U.S. writers strike could mean big changes in advertising

NEW YORK, Nov 11 (Reuters) - The Hollywood screenwriters strike is less than a week old, but already concerns are spreading that a long walk-out could drastically change the face of television advertising.

The $70 billion television advertising industry is still considered the best way to promote brands and products, despite the buzz over advertising in digital media like cell phones and video games.

A prolonged strike by screenwriters, however, could lead to big changes. Audience ratings are likely to slip without new TV shows to watch, and as viewers move elsewhere, so too will advertisers.

“I don’t know how long it will take, but viewers will start to go to other places, and we as advertisers have to follow them,” said Lisa Herdman, vice president of network programming at RPA, an advertising and media buying agency. “Whether we will go back to TV is another question altogether.”

In many ways, experts say, the strike could not have come at a worse time for the television industry, given how much competition it faces for audiences and advertisers from the Web, iPods and every other sort of digital media.

“Marketers have more alternatives than ever before on how and where to spend their money,” said Brad Adgate, director of research at Horizon Media, an independent media services company. “There’s more than the 30-second TV spot. There are opportunities out there and dollars are going to follow the eyeballs.”

He added: “While television still remains the entertaining center of your living room, there is some concern that the longer this strike stretches out people’s habits will change.”

The Writers Guild of America went on strike on Nov. 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.


Even before the strike, TV ratings were falling this season. Viewer numbers are down nearly 10 percent from a year ago and, moreover, the fall TV season has started without a major breakout hit from ABC, NBC, CBS or FOX.

“If this strike wasn’t happening, we would be spending this time talking about the ratings and what are we going to do about them,” RPA’s Herdman said.

Chances that any of the new shows will catch fire become far smaller should a strike force networks to replace today’s programs with reruns or unscripted content like news magazines or reality shows.

“The fact that so many new prime-time shows are struggling to find an audience, and now you’re going to take them off the air for who-knows-how-long, the odds are that even the audiences they generated for the last several weeks are just not going to come back,” said Jack Myers, a media industry veteran and editor of

Most prime-time scripted comedies and dramas are likely to shut down production later this month if the strike is not settled. At the moment, the impact is mainly being felt by talk shows like NBC’s “The Tonight Show With Jay Leno” and CBS’s “Late Show With David Letterman.”

Few are willing to predict how long the work stoppage will last, but a strike by the Writers Guild in 1988 lasted for 22 weeks, delaying the start of the fall TV season that year and costing the industry an estimated $500 million.

“If it goes past Thanksgiving, we’re looking well into the first quarter before there is a resolution,” Myers said. “It’s unlikely they are going to solve between Thanksgiving and Christmas. Positions harden, plus there are no obvious solutions.”

The worst-case scenario would see the strike dragging out well into the spring, the season when the industry prepares for the upfront market, in which networks present their new programming schedules to advertisers and affiliates.

Around $9 billion of prime-time commercial deals are sold by the major networks in the weeks after the presentations.

“The networks would need to make a choice as to whether they wanted to present the schedule without pilots, in many cases without concepts, heavily weighted toward returning and reality programming, and with an inability to estimate ratings for the ad community,” Myers said.

Under that scenario, “I think there is a very good chance the upfronts would be canceled,” he added.

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. (Editing by Gary Hill)