Follow the Money: Let’s be Upfront about the Infronts

Jennifer Holt / UCSB

NBCs Ben Silverman

NBC’s Ben Silverman

Last week, NBC unveiled a “supersized” 65-week schedule (through Summer 2009) to advertisers and journalists in a stripped-down version of the upfronts—those glitzy presentations that unveil network prime-time lineups to much fanfare each May. This ritual is more than just publicity, though; the upfronts are also a $9 billion market (and that’s just for primetime) where sponsors buy advertising time before the season begins. For both networks and advertisers, this is a mutually beneficial opportunity for risk reduction – the networks unload between 80-90% of their ad inventory in advance and advertisers save money by locking in rates on potential hits that would be far pricier buys if the shows were to find a big audience.

This year, however, just as President and CEO Jeff Zucker has repeatedly promised over the last six months, NBC offered a radical alternative to the traditional over-the-top “razzle-dazzle and surfeit of shrimp” as the upfronts were recently described in Variety. ((Adalian and Schneider, p.14)) Instead, the network’s chief executives are having a series of low-key meetings with advertisers to present new shows and strategies, minus the seductive parties…and calling them “the infronts.”

Much of the press discourse on NBC’s “infronts” –which took place 6 weeks before the other networks’ upfronts – has been focused on describing the new lineup with giddy anticipation. The rest has been devoted to speculation as to whether or not wunderkind Ben Silverman, the recently appointed Co-Chairman of NBC Entertainment and Universal Media Studios, had pulled off the minimalist makeover of such a vaunted tradition.

Silverman arrived last June at an NBC that has been stuck in last place for almost four years now. He was charged with developing NBC’s prime-time, overseeing production and creating innovative digital strategies in order to pull the company out of the ratings gutter and into the era of “360-degree distribution,” where content is delivered anytime, via multiple platforms, whenever the viewer wants. After 10 months, a renewed devotion to “product integration” by any means necessary and a smooth reception last week, the verdict seems to be that Silverman has pulled it off.

Friday Night Lights

Friday Night Lights

In fact, he has pulled off much more than launching a successful “infront”: he has made self-dealing expected and even non-controversial in the current business climate. This year, all of the scripted series ordered by NBC went to sister company Universal Media Studios, except for three that went to international producers. ((Gough and Andreeva)) That is to say, no studio competitor or independent production company received an order for their projects. When adding the six new series ((My Own Worst Enemy, Knight Rider, Kings, The Philanthropist, The Office spinoff, Kath & Kim)) to the ones already airing in prime-time that NBC Universal has an ownership stake in (such as The Biggest Loser, Lipstick Jungle, Life, The Office, 30 Rock, Heroes, Friday Night Lights, American Gladiators and, of course, the motherlode Law & Order franchise), the result is one very self-involved programming strategy.

More than any other network, NBC has embraced a game plan of buying its own product. Even more glaring are the deals that the network has made with Reveille, a phenomenally successful production company and one of NBC’s chief suppliers. The company, based on NBC’s lot, produces The Office, The Biggest Loser and American Gladiators among others. Silverman first began his tenure as NBC’s chief programmer while he also owned Reveille. In the 9 months from June ’07 when he began at NBC to February ’08 when he sold his company for $125 million (to Rupert Murdoch’s daughter, Elisabeth), Reveille sold 14 shows and scripts to NBC. Prior to his hire, the company had only 3 projects at the network. ((See James and Lauria))

Michael Scott The Office

Michael Scott, The Office

It is quite surprising, even in this business, that such a blatant conflict of interest was not a larger issue in the press or even at the network. Of course, Silverman is not the first to be in such a position. At the very same network, Grant Tinker also went from producer to network executive when he became Chairman and CEO of NBC in 1981 (notably, the network was in last place at that time as well). Tinker eventually sold his interest in MTM, which had Hill St. Blues on NBC at the time of his arrival. He later commented on the sale of MTM, saying that while the terms of the deal were not optimal for him, “You can’t be buying programs and selling them at the same time.” ((James))

And yet in 2008 it appears that you can do both, indeed now more than ever. In the days before the financial interest and syndication laws (“fin-syn”), networks monopolized their prime-time schedules with homegrown product, forcing the hand of regulators to forestall vertical integration in the television industry. Since the repeal of fin-syn in 1995, networks have owned increasingly larger percentages of their prime-time schedules, growing to over 70% at various times. This process has appeared to be somewhat gradual and (except for the self-dealing lawsuits in the late 1990s) occurring under the radar of most press accounts. ((For more on this process as it has evolved in the present television landscape, see Chapter 3, “Making Television” in Amanda Lotz, The Television Will Be Revolutionized, NYU Press, 2007.))

In the last 2-3 years, however, the commitment to program ownership has taken on renewed intensity at the networks. TV’s business model is currently dying at the hands of digital technologies, and executives are frantically searching for new ways to repurpose content for aftermarkets and “monetize” their programming– via webstreaming, digital distribution or even on DVD. In order to maximize exposure during a show’s initial run and profit from new technologies in the long term, owning the product is key. The recent writer’s strike was a dramatic expression of how crucial the issue of ownership has become in the consolidated entertainment landscape, and NBC’s current schedule is yet another reminder of that fact. Perhaps the absence of fancy buffets and open bars at the “infronts” is even more evidence of the same reality: as the stakes and stakeholders in the television industry continue to evolve, and as networks produce more of their own schedules, the business becomes less about serving others and more about serving yourself.

Sources:

Adalian, Josef and Michael Schneider, “Upfront Upheaval,” Variety, March 31-April 4, 2008, p. 14.

Gough, Paul J. and Nellie Andreeva, “NBC Presents Shows, Strategy at Upfront,” Hollywood Reporter, April 2, 2008.

James, Meg, “NBC’s Silverman Sells Production Company,” Los Angeles Times, February 14, 2008.

Lauria, Peter, “Shine on Sale by Silverman,” New York Post, February 15, 2008

Image Credits:
1. NBC’s Ben Silverman
2. Friday Night Lights
3. Michael Scott, The Office

Additional Reading:

Belloni, Matthew. “It’s Ten O’Clock. Do You Know Where Your Network President Is?” Esquire, November 8, 2007.

Weprin, Alex, “Upfront and Center: NBC Unveils 2008-09 Season,” Broadcasting and Cable, April 2, 2008.

Please feel free to comment.




How to Monetize Friends and Influence Distribution: Lessons from Four Days at NATPE

img_1-0813.JPG

The Alternative Programming panel, at NATPE 2008 in Las Vegas

Attending the NATPE (National Association of Television Program Executives) conference last month as a faculty fellow was a rare privilege and opportunity, not only to hear executives discuss the worst reality show pitches they have ever heard (The Orphanage, Iron Lung and my personal favorite, Adoption Island) but to watch those in and around the TV business analyze, promote, forecast and try to explain the industry’s current state of affairs. Despite the utopian rhetoric and boosterism pervading most conversation, the simmering panic in the air was palpable. This brand of anxiety was unique for Sin City…because it was all about television.

The panic was clearly evident in the conference’s recurring party line of optimism, which was being betrayed in real time by grim business realities. Over and over, the panels trumpeted the “excitement” that was supposedly taking over the industry at this critical turning point for TV. We were repeatedly told that this is a time of reinvention and renewal, a period of democratization and reimagination. Yet at the same time, there were reluctant acknowledgments that “digital has thrown the entire formula into chaos,” and while this appears to be a good time for content producers, the business around them is in turmoil. With panels like “Taming the Online Video Beast,” “There’s No Such Thing as a Free Lunch,” and “Lights, Camera, Lawsuit,” the possibilities of TV 2.0 often felt outgunned and outnumbered by the fear of the future and the menacing threats of digital technologies to any and all business models.

img_4-0770.JPG

NATPE panel: “There’s No Such Thing as a Free Lunch”

Multi-media strategies are an absolute imperative for all points of the business, and thus the digital interlopers, as they used to be called, have now become the focal point of the conference. Consequently, at some point during the four days of talk about Hulu, Joost, Amazon Unbox, Google, YouTube and the iPhone, defining television became very tricky business.

A few other issues of definition and strategy also became apparent at “The World’s Television Marketplace” in the middle of the desert. For example, I learned that TV’s survival depends on its complete transformation. This edict came straight from the keynote address by the President/CEO of NBC Universal. It was entitled “A Time for Change,” but I couldn’t help thinking it would be more aptly named “The World Is Changing: Some Thoughts on Our Business by Jeff Zucker.” The latter title is taken from Jeffrey Katzenberg’s infamous 1991 memo, which implored Disney and the film industry at large to stop racing like lemmings into the sea in pursuit of the next blockbuster. Zucker essentially delivered the new millennium TV version of this rant against big budgets and excessive spending. Katzenberg was coming off of Dick Tracy and panicking over the $100 million movie; Zucker is experiencing a writers’ strike and in his words, “a wrenching analog-to-digital transition … marked by game-changing technological developments and profound shifts in consumer behavior … all of which demands a re-engineering of our businesses from top to bottom.” Katzenberg’s memo criticized Hollywood’s “tidal wave of runaway costs” and was the subject of much derision after being leaked to Variety; Zucker set himself up for similar scorn with his unyielding thoughts about the current strike (which he compared to a forest fire that “fertilizes the soil with new ash and clears the ground, often setting the stage for robust growth”), his disdain for pilots (inefficient and too expensive) and his promise of impending drastic changes to NBC’s upfronts (less glitz, no more big presentations). Tightening the belt might help when you are behind everyone else in prime time, but it can also ensure that you stay there. Still, there might be something to Zucker’s uncharacteristically humble observation that when you are on your back, it’s easier to see the future.

img_3-0759.JPG

Jeff Zucker Delivering NATPE’s Keynote Address

The rest of the future talk at NATPE was about distribution. Despite paying a great deal of lip service to content, most of the focus was on technology. Broadband, mobile, digital — anything that carried content was of far greater interest than the content itself. This despite the fact that NATPE is first and foremost a market; it is about “filling people’s pipelines,” as it was described by one executive, and there are 330 production companies in the exhibit hall desperately trying to sell syndicated product to anyone with a “Buyer” nametag. Yet, while everything from “adult entertainment,” telenovelas, and Swedish educational programming to TMZ, Live with Regis and Kelly and even The Rifleman were for sale, the panels were much more concerned with distribution and marketing strategies than they were with content concerns. When content discussions did come up, they were primarily about the excellence of unscripted TV and embracing trash as the medium’s potential salvation. As one speaker put it, “We cannot be above American Gladiators.”

american-gladiators.jpg

American Gladiators

Advertisers were also a significant presence at the conference, which led to many discussions of the desperate need for “new metrics” to deal with “video snacking” and track media usage across various platforms. As was noted on many occasions, for television to become “Tivo-proof,” there must be ways of measuring the audience that transcend typical usages and methods, outsmarting the nasty habits of online video and DVR cultures. There was a sense of urgency around this topic and even Jeff Zucker echoed the clarion call to find the audience once again.

This mighty struggle to find the market, to “monetize communities,” find a business model for the digital age (all broadcast networks have different “digital strategies” at the moment), and root out new technological niches seems to have most players confused. Not confused about the need to “monetize” something — that being the most overused word in the industry right now — but confused about how to put that into practice as the audience has become even more elusive in the digital era. The striking affirmation of this problem was in the snowboarding convention down the hall: there they were, 18-34 year-olds in massive numbers, decidedly not watching television. But they did seem to be having quite a party. Perhaps NATPE partied this way too, before everyone started to panic.

img_2-0796.JPG

Snowboarding Convention Participants

Lastly, we were informed that there is no more “flow” in television, something the editors here might find surprising and alarming. Let’s hope this journal does not need a new name in light of this revelation. “Pulling Content for Personal Use — A Critical Forum on Television and Media Culture” just doesn’t have quite the same impact.

Image Credits:

1. The Alternative Programming panel, at NATPE 2008 in Las Vegas, image provided by author.
2. NATPE panel: “There’s No Such Thing as a Free Lunch,” image provided by author.
3. Jeff Zucker Delivering NATPE’s Keynote Address, image provided by author.
4. American Gladiators.
5. Snowboarding Convention Participants, image provided by author.

Please feel free to comment.




All I Want for Christmas is Some Cultural Policy in the Public Interest

Judging by the FCC’s holiday plans, it seems that this year, billionaire media moguls have been very, very good and the public has been rather naughty.

Acting as Santa Claus or the Grinch, depending on your perspective and corporate holdings, FCC Chair Kevin Martin announced last month that he would like to make dramatic changes to the nation’s media ownership rules… before Christmas.

Kevin Martin

Kevin Martin

Martin’s announcement was shocking for a number of reasons. First, the idea of increased consolidation in the media industries has been wildly unpopular of late with the American public; indeed this issue became political suicide for his predecessor, Michael Powell. The last time the FCC attempted to loosen these rules 4 years ago (under Powell), the ensuing public uproar stopped the FCC in its tracks. The Commission received millions of complaints and statements opposing further consolidation, Congress stepped in, the President made an about-face and declined to intervene on behalf of his appointed Chairman and when the federal courts finally got involved, Powell was “taken to the woodshed by the 3rd Circuit” as Commissioner Michael Copps has described it. And yet, the resulting “compromise” from that round of negotiations increased the station ownership cap to — surprise! — the exact percentage held by Viacom and News Corporation (though still short of what Powell and media lobbyists had planned). Those rules were eventually sent back to the FCC for another rewrite after the Supreme Court refused to hear corporate media’s appeal, and their fate has remained in limbo. Until now. This time, the FCC is again attempting to craft policy solely based on and determined by the needs of the largest media companies. The biggest issue on the table is the cross-media ownership rule, which has prevented one company from owning a newspaper and a broadcast station in the same market since the mid-1970s. Martin is intent upon repealing this with unprecedented speed, leaving no time for sufficient analysis or public comment and also ensuring that those opposed will not have the time to organize the type of widespread response that was generated in 2003.

Martin’s remarkably swift timetable is perhaps more easily understood when looking at the ticking clock on the $8.2 billion deal for the Tribune Company. Chicago real estate baron Sam Zell is relying on the FCC to repeal the cross-ownership ban in order to keep the Tribune empire intact; currently, the company owns newspapers and broadcast stations in 5 markets, including Chicago, New York and Los Angeles. The waivers allowing for this would expire if the company changes ownership, which makes this repeal crucial for Tribune and Zell. Further, if the deal does not go through by December 31, there are provisions that make it much more expensive — $871,884 more expensive every single day, to be exact. Many analysts think that if the rule is not repealed or if Tribune is not granted temporary waivers for all five markets by mid-November, the deal could unravel.

Sam Zell

Sam Zell

Each time ownership limits have been deregulated, large-scale mergers in media industries follow. Thus, the potential scope of impact on the media landscape and their schedule for completion are clearly alarming aspects of Chairman Martin’s latest announcement. Yet for television scholars and critics, this Media Ownership Redux should also be quite striking for its lack of visibility in discussions and debates about television itself. The issue of ownership ultimately becomes just as much (if not more) a question of arts and culture as it is of legality or economics. In fact, this relationship between regulatory practice and discourses, the vitality of media and the nexus of technological and institutional convergence is actually a matter of cultural policy. However, largely because of the (entirely false) mythology that the United States does not have cultural policy, the domain of the FCC is rarely framed as such.[1] Unfortunately, that disconnect means that it is much harder for media regulation and reform to hit prime time, or at least get closer to the front page or the entertainment news. Most coverage of these impending changes has been eliminated outright — especially on mainstream television. What remains in newspapers has been relegated to the business or financial sections. This placement ensures that media ownership is almost never discussed in the press as a cultural issue or one relevant to the public, art or personal freedom. And yet, it is one of the most crucial elements behind the quality of public information, collective cultural expression and the strength of a functioning democracy. Market forces are strongly related to arts subsidies, carriers are intricately attached to their content and the political economy of television is directly linked to the schedules of Dancing with the Stars and Kid Nation. Culture and commerce are obviously and desperately interconnected but somehow critical discourse has failed to characterize this relationship effectively enough to achieve much notice from the FCC.

WGA Strike

WGA Strike

Of course, those in the media reform movement have been boldly ahead of this curve for many years.[2] They have also been turning their attention to the issue of who will control the digital space where television will soon reside full-time. One only needs to look at the issues in the current WGA strike to have a full appreciation of what is at stake for this intersection, especially in relation to the consolidation of media ownership. Chief among reformers’ concerns is control of distribution, which is also part of the fight to maintain “net neutrality.” This safeguard against corporate gatekeeping in cyberspace was secured for just two years as a condition for regulatory approval of the AT&T/Bell South merger.[3] It is still alive, but just barely. As Mark Cooper, Director of Research for the Consumer Federation of America and one of the foremost experts in this area has said, “We saved it, but it is on life support in the ICU and a code blue is about to sound.” Based on the present goals of the FCC and the recent antics of Comcast, it appears that this frontier of media ownership is poised to host the next showdown between government regulators, telecommunications giants, global entertainment conglomerates and the public interest. Hopefully, it will be understood for the complex battle that it is: one that could determine the art and economics of media’s future. Stay tuned to the middle of your business section (below the fold) for more on these important stories!

If you are unhappy with your probable lump of coal from the FCC, try clicking here:

“http://www.house.gov/writerep/”

http://www.senate.gov/general/contact_information/senators_cfm.cfm

http://gullfoss2.fcc.gov/ecfs/Upload?hot_docket=1009000908%7C04233%7CLocalism+Task+Force&Send=Continue

Notes:

[1] For an excellent discussion of this divide, see Napoli, “Bridging Cultural Policy and Media Policy in the U.S.: Challenges and Opportunities,” 2006

[2] In fact, Bill Moyers’ Journal on PBS has recently profiled this issue. For outstanding coverage, links, transcripts and resources, click here: http://www.pbs.org/moyers/journal/11022007/profile.html

[3] This was an $85 billion deal and the largest telecomm merger in history.

Image Credits:
1. Kevin Martin
2. Sam Zell
3. WGA Strike

Please feel free to comment.