Buffeted by gale-force winds of change, the broadcast network biz faced up to its unpredictable future last week with the primetime lineups unveiled for the 2009-10 season.
For as many decades as executives have lamented the need to rein in production and talent costs, this year the Big Four networks and the studios that serve them were forced by external pressures to take draconian steps to downscale budgets and, in many respects, their ambitions.
This was the year when cost concerns far outweighed creative decisions — a harsh reality that was entirely predictable but still left many reeling at the end of upfront week.
The industry got religion about spending and planning this year mostly because it had no choice, between the impact of the recession, the vast upheaval in the programming marketplace (thank you, Hulu, TiVo, iTunes, et al) and the lingering effects of the writers strike.
So with that prodding, the impetus to cut costs at every level was embraced across the board at the nets because leaders of the major showbiz congloms have long yearned to impose a kind of market correction on the creative community. It started in the immediate aftermath of the 100-day writers strike early last year, and reached its apex last week during the parade of upfront presentations.
“There’s no question we’ve taken tens of millions of dollars out of budgets,” says ABC Entertainment prexy Steve McPherson, who recently assumed oversight of the ABC Studios production wing as well as Alphabet programming. “We still did more pilots than we’ve ever done, for less money. We’re taking advantage of tax incentives around the country.”
The parent companies of ABC, CBS, NBC and Fox are as mindful of their image on Wall Street as they are eager to impress Madison Avenue. The programming decisions, many of which were made at the 11th-hour after weeks of strenuous negotiations, were an effort by the nets to get their balance sheets in order in preparation for the main event, upfront advertising sales process.
By the most optimistic projections, ad spending on the Big Four and CW in the recessionary environment will be down 5%-10% (or 10%-20% in worst-case projections) from last year’s haul of about $9.2 billion. As tough as the programming dealmaking has been the past few weeks, it’s likely to be a cakewalk compared to the nets’ upcoming negotiations with media buyers on advance bookings for the coming season.
As the nets gird for a big cash flow hit, the fallout from last week included:
n Production budget cuts imposed on virtually all scripted series;
n Budget and/or license fee cuts were a condition of renewals for numerous returning shows, including “Bones,” “Cold Case,” “Chuck.” Some couldn’t cut enough to make the cut: ABC’s “Samantha Who”,” NBC’s “My Name Is Earl” and CBS’ “Without a Trace”;
- The embrace of lower-cost Canadian-produced dramas: CBS “Flashpoint” and “The Bridge”; NBC’s “The Listener”;
n Networks taking a page from cable with shorter episode orders on some shows –13-16 for shows like “Law and Order” and “Southland” rather than the traditional 22-24;
n Encores aplenty. Selected shows have built-in repeat telecasts within the same week to more quickly amortize costs.
n Unscripted shows gobble up more prime primetime slots. In addition to the Jay Leno move, NBC will have two hours of “The Biggest Loser” on its sked each week. ABC has elongated “Dancing With the Stars” to three hours a week, while Fox is adding three hours of “So You Think You Can Dance” in the fall.
The reaction to the harsh economic times of 2009 came on the heels of two jolts suffered during the past two years. One was man-made, while the other is more of an evolutionary phenomenon.
The disruption caused by the 100-day writers strike in late 2007 and early 2008 forced the networks to scrutinize their scripted programming businesses at the exact moment when the future of that business had never been more challenged. And the greatest threat to the long-term health of the scripted biz was the very same issue that drove the wedge of the picket line between Hollywood’s labor and management: the transformative impact of new media.
The rapid transformation in the way viewers watch TV — enabled by the on-demand powers of DVRs and online distribution via Hulu and its ilk — has upended the traditional primetime business model. Viewers are increasingly watching shows on their own timetables, robbing networks of the traditional power to use hit shows to seed sampling for new programs.
And nobody has a big enough crystal ball to determine what all the instant availability of program repeats these days will mean for the long-term syndication value of series. The Big Four nets themselves are divided, with NBC, Fox and ABC making a lot of shows available for paid downloads and webstreaming, while CBS and Warner Bros. TV have been more conservative in what they view as guarding against the potential to depress a show’s value in syndication.
Because future profit margins are so uncertain, studios are being much more selective about taking on big deficits unless they’re confident of a show’s ability to recoup via DVD and international sales, as well as syndication.
“It’s challenging whenever you try to change the mindset of an industry,” says Gary Newman, who with Dana Walden is chair of 20th Century Fox TV. “But look at so many industries in our country where the underpinnings of them have given way. The economics of programming have given way to one degree or another, whether it’s ad revenue or home entertainment or syndication (sales). It’s inevitable that this effect is going to radiate up to the costs of the shows.”
Surprisingly, Newman and other execs say there was a reluctant understanding among many in the creative community about why cuts or salary freezes had to be implemented. Like so many workers in a recessionary environment, showbiz laborers are happy to have a job in a contracting market for scripted entertainment.
“It’s looked on at a different scale that it has been in the past,” Newman says. “The entitlement that a network or studio or talent used to feel that if we just get to 100 episodes (on a series), we all get to collect. That mentality is changing.”
The cost clampdown could have unintended consequences in taking away some of the big-ness that has been network TV’s competitive advantage against the encroachment of cable. If viewers are less impressed, they might tune out, hastening the gradual erosion of the Big Four’s dominance of primetime.
Execs stress that each show has be evaluated in terms of its specific needs, so as to not gut the final product that gets on screen.
“Specific kinds of shows are going to be targeted. When you have a budget for a single-camera comedy that could run over $2 mil an episode for a half-hour, then you start talking about economics that don’t work,” McPherson says. “Hourlong dramas and multicam half-hours and single cam half-hours that are feasible, there’s still a huge market for that both domestically and internationally.”
More and more, programming decisions have to be thought of as managing an investment portfolio. NBC had more money to spend on a smaller batch of pilots because of the Jay Leno 10 p.m. move. And within those parameters, the Peacock balanced its orders by going for a bigger-budget actioner in “Trauma” and a star-driven ensemble cast in “Parenthood” with more modestly budgeted hours like “Mercy.”
“We’re all having to do much more in the way of planning — it’s a very different strategy than in the past,” says Angela Bromstad, prexy of NBC primetime and Universal Media Studios. “Now we have to realize that we’re making very different kinds of shows and know that we’re going to spend a little more on ‘Trauma’ than we will on ‘Mercy.'”
Others point to the changing strategy of nets focusing on a few high-priority launches rather than marketing all shows equally. There’s too much competition from cable and other entertainment alternatives to go for the blanket approach anymore.
As a result, studios will bet more frequently on the shows that get extra TLC from their networks. Walden, 20th chairman, points to Ryan Murphy tuner “Glee” as a big swing at the bat that Fox and 20th are willing to take because it’s been promised a post-“American Idol” timeslot.
“All of the networks are focused on their top shots in terms of programming,” Walden says. “The checkbooks will be a little freer on those particular opportunities.”
Michael Schneider contributed to this report.