For many in the media and entertainment industry, the past 12 months could be described as a year of everything and everyone at once, a period of turmoil and correction. And that is for you take into account the writers’ strike.
Last May, Jeff Shell and Bob Chapek bounced onto the stages of New York’s Radio City Music Hall and Pier 36, respectively, as CEOs of their respective kingdoms, NBCUniversal and Disney. Almost a year later, both men are unemployed. In fact, most of the top executives who were the upfronts for NBCUniversal, Disney, Paramount, Fox, YouTube, Warner Bros. Discovery and The CW led, not taking the stage this time (YouTube and The CW have since replaced their CEOs as well). , and Paramount skips the upfronts altogether).
Those holding events from May 15 to 18 will be wrestling with probably hundreds of notable writers just outside the doors of Radio City Music Hall and Madison Square Garden. Netflix will join the fight to grow its advertising business for the first time. But it, too, has seen its share of tumult, culminating in the decision to abandon its scheduled May 17 in-person presentation for a virtual event.
“I thought COVID threw a spanner in the works on the pre-presentations, but (the strike) could tame those (COVID disruptions),” jokes a high-level advertising source at a major entertainment company.
It’s not just former CEOs missing from this year’s upfronts; if the attack continues, there is also a risk of reduced star power. It goes without saying that comedic monologues from Seth Meyers and Jimmy Kimmel will be missing, but key talent looking to signal an alliance with writers could also play a part.
Already, Bupkis star Edie Falco skipped Peacock’s Newfront on May 2 (the day of the strike’s first picketline), and Law & Order: SVU showrunner Warren Leight suggested on May 3 that others will follow suit. “Talked to some other high profile actors – I don’t think many actors will appear on Upfronts next week,” Leight shared on his social accounts. “Grateful for the loyal support of SAG-AFTRA and its members.”
It’s common for stars to appear on stage and introduce clips or performances, but the picket lines expected beforehand throw those plans into disarray. Likewise, many of the venues that will host the upfronts rely on the labor of IATSE and Teamsters for lighting, sound and stage management. If those unions refuse to cross picket lines, anything can happen.
“I don’t envy any of the companies that have to put on a happy face and hang clouds like that over their company,” says a top executive of another media company that does not organize an upfront. “One big presentation event, and then a big party, isn’t really effective for today,” Paramount CEO Bob Bakish told analysts on May 4 of his company’s decision to skip the upfronts in favor of smaller, brand-specific meetings, in what now seems like a prescient decision, especially after their dismal earnings report.
The strike will also cause some chaos with the fall TV broadcast schedule, with uncertainty over what will be available and what won’t.
“The timing of the strike, obviously with the upfronts next week, is causing some — what’s the word — hesitation,” Fox CEO Lachlan Murdoch said on his company’s latest earnings call on May 9. “It’s hard to present an exact schedule, isn’t it?”
And the strike comes at the same time the industry is in what Warner Bros. Discovery ad sales chief says Jon Steinlauf describes it as a “bland ad market,” and what another head of ad sales describes as “difficult” and “unpredictable.” On May 4, Paramount reported that TV advertising revenue was down 11 percent year-over-year, citing “weakness in the global advertising market.” NBCUniversal also reported that its ad revenue fell more than 6 percent in the first quarter (excluding the Super Bowl).
It’s a market where a steady hand on top of the ad business could help ease marketers’ concerns. Of course, on Friday morning, Linda Yaccarino, NBCUniversal’s head of ad sales (who also hosted last year), left the company “effective immediately” despite being in “back-to-back rehearsals” for the upfront on Thursday. In other words, NBCU will have to run again Monday morning.
That hard-to-predict advertising market, combined with what appears to be ongoing secular headwinds facing the traditional TV business, has led to quite a bit of disruption, including massive layoffs in the tech and entertainment industries and creative accounting techniques to drive down costs.
It’s been a year since Discovery and WarnerMedia merged to form Warner Bros. Discovery. What followed was a wave of cost cutting and content write-offs the likes of which the media industry had never seen before, and it sparked an industry trend of sorts, which, widely written, revolved around chasing cash flows and streaming profitability after years of chasing. grow. Paramount took nearly $1.7 billion in content write-offs in the first quarter related to the merger of Showtime and Paramount+.
At AMC Networks, the company has had three CEOs since last and saw significant layoffs last year. “It was our belief that losses from cutting cables would be offset by gains in streaming. This has not been the case,” said the chairman of AMC Networks Jim Dolan wrote at the time. “We are first and foremost a content company and the content monetization mechanisms are messed up.”
As for traditional TV’s declining trajectory, it reported for the first time since Fox Corp. if his own business is spun off, that cable revenues in the past quarter were lower year-on-year as cable-cutting outpaced higher transportation costs. The company hopes new deals can help it grow again. Of course, Fox Corp. this year also had some other challenges that made national headlines (to say the least, see: Dominion), with the possibility of more to follow.
Not every entertainment company lost its CEO in the past year (though certainly more of them did than expected in April 2022, with cable giants Charter and Altice also swapping CEOs, and WWE’s Vince McMahon mayhem), but between the advertising crisis, cost-cutting measures and layoffs, no company has been left unscathed.
There is a tough macroeconomic environment driving a downturn in advertising; a slew of top executives out the door; a writers’ strike that threatens to cripple the scripted entertainment market; continued cable cuts biting into linear TV’s profit margins; and a cutthroat streaming market that prevents the emergence of a sustainable business model. But as preparations get under way, expect plenty of new smiling faces on stage, touting their huge streaming offerings and, of course, live sports – offerings that just happen to be advertiser-friendly in an otherwise tough market, and are also relatively isolated from the strike.
What happens next has not yet been described.
A version of this story appears in the May 10 issue of The Hollywood Reporter magazine. Click here to subscribe.
