[opendtv] Re: Analysis: Broadcast TV Faces Struggle to Stay Viable
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Tue, 3 Mar 2009 08:38:04 -0500
At 5:46 PM -0500 3/2/09, Manfredi, Albert E wrote:
Craig Birkmaier wrote:
One part of the problem:
"Network dramas now cost about $3 million an hour."
Makes one wonder exactly "what" is broken.
Why should that surprise anyone? Do you ever compare today's prime time
TV shows to those of a couple of decades ago? There is no comparison.
The acting and actors, the special effects, and even the plots are right
up there with those of Hollywood movies. Try watching a rerun of, for
instance, the original Star Trek. "Campy" is the best description. Which
explains why the article says:
What a riot!
So you think that the high cost of network shows is due to production
values and hiring better talent in supporting roles?
And why are Hollywood movies the benchmark for comparison?
It seems that that model is just as badly broken, or to put it in
today's political newspeak, that somebody is being paid too much!
What's the difference between a CEO getting a bonus for cutting costs
and firing a bunch of employees at a failing company, and an actor
getting paid millions for a movie that sucks and loses money?
The answer is that the Hollywood business model is based in risk
taking. They know that only a small percentage of the stuff they make
will make money, but they make certain that they get paid well, even
when the product sucks.
Like the professional sports franchises, Hollywood has become
accustomed to an economic spoils system that is based upon the
massive revenues generated by the large audience for its products and
the long term syndication value of "some" of the content they create.
An example. At one time I was a producer/director, calling the shots
and punching the buttons on those big production switchers we used to
make at Grass Valley. I made $110 per week doing this at a local TV
station in a large market in 1972. At about the same time, I was
visiting a friend at CBS Studio City in Hollywood. We visited the set
for Wheel of Fortune (I think - or another top rated game show in
syndication). My friend told me that Johnny Carson's brother was the
technical director (he punched the buttons) for each show. But he was
also one of the creators/owners of the show. So he got $500,000 for
each 30 minute episode...
The $3 million cost per episode to produce a Hollywood drama is based
almost entirely on the "potential" to make big bucks on a popular
show. Even if the show sucks, and the vast majority do, everyone gets
paid VERY WELL. It's all about cost (and profit) shifting, and the
residuals for the few shows that do well in syndication.
It is not the "advertising recession" that is causing this business
model to break. The number of new shows has been in decline for as
long as network ratings have been in decline, which is now bout two
decades. As with other monopolies and oligopolies that have been
milked for all they are worth throughout history, the folks in
Hollywood have been pushing the limits - in terms of compensation -
as they ride the Network TV ship down.
The model is broken because advertisers have finally reached the
point where they will keep paying more for less. This is not an
advertising recession - it is a fundamental realignment of the
marketplace for content and the value proposition for advertisers.
All that is left for the networks is to try to suck in the revenues
they are now sharing with distribution partners, INCLUDING their own
O&O Stations.
The biggest problem is the advertizing recession, Craig, not a
hopelessly broken model. The plummeting revenues over just one year,
e.g. $245M down to $18M reported by Fox, can only be explained by that.
Not by dropping audience.
Do you ever think before you type. This is hilarious!
The networks may certainly have to go back to more primitive, "campy"
shows to weather the storm. In my book, if they think they can just get
by with reality shows, they will most certainly go bust.
They ARE going bust as they suck the life out of the broken model
while they try to figure out how to control distribution in a world
that no longer needs them. Independent producers can and ARE going
direct to consumers and making money.
Obviously, in a recession, highly compensated people are treading on
thin ice. But it's silly to make more of this than it really is. If some
cable channel shows only cost $25,000 per episode, maybe that explains
why their viewership is negligible. On the other hand, if this trend is
also happening:
Obviously, content made for niche markets must survive and profit
from the audience and resulting revenues it can generate. This is
right out of your basic economics textbook.
Increasingly, however, there are shows on these cable channels that
accumulate better ratings than many of the low cost network shows.
Perhaps if you had the ability to watch the shows on cable you could
talk about them more intelligently.
"Overall television viewing is up, however, and some big cable networks,
like USA and TNT, are attracting new viewers."
it can only mean that cable networks are starting to create more
expensive shows, more in line with what the networks have been doing.
First, you should be very suspicious about the claims that TV viewing
is up. The industry has done a great job creating the illusion that
it keeps growing - advertisers are starting to understand that they
are getting less bang for their bucks and are looking for - and
finding - better ways to spend their money.
So, to avoid the drama-queen reactions to a shifting economic situation,
it seems logical that network TV will have to tighten its belt when it
comes to the cost of producing its shows. If the drama queens have their
way, over-reacting as drama queens usually do, they coule easily cause
more harm than good.
Coming from the biggest "Drama Queen" on this list, once again you
have demonstrated a profound lack of understanding of an industry you
know little about.
Me thinks that the belt is tightening..
around their necks.
Regards
Craig
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