Jack Myers' Think Tank: Advertisers and Agencies Meet with Writers As Long Strike Seems Pre-Ordained

Direct deals between advertisers and writers are in the works, and members of the Writers Guild of America have been meeting with media agency executives this week on fact-finding missions and to clearly outline their negotiating positions. According to multiple media agency senior executives contacted by Jack Myers Media Business Report, the meetings have been productive and have clarified the writers' stated positions that:

 

  • "Throughout negotiations, the AMPTP has made the same unreasonable offer on New Media residuals over and over again (1/3 of a cent on the dollar), giving it different names and mathematical configurations but never truly improving on it, despite the multiple counter-offers, flexibilities, and restructurings we have proposed.
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  • "The AMPTP's stridency at the table -- combined with its public reassurances to the business community -- suggest it is not truly motivated to make a deal soon and could let the strike drag on, to the detriment of WGA members, industry employees, advertisers and consumers.

     

  • "The WGA has every motivation to reach a deal and remains ready and willing to negotiate."

    I have consistently pointed out that the networks and studios have little economic incentive to settle the strike, and writers now believe they have common cause with advertisers and agencies to push for more active negotiations. "Ultimately both sides need to be together in a room and both sides have to be willing to communicate and exchange ideas," commented Rino Scanzoni, Chief Investment Officer for Group M North America, the largest purchaser of network television commercial time.

    Sarah Fay, CEO of Carat U.S. and Isobar commented, "The strike is a huge issue for advertisers. It seems like the networks are intent on burning their own house. And ours! Not only that, but it also appears that the industry press, and of course the news channels, won't cover the writers' side fairly because of politics. They are now talking to people like me because they want us to know how dire the situation is."

    The writers have become increasingly frustrated by what they perceive as intransigence by the AMPTP (Alliance of Motion Picture and Television Producers). And while the WGA has complied with certain requirements demanded by the producers, they have a long collective memory of 1988 negotiations when they accepted concessions related to DVD residuals and, as a result, set back the writers' participation in a huge revenue stream. As a group, they appear dedicated to avoiding a repetition of past history and are unlikely to return to work with the short-term fix that some industry observers anticipate will be offered to them. "If there is a legitimate offer for new-media payments, all else can quickly be resolved," suggested a writer who does not represent the WGA negotiating committee.

    In response to the AMPTP's negotiating stance, the WGA has retained political crisis consultants Fabiani & Lehane, which has strong ties to Democratic politicians and refers to itself as "the masters of disaster."

    In the interim, "Family Guy" creator Seth McFarland has contracted with Google to develop a series of sponsored five-minute mini-programs. Rather than residuals, McFarland will retain 50% ownership of the copyright. As the strike drags on, we can expect to see more unconventional content solutions to satisfy the hunger for scripted programming. Miller Beer is reported to be talking to late night TV writers about a talk show for online and alternative distribution. One writer who is aware of the discussions believes the strike is "fostering a new era of direct relationships between the writing community and advertisers." Broadband video content companies Worldwide Biggies and Next New Networks are ramping up their production to capitalize on the suddenly available audiences and writers.

    While Scanzoni acknowledges "there are some huge issues on the table, other than putting pressure on TV networks to continue the dialogue, there is little advertisers and agencies can do." While he believes the strike is not good for advertisers, he admits, "If it kills the traditional fall season we will all be in better shape. With 100-plus channels and so many choices, not a lot of shows get traction. We have to move to an ongoing process of putting shows on the schedule and promoting them. [If we are able to do this] it will reduce the costs of production." In the short term, though, Scanzoni argues, "If they don't get going and there is no product on for this fall season, it will be a challenge for the networks to get viewers back and it can [permanently] change viewing patterns. It's not good for our business. We need dialogue and exchange."

    As I have reported previously, if the strike continues past mid-January it is highly unlikely there will be a traditional fall TV season and there will be little for networks to present during the traditional May upfront presentations. However, says Scanzoni, "a continuing strike won't preclude our ability to structure long-term agreements with the networks. There is still cable and other dayparts, plus," he laughs, "even in prime time, once we're out of the fourth quarter, you don't know what programs you're buying anyway. The upfront is a futures GRP [gross rating points] market. It will be delayed and more complex but it can be sorted out. Clients and agencies will look to continue with their long-term investments [in network television]."

    It's this reality, among many others related to the high risk of network programming investments and increasing production costs for hit series, that translate into the producers' "intransigence." The inherent conflict between the best interests of the studios and networks and those of writers, actors and directors create a scenario in which the strike is likely to stretch well into next year. However, that same scenario could result in a realization that hard-line positions are untenable and could cause AMPTP to moderate its position if negotiations resume in earnest in early January. But insiders on both sides are convinced the strike will last at least into March.

    When the strike does settle, it will most likely result from one-on-one conversations between individual writers and individual network and studio heads. Committees, one industry leader pointed out, rarely produce anything constructive. There's a lot at stake and no one is willing to publically change their position. One-on-one discussions offer more opportunity for common ground and once you define a framework with one party, the group can move toward consensus.

    Although both the Association of National Advertisers and the American Association of Advertising Agencies have been approached by writers' groups, neither have scheduled meetings (although the 4As appears willing to meet). If advertisers and agencies begin cutting direct deals with top writers, and advertisers place some form of economic pressure on networks, which is unlikely, there may be some movement by networks to advance a more moderate position. But as of now, it looks like it will be a long time before our favorite programs will return. When ABC's eight episodes of "Lost" begin their run early next year, savor each precious moment. "Lost" might be the last of the great network event series for a long time to come.

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