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Last Updated: Friday, 8 February 2008, 00:06 GMT
Writers' strike helps usher in new world
Anthony Reuben
Business reporter, BBC News

You could not have made up the thrilling finale to last weekend's Super Bowl.

David Tyree of the New York Giants makes a crucial catch
You could not make it up

And that is a good thing, because the people who usually make up the thrilling finales on US screens have been on strike for almost 15 weeks.

The strike is certainly beginning to bite.

Ratings on the US networks have taken a dive this year, a trend that many have blamed on their original programming beginning to run out because the strike prevents new material from being produced.

This poses a problem for the network, since it makes it harder for them to make money from advertising, which in turn leaves less for new programme production in the future.

Gloomy predictions

Short-term boosts to viewer figures, such as the Super Bowl which helped boost Fox's prime-time viewing figures to an average of more than 33 million people last week are welcome, though they do little to distract from the uncomfortable fact that most network ratings have fallen this year.

Not one of CBS, ABC or NBC rose above seven million last week, down from averages between 7.4 million and 11.4 million for the networks that were up against last year's Super Bowl.

Bleak predictions about how the current strike will hit Hollywood coffers abound.

Last time The Writers Guild of America went on strike, 20 years ago, it lasted five months and was estimated to have cost the industry $500m in lost advertising revenue - peanuts compared with the figures that are bandied around today.

This time around, the Los Angeles Economic Development Corporation says the strike has already cost the region's film and TV industry at least $650m in lost wages, with the wider economy racking up losses of some $1bn.

I'm not particularly concerned about whether I can sit eating cold pizza or shrimp and watching pilots
Lyle Schwartz, Media Edge

An industry study conducted by "informed sources", and leaked to the show business publication Variety, predicted that if the strike goes on until the end of the current season in May, the amount of lost investment in production could reach $3bn.

Taking into account the added effect on businesses such as scenery manufacturers, taxis, catering and shops in which writers and actors will not be spending their money, the study puts the overall cost to the US economy at $8.4bn.

Wrong programmes

The future may indeed be bleak for the industry, but not everyone agrees that it is the fault of the writers on strike.

Rather, the strike has just hastened industry changes that were already underway, according to Lyle Schwartz, who represents advertising group WPP's media buying agencies in the US.

"It's really about the programming and not the writers' strike," he says.

Pamela Segall and James L. Brooks demonstrate outside Fox Studios
There are rumours that a settlement may be reached soon

"The ratings fall so far is because the programmes are not what people want to watch.

"The original programming that has been shown has had quite low ratings."

Mr Schwartz says that the only effect of the strike has been to accelerate the movement of advertising spending away from the networks towards cable channels.

Cable channels have been less badly hit because they show less original programming and because they make it further in advance.

Little impact

Remarkably, the networks themselves also insist that their finances have not yet been hit by the strike.

"It did not have a significant impact on the quarter that we're just announcing, and we are hopeful an agreement will be reached soon," says Robert Iger, chief executive of Walt Disney, which owns ABC.

News Corp, which owns the Fox network, agrees.

"The writers strike did not have any material impact on the quarter's results," says David DeVoe, its chief financial officer.

Awards ceremonies

But there is no question that NBC suffered from the loss of the Golden Globe Awards, when a press conference replaced the usual razzamatazz.

NBC, which broadcasts the ceremony, usually makes about $15m from advertising around the ceremony, but is likely to have taken only a small proportion of that this year.

Dayna Devon at the Golden Globe Awards
The Golden Globe Awards had to be announced at a news conference

The major impact from the loss of the ceremony is expected to be felt in reduced DVD sales and rentals of the nominated films, which would usually receive a big dose of free publicity from the event.

The effect will be more serious if the Oscars ceremony on 24 February is scaled back.

But Sid Ganis, president of the Academy of Motion Picture Arts and Sciences, says that there is no doubt the Oscars will take place whether the dispute is resolved or not.

Changing industry

Many people are predicting that the Oscars on the horizon will provide the deadline for the two sides to reach a resolution, though even if that happens, the studios say it will not be business as usual.

ABC and Fox plan to make fewer pilot shows this year as part of attempts to cut costs, while NBC announced in January that it is going to stop making pilots altogether.

"I would say that, sure, the strike may be a catalyst, but we've also been exploring and re-evaluating all parts of that [TV] business," Mr DeVoe says.

Anachronistic hors d'oeuvres

The studios are also reconsidering what is known as the "upfront" process, when advertising space is sold in May for the upcoming season's programmes.

"How we present the schedule and what schedule is presented is still open for discussion," Mr Iger says.

"The manner that the upfront or the schedule is presented with the sort of bells and whistles on big stages and a fair amount of hors d'oeuvres feels like a bit of an anachronism to me," he adds.

Mr Schwartz says that the loss of the parties will not be a great problem.

"As long as we get an idea of what the new programmes are, I'm not particularly concerned about whether I can sit eating cold pizza or shrimp and watching pilots," he says.

So as the studios try to settle their differences with the writers about how to deal with new media, the writers' strike appears to be accelerating changes that were already taking place in the industry.

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