WGA strike redefines TV business

Changes include end of TCA tour, upfronts

As the writers strike hits the six-week mark on Monday, the ramifications for the TV biz are growing by the hour.

Starting next week, the force majeure ax may begin to fall on various talent deals at the major studios. Industry insiders say some of the nonwriting producer deals and nonwriting “pod” deals that have proliferated during the past decade could be vulnerable, particularly for those with a mixed track record of delivering successes to their studio partners.

(Many contracts use the six-week mark for allowing termination of a deal under provisions of force majeure, or a disruptive event that prevents both sides adhering to the terms of the contract, but the length of time can vary significantly depending on the deal.)

Decisions on who gets cut will be made on a case-by-case basis, and they are unlikely to come in one big wave. Each of the six majors has different needs and strike contingency plans. Some may decide to trigger the option that allows studios to extend deals by the number of months the strike lasted. “There will be terminations,” a studio chief said. “We just don’t know when.”

In the short term, networks and studios are scrambling to get through the rest of this season with replacements for scripted skeins that will be out of commission for the foreseeable future. The immediate question with which netheads are wrestling is what to do with this season’s new crop of shows. Some promising newcomers have already secured full-season renewals. Those orders can be rescinded, given that episodes can’t be delivered in accordance with the contract, though few believe it will come to that.

“I don’t think you’ll see networks and studios fighting over contractual issues,” a TV studio topper said. “We’ll work something out.”

Other short-term strike causalities to date have included industry traditions, such as the winter Television Critics Assn. press tour, that the congloms have been seeking a way out of for years. None of the major broadcasters had wanted to risk alienating TV journos by being the first to pull out of the tour, until the strike spurred NBC to make the move last month.

The elaborate network upfront presentation ceremonies held in Gotham in mid-May will likely be scrapped next year as a result of the strike, with no tears shed by net execs eager to save the $3 million-$5 million cost of the putting on the dog-and-pony shows. NBC has already said it will forgo its traditional upfront presentation at Radio City Music Hall next year.

The uncertainties caused by the strike could also influence the more important aspect of the upfront — the wheeling and dealing of booking commitments for the 2008-09 season — though from Madison Avenue’s point of view, the effect could be positive.

“There’s no reason a lack of new shows should interfere with the upfront per se,” said Steve Sternberg, exec veep at media buying giant MagnaGlobal. “You buy in the upfront to get guarantees, get lower CPMs and secure the best inventory. With no new shows, it will remove some of the urgency. It will also make the process easier if we only have to project the performance of returning series.”

As for the long term, Hollywood insiders are abuzz with talk that the primetime biz will never be the same even after the strike inevitably ends.

“We’ve all been looking at where the business is going and thinking about what we need to do to keep this a viable business,” said one top TV exec at an AMPTP conglom. “The strike has just accelerated those efforts.”

In the words of another network topper: “As hard as it is to see all the human misery that is coming from this strike … there is as much opportunity here as there is detriment.”

Barring a miracle breakthrough between the WGA and Alliance of Motion Picture and Television Producers, it already appears that pilot season for the 2008-09 season will be scaled back dramatically, if not tabled altogether.

Going forward, industryites say the forced interruption of pilot season could be what spurs the biz to shift to year-round development instead of the chaotic process in which each net shoots 15-20 pilots during the January-April period. That could also spur networks to break from the tradition of the fall launch in favor of a gradual rollout of shows throughout the year, though skeptics point to Fox’s limited success with its big push a few years back (and since largely abandoned) to move to a year-round development and skedding cycle.

With pilot season like to be off track, some say that next year returning skeins might debut in late August or early September, and new shows bowing throughout the year.

“When everyone tries to launch 30 new shows in a week in the fall, we end up screaming in the wind,” one suit said. “We spend $200 million collectively in off-air media to get the word out, and we have to change that.”

Even before the strike, Fox was planning to air original episodes of existing shows like “24” in June, part of a plan to extend the season beyond the traditional September-May confines. Depending on when a strike is settled, leftover episodes of shows (assuming they’re produced) may well air in the summer months.

The head honcho of a conglom that includes a Big Four network said Wednesday that the net’s annual budget for scripted pilot fare could be pared by double digits next year and beyond. Many point to the cable model of doing fewer pilots overall and devoting more time and energy to each one.

Some say that talk of draconian post-strike changes to the development process is heat-of-the-moment thinking and that the biz will settle back to its usual rhythms once the tremors caused by the strike subside. Others say it’s an opportunity to make long-overdue changes to a biz that hasn’t changed how it operates in decades.

“One good thing that may come out of this is that it could change the development process,” said Fred Silverman, producer and former programming prexy of CBS, ABC and NBC. “The business is kind of stumbling into a year-round development process. To have one time of year where everyone is vying for the same pool of talent is insane.”

Pilot costs for broadcast nets will also be reduced as networks move toward shorter presentations — or even decide simply to go straight to series. While series commitments cost more initially, nets save millions by not having to waste money on building new sets and on other costs associated with pilots.

“A couple years ago, a pilot cost $2 million-$3 million. Now people expect it to be up to $7 million. That’s insane,” one insider said.

NBC has two or three projects going directly to series (including “Robinson Crusoe”), while CBS gave a series order to “Eleventh Hour.”

One studio prexy said the strike will force a fiscal discipline long discussed in Hollywood but never implemented.

“We’re going to lose a number of episodes this season, which means we won’t be able to amortize the costs of these episodes,” the suit said, noting that if the strike goes on long enough, studios will lose millions in DVD and international revenue.

“We’re never going to get that money back, so we’re going to have to demand that the shows make it up (next season).”

If pilot orders are downsized in a dramatic, permanent way, it will, of course, result in fewer opportunities for scribes to secure pilot script commissions, which bring higher fees for writers than penning a script for an existing skein. There’s also chatter of studios moving to reduce the overhead carried on scripted shows by insisting that showrunners cut back on the number of writer-producers on staff and use more freelancers for individual episodes.

“The biggest irony of the strike is that when it ends, the writers are going to come back to fewer scripted shows. No matter what, reality programs are going to replace (many of) these scripted shows,” the conglom honcho said. “The biggest issue here is that the Writers Guild does not understand how much is broken about the system they’re used to working in.”

Studio execs also predict they’ll make far fewer overall term deals with writers and producers — a process that had already begun but will be hastened by the economic jolt of the lengthy work stoppage.

“Overall deals are a really bad business,” exec said. “They make sense when they’re attached to someone who’s producing a hit show… But is it worth spending all this money for two or three scripts?

“This is a great opportunity to come up with a business model that makes television healthier.”

Industry vets point to the end of the last WGA strike in 1988 as one reason for the proliferation of staff writer-producers on shows. By the time the five-month work stoppage ended in August 1988, producers were in such a scramble to get fresh episodes on by year’s end that they beefed up their staffs to work round the clock, recalls Tom Wertheimer, a former top Universal TV exec who was heavily involved in the 1988 strike negotiations.

“The hyphenate (writer-producers) benefited greatly from it and got paid more, but the freelance market almost disappeared,” Wertheimer said.

(Michael Schneider contributed to this report.)