Even before the COVID-19 pandemic tossed any idea of a normal fall TV season to the backburner, the value of the upfront marketplace, where upward of $20 billion in annual national TV advertising is placed over a few frenzied weeks in June, was being questioned.
Under normal circumstances, we would now be in the middle of pilot season, when the broadcast networks prepare their mid-May upfront presentations to the advertising industry. These have traditionally been big, expensive events, at venues such as Radio City, Lincoln Center, and Carnegie Hall, where the broadcast networks unveil their new programming for the following fall, talk about how powerful a marketing brand they are, discuss their strategy for the next broadcast year, and trot out a number of stars from their various shows.
Cable networks have generally had smaller presentations, which took place before the bigger and glitzier broadcast network affairs. That was starting to change, however, as these large conglomerates are realizing it makes sense to combine their broadcast and cable properties into a single event. For the past few years, NBCUniversal has included NBC, Bravo, E!, MSNBC, Oxygen, USA, and Telemundo in its annual presentation at Radio City, which traditionally leads off the broadcast upfront week. Disney hosted its first combined upfront presentation last year, with ABC, Freeform, and ESPN (which previously had its own upfront event), being joined by FX and National Geographic, which Disney acquired in its $71.3 billion acquisition of Fox assets. CBS has long held its event at Carnegie Hall. Last year was Fox’s first presentation as an independent broadcast network. Turner (TBS, TNT, Tru, CNN, Adult Swim, Cartoon Network, HLN, Boomerang, and Turner Sports), which always tried to play with the big boys, with its presentation mixed in with the broadcast networks, is now even bigger as part of WarnerMedia. Discovery (now merged with Scripps), A&E Networks, and MTV have often had bigger events (although before the broadcast upfront week). And now all of the broadcast networks’ parent companies (except FOX) have their own streaming services.
Of course, the very idea of a fall TV season in today’s video world seems old fashioned. The broadcast networks might still adhere to fall and mid-season schedules for debuting new shows, but their competitors do not. In a television landscape of 10-episode cable series, and streaming services where you can binge-watch entire seasons, viewers don’t necessarily think in terms of TV seasons anymore. Nevertheless, the broadcast networks still hold onto a schedule that starts in the fall. In light of the current pandemic, this might finally start to change.
Ad-supported cable networks premiere many new series when the broadcast nets are airing repeats and some limited-run series (mostly non-sweeps months and the summer). Premium cable networks, such as HBO, Showtime, and Starz, air new shows throughout the year. Streaming services, such as Netflix, Hulu, and Amazon Prime, release full seasons of new series whenever they happen to be ready. CBS All Access does as well, although it releases new episodes on a weekly schedule, rather than all at once. Disney+ and Apple TV+ recently added to the mix, and are about to be joined by Peacock and HBO Max.
Because of all the new competitors emerging over the past few seasons, developing and sustaining successful scripted broadcast series (without NCIS or Chicago in the title) is more difficult than ever. Unless a show clicks right off the bat these days, it’s hard to build it into a hit. We are not likely to ever see another Cheers, which began as the lowest rated show of the week and ended its 11-year run in the top 10. Or Seinfeld, a little-watched, mid-season sitcom that took three seasons to find an audience. Or even The Big Bang Theory, which finished its first season in 68th place and last year completed its 12th and final season as the longest running multi-camera comedy in television history.
It will be interesting to see what the networks do if there is no original new product to air come fall. It would make sense to air content from their own streaming services. CBS could certainly air CBS All Access’s The Good Fight, The Twilight Zone, Star Trek: Discovery, and Star Trek: Picard on its linear network. It would serve to provide free content and also to promote its streaming service. ABC could do the same with The Mandalorian from Disney+ or any number of Hulu series – they might need to renegotiate some profit-sharing elements, but that would be more than offset by not having to pay additional production costs. A broadcast network could also cut a deal with Netflix, Amazon Prime Video, or even Apple TV+ to air a season or two of one of their shows (which would also serve as good promotion for the streamer). The first couple of seasons of Bosch, for example, would fit in well with either the CBS or NBC procedural drama audience. The show has six 10-episode seasons on Prime Video, and this could be great cross-promotion. The broadcast networks accept advertising for streaming services, so the argument against promoting a competitor doesn’t fly.
Is the traditional pilot season in danger? Spending tons of money on new programming remains a risky proposition – only about 20% of all the new series that debuted during the past five years were still on the air this season. Producing pilots for shows that never make it to air is also quite costly. Will this pandemic-delayed season be the impetus to end the antiquated upfront system and do away with pilots altogether?
Here are some reasons why advertisers used to benefit from the upfront buying season but no longer do, and why the broadcast networks (mostly) still like the process:
- Advertisers no longer need the upfront. There was a time, in the era of “Must See TV,” when certain shows and network nights were so far above the rest of the pack both in ratings and critical acclaim (NBC Thursday, ABC Tuesday, CBS Monday), that media agencies would scramble to ensure their advertisers got the limited inventory in those shows. The bigger advertisers and agencies would invariably move the upfront marketplace to ensure they got first dibs.
Today, there aren’t really any broadcast series so head and shoulders above the rest that advertisers feel they need to be in them. There are no Friends’, M*A*S*H’s, or Roseanne’s on the air anymore. Young Sheldon might be popular, but it’s not The Big Bang Theory. Grey’s Anatomy and The Good Doctor get solid ratings, but they are not E.R.
- Broadcast networks like the upfront. Even though there is no question that linear TV is losing ground to other screens and streaming services, people of all ages (yes, even Millennials) still spend significantly more time with traditional television on an in-home TV set than with any other video source. Both the consumer and trade press cover these events, and it enables the networks to push back against the regular press narrative shouting about the demise of linear TV. Of course, as the upfronts have transitioned to mega-conglomerate events, this message about broadcast network strength has been diluted. It is no longer the broadcast branding event it once was.
- The upfront still benefits broadcast networks but not advertisers. Only an upfront system enables networks to continually raise prices for declining ratings. By having a broadcast upfront followed by a cable upfront, the broadcast networks have traditionally created an artificial demand for what is essentially an unlimited supply of commercial rating points. Then, based off the increases the broadcast networks achieve, it sets the increases the cable networks can get (despite their own declining ratings).
Thirty years ago, the average broadcast network rating was more than 10 times the average of the top 10 cable networks. Twenty years ago, it was 6 or 7 times larger. Today it’s only 3 or 4 times larger. The rating and reach advantage broadcast once had over cable is not nearly what it used to be.
- The upfront actually contributes to declining ratings. The upfront causes rankings to be more important than rating size. In other words, if you gave network executives a choice between having their ratings increase by 10% but falling from first to third place in the standings, or declining by 10% but moving from third to first place, they would all take the latter. This results in hurting the other guy being more important than improving your own ratings. At a time when the broadcast networks should see themselves as allies, they stubbornly hold onto the antiquated notion that they are their only competitors.
The same is true for cable networks. Despite the fact that only a few tenths of a rating point separate 30 or so networks, being in the top 10 is still ridiculously more important than getting higher ratings.
- Audience guarantees, still make the process seem worthwhile for advertisers. But as ratings continue to decline, both average network performance and individual program ratings become easier to predict. It is far more likely that you will under-estimate a show’s performance than over-estimate it. Guarantees only have value if a significant number of series perform below expectations. This type of safety net is no longer necessary. I’d rather buy commercial time on a quarter-to-quarter scatter basis than upfront – it would provide a greater degree budget flexibility and more certainty as to whether the programming I buy will actually air as scheduled.
- The upfronts allow the networks’ corporate owners to provide Wall Street with the confidence that they are financially healthy. It’s like a futures market. It also gives the networks a more structured control over their inventory, and removes a level of uncertainty that would exist if they didn’t sell 70-80% of their commercial load at one time.
Upfront presentations and events will continue to evolve, and may not happen at all this year, but they are not likely to completely disappear anytime soon. As long as the networks believe the process benefits them they will resist change. And it’s much easier for the few sellers to get on the same page than the many buyers. But if the question is whether or not advertisers need the upfront anymore, the answer is no.
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