July 2013
Volume 33 No. 5

May 2013
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L.A. Screenings: A Plethora of New Shows Makes for Chilly Screenings. Blankets Needed to Warm Up

“Networks try to shake off a chilly fall,” was the headline of a story in USA Today on May 23, the day that marked the end of the 2012-13 TV season. The daily newspaper proceeded to explain that CBS averaged 11.9 million primetime viewers a day and ABC 7.8 million. It also wrote that CBS reached 3.7 million viewers among ages 18 to 49. To those should be added 7.1 million average primetime daily viewers for FOX and seven million for NBC.

Certainly, no one could call this a “fall,” because no matter what, broadcast television still delivers a critical mass to advertisers and it's still the most effective, efficient and economical form of advertising. This is why CPM (cost-per-thousand viewers) increases yearly, now reaching $50.20. It is estimated that, for the 2013-14 season, unit prices will rise five percent for CBS, four percent for FOX and three percent for both ABC and NBC. Even if ratings drop drastically, as long as the networks are able to deliver a relative critical mass to advertisers, the business model continues to be a winner. Indeed, during the Upfronts CBS's Leslie Moonves pointed out that broadcast TV “reaches people like no other medium on Earth.”

Yes, the industry is changing, but what's not generally understood is the fact that broadcast television has another moneymaking function: It is a conduit for producing high quality content that makes lots of money internationally.

Let's do the numbers: A studio produces for its own or other networks a one-hour primetime drama carrying a $1.5 million deficit. From that show, the network grosses an average of $7 million and nets $5 million (often with internal accounting). The studio then recoups the deficit internationally (including the 10 percent cost of doing business) and generates $1 million in re-runs with domestic syndication. In effect, an hour-long drama costs the studio/network $3 million, while generating revenues of $9.5 million ($7 million from the network, $1.5 million internationally and $1 million in syndication) bringing profits of $6 million after deducting distribution, development and interest costs. And all this is within a two-year period, with a library value that continues to appreciate over the years.

For a studio without a U.S. TV network, such as Sony Pictures, revenues per show produced are lower than those with a network (CBS, Disney, Fox, NBCUniversal, WB). Perhaps this is one of the reasons shareholder and activist investor Daniel Loeb (his firm holds 6.5 percent of Sony) is suggesting spinning off Sony Pictures from conglomerate parent Sony of Japan, which as a foreign entity cannot own terrestrial TV stations in the U.S.

So far, 53 new shows have been announced for the 2013-14  broadcast season and an additional 17 will premiere this summer. Last year 42 TV shows premiered on ABC, CBS, NBC, FOX and CW. Of those only 11 are returning this fall. The new season counts 23 new comedies - compared with 16 last season; 29 new dramas - compared with 22 last season. Nets want producers to provide 13, 15 and 17 episodes, rather than the standard full season of 22 episodes. Indeed, emphasis is placed on limited series (to maximize exploitation without risking a dud) and avoiding stretching 22-episode orders over a 35-week span.

It has been said that there is no longer a fall season (according to FOX's Kevin Reilly, FOX launches programs virtually year-round). Nevertheless, this year, Upfront presentations multiplied to include cable networks, Hispanic TV channels and digital TV outlets. And announcements about pick-ups came from New York City earlier than usual. By the Friday prior to the kick-off of the major broadcast Upfronts, 20 new shows had already been announced by the studios.

The first Upfront of the year - for U.S. cable network Oxygen - took place on February 5. Between then and May, a plethora of other ad-supported cable networks - including Bravo, Syfy, BET, and even The Weather Channel, have held presentations. 

This year a good share of the attention was paid to the second annual “Digital NewFronts,” a five-day event held in New York City at the end of April/beginning of May. At the NewFronts, digital media sellers tried their hands at imitating the traditional TV business model in an attempt to attract money from marketers and ad agencies.

Nearly 20 companies - including Google, Microsoft, Yahoo, Hulu and AOL - held NewFronts under the aegis of the Interactive Advertising Bureau, and about 100 new programs were unveiled. In fact, the number of attendees at the AOL Upfront outnumbered the spaces available at the Farley Post Office, requiring the company to add an overflow room at a bar across the street. Guests were turned away from the Yahoo presentation at the Best Buy Theater in Times Square (capacity: 2,100) and at Google's Brandcast at Pier 39 (1,500 guests attended).

The question still looming is whether that digital ad spending will come from budgets diverted from television or whether it will represent additional money.

Digital arms of the large studios  - including CBS Interactive - also held separate NewFront events. CBS Interactive announced the upcoming launch of several online series based on network shows. However, as it stands for a TV network it's better to collect retrans fees from cable than to go the live stream route via the Internet. Perhaps the business model will change toward streaming if cable and satellite operators drop the networks in favor of original programming a la carte.

Finally, when the U.S. broadcast networks and the Spanish-language broadcast networks like Univision, Telemundo and Fox Hispanic held their Upfronts, they marked the end of a multi-month-long run of presentations geared at advertisers (clients and agencies). During last year's various Upfronts, advertisers committed to pre-buy an estimated $20 billion worth of commercial time. Then the focus switched to the L.A. Screenings.

The unusually large - but welcome - number of new TV series for the 2013-14 season meant longer screening hours for international buyers in those extra cold Hollywood studio theaters.

Fortunately, after the 2011 VideoAge Daily at NATPE story on “How To Dress For the L.A. Screenings,” an increasing number of studios offered blankets to keep warm. Considering that as the number of new shows goes up the temperature in the screening rooms and theaters seems to go down, those blankets came in handy.

Also keeping buyers warm was a large slate of new broadcast and cable shows, including 13 from Sony Pictures TV (SPT), 13 from Disney, eight from CBS, 10 from NBCUniversal and 12 from WB. These in addition to many new cable shows and even original programs for digital outlets such as Netflix.

Executives at SPT have repeatedly told buyers that this year the studio had more new shows than in the past 14 years, making for a total of 33 shows, including those currently on air and those set to air. Another observation was that, with the improving economic situation, more budget-friendly comedy slots are being replaced with big, high-budget dramas.

Last year, some buyers were able to split some screenings days between two studios. This year, due to the large number of shows, they had to devote a full day to each studio.
Most Latin buyers arrived two days after the indie suites were set up at the Century Plaza Hotel in Los Angeles. But the few who came early were nevertheless sequestered by the studios, which showed them the New York City Upfront presentations via satellite. This meant that the indies arrived one day too early. Some indie exhibitors at the Century Plaza Hotel commented that, instead of May 14, their Screenings should have started the next day.

By Saturday, May 18, the indies were winding down while the studios picked up steam. With Latin buyers first invading the studio lots (Canadians had already made their selections), followed by Europeans and Pan-Pacific buyers, more unusual comments were heard. For example: Overall, colors on the screen affect buyers' moods; screenings that showed red colors overall tended to warm up buyers. Conversely, blue tended to cool them off. Plus, some buyers found the pre- and post-screening producers presentations to be useless and time-consuming. In addition, while many buyers enjoyed the large screen presentations that make TV shows look and feel like theatrical movies, others preferred watching on a smaller screen. Finally, some buyers wished to return to the individual screenings of the past. On the indie side, it was observed that, out of the 78 exhibitors, 45 were on the 17th floor of the Century Plaza Hotel, while 14 opted for the larger rooms of 19th penthouse floor.

As far as the party scene was concerned, Venevision opened the indie portion with a reception on May 15, while the Disney party opened the studio screenings the following Sunday. For its part, the Fox party closed the event on May 23. The Eighth Annual L.A. Screenings Veteran Luncheon, now honoring the memory of veteran international TV distributor Jim Marrinan was also held on the 23rd at the InterContinental Hotel.

Indie general screenings-cum-cocktail parties included those of Colombia's Caracol and Argentina's Telefilms. Many indies also reported brisk sales, with Fremantle Media's Sheila Aguirre commenting that it was “better than expected.” Aguirre also invited some buyers to attend the live broadcast of its American Idol at the Nokia Theatre in Los Angeles.