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Strike May Cause Higher Ad Prices, Reduced Inventory, Changing Viewing Habits

Late night and daytime talk shows are now in repeats thanks to the TV writers strike, disrupting media buys and causing gnashing of teeth for media buyers, who fear that this is just the beginning of what could be a long, drawn-out process.

Ad schedules for daytime dramas look as though they will also be disrupted, as networks have only a few weeks of daytime scripts in reserve, writes Media Life.

Media buyers are also worried that ratings will begin to slip if schedules fill up with reruns, causing a strain on inventory that is already tight due to networks giving advertisers makegoods for shortfalls in ratings guarantees. If inventory gets too limited, networks may pull ad space from the scatter market, and tight scatter would mean rising ad prices.

John Miles, director of investments at MediaCom, points out that advertisers can be assured of audience delivery, because that is how they buy ad space. But if the quality of programming deteriorates, buyers will begin to question whether network TV continues to be an appropriate place for clients to advertise. As prices rise and quality slips, buyers may eventually have no choice but to ask networks to return their money.

If viewers tire of reruns and unscripted shows and begin to turn their attention to cable TV and new media outlets, the networks could be in trouble. “During the last strike in the late 1980s, the cable networks started up first-run programming. Potentially, things like YouTube could run first-run programming, which could change viewing habits,” says Bill Reynolds, vice president and media director at Interpublic’s Erwin-Penland.

Meanwhile no one is willing to hazard a specific guess on how long the strike will last. The main issue is over whether and how writers share in revenues from new media, such as downloading of television shows to computers and cell phones. Writers are determined to share in new media residuals, particularly because they feel they have been short-changed on DVD sales. A serious challenge to striking a deal on the issue is the fact that nobody is sure how media will be consumed in the long term, or how it will be monetized.

A mistake for either side could cost a fortune in the long run.