Showbizreporting's Blog

December 29, 2009

No More Free TV

Filed under: Entertainment — showbizreporting @ 1:45 pm
Tags: , , , , , ,

NEW YORK – For more than 60 years, TV stations have broadcast news, sports and entertainment for free and made their money by showing commercials. That might not work much longer.

The business model is unraveling at ABC, CBS, NBC and Fox and the local stations that carry the networks’ programming. Cable TV and the Web have fractured the audience for free TV and siphoned its ad dollars. The recession has squeezed advertising further, forcing broadcasters to accelerate their push for new revenue to pay for programming.

That will play out in living rooms across the country. The changes could mean higher cable or satellite TV bills, as the networks and local stations squeeze more fees from pay-TV providers such as Comcast and DirecTV for the right to show broadcast TV channels in their lineups. The networks might even ditch free broadcast signals in the next few years. Instead, they could operate as cable channels — a move that could spell the end of free TV as Americans have known it since the 1940s.

“Good programing is expensive,” Rupert Murdoch, whose News Corp. owns Fox, told a shareholder meeting this fall. “It can no longer be supported solely by advertising revenues.”

Fox is pursuing its strategy in public, warning that its broadcasts — including college football bowl games — could go dark Friday for subscribers of Time Warner Cable, unless the pay-TV operator gives Fox higher fees. For its part, Time Warner Cable is asking customers whether it should “roll over” or “get tough” in negotiations.

The future of free TV also could be altered as the biggest pay-TV provider, Comcast Corp., prepares to take control of NBC. Comcast has not signaled plans to end NBC’s free broadcasts. But Jeff Zucker, who runs NBC and its sister cable channels such as CNBC and Bravo, told investors this month that “the cable model is just superior to the broadcast model.”

The traditional broadcast model works like this: CBS, NBC, ABC and Fox distribute shows through a network of local stations. The networks own a few stations in big markets, but most are “affiliates,” owned by separate companies.

Traditionally the networks paid affiliates to broadcast their shows, though those fees have dwindled to near nothing as local stations have seen their audience shrink. What hasn’t changed is where the money mainly comes from: advertising.

Cable channels make most of their money by charging pay-TV providers a monthly fee per subscriber for their programing. On average, the pay-TV providers pay about 26 cents for each channel they carry, according to research firm SNL Kagan. A channel as highly rated as ESPN can get close to $4, while some, such as MTV2, go for just a few pennies.

With both advertising and fees, ESPN has seen its revenue grow to $6.3 billion this year from $1.8 billion a decade ago, according to SNL Kagan estimates. It has been able to bid for premium events that networks had traditionally aired, such as football games. Cable channels also have been able to fund high-quality shows, such as AMC’s “Mad Men,” rather than recycling movies and TV series.

That, plus a growing number of channels, has given cable a bigger share of the ad pie. In 1998, cable channels drew roughly $9.1 billion, or 24 percent of total TV ad spending, according to the Television Bureau of Advertising. By 2008, they were getting $21.6 billion, or 39 percent.

Having two revenue streams — advertising and fees from pay-TV providers — has insulated cable channels from the recession. In contrast, over-the-air stations have been forced to cut staff, and at least two broadcast groups sought bankruptcy protection this year.

Fox illustrates the trend: Its broadcast operations reported a 54 percent drop in operating income for the quarter that ended in September. Its cable channels, which include Fox News and FX, grew their operating income 41 percent.

Analyst Tom Love of ZenithOptimedia said he expects the big networks will end the year with a 9 percent drop in ad revenue, followed by an 8 percent drop in 2010 and zero growth in 2011.

A small chunk of the ad revenue is being recouped online, where the networks sell episodes for a few dollars each or run ads alongside shows on sites such as Hulu. Media economist Jack Myers projects online video advertising will grow into a $2 billion business by 2012, from just $350 million to $400 million this year.

But that is not significant enough to make up for the lost ad revenue on the airwaves. Advertisers spent $34 billion on broadcast commercials in 2008, down by $2.4 billion from two years earlier, according to the Television Bureau of Advertising.

So rather than wait for the Internet to become a bigger source of income, the networks and local stations are mimicking what cable channels do: They’re charging pay-TV companies a monthly fee per subscriber to carry their programming.

Since 1994, the Federal Communications Commission has let networks and their affiliates seek payments for including their programming in the pay-TV lineup. Not everyone demanded payments at first. Instead they relied on the broader audience that cable and satellite gave them to increase what they could charge advertisers.

The big networks also were content to let their broadcast stations essentially be subsidized by higher fees for the cable channels that fell under the same corporate umbrella. A pay-TV company negotiating with the Walt Disney Co., which owns ABC, is likely paying more for the ABC Family channel than it otherwise would, with the extra assumed to help Disney cover its costs for the ABC network broadcasts.

But over time — such contracts generally run about three years — more networks began demanding payments for the stations they own. And affiliates already receiving the fees have bargained for more money.

Some talks have been tense. In 2007, Sinclair Broadcast Group, which operates 32 network-affiliated stations around the country, pulled its signals for nearly a month from Mediacom Communications Corp., which provides cable TV to about 1.3 million subscribers, mainly in small cities.

The American Cable Association says its members — mainly small cable TV providers — have seen their costs for carrying local TV stations more than triple over the past three years. The group’s head, Matt Polka, says those fees have gone “straight to consumers’ pocketbooks” in the form of higher cable bills.

Gannett Co., for instance, which operates 23 stations, has taken in $56 million in fees from pay-TV operators this year after negotiating a new batch of agreements, up from $18 million in 2008. Dave Lougee, president of Gannett’s broadcast arm, defends the fees, saying “broadcasters were late to the game in really starting to go after the fair market value of their signals.”

Analysts estimate CBS managed to get as much as 50 cents per subscriber in its most recent talks with pay-TV providers that carry CBS-owned stations. CBS Corp. chief Leslie Moonves said such fees should add “hundreds of millions of dollars to revenues annually.”

That could be just the beginning. CBS and Fox are also asking for a portion of the fees that their affiliates get, arguing that the networks’ shows are what give local stations the leverage to ask for fees.

Over time, the networks might be able to get even more money by abandoning the affiliate structure and undoing a key element of free TV.

Here’s why: Pay-TV providers are paying the networks only for the stations the networks own. That amounts to a little less than a third of the TV audience, which means local affiliates recoup two-thirds of the fees. If a network operated purely as a cable channel and cut the affiliates out, the network could get the fees for the entire pay-TV audience.

If forced to go independent, affiliates would have to air their own programming, including local news and syndicated shows.

Fitch Ratings analyst Jamie Rizzo predicts that at least one of the four broadcast networks “could explore” becoming a cable channel as early as 2011.

Any shift would take years, as the networks untangle complicated affiliate contracts. At an analyst conference last year, CBS’s Moonves called the idea an “a very interesting proposition.” But he added that it “would really change the universe that we’re in.”


August 13, 2009

Emmys on schedule?

Emmy ceremony to proceed in real time

TV Academy, CBS ditch plan to time-shift eight categories

By Nellie Andreeva

Aug 12, 2009, 02:13 PM ET

Updated: Aug 12, 2009, 11:04 PM ET

More Emmy coverage  

It has been a season of reversals for the Primetime Emmy Awards. First, the ceremony was shifted from Sept. 20, only to be returned to that date two weeks later. Now, in an even bigger about-face, the Academy of Television Arts & Sciences has scrapped a plan to time-shift eight categories on this year’s broadcast after a firestorm of criticism from the creative community.

As a result, all 28 categories slated for the CBS broadcast will be awarded live.

“This decision was made to mend relationships within the television community and to allow executive producer Don Mischer to focus his full attention on producing the creative elements in the telecast,” TV academy chairman and CEO John Shaffner said. “Our goal is to celebrate the year in television and honor excellence and this year’s great achievements with the support of our industry colleagues and our telecast partner.”

Last month, Mischer proposed and ATAS’ board of governors voted to approve a time-shift of eight awards.

The proposal included mostly longform categories: best movie and best miniseries; writing for movie/miniseries; directing for movie/miniseries; supporting actor and actress in TV movie/miniseries; writing for drama series; and directing for variety, music and comedy series.

“We try to make the Emmys more relevant to mainstream viewers while honoring the choice of the academy properly and appropriately,” Mischer said at the time.

But the move drew criticism from the WGA, DGA, SAG and several networks, including HBO, which dominates the longform field. More than 100 writer-producers, including Shonda Rhimes, Seth MacFarlane, Matthew Weiner and John Wells, signed a letter protesting the decision.

That petition was the wake-up call for the Academy that created the momentum to scrap the plan, WGA West president Patric Verrone said.

“It’s important that the TV Academy appreciates the power that writers and showrunners wield when they work together and they are a force to be reckoned with,” he said.

A main point of contention was that the plan had been drafted without input from the guilds.

After the ill-fated time-shifting announcement, there have been phone conversations between the Academy and WGA.

“There will be more going forward to prevent unilateral decisions like this being made without consulting with a very important part of the creative process — writers,” Verrone said.

The creative community’s public outcry over the plan spilled into the recent Television Critics Assn. press tour, where talent and executives univocally condemned the idea and CBS execs were forced to defend it.

With the backlash showing no signs of subsiding, ATAS, after consulting with CBS, decided to back off.

Mischer said the decision to keep all Emmy categories live “was made because ultimately it is in the best interest of the show” and “in the best interest of the entertainment industry.”

“We had attempted to make room in the show for more live performances. However, our community did not embrace the plan, which is a very important consideration,” he said.

This year’s Emmycast is a crucial one for the academy coming off last year’s ceremony, which hit an all-time ratings low, and entering the final year of its contract with the broadcast networks.

With ratings for other main awards shows rebounding, the academy and CBS have been looking for ways to liven up the telecast, which includes more categories awarded live than its counterparts.

July 18, 2009

Walter Cronkite dies at 92

Filed under: Entertainment — showbizreporting @ 1:07 am
Tags: , ,
By FRAZIER MOORE, Associated Press Writer Frazier Moore, Associated Press Writer 5 mins ago

NEW YORK – Walter Cronkite, the premier TV anchorman of the networks’ golden age who reported a tumultuous time with reassuring authority and came to be called “the most trusted man in America,” died Friday. He was 92.

Cronkite’s longtime chief of staff, Marlene Adler, said Cronkite died at 7:42 p.m. at his Manhattan home surrounded by family. She said the cause of death was cerebral vascular disease.

Adler said, “I have to go now” before breaking down into what sounded like a sob. She said she had no further comment.

Cronkite was the face of the “CBS Evening News” from 1962 to 1981, when stories ranged from the assassinations of President John F. Kennedy and the Rev. Martin Luther King Jr. to racial and anti-war riots, Watergate and the Iranian hostage crisis.

It was Cronkite who read the bulletins coming from Dallas when Kennedy was shot Nov. 22, 1963, interrupting a live CBS-TV broadcast of the soap opera “As the World Turns.”

Cronkite was the broadcaster to whom the title “anchorman” was first applied, and he came so identified in that role that eventually his own name became the term for the job in other languages (Swedish anchors are known as Kronkiters; in Holland, they are Cronkiters).

“He was a great broadcaster and a gentleman whose experience, honesty, professionalism and style defined the role of anchor and commentator,” CBS Corp. chief executive Leslie Moonves said in a statement.

His 1968 editorial declaring the United States was “mired in stalemate” in Vietnam was seen by some as a turning point in U.S. opinion of the war. He also helped broker the 1977 invitation that took Egyptian President Anwar Sadat to Jerusalem, the breakthrough to Egypt’s peace treaty with Israel.

He followed the 1960s space race with open fascination, anchoring marathon broadcasts of major flights from the first suborbital shot to the first moon landing, exclaiming, “Look at those pictures, wow!” as Neil Armstrong stepped on the moon’s surface in 1969. In 1998, for CNN, he went back to Cape Canaveral to cover John Glenn’s return to space after 36 years.

“It is impossible to imagine CBS News, journalism or indeed America without Walter Cronkite,” CBS News president Sean McManus said in a statement. “More than just the best and most trusted anchor in history, he guided America through our crises, tragedies and also our victories and greatest moments.”

He had been scheduled to speak last January for the 50th anniversary of the U.S. Space & Rocket Center in Huntsville, Ala., but ill health prevented his appearance.

June 2, 2009

Variety: AFTRA covers (MAR. 19, 2009)

Filed under: Entertainment — showbizreporting @ 11:18 pm
Tags: , , ,


AFTRA covers

Web staffers added to union



HOLLYWOOD — AFTRA has organized the employees at in Philadelphia — among the first website workers at a local owned-and-operated station to be covered by an AFTRA contract.

The American Federation of Television & Radio Artists said employees had voted Wednesday to make AFTRA their collective bargaining representative.

The union said the five newly AFTRA-covered employees will join the 70 or so existing on- and off-air AFTRA-covered news staff at KYW-TV CBS3, which includes reporters, anchors, writers and producers.

Neil Rattigan, CBS3’s shop steward, said, “Since much of our work is repurposed on, it’s logical to have Web staffers as part of our union.”

Link here:

Hollywood Reporter: Historical Event (Final figures confirm AFTRA rules in pilots!!!!) (Mar. 11, 2009)


Final figures confirm AFTRA rules in pilots

66 of 70 to be union-affiliated, up from handful last season

By Nellie Andreeva

March 10, 2009, 11:00 PM ET


The digital revolution that swept TV production this pilot season also has swept AFTRA into place as the dominant actors union.

The looming possibility of a SAG strike and the lure of the less-expensive and more-flexible digital production has accelerated the transition from film to digital. The union affiliation for a pilot and the subsequent series is determined by the method of filming: film for SAG and digital for AFTRA. That is firmed up after directors are hired, and with all pilot helmers in place, the final union pilot tally is coming together.

Sixty-six of 70 pilots this season will be AFTRA-affiliated, up from a handful last pilot season. The tally doesn’t include the “NCIS” and “Gossip Girl” spinoffs as they are filmed as episodes of the regular series under the same conditions as the existing shows.

Four out of six studios went 100% AFTRA/digital this pilot season: 20th Century Fox TV (nine pilots), ABC Studios (15), Sony TV (nine) and Universal Media Studios (nine). The haul includes 20th TV’s “Masterwork” and “Maggie Hill,” ABC Studios’ “Flash Forward” and “Happy Town,” Sony TV’s “Community” and untitled Lauren Graham series and UMS’ “Day One” and “Parenthood.”

For CBS Paramount TV and Warner Bros. TV, the percentages are 92% and 79%, respectively.

Only one CBS Par pilot, the untitled U.S. Attorney project, is being done under SAG, with the other 12 (excluding the “NCIS” spinoff) AFTRA-affiliated, including “Washington Field” and “The Good Wife.”

Meanwhile, 11 of WBTV’s 14 pilots (excluding the “Gossip Girl” spinoff) are shot on digital under AFTRA, including “Human Target” and the two Jerry Bruckheimer pilots. The studio’s SAG-affiliated pilots are “V,” “Eastwick” and single-camera comedy “The Middle,” which was a summer pickup.

Also shot under AFTRA is the lone independently produced pilot this season: Marshall Herskovitz and Ed Zwick’s CBS drama “A Marriage.”

Additionally, NBC/UMS’ upcoming single-camera series “Parks and Recreation” and Fox/20th’s single-camera comedy pilot “Boldly Going Nowhere,” which will be reshot later this year, also are produced under AFTRA.

Article is here 

Expectations are low for CBS’ earnings (Feb. 19, 2009)

Filed under: Entertainment — showbizreporting @ 4:07 pm
Tags: , , , , , ,

Expectations are low for CBS’ earnings Given that nearly 70% of the broadcaster’s revenue comes from advertising, Wall Street isn’t optimistic about quarterly results, which are due today. By Meg James, LA Times,

2.18 CBS declared itself “Mentally Strong” in a news release the other day, trumpeting the big ratings for the network’s latest hit drama, ” The Mentalist.” Fiscally fit, however, is the question. The broadcasting giant today reports quarterly results, and Wall Street is bracing for grim numbers — and looking for CBS Corp. to outline a strategy for how it will navigate the choppy waters ahead. A rapidly deteriorating economy is making it difficult for CBS to capitalize on its resurgence in prime time, where viewership is up 6% over last season, a notable achievement at a time when network TV is experiencing an audience exodus.

In addition to “The Mentalist,” the network has notched gains for sitcoms “Two and a Half Men” and ” How I Met Your Mother,” the Navy forensic drama “NCIS” and the news magazine ” 60 Minutes.” Even “CBS Evening News With Katie Couric,” pummeled by critics after an embarrassing start with Couric in the anchor chair, has increased its audience about 1% this season. But all that isn’t of much help right now for CBS, which is uniquely vulnerable to the recession because nearly 70% of its revenue comes from advertising. TV and radio stations have been battered as mainstay advertisers such as automakers, financial firms and retailers have slashed spending. Unlike media rivals Time Warner Inc., Walt Disney Co. and News Corp., CBS doesn’t have a broad stable of cable channels pouring in subscriber revenue to offset advertising declines. The nose dive in TV and radio ads is hitting the company on the balance sheet. Last fall CBS took a $14-billion write-down to reflect the diminished value of its broadcasting assets and billboards. Since then, the economy has eroded further. CBS’ Internet play — spending $1.8 billion to buy technology news operation CNet Networks Inc. — is widely considered an ill-timed investment in the wake of a massive retrenchment in online advertising. “They overpaid for it,” said longtime media investor Harold Vogel. “I wouldn’t be surprised if they had to take another write-down.” Then there is the issue of CBS’ generous dividend. Vogel and other analysts are watching to see whether CBS reduces the payment. The company currently issues more than $725 million a year in dividends to shareholders, which it has done to attract investors. That is money that CBS desperately needs for other purposes. “In this environment, cash is the most important asset that you can have,” Vogel said. Last week Standard & Poor’s downgraded CBS’ credit outlook to negative from stable, citing the “extremely weak recent results and lowered guidance” issued by other media companies. “The outlook revision reflects our growing concern about the deepening recession, which we expect will continue for all, or the majority, of 2009,” S&P credit analyst Michael Altberg said. In addition, S&P noted, CBS’ cash position is at its “lowest point” since the company split from Viacom Inc. in December 2005. On Sept. 30, the end of the most recent reporting period, CBS had $553 million in cash. Some analysts have further suggested that CBS could face a cash crunch and a problem meeting a $1.6-billion debt repayment due in 2010. “Local ad trends continue to shock us with unimaginable rates of decline,” Sanford C. Bernstein & Co. analyst Michael Nathanson wrote in a recent report. CBS’ decision about its dividend payment is playing out against the backdrop of the credit troubles facing Sumner Redstone, the 85-year-old controlling shareholder of CBS and Viacom. Redstone divided his company in half to try to “unlock” value. Viacom, with the cable channels MTV, Comedy Central and Nickelodeon, was supposed to be the fast-growing company while CBS, which generates billions in cash, was the slower-growth company that paid a sizable dividend. The CBS dividend provides a steady stream of income to the Redstone family’s privately held firm, National Amusements Inc. In October, National Amusements disclosed that it was in violation of its debt covenants and had to restructure $1.6 billion in debt. To satisfy bankers, the company shed its investment in the underperforming video game firm Midway Games and said it would sell some movie theaters to raise money to pay down debt. Last week, during Viacom’s quarterly earnings call, Redstone said National Amusements was close to an agreement with bankers. It is unclear whether the CBS dividend factors into the negotiations with bankers to restructure debt. Martin Pyykkonen, media analyst with Wunderlich Securities, said CBS could save more than $300 million this year by cutting its dividend 50%. “Even if they cut the dividend in half, that would still be a 10% yield, which by any measure is still high,” he said. “As the controlling shareholder, Redstone carries a pretty big stick. But you would have to question the prudence of management if they keep paying out such a large dividend.” Bernstein analyst Nathanson predicted that TV revenue for CBS could decline 10% in the fourth quarter “as the weak local advertising market will more than offset the benefit of broadcast station political advertising.” He also estimated that revenue to the stations could fall as much as 17%. Radio trends are also on the slide. Nathanson predicted that CBS radio revenue would decline 22%.

Blog at