Down Low on the Up-Fronts

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I'm Matt Holzman with The Business Brief, a guide to what's happening in and around the business this week.

I once saw a motivational poster in an in-flight catalog that had a picture of butterfly and it said "change is the essence of life. Be willing to surrender what you are, for what you could become." I'm guessing that the TV networks don't have that catalog on their executive jets.

Certain things have remained the same in the TV business for decades even though the original reason for doing them no longer exists. Like the idea of introducing new shows in fall. When the networks relied most heavily on the car makers for ad revenues, the roll-out of new shows coincided with the roll-out of the new car models.

Even the nature of car advertising changed years ago, and even though broadcast TV audience is shrinking and so is ad revenue, the TV networks fall roll-out has not changed.

Ratings are down, revenues down, and yet they keep doing the same thing over and over.

Luckily for them, change is the silver lining TV got from the cloud that was the writers' strike. Because many TV pilots weren't completed before the up-front ad sales extravaganzas, the networks had less to show potential advertisers. That forced the whole bacchanalia to be toned down a bit.

The up-fronts are smoke and mirrors anyway; the idea that Proctor & Gamble is going to commit millions because a brand manager shared rumaki with Christina Applegate always seemed like a bit of a stretch to me.

Shockingly, some within the industry agree. At the annual confab of TV executives in January, NBC president Jeff Zucker said the networks "can no longer spend millions putting on upfront presentations that are really aimed at a half a dozen influential media buyers."

But Mr. Zucker is still missing the point a bit. The issue for networks isn't as much about the cost of the up-fronts but the cost – financially and creatively – of pilot season. Now I'm not talking about whether to make pilots or go straight to series here – that's a whole other mishagoss – I'm talking about a season where pilots get made.

The networks normally sell something like 75% of their prime-time ads during the up-fronts. That means they have to have a lot of product to show to advertisers. And that means a lot of TV shows are being made all at the same time. The result is two-fold. One, the networks have to fight over the same talent pool – and they end up paying way too much for ideas and the hottest cast members, writers and directors. And second, production schedules are awfully tight. They can go from choosing wallpaper for a set to actually having a show in the can in under eight weeks.

For their part, the advertisers may have liked the glitz and glamour of the up-fronts, but they never really made much sense from a business standpoint. Betting on untested shows was a huge gamble. Especially because in the star-infused, shrimp- and Champagne-fueled circus of the up-fronts, even the crappiest shows could seem like Emmy bait. NBC reportedly brought in $2.9 billion during the up-fronts in 2004 largely because of the hype about over Matt Leblanc's post-Friends sitcom; Joey went on to die a painful death just 22 episodes later.

But advertisers had to throw the dice; not buying up-front meant they might get locked out of the most popular shows and end up paying premium prices on the spot market.

So, why haven't the networks switched to year-round development? Well, partially because of the Joey phenomenon. After six months on the air, they couldn't have given away air time on that show. But at the up-fronts before anyone knew how it would do, they got a ton.

But the price of doing things the same way has just gotten too high. In the past decade, the quality programs you find on cable have started to eat the networks' lunch. And cable's been able to create quality programs at a reasonable cost partially because they don't have a pilot season.

Up-front spending has been declining because of falling ratings. A number of large advertisers have refused to play the upfront game in the last few years. The writers' strike has pushed the networks in a direction they needed to go. With so much less to lose, we'll see if some network chief can play the part of the butterfly and surrender what the broadcast TV ad model is, for what you could become.

For KCRW, I'm Matt Holzman and that's The Business Brief.



Matt Holzman