’s it.

“Undoubtedly, advertisers at some point are going to be unwilling to pay more for less,” Grushow says. “Networks have got to figure out a way to open an alternative revenue stream.”

Fox believes the answer may be subscription-based video-on-demand. Net is teaming with Cablevision to test a service where cable customers pay a few bucks per month to get unlimited, instant access to all Fox programming from the past month.

Grushow says it’s too soon to say if SVOD will pan out, but the net believes the potential must be investigated.

One exec believes that if the Big Six got together and bundled their programming into an SVOD package priced at $5 a month, it wouldn’t be hard to imagine 25% of the nation’s 80 million cable homes subscribing.

“That’s $1.2 billion a year right there,” the exec says.

To get producers to agree to the plan, Fox is giving studios the option of releasing shows on DVD as soon as they air, rather than making them wait the traditional four or five years to exploit a hot property.

While nets don’t directly benefit from DVD, the medium has been a boon to the studio side of the business.

“It’s been a godsend and helped continue to drive the studio TV business at a time when domestic syndication revenue and international sales are going down and costs have continued to increase,” Grushow says.

  • Bottom-line-obsessed and cost-conscious congloms will force networks to trim budgets and demand new financial models for producing shows.

    Networks once were able to amortize the cost of a show by airing it two or three times per season. But with viewers simply ignoring reruns of many shows, nets have lost their enthusiasm for encores.

That’s one reason many believe broadcasters may finally get serious about lower-budget programming.

“It’s crazy that when things get produced for cable, it costs X, and when it gets produced for a network, it costs Y,” Zucker says. “People are holding on to this idea that networks should pay more. It’s just asinine.”

Many believe above-the-line costs still need to come down, with nets still too easily seduced into spending top dollar for a big feature writer or helmer — despite mountains of evidence that the biggest hits come from less proven talent.

Fox’s Grushow believes nets and studios have no choice but to do better at containing costs or, at the very least, to offset expensive scripted skeins with less costly reality or hybrid series.

“That’s not to say each network isn’t going to stretch for a new show, or that they will be unwilling or unable to pay for shows in success,” he says. “It does mean networks are going to have to find a way to balance their higher cost program with lower-cost series.”

  • Nets will pressure Madison Avenue to do away with the notion of selling the bulk of ad time in a May upfront market.

    “It would be really good if the upfront would be eliminated and (ads) could be bought entirely in scatter,” says CBS chairman-CEO Leslie Moonves. “This is a Madison Ave. question, and I don’t how they’ll figure it out. But it would be really good if we could produce pilots year-round, and (eliminating the upfront) would be helpful.”

Some coin already is moving out of the upfront as advertisers and webs work on alternatives to the traditional 30-second commercial. Reality shows such as Fox’s “American Idol” and the Eye’s “Survivor” have been pioneers at working ad messages into program content.

Such deals don’t happen in the frenzy of upfront season.

“You have to plan integration further in advance. You want to have discussions weeks in advance, not at 3 in the morning,” Carat senior VP/director of national broadcast Andy Donchin says.

Endeavor partner Rick Rosen says changing the upfront sales calendar is key to getting the network biz healthy again.

“The concept that we all in television go after the same talent for development in the summer and fall, and actors and writers in the winter, doesn’t make sense,” he says. “As long as we’re dictated by the upfronts, I don’t see it changing.”

  • The desperate need for new hits will convince networks and studios to step back and let creative types do their job.

    “There are too many people involved” in the creative process, Zucker says. Thanks to the proliferation of pod deals and studio co-productions, it’s not unusual to have four or five execs looking over a showrunner’s shoulder.

“You get too many notes and thoughts that are at cross-purposes,” Zucker says. “It’s impossible for that many people to agree on one thing.”

“Oliver Beene” exec producer Steve Levitan believes nets and studios need to have more faith in the people they charge to create hits.

“I would hire the smartest people and would let them do what they want to do and do my best to stay out of it,” Levitan says.

Despite the clear evidence that big change is necessary, nets still are taking mostly baby steps to deal with their woes.

Part of the problem is that few execs want to (or can) think beyond the next sweeps period. Those who get what’s wrong don’t want to sound the alarm bells too loudly, for fear of being painted a reactionary or someone just passing the buck.

“This is a business that’s headed for a perfect storm,” one veteran exec says. “You’ve got PVRs, DVDs, more cable choices and young viewers who don’t know the difference between them all. What happens when all of that converges, and there’s not the same money in the ad marketplace there is now?

“If you’re at a network, and you’re not coming at this thing from every angle, five years from now you’ll be left holding the bag.”

(Michael Schneider and Pamela McClintock contributed to this report.)

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