Each year the networks rake in more dollars during the upfront, while the pickings get slimmer. What exactly are media buyers buying?
If a group of media professionals from another planet (planners are from Venus and buyers are from Mars?) descended to earth to scarf up some free shrimp at next month's network upfront presentations, they might be forgiven for scratching whatever it is they scratch. To an outside observer, the upfront—not to mention the primacy of network prime time in the television business—is a curious thing that gets curiouser every year.
In what other business do customers line up to pay more and get less? This is a simpleminded observation, beloved of simpleminded cable sales execs. Network CPMs have marched upward for years (excepting one off season or two), even as cable as a whole has surpassed network prime time in audience share. Yet advertisers continue to shovel dollars into the maw of network prime time, which rakes in perhaps $9 billion of the $26 billion TV ad pie. Despite a blah economy and the uncertainty of war, there is plenty of talk that this will be yet another very healthy upfront for the nets.
But there is another discomfiting wrinkle. Prime time has been overrun by reality programming, much to the chagrin of the many advertisers skittish about associating their fine products with humiliation and titillation. With several new reality shows going down in flames, the nets are now talking ever so sincerely about the importance of scripted programming. No doubt they will present schedules next month chock-full of the hilarious comedies and searing dramas that advertisers crave.
And there is no doubt what to expect come the November sweeps and next January: more reality Band-Aids.
"It is so transparent now," says one veteran buyer. "The nets are afraid to show that hand in May while the clients are sitting there. But it's a helluva lot easier to take a makegood in reality than to buy it up front. It is more and more a game of bait and switch."
The advent of reality has highlighted what is arguably a lull in the scripted form. Certainly, comedy is in crisis. Friends and Frasier are heading into their valedictory seasons, while Drew Carey is an albatross around ABC's neck and Jim Belushi qualifies as a comedy star. ABC's 8 Simple Rules for Dating my Teenage Daughter and CBS' My Big Fat Greek Life draw decent numbers, but can anyone get excited about showing them to a client?
Drama certainly is healthier, though CBS' CSI: Miami and Without a Trace are solid performers more than breakout hits. The only scripted "watercooler" show to emerge this season is Fox's 24.
Do not adjust your sets—something is definitely wrong with this picture.
The reality of television programming
Reality series represent an amazing six of the top 10 shows in adult demos this season, but observers label this as the genre's high-water mark. "It's already oversaturated and they're starting to pull back," says Steve Sternberg, senior vp at Magna Global USA, citing the failure of Married by America, The Family and Are You Hot? "Unless it's a Survivor or American Idol, the nets can't get their money back because there are no repeats and no back-end [syndication]. Reality is a short-term fix; you've got nothing left when it's over. The nets need scripted shows to build their brands. You'll have Survivor and American Idol and a few other successes, but the rest aren't fooling people. How many Are You Hot?s can you put on?"
"The nets amply realize that the miracle cure of reality programming has barely masked the crippling disease of failed scripted programs," says John Rash, senior vp at Campbell Mithun. "All of the nets seem aware of the impending boredom with and backlash against reality, and they are reinvesting back into scripted programs, which are the backbone of their business."
Jordan Levin, president of entertainment for the WB, has been quite judicious with reality, and he believes the genre has wreaked untold havoc at the nets. "Reality has driven up the cost of scripted programming by reducing the profitability of repeats—you have lower ratings and fewer time periods to run them in," he says. "There's an original program push every night and there's much greater schedule churn, which means more marketing costs. Reality creates a very reactionary scheduling environment—you make short-term moves because of the short production cycle, and everyone reacts to blunt it. I think all this churn creates a fundamental mistrust with media buyers and ultimately destabilizes the viewership base."
Mike Shaw, ABC's president of sales, adds: "If a time period isn't working, we make a change and incur the expense of trying to fix it. We've tried a lot of reality this year, looking for something that clicked. But we don't plan on having more than an hour or two of reality on the schedule this fall—our programming guys were very upfront about that. We have eight comedies on now and we'll announce 10 in May. And I don't believe we'll back up those sitcoms with reality; that's not the direction we're going in."
"The success ratio in scripted programming is two out of 10," says David Poltrack, CBS' executive vp of research. "When reality came in, it was instant gratification—Who Wants to Be a Millionaire, Survivor, American Idol—and people thought, Wow, this genre's breaking the rules. Guess what? We got the two hits first. Now the pattern's becoming scripted programs in the fall and try out reality in the summer."
Reality has made media buying more complicated because so many advertisers are wary of its raunchier iterations. "Second-tier reality probably does have less demand than a repeat sitcom," Shaw acknowledges, "but we have content issues with a number of vehicles."
"Yeah, some advertisers have concerns, but on the other hand, reality has helped stem the flow of audience to cable," says Steve Grubbs, chief executive of PHD USA. "For some people, [reality] is a great deal—it'll help drive down their costs. For those who are very picky about their environment, it's a problem, and the weight is on the side of those looking for an environment they are proud to put their creative in."
"Reality was a dirty word six months ago," says Tim Spengler, executive vp at Initiative Media. "But you can't paint every show with the reality brush; people have become more discerning. Some of these shows are light entertainment that deliver a young audience, and advertisers have become more comfortable with them."
Has the rise of reality changed ad spending? "It affects the market to the extent that certain advertisers choose to stay away from some reality programming," says one top agency media executive. "The longer the list of shows we don't want to buy, the more pressure there is on pricing [for scripted shows.]"
"I think you'll see a variety of pricing structures," says a cable sales executive. "If you won't take any reality, you pay a huge increase, and if you're willing to take some, you may get a wonderful deal. You'll see a lot of caveats on deals. All I know is, I'm going to be undersold for the second half, so when clients don't accept those [midseason] reality shows, I'll take all that money."
"If we don't like the makegoods, we don't take 'em," says Grubbs. As for the shell-game element of replacement shows, he notes, "It's always been that way. Maintenance is a big element of what we do, and now more than ever."
One top buyer contends the nets were able to play their shell game this year "because the market was so strong. They said, 'You can take your money back,' knowing full well there was nowhere else to go. In a softer market, ABC can't just preempt half its schedule because we can just go over to CBS. They got away with it this year, but next year, we'll see."
Watercooler hits outside of reality may be thin on the ground, and some perceive a decline in network quality, particularly in comedy. "It is alarming that there are so few hit comedies," says Spengler. Observers ritualistically cite The Cosby Show as the hit that reignited the D.O.A. genre two decades ago, but the world has changed. "If a Cosby came along today, I'm not sure it could do that anymore," says a cable executive. "It's much harder to have anything break through simply because of the sheer weight of choice."
"Do I think it's dismal? Sure," says one packaged-goods client. "Because of the lack of watercooler shows, it's easier and easier to walk away from prime time as a centerpiece. You do pull back [in the face of rising prices], but you also have to look at where your competition is and to the extent you can participate, you do it." A show like 8 Simple Rules might not be a comedic watershed, but media execs offer no apologies for buying it. "TV remains a viable viewing democracy," says Rash. "If 50 percent of women 18 to 34 choose to watch Joe Millionaire, all the bad reviews in the world will not transcend its ability to speak to vast numbers of people."
Do "quality" shows receive a premium? "A show with both mass and class like The West Wing in its prime is handsomely rewarded," Rash replies, "but advertisers have never overly rewarded superbly crafted TV for its own sake." Modestly rated critics' darlings such as American Dreams, Alias and the now- departed Once & Again have been buyer favorites, but any quality premium "has as much to do with the quality of the audience," says Rash.
"Hogwash," says Sternberg at the notion of a dip in primetime quality. "OK, there's been a lull in comedy, but that happens. 8 Simple Rules isn't Daddio either. You're thinking of Seinfeld, Friends and Cheers without remembering all the junk. And look at all the dramas on the schedule; I'd put 'em up with any list of dramas in the last 20 years. What the press calls 'quality' and 'hot' isn't the same as how people look at it. Judging Amy is one of the most watched shows and JAG is a major hit among older viewers, but they aren't on magazine covers. What's a watercooler show? Only two people in my office saw 24 last night."
"Part of what network TV is about is having that watercooler show," Poltrack maintains. "Yeah, there's a psychology to it. The top 30 shows drive network TV, and you need some new shows to get in there, preferably in the top 10. If no new shows make it, that obviously dampens the enthusiasm of some. But this will be such a strong market that I don't think you'll see this factor absolutely cause dollars to shift to cable."
Fragmentation has changed the notion of what constitutes a watercooler hit. Long gone are the days when everyone buzzed about Archie Bunker's latest outrageous comment or J.R.'s evil machination. Today, one can even be blissfully unaware of who was eliminated on Survivor last night and still walk into the office with head held high. The plethora of specialized and targeted programs means there are dozens of mini-watercooler shows, from Gilmore Girls to Six Feet Under to TLC's Trading Spaces. And the measure of a hit, ultimately, is relative. "People pay for what's doing best," says a media agency exec, "not for what's doing well."
Will the bubble burst?
Issues of program quality and the reality onslaught throw into sharp relief longstanding questions about the value of network prime time. The CPM gap between the nets and cable has increased over the last few years, leaving many skeptical clients and media buyers wondering if and when the prime-time bubble will burst. How do media buyers pay high prices for lower ratings and then look themselves in the mirror each morning?
Steve Grubbs is quick to point out that the more-for-less formulation is inaccurate. "We're buying rating points, not network erosion," he notes. "All we're concerned about is our CPM increase or decrease. Sometimes we pay more, but we're not getting less. And every year we reallocate our spending, including lower-cost alternatives. In a bad year, our costs may rise 10 percent in prime, but overall the plan is plus-3."
"The overall combined cost of television hasn't gone up at nearly the same rate as the network component," says Rino Scanzoni, president of the broadcast division at Mediaedge:cia. "We can reach our audiences more efficiently and maybe more effectively than 20 years ago when you had three nets doing boxcar numbers. For most clients, the percentage of GRPs in prime is going down versus years ago. It becomes harder to generate significant circulation, but the good news is there are lot more places you can go. I see the glass half full."
One cable executive avers, "There's no such thing as broad-reach media anymore—it's all niche. The average demo rating on the so-called Big Four networks today is a 3.2. When I tell that to clients, they say it can't be. But people are slow to acknowledge today's reality. Network TV is still easier to execute. Look at the economic problems at agencies–they'd rather spend the money quickly, though every agency guy would swear that's not a consideration. There's no reward for buying the tallest midget."
"The very fragmentation that has diminished the nets' impact has made their relative share that much more imperative versus the other options," says Rash. "It's a dynamic where they remain the last bastions of national reach."
"Clients and agencies say they're mad as hell and they're not going to take it anymore, but they do," notes a veteran Detroit media executive. "It's the 'in' thing to say the networks are too expensive. It's not stylish to advocate network TV, but it is OK to advocate Internet games. Supply and demand is such simple math, but the clients don't want to understand it."
Adds ABC's Shaw, "Over the last 18 months, we've seen a real flight to the quality of network TV. Why has the gap grown between network TV and cable? Those optimizers are sending dollars to network TV, and going forward it seems like the top 10 cable nets will be taking it in the shorts as much as broadcast. If the four nets are doing a 4.0 to a 4.6 rating on adults 18 to 49 in prime time and the top 10 cable nets are doing a 0.3 or 0.4, we're doing 10 times their rating and they're getting half our CPM—why aren't they getting a tenth? Look, you've got advertising opportunities from TV to print to radio to outdoor to benches and matchbook covers. But if you've got national distribution or shelf space or a dealer group, network TV is what you base your plan around."
It is curious that buyers invariably invoke the multiplicity of options and yet the prime time total climbs inexorably. "Are we walking the walk? Maybe not to the degree we talk the talk," admits Spengler. "But we spend a higher percentage of money in cable every year. Look how much more has gone there over five or 10 years. At this rate, the price of network prime will drive out the packaged-goods companies, which started to happen with tech and the dotcoms."
Indeed, there are ominous rumblings on the client side about reevaluating network TV's primacy. Consider Procter & Gamble's decision to have its hard-nosed purchasing department act as counselor to its media executives to be a straw in the wind for the industry.
Yet, no one is walking away just yet from network TV and its much-derided upfront. "Prime time is really a phenomenon that is hard to explain," says Spengler. "But network TV is still proven to be the most powerful platform in media—try launching a wireless communications product, say, in radio and newspaper. If the upfront offers our clients the programs we want in the weeks we want, at a better price and with audience guarantees, then it's worth doing."
Eric Schmuckler is a contributing writer for Mediaweek.