Writers' strike hastens change in TV landscape

NEW YORK (Reuters) - Hollywood screenwriters should be back at work within days after their three-month strike, but that hardly means a return to business as usual for the television and advertising industries.

Those looking for a happy ending to the labor troubles can take comfort from the prospect of hit comedies and dramas returning to prime-time TV this spring following Sunday's endorsement of a labor deal by union leaders.

Beyond disrupting the TV schedule, however, the strike shone a spotlight on broad issues facing the industry: how commercial time is bought and sold is badly outdated; show development is too costly; and, most troubling, audiences are shrinking.

"The strike kind of moved the industry from a state of evolution to one of revolution," said David Scardino, the entertainment specialist with media buying firm RPA.

"People have looked at this strike as an opportunity to smash the old models and come up with new ideas," he said.

NBC Universal Chief Executive Jeff Zucker could be included in those ranks. Against the backdrop of the strike, he said the majority owned affiliate of General Electric Co wanted to largely exit the business of developing shows through pilots, a move that could save $50 million a year and dismantle an established business practice in Hollywood.

Networks use pilots -- essentially test shows -- to decide whether to move ahead with TV series. The trouble is that pilots are expensive and often lead nowhere.

"The excess and waste that is inherent in the Hollywood system of making pilots and marketing them is just crazy," Zucker said in a speech last month.

The idea is that scripted comedies and dramas would move straight to air, with implications in Hollywood and along Madison Avenue.

"If you're going to order shows without pilots, you're going to look at more seasoned writers," said Scardino. "New writers will find it difficult get a foot in the door."

STRATEGIC DISCUSSIONS

Skipping pilots would also change the way advertisers buy prime-time commercial spots from the networks -- a practice increasingly viewed as outdated.

Until now, as much as 80 percent of prime-time advertising is purchased each spring during the "upfront." Each May, in a practice dating back to the 1950s, the networks invite advertisers to New York for a week of star-studded presentations at spots like Carnegie Hall and Radio City.

Advertisers, having seen the pilots and proposed schedule, then knuckle down to negotiations with broadcasters over about $9 billion of commercial time.

This year, however, the strike has delayed the development season and made it unclear whether broadcasters will have a schedule and pilots to promote for the 2008-09 season. At the least, many expect the showcase presentations to be canceled.

That could open the door for the industry to start negotiating commercial time differently -- likely moving to a more flexible practice, with most commercial time bought throughout the year rather than in one month each spring.

Advertising deals could also be built around more than TV, with the media companies packaging everything from TV shows and Web sites to billboards and product placements in movies.

That could favor media conglomerates like News Corp, which can offer companies a variety of advertising avenues.

"It could be a larger discussion, a more strategic discussion," said Tim Spengler, president of Interpublic Group of Cos Inc's Initiative USA, a media buying agency. "It should be a discussion of more than the network TV offering."

One reason for broader deals is that TV is losing audience, a development underscored by the strike. So far this season only ratings from News Corp's Fox are up from a year ago. Ratings at NBC and Walt Disney Co's ABC have dropped 9 percent, while CBS Corp's CBS network ratings are down 23 percent for 18-49 year olds.

"The longer the strike went on, the greater the potential for audience loss. You get out of the habit," said Scardino.

But the strike has also showed that audiences still watch reality programs like "American Idol" or "The Apprentice." Given that unscripted programming is cheaper to produce and immune to labor troubles, experts predict more reality series down the road.

They also expect the TV industry to shift further away from the traditional practice of rolling out most new programs over the course of a few weeks each fall.

Some changes will be more immediate, particularly relating to the TV schedule over the next few months. Some believe that since the strike has delayed the 2008 TV season, it could be extended by weeks, perhaps into July.

Existing advertising deals would then be thrown into disarray, since nobody planned for first-run shows in the summer when the agreements were signed.

"If there is an opportunity for advertisers to get a little more than they expected, well that counteracts what had gone on in the last few months," said Spengler.

(Editing by Gerald E. McCormick)