Pilot Error at Networks?

If the TV executives at the National Association of Television Program Executives (NATPE) conference left Las Vegas with anything last week, it was this: It's time to blow up the old financial model.

The clarion call came from NBC Universal President and CEO Jeff Zucker, who went on the attack against network TV's profligate development process. In a keynote speech that was at times intense and urgent, he advocated a radical reordering of the way NBC will—or, more accurately, will not—develop series in the future. The network will drastically cut back ordering pilots, and those lavish upfront parties might be toned down, too.

“Last year, the five broadcast networks spent more than $500 million—more than half a billion dollars—on development of new series, scripts and pilots,” Zucker said at the opening session at NATPE. “Some 80 pilots were made for next fall, or whenever the next television season begins. At most, eight of those series will return—1 in 10. And of those eight, none could be considered a big success.” The year before, out of about 120 pilots, 12 came back for a second year.

Echoing fellow network executives, Zucker said that they can no longer spend tens of millions of dollars every year creating dozens of pilots that will “never see the light of day.” NBC might still produce five or so pilots, presuming, of course, that the writers' strike ends soon. “In recent years, those pilots have become standalone mini-movies, costing as much as $10 million apiece to make,” Zucker said. “The problem is they're not even close to what the series will look and feel like. Why not have the courage of our convictions and orders series straight to air, just as we do now on the reality side?”

The broadcast networks, which rent out grand venues like Radio City Music Hall and Carnegie Hall to show advertisers snippets of new series on giant screens, might take a cue from cable-TV networks, which have modest upfronts and shoot fewer pilots.

As content migrates from TV sets to computers and cellphones, the economic model no longer works, Zucker concluded. The new technology still doesn't bring in the same cash, while networks are still spending hundreds of millions to produce 22 hours of primetime programming a week—even as viewership declines. “We can't be trading analog dollars for digital pennies,” he said.

His analysis, he acknowledged, may be a little more dire than others, because of NBC's descent from primetime dominance. “Sometimes when you're on your back,” he said in a question-and-answer session later, “it's easier to see the future.” (Some specutlate NBCU is ready to sell the network after the Olympics, and that Zucker is just clearing the books,)

But other networks are scrambling to reduce development and pilot expenses. CBS, blaming the writers' strike, says its needs have changed and because of time constraints, it probably will concentrate on fewer shows. Other major broadcast networks are coming to the same conclusion, though with a lot less flamboyance.

“In the current environment, we've been forced to take a hard look at our needs for the upcoming season, and as a result we're going to target a more focused range of projects,” Fox said in a statement.

ABC says it will trim its batch of pilot scripts in an effort to save costs during the prolonged writers' strike. In a statement, the network says, “The stoppage has caused us to re-evaluate our development needs, and we've made the difficult decision to reduce the number of scripts under consideration.”

CBS Paramount Network Television made a deal to order 13 epsodes of the police drama, Flashpoint, partnering with Canada's CTV and other Canadian producers, after the pilot was already accounted for. That might be a signal CBS is not only thinking outside the box, but outside the boundaries.

“This year's pilot season, at best, will be played out in a very compressed time frame,” CBS said in a statement. In this landscape, we are better served creatively, financially and strategically by focusing our development on a more targeted number of projects.”

After Zucker's speech, the NATPE crowd buzzed with reaction. And in other television circles, Zucker's words were music to some ears. “It's about time!” says Jon Mandel, a veteran buyer and former chairman of MediaCom U.S. who now heads a new unit at Nielsen called NielsenConnect; he says he made the same argument to Zucker a couple of years ago. Mandel says the upfronts and the pilots are largely a waste of time and money.

The pilot process, in particular, most agreed, needs fixing. Pilots are famously expensive—and misleading. The pilot for Bionic Woman, for example, was received enthusiastically by buyers, but it was much more costly and intricate than a typical episode. It began to fade quickly after its strong premiere.

Mandel says another studio executive once text-messaged him during a network's upfront presentation, telling him, “I figured out why you're the most cynical guy in the business. You must have seen 4,200 pilots that networks said were 'the highest testing pilot of all time.'”

In fact, Mandel says, in the 1970s, buyers at upfronts saw entire episodes. “It was about the show, not the shrimp,” he says. Now, buyers are making decisions on pilots “networks have spent millions on that the buyers haven't even seen beyond a snippet.”

Richard Leibner, head of N. S. Bienstock, a firm that represents news personalities, proclaimed in the hallway of the Mandalay Bay convention center a few minutes later, “It was like a thesis about what's wrong with this business. And for Jeff, it was his coming-of-age moment.”

To others, Zucker's speech and other networks' promises to belt-tighten are just a well-spoken empty threat. “I think each network is going to come out of this strike with a different philosophy of what to do,” said one top programmer. “But I do believe at the end of the day it will back to business as usual much quicker than anyone is willing to admit publicly or even to themselves. They buy everything, and they spread themselves out to the point where they can't create success. They're just managing failure.”

One reason network chiefs can't help themselves from returning to high-spending habits is that it's easier to pick a hit from a bigger group of contenders. Like a lottery winner looking for a prize, network chiefs, in effect, buy as many tickets as they can. Only in recent years, with splintering media choices, rising production costs and a more fickle viewing public, has cost-cutting been considered.

Zucker says the strike only served as a “catalyst” for his current thinking. He compared the strike to a forest fire, which he says, has “devastating consequences,” but because it's part of the natural cycle, stimulates new growth. “It would have been a lot better if there had been no strike,” he said carefully, “but maybe what we are going through now is our industry's version of a forest fire...But if we are very lucky, it may very well leave behind fertile soil, clear ground and the opportunity for robust growth.”

There were skeptics who wondered if all Zucker may have been doing was posturing and promising a change in attitude the business can't deliver. In October 2006, NBC and Zucker led a cost-cutting restructuring, “NBCU 2.0,” aimed at reducing costs by $750 million in part by trying to air reality shows and less expensive fare in the first hour of primetime.

“There's an enormous amount of fear in people in those positions,” said one executive. “If you just do the math on how many pitches come in, how many scripts are made, how many pilots are made and how many shows we eventually put on the air and how many of those shows fail, you very quickly realize that the process is about failure, not about success.”

With additional reporting by Marisa Guthrie