Strike may punish primetime TV ratings

NEW YORK (Reuters) - A drawn out strike by Hollywood's screenwriters could send prime-time ratings at the major U.S. television networks plummeting 20 percent, a top media buyer said on Thursday, at a time when the industry is already struggling to satisfy viewers and advertisers.

But a strike lasting well into the winter or spring could also lead to some badly needed changes in the television business, said Rino Scanzoni, chief investment officer for North America at WPP Group's (WPP.L) GroupM unit.

"The good thing about something like this is the fact it will probably encourage the networks to put things on the air that they might not have put on the air otherwise," Scanzoni told the Reuters Media Summit in New York. "If they take bigger chances, they might find some success where they wouldn't if they were trying to play it safe."

Another silver lining to a prolonged strike, he said, is that it may force networks to reexamine the industry's custom of launching most of its new shows over a few weeks each fall.

"I would love to see the broadcast networks get off this fall season scenario," Scanzoni said. "The whole idea of putting on a lot of new shows in a couple of weeks in a new season does not work. If this disrupts that and creates more of an ongoing process, that's a good thing."

The Writers Guild of America went on strike on November 5 after the collapse of talks with the major film and television studios, halting nearly 20 years of labor peace in Hollywood.

At issue are writers' demands for a greater share of revenue from the Internet, widely seen as a key future distribution channel for most entertainment.

Talks restarted this week, and Scanzoni said it appeared negotiations between the screenwriters and media companies were progressing.

"The feedback we're getting is probably more positive this week than it was two weeks ago," he said. "Back then everyone thought it would be a long strike. It still can be. But the sense I am getting is there are expectations maybe they can get this thing agreed to and put to bed by the holidays or right after the holidays."

Still, the strike comes at a difficult time for the TV industry. Even before the walkout, Scanzoni pointed out, the U.S. networks were seeing a drop of about 12 percent in prime-time ratings. The fall TV season, moreover, started without a major breakout hit from ABC, NBC, CBS, FOX or CW, the fifth broadcast network.

"Even if there is no impact on the strike because writers get back to work and shows get produced, the big challenge for the broadcast networks this year is that the numbers are down quite significantly," he said.

If the sides fail to reach an agreement in the coming weeks, and more repeats are broadcast, the drop-off in audience for prime-time will only accelerate, he added.

"There is no doubt that if this continues into January and February it is going to have a considerable impact on the kind of programming that is on television, particularly with the five broadcast networks," he told the Summit.

"If you have a strike and suddenly you put more repeats on, you have to rejuggle the schedule, it's not unforeseeable for that 12 percent to go to 20 percent."

Unlike some industry-watchers, however, Scanzoni doesn't expect the audience to leave television for other types of entertainment, like video games or the Internet.

Rather, he expects audiences to move from prime-time shows on the five major networks to shows airing on cable channels.

"What will ultimately happen is that viewers will not turn off the set, but basically migrate to cable. Our concern isn't that all of a sudden we're going to have a big void in viewership levels," he said.

"I don't see a situation where people are going to throw their TV sets out," he said. "The risk for the broadcast networks is that if the viewers migrate to other channels and find something they like it will be difficult to bring them back."

ABC is owned by Walt Disney Co. (DIS.N), CBS is owned by CBS Corp (CBS.N), Fox is owned by News Corp NWSa.N and NBC is majority owned by General Electric (GE.N).

(Additional reporting by Michele Gershberg; Editing by Brian Moss)

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