The six-week impasse between writers and studios in Hollywood has reached a point where individual TV stations could start feeling the impact.
“I think it will have a noticeable effect by early January,” said Brad Adgate, senior vice president of research at Horizon Media in New York.
Primetime viewership is lagging, late-night talk shows have plunged and there’s little inventory left this month to make up for ads that don’t get the necessary number of eyeballs.
“There’s going to be ratings fall-off and make-goods, so where are you going to go?” Adgate said.
While make-goods could spill over into January, Rich Greenfield of Pali Capital in New York said it was still early enough for stations to avoid a heavy hit in overall revenues.
“I think it all comes down to how long,” Greenfield said. “If this lasts ’til May, it could have lasting damage; if February, I doubt it. Time will tell.”
The stand-off between the Writers Guild of America and the Alliance of Motion Picture and Television Producers reached high drama Friday when negotiators walked away spitting nails.
The WGA chief referred to the other guys as “liars,” while AMPTP enlisted two former Capital Hill flacks to paint the WGA as what Patrick Goldstein in the Los Angeles Times termed “militant apparatchiks.”
For the 1,300 or so network-affiliated TV stations around the country, there is little recourse. Media General Group in Richmond, Va., owns and operates 23 of them. Steve Gleason, vice president of programming for Media General, noted that affiliates are locked into network agreements, so there’s not a lot they can do but ride out the strike.
Colleen B. Brown, president and CEO of Seattle-based Fisher Communications, said there are no contingency plans for a strike scenario. Fisher has 12 full-power TV stations in 10 markets.
“There is no normal course of action for something like this,” she said. “The last strike of this type was in 1988, and was in a far different media environment. Today, our audiences are used to more repeats and more reality shows than during the previous strike. Video streaming is in its infancy as a business model, but it appears to be driven primarily by TV content.”
Fisher stations will focus on local news while the networks cycle repeats while awaiting the Hollywood hatchet burial.
“As with any strike, we hope there can be a meeting of the minds sooner than later,” Brown said. “Disruption in the creative process and business cycle isn’t good for anyone.”
Broadcast networks have continued to dominate in ratings, even in a universe of several hundred cable channels, but the strike could erode their lead. A prolonged standoff may drive viewers to cable networks, which could cut further into a station’s set-aside inventory for make-goods, said Larry Patrick of Patrick Communications of Elkridge, Md.
“If the audiences start to sample other cable programming--and it is difficult to say when this will happen and to what extent it will--then the networks face a double-edged problem: Running out of original prime-time programming while having also to run make-goods to deliver the audience delivery guarantees that they have promised,” he said.
February sweeps are also “looming large,” he said. “The upfront and series development timeline is also going to be threatened if this strike goes another month.”
By most accounts, broadcasters have enough on their plates in the coming year, preparing for the 2009 analog shutdown. The outlook for revenues and sales multiples have nonetheless been considered healthy because of expected political spending.
Burt Sherwood, a station broker in Sarasota, Fla., says in the December issue of Television Broadcast that TV station business prospects for the coming year are great.
Later, as the strike dragged on, Sherwood said, “anything prolonged will kill a banner year in 2008, and both sides know it.”
The conventional wisdom in Hollywood is that the writers will cave because they are primarily working people pitted against corporate giants. Yet Goldstein said writers could take their skills directly to the Internet, which lies at the crux of the stand-off. Writers want residuals for programming repurposed on the ’Net; studios are shocked, just shocked, at the impudence.
“What’s to stop Google or Yahoo or Mark Cuban from striking a deal with a top TV show runner who has a proven ability to create characters and stories that would bring eyeballs to the Internet?” Goldstein wrote.
Further complicating matters are likewise negotiations between AMPTP and the Directors Guild of America, which are expected to commence any day and go smoothly, but preclude any progress between the writers and the studios in the meantime.
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