TV, film production losses could top $3 billion

Now that the two sides are talking again, hope is rising that the writers strike will be settled sooner rather than later. If that doesn’t happen, the showbiz community will face far more financial pain related to the strike — just as the national economy appears to be skidding into a recession.

If the 3-month-old strike were to persist for an additional 60-90 days, the direct amount of lost spending on TV and film production could reach $3 billion, according to an industry study conducted by informed sources.

The study provided to Daily Variety on a confidential basis has calculated a cost of about $1.9 billion in lost episodic production for the more than 70 broadcast and cable primetime skeins, assuming no more segs are delivered for the 2007-08 season. That includes more than $800 million in above-the-line expenditures and $1.1 billion in below-the-line salaries.

If pilot season is tabled entirely, that would yank an extra $300 million-plus out of the showbiz economy, a calculation based on the conservative assumption that the five broadcast webs have, in recent years, produced about 50 half-hour pilots at a cost of about $125 million and roughly 45 hourlong pilots running $180 million. NBC has already said it is curtailing pilot production this year.

Crunching the numbers on the film side is tougher than in television, because movie production is generally more pliable in terms of when a pic begins lensing; TV by its nature offers a more easily quantifiable production process. But after surveying major employers and talent reps, the study authors conservatively estimate that pic production losses would reach $1 billion if the strike runs two or three more months.

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., estimates that the strike to date has cost Los Angeles County about $1.5 billion in wages and related economic activity — not including the lost studio spending on production.

The really staggering figure comes when you take the $3 billion estimate for lost film and TV production spending and consider the multiplier effect, or the lost spending stemming from expenditures for physical production (lumber, paint, craft services, supplies, town cars, etc.) plus the lost spending among actors, writers, directors, crews et al. who didn’t have as much money to drop on meals in restaurants, clothing and that new Prius they might’ve been eyeing before the strike.

Because showbiz workers are generally highly paid (and unionized), the U.S. Dept. of Commerce applies a high multiplier of 2.8 in assessing the ripple effect of the showbiz sector, which means that $3 billion in lost coin will really feel like a loss of $8.4 billion in Los Angeles, New York, Vancouver and other production hubs should the strike persist into April.

In an effort to salvage as much coin as possible, top brass at major TV studios are working overtime on contingency plans to determine how many episodes of various series could be salvaged if the strike ends within two to three weeks.

Studio brass said there’s no blanket approach to such planning; each show’s fate will be determined by a combination of network need, syndication and foreign licensing contracts and the feasibility of getting production up and running in a hurry.

One studio topper said he’s most concerned over what to do with bubble shows. Having to return and jump-start production on a show — when it’s not known whether the network is even planning to bring it back next year — may be too cost-prohibitive.

“If all we can do is four more episodes, there are pretty substantial amortization costs in order to go back into production,” the exec said. “Each of those episodes will cost a lot of money. And my guess is the networks won’t be generous in helping with that.”

There’s been a lot of optimistic discussion about keeping shows in production during the traditional summer hiatus period to make up the lost episodes, but others caution that network appetites may be diminished. Some returning skeins may just have to take the loss and hope for a return to normal orders in the 2008-09 season.

But insiders believe nets will be angling to get as many original episodes of their signature shows as possible.

“Any show that’s a keeper, something that’s working, you’re going to want episodes,” the studio topper said. “And we’ll be able to figure it out: 22 (episodes) for next year, and somewhere between three and six or seven for this year.”

Every show is different, but it’s believed showrunners will take anywhere from two weeks (for multicamera laffers) to six weeks (for newer hourlong dramas) to produce their first post-strike episodes. “Desperate Housewives” creator-exec producer Marc Cherry recently told KABC-TV that he could finish the full season of his show if the strike ended fairly soon.

But there are other caveats.

Many nets have declared that they no longer want to be bound by the traditional September-May season. Even before the strike, for instance, Fox had planned to air the season finale of “24” in June.

The strike would give nets the perfect chance to experiment with airing original segs of scripted hits in June. And given how tight the scatter market has been, advertisers may welcome the opportunity to tout their wares in something other than reality shows during the summer.

Some believe nets may instead convert the back-nine orders for some of this year’s frosh success stories — think NBC’s “Chuck,” ABC’s “Pushing Daisies” and CBS’ “The Big Bang Theory” — into 13-episode orders for next fall.

Another possibility: Nets may produce the full orders of some shows now but hold back airing the episodes until next season. That may mean more original episodes next season and fewer repeats.

Of course, there’s plenty of TV production spending that has already irrevocably vanished as a result of the strike.

The industry survey pegged the cost of the lost production of the major latenight talkshows, which went dark for eight to nine weeks following the onset of the strike on Nov. 5, and NBC’s “Saturday Night Live,” which remains out of commission, at more than $95 million. That included $55 million in above-the-line fees and $39 million in below-the-line pay on eight shows including CBS’ “The Late Show With David Letterman,” NBC’s “The Tonight Show With Jay Leno,” ABC’s “Jimmy Kimmel Live” and Comedy Central’s “The Daily Show With Jon Stewart,” as well as “SNL.”

(Michael Schneider contributed to this report.)

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