What’s all this talk about the struggles of the TV industry?

Sure, ratings were down again last season. Screenwriters walked off the job, and while they eventually settled, the actors may be next to strike. No new shows really caught fire, and that Web thing sure does seem to be stealing advertising dollars. Then there’s $4/gallon gasoline, a housing slump, job losses — which all adds up to a generally lousy economy.

And yet… the upfront market looked pretty strong. Last week, NBC gave an early indication that the market was healthy and moving more quickly than expected as reports surfaced that it had booked deals worth about $1.9 billion, with prices up by mid-single digits to high-single digits on a percentage basis.

Yesterday, word spread that ABC’s prices were up about 9 percent and CBS landed gains of 7 percent to 9 percent. Fox is believed to have done even better.

So what happened? The general consensus is that advertisers are worried about the economy and thus have turned to what they know best — the good old TV.

“In tough times, I think advertisers gravitate to what they know,” Andy Donchin, director of national broadcast for Carat North America, the ad-buying arm for media firm Aegis, told the New York Post. 

Or as one ad buyer told ADWEEK: “When national advertisers looked at their media plans to determine what worked most effectively, the bottom line was that it is television, particularly broadcast television.”

AdAge also points out that advertisers wanted to lock in prices out of fear that rates could be higher in the spot  — or scatter — market come fall.

What’s more, the TV networks “would rather have the money upfront, and they’ll play the scatter game later,” said Ed Atorino, a media analyst with The Benchmark Co., told AdAge.  ”What advertisers are doing is locking in, [but] by taking it out of scatter, they’re leaving a potential hole in the market.”

Keep an eye on:

• A joint venture made up of six of the leading cable companies is expected to announce that it has completed its long search for a chief executive officer, naming former Aegis Group executive David Verklin to the post. (WSJ.com)
•  Screen Actors’ Guild leaders declared war on another actors’ union, increasing the odds of new labor trouble in the entertainment industry. (NY Times)
• Paltalk is releasing a version of its multi-person video chat service on the Web in beta. It is called Paltalk Express and will allow thousands of people to participate in a video chat session at the same time. (TechCrunch)

(Photo: Reuters)

TV strike? What TV strike?

Seems that Fox survived the 14-week writers strike, and arguably thrived if you stack its prime-time ratings up against major broadcast networks. It has  finished the season as the undisputed ratings leader for the first time, thanks to a combination of the Super Bowl and that little talent show known as “American Idol.”

Sure, “American Idol” ended its latest run with year-to-year declines in both overall audience and ratings for viewers aged 18 to 49 – and the show notched some record ratings lows this season. But let’s be honest here, it’s coming off pretty tough comparisons.

Even if the talent show is fading a bit, the network has built a strong supporting cast around “American Idol,” one that includes “House,” “Bones,” and “24,” which will be back next year after the strike kept it off the schedule this season.

Simply put, Fox is dominating right now. As per usual, it winds up the season as the most popular network with young adults, but now, for the first time in its two-decade history, it also wears the crown of the most-watched network in prime-time. CBS had long owned that title.

Not that Fox is free and clear. In a year when the five largest English-language broadcasters — ABC, CBS, NBC, Fox and the CW — ended the season down 10 percent collectively among young-adult viewers and 7 percent in overall audience, everybody in the industry is worried. Fox is just a bit less worried.

(Reuters)

 Keep an eye on:

• Yahoo has nominated nine of its 10 existing directors for reelection to the company’s board.

• Why hasn’t online online video advertising taken off as quickly as many expected? Executives attending the Reuters Global Technology, Media and Telecoms Summit this week cite inexperienced creative and sales staff and fear of the unknown among the roadblocks for online video advertising (Reuters)
• Steven Spielberg’s fourth “Indiana Jones” installment is one of the most highly anticipated films of the year – one that many in Hollywood hope will revive a sluggish box office (Reuters)
• The leading contenders to buy the Weather Channel in an auction are Time Warner and a partnership between General Electric Co’s NBC Universal and Blackstone Group LP, people familiar with the auction tell The Wall Street Journal.

(Photo: Reuters)

Take that Google!

Microsoft, in a bid to win share of the search market from Google and Yahoo, now plans to offer a new “cashback” service that provides a rebate when users buy something they found searching with Windows Live.

Chairman Bill Gates’ announcement of the rebate plan is the latest loud and clear sign of how much importance Microsoft is placing on advertising. (It apparently has been in talks with a company named, ummm, Yahoo, about just this).

“This is giving you a reason why you should use a particular search engine,” Gates said at the company’s Advance 08 advertising conference.

At first glance, it seems like a sound strategy, particularly given the timing of the initiative. Consumers could soon be facing $4/gallon gasoline prices, food costs have jumped and the overall economy still looks glum. If ever there was a time when people wanted coupons or rebates, this would seem to be it.

This alone isn’t going to close the gap with Google in the search department, but for a company that is facing a long road in catching up to the market leader, it just may be a step in the right direction.

Keep an eye on:

• David Cook won the coveted title of “American Idol,” dealing an unexpected but decisive defeat to a silken-voiced teenager on Fox’s blockbuster TV show (Reuters)
• Advertising on mobile phones has enormous potential to become a significant platform for marketers, but any breakthrough is years away and major operators must work together to succeed, executives said at the Reuters Technology, Media and Telecoms Summit (Reuters)
• With movies getting more costly to make and market, Hollywood is increasingly using release dates that have worked in the past to launch movies with the same genre, star or filmmaker (LA Times)

(Photo: Reuters)

So Microsoft is now proposing a new deal: This one could be some sort of partnership or joint venture for search-related advertising to take on Google Inc, the New York Times reports.

Just one problem. Carl Icahn doesn’t appear to be hot on the idea. Reuters, citing a person familiar his with the financier’s thinking, reports that this latest talk about an partial Microsoft-Yahoo alliance could prompt the billionaire investor to press Yahoo to further pursue a deal with Google.

“Microsoft is trying to get the milk without buying the cow, and if you look at Icahn’s history, he has never been used that way,” said this person. “He does not want to see Yahoo pushed into some joint venture with Microsoft and is not going to be used to push Yahoo into it.”

Icahn launched a proxy campaign last week to replace Yahoo’s board, saying it acted irrationally in refusing Microsoft’s $47.5 billion bid.

Icahn’s presence further complicates the Yahoo situation. He’s accumulated 59 million shares and options in Yahoo and has the support of Paulson & Co, a $30 billion hedge fund that has amassed a 3.4 percent stake in Yahoo, and other investors upset by the board’s handling of negotiations with Microsoft.

That gives Icahn a lot of pull in Yahoo’s future, whether that’s alone, with Microsoft, with Google, with whomever — yet a source tells Reuters that Microsoft hasn’t held discussions with him.

Maybe Microsoft and Yahoo want to pick up the phone and give Icahn a ring.

Keep an eye on:

• Facebook founder and CEO Mark Zuckerberg is stressing his company’s independence after a report that the social networking site might be sold to software giant Microsoft, which is hunting for ways to beef up its Internet business (Reuters)
• Fox Networks is launching an international online ad network focused on financial news and advice, with help from the Wall Street Journal Digital Network (Reuters)
• Leading U.S. cable television chiefs say the industry has been “recession-resistant” in spite of fears that it would be tripped up by the housing market downturn and slowing U.S. economy (Reuters)

Tired of all those commercials? Don’t have a DVR? Fox reckons it has something for you. Forget the name (they’re calling it Remote Free TV) and concentrate on the concept: a big tentpole drama with half the normal commercials and promotional time.

Fox will first try out this idea with “Fringe,” an FBI, mystery, science-fiction, thriller, supernatural drama from J.J. Abrams that’s rolling out this fall.  Come midseason, it will do the commercial shrinking thing with ”Dollhouse” from Joss Whedon, who was behind teen supernatural hit “Buffy the Vampire Slayer.”

Fox Entertainment Chairman Peter Liguori — after calling his network scrappy and populist — told advertisers at the upfront that he refused to let things get boring. “We’re the number one network. We’re the rebel innovators.”

Here’s his plan: “With both of our scheduled dramas of the season, we’re going to try something different, something a little unusual. We are going to redefine the viewing experience. All season long we’ll air these two series with less commercials, less promotional time, and above all, less reason to grab the remote and change the channel.”

What’s that mean? ”These two series will run with half the normal commercial and promotional time all season long,” he said. “Some people might think this is a scary financial prospect. We really see it as an investment. We need to give viewers a new reason to come to broadcast TV.”

Sure, viewers may love it. We’ll see what advertisers have to say. 

(Reuters photo of Peter Liguori)

For years we have interviewed media analyst/newsletter editor/industry maven Jack Myers about the television upfronts. We have tried to track him down at upfront parties, cocktail napkin in hand, to get his initial reaction on the new shows trotted out by the networks while he talks to the most senior executives. We have written up his forecasts and predictions on how many billions of advertising dollars the nets will say they have booked.

And now, in what may be the most definitive sign that more than 50 years of upfront fanfare has come to an end, Myers says he will no longer prognosticate on their outcome, according to an e-mail newsletter sent round today:

This year, I am not offering predictions nor will I report after-the-fact on network Upfront revenues. The Upfront is no longer a representative indicator of network performance and the information released by the networks is, at best, questionable. If a network ever actually reports poor performance in the Upfront, then we can be assured it was a disaster.

The change of heart makes sense given the total overhaul of the television industry. Networks are selling more and more advertising for shows not only when they appear on air, but on the Internet as well. A television writers’ strike over the winter that brought pilot production to a standstill means they have very few shows to preview to advertisers this year. The introduction of a new ratings system to account for DVR use has wreaked havoc on the numbers used to set advertising rates.

And of course, there’s the economy.

But we are definitely sad to hear this from Jack, whose predictions were so on target:

My own performance has generally been on-the-money, although last year I believed the market would be considerably softer than it, in fact, turned out to be.

Aside from the specific revenue forecasts, Myers does give general conclusions about the state of upfront negotiations. Based on his talks with industry leaders, he sees a reasonably quick haggling season that should end before the July 4 holiday weekend. He expects the networks to boost their CPM pricing and incremental revenue from their new digital distribution models.

(Photo: Reuters / ABC’s “Desperate Housewives” at the more festive 2007 upfronts)

One thing you can bank on next week is that the TV networks won’t be showing off dazzling pilots of new shows at the upfronts, as we highlighted in a preview.

Executives have made no secret of the fact that pilots are costly, and, it seems, not all that useful. Already, NBC previewed their season with little more than a few very, very short clips. CBS, ABC and Fox aren’t expected to offer a whole lot more.

So what do advertising buyers think of this brave new world without pilots? Are they and their clients comfortable shelling out big bucks without seeing a full episode of a new comedy or drama.

Here’s what several had to say on the subject:

Aaron Cohen, Director of Broadcast at Horizon Media:

It worries me, but it’s similar to when replacements are made for programs that aren’t working.

It hasn’t been for a while that you’ve been able to lay down a schedule and say ‘This is what I’m buying and it’s going to be there for four quarters.’ You know you want to reach this particular demographic and you know they have an affinity to watch these forms of programming more than others. That’s what you’re looking for.

   
Stacey Shepatin, Senior Vice President, Director of National Broadcast at Hill Holliday:

It always makes you feel better when you can see the full pilot. The goal will be to be able to see a full episode to make sure that it is appropriate for our brands, there are no content issues and the storyline fits with what our consumers are looking for. So that will all come into play when we look at what shows to purchase.

You’re not going to just run blindly into something, you’re going to want to see what the production quality is, what the storylines are, all of that.

Donna Wolfe, Chief Negotiations Officer at Universal McCann:

The interesting thing is for years we were able to view new pilots. but the failure rate for new shows was extremely high. On average, 70 percent of the new shows fail. All the testing that the networks do, and all the pilots, it doesn’t necessarily spell success.

But I think we have to be comfortable that the content will be appropriate for our clients. It’s in their best interest and the network’s.

(Photo: Reuters)