The New Deal

With the 100-day-long strike over, networks race to salvage the season and search for new ways to do business
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When the Writers Guild of America brass recommended on Feb. 10 that members vote to end the 100-day-long strike, it snapped the television industry back to work.

Networks and studios scrambled to salvage what they could of the 2007-08 television season, and at the same time rushed to figure out how to develop and plan for the fall of 2008 despite the late start.

The new deal, approved by 93% of the voting membership on the night of Feb. 12, raises the pay for writers and compensates them for shows aired over the Internet and portable devices. The agreement, comparable to the deal struck by the Directors Guild of America last month, was outlined to union members over the previous weekend at meetings in Los Angeles and New York. It gives writers pay increases of up to 3.5% a year. In the third year, the writers get 2% of the advertising sales received by networks for shows streamed on the Internet.

The industry won't know for a while which side got the better deal. But in retrospect, most everyone agrees that the imbroglio should be a lesson to remember when negotiations come up again in three years.

For now, the TV writers and the networks are forced to scramble to prove themselves to advertisers in May to keep the $9 billion in upfront money flowing into broadcast network coffers. More important, they'll have to prove themselves to viewers, including those who strayed from TV altogether during the hiatus of big shows.

How the Deal Was Done

The WGA went on strike Nov. 5 but talks to end the walkout broke down in December. A script of how the strike would play out began to come together by early January. Some even mentioned mid-February as the most likely time to bring the drama to an end. The predictions came based on how long it would take for the AMPTP and the Directors Guild of America to get their deal done (it was completed Jan. 17), coupled with the fact that Feb. 15 would allow for the Oscars to go on as planned. Mid-February would also allow networks to bring back many of their shows for a late-season push, and a development season, albeit abbreviated, to take place leading to an upfront selling season.

Both sides acknowledge the timing was right, but it also took a re-shuffling of the personalities involved. AMPTP chief Nick Counter and WGA West Executive Director David Young had been working on a deal since July 2007, an icy relationship that bred little progress.

But recently, when Disney’s Bob Iger and News Corp.’s Peter Chernin got involved directly for the companies and the WGA brought on attorney Alan Wertheimer to represent them, strong stances on several issues began to soften.

Much of the framework for the final agreement was hammered out at a Feb. 1 meeting at the Luxe Hotel in Los Angeles.

Both Sides Claim Victory

In Hollywood, image is everything, so of course each side made enough room for the other to claim victory.

Once the DGA deal was done, the WGA could not look like it was bullied into taking the same deal. It was important that many believed—whether true or not—that the DGA deal wouldn’t have been done so quickly and the directors wouldn’t have obtained gains in their contract without the writers’ strike.

The WGA deal built on the DGA deal, and both sides had their wins. For the WGA, it got a flat-rate residual ($1,200 per hour) for shows streamed online during the first two years of the deal, but the real win was a precedent-setting 2% of revenue in the third year of the deal.

The WGA also got jurisdiction for shows created for the Web, and doubled the residual rate for projects sold through online.

The media companies shot down the WGA demand for jurisdiction over reality and animation, which WGA West leader Patric Verrone called “personally heartbreaking.” The companies also held onto a lengthy promotional window to stream shows online before residuals to writers kick in.

Salvaging the Season

Once word began to spread in early February that a deal was imminent, the networks quietly began preparing to ramp up production on hit shows such as CSI, Grey’s Anatomy and The Office.

Last week, networks began selecting exactly which shows would return this season for five to eight episodes, which would return next season and which ones would never come back.

Many big hits aren’t coming back this season due to creative or other challenges. Heavily serialized shows like Fox’s 24 and NBC’s Heroes won’t be back on the schedule this season. There are also many less-watched shows that the networks won’t bother ramping back up until next season (like NBC’s Friday Night Lights and CBS’s Cane), if at all.

Networks also are considering airing originals past the traditional May close to the season. “Now it’s going to be a whole lot of what do we have, how many can we get and how can we build some sort of a schedule through the rest of the season and maybe into the summer,” one network programming executive said the week before the deal was cut.

August will force creative decisions from the networks, with NBC set to air the Olympics from Beijing. The network will inevitably begin programming right out of the Games to leverage their promotional power. Other networks, such as Fox, that are accustomed to launching shows before the September rush will have to decide how they want to counter-program.

Network executives say they expect some networks to air originals into June, and then step aside in July and most of August as usual.

Cable Takes a Hit As Well

But even bleeding originals into June steps on the real estate now owned by cable, which runs many of its big hitters over the summer.

The cable nets that rely on scripted series were obviously hurt most by the strike. But had the strike dragged on much longer, many wouldn’t have had time to get their pricey scripted shows written and on TV by the summer months and could’ve been robbed of ad dollars.

Most scripted cable summer shows had to push off production—some, like TNT’s The Closer and Saving Grace, by just a few weeks; others, like Lifetime’s Army Wives, for months. Other high-profile delayed shows include USA’s Starter Wife; FX’s It’s Always Sunny in Philadelphia, Damages and Rescue Me; and Sci Fi Channel’s Eureka.

With some hustling to make up for lost time, TNT, Lifetime and others are putting their series into production immediately and aiming for premieres this summer, if a week or two late.

Other networks like HBO decided to hold off on shows they’d been eying for summer, such as Entourage, Big Love and new vampire series True Blood. The network will use the summer to run its Marines miniseries Generation Kill, which was ready before the strike.

Many other networks had similar strike-induced plan Bs ready. ABC Family, for one, acquired a Canadian comedy, Sophie, to run if it wasn’t able to produce shows of its own. The network will now likely have enough time to get supernatural drama Middleman, the front-runner of four pilots it’s considering, on TV for summer. It’s also sitting on six scripts it bought from 7th Heaven creator Brenda Hampton, and may ready those or its Samurai Girl pilot for summer as well.

A few, like Showtime, were not affected. One of its series, Weeds, was able to begin production with a waiver for its studio, Lionsgate.

Development Season Sprint

With months of the annual development cycle lost to the strike, the networks will now launch into a mad scramble to find new product. Not only is there less time, but there are fewer scripts to choose from after ABC, CBS, The CW and Fox collectively dumped about 100 scripts in January.

The shortened development season will lead the networks to order far fewer pilots, which is where they say they want to take development anyway. Networks would like to try and develop shows more through cheaper presentations (mini-pilots of varying length) or just order series off scripts or formats.

For instance, a well-produced pilot such as Pushing Daisies or Heroes runs upward of $7 million. A presentation can cost a quarter of the price. And it’s long been known that a series seldom looks like its pilot due to the time and money put into that initial episode.

The networks are also looking at other English-speaking territories to adapt scripted shows, which makes it easier to order straight to series, as NBC did with Kath & Kim from Australia and CBS with the Canadian Flashpoint.

But especially in a hurried environment, sticking to a new and more responsible way of doing things is easier said than done (see Left Coast Bias, page 8). “I can already feel the resistance to trying to do things the new way,” says one network chief.

Being Upfront With Advertisers

Once the networks decide which shows will air, they’ll promote them relentlessly in the upfront selling season, which despite all the hand-wringing over waste and cost, won’t look that different from years past. The networks will cobble together fall schedules of new and returning shows, and advertisers—as guilty of inertia as TV execs—will probably spend at pre-strike levels (more than $9 billion in the upfront) once again.

“We haven’t lost confidence in network television to build reach,” says Shari Anne Brill, senior VP and director of programming at Carat. “And when those shows come back, people will be there.”

Some networks are already vowing to trim upfront costs. NBC has likely nixed the traditional Radio City show, though a senior executive said a road show to advertisers around the country may not save that much money. CBS said last Thursday it will still present its upfront in May at Carnegie Hall. Fox, ABC and The CW will hold upfronts, though the presentations could be scaled back.

Last season, networks began offering TV shows free online with unskippable commercials. They are likely to do even more of that next season, and are working with advertisers to find ways to incorporate messages that go beyond embedded pre-roll and post-roll.

“You know you’re engaging the person who is looking at [the commercial message] on a one-to-one basis, especially if they can’t fast-forward through it,” says Aaron Cohen, chief media negotiating officer at Horizon.

Actors Next?

As the television world returns to normalcy, there is one question on most everyone’s mind: What will happen with the Screen Actors Guild agreement? The contract for SAG, which stood alongside the WGA in its walkout, is up on June 30.

Additional reporting by Anne Becker and Marisa Guthrie

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