June 4, 2007
Reading the UpFronts: A Conversation with Media Analysts Stacey Lynn Schulman and Alex Chisholm
Last week, I previewed a CMS course description for the fall 2007 semester, Quantitative Research: Case Studies in the fall 2007 Television Ecosystem. As a follow-up, Alex Chisholm and Stacey Lynn Schulman, the course instructors, started a dialog around some of the dominant issues in the television marketplace as they create the syllabus. Much of the discussion here follows upon the recent upfronts, an annual event during which each of the networks announce their plans for the coming television season. Their perspectives illustrate both the urgency of change and the breadth of historical perspective these two will bring to students at MIT this fall.
Characterizing the State of Primetime Television Performance
AC: This year's television season was, at best, lackluster. Despite some really great promise, especially with the arrival of many new and expanded extension strategies, there wasn't much to get excited about. Viewers either tuned in or didn't show up at all -- there didn't seem to be much of other networks catching the "run off" when a proven or presumed hit didn't deliver. Even juggernaut hit American Idol ended the season down in year-to-year ratings despite a strong early showing. Ratings that used to guarantee a show would be cancelled (anywhere between 4.0 and 6.0) are now regarded as highly respectable (the CW seems to be sustaining a business with shows averaging 0.5-2.0). At face value it seems that the sky is falling...
Meanwhile, with DVRs, online extensions, iTunes downloads, and advertiser-supported streaming video at network sites, we're seeing a significant shift in how people consume television content. While actual numbers aren't available because they're proprietary,
I believe that during the Tuesday and Wednesday following the broadcast of the Heroes series finale, NBC set a network record for the total number of page hits and video streams it served. Heroes was arguably the biggest new hit of the season.
SLS: The current season's performance is actually part trend, part business-as-usual. Keep in mind that new season successes are few and far between -- very few shows make it past the 4th quarter (October - December) and even fewer are picked up for the next season. Each year around this time I present the new season to advertisers and make the same point -- networks are in first place this year with ratings that would have left
them in third place just a year before ... and what constitutes a "hit" is relative to the network (i.e. CW). This trend is unavoidable in a fragmented entertainment market where the average home receives 102 channels. So, these observations have been fairly standard in TV analysis over the past 15 years. In the past, the industry has blamed cable as both thief and benefactor of disenfranchised network TV viewers. What is different about this past season, as Alex correctly points out, are new challenges facing programmers in a universe of time- shifting and on-demand viewership. Nielsen reported in April that DVR penetration had reached nearly 18% of the TV population and networks began full-force efforts to provide multiple viewing windows on air (in repeats) or online (on demand) throughout the season. Subsequently, the "live" TV audience for many established hits appear to be waning - and new shows are being
sampled, but in totally new ways. Unfortunately, without good cross-media metrics, we still can't tell whether the online (or alternative view) audience is the same or different from the TV audience ... and if their viewing once or multiple times. Here the question of actual audience size comes down to an old metric of reach and frequency ... how much of your audience is unique or unduplicated? And which environment is better for advertising - one in which you CAN skip the ads or one in which you CAN'T?
Look at how HBO's long-awaited final season of The Sopranos has declined every week from its premiere. The network wants to explain it away by the multiple windows they're
providing throughout the week to catch the show (on air)... but one has to wonder whether the bloom is far off the rose when there is significant audience erosion on the first original airing each week -- clearly not a water- cooler event!
Programming and Scheduling Strategies in a New Media World
AC: Last year was my first chance to attend all of the network upfronts. As a "newbie," I found the whole experience to be fairly entertaining and very much like what I've seen at other "pitch fests" such as the old E3Expo, the Consumer Electronics Show, and Macworld. It was a challenge to focus on what was "new" and what was "business as usual" (or "business in crisis"). I remember being excited by the amount of time NBC had spent on their digital strategies and then was disappointed to see that presentation slammed so badly in various media and financial reports through the rest of the week. What did I know? Given the way that last year's television upfront presentations were pitched -- new shows, mid-season replacements, lots of promos that started as early as last May -- and the reality of what happened during the year, I started to seriously question how much longer the traditional "season" of September to May is going to endure.
Two years ago, Prison Break was introduced in the late summer and has gone on to do very well. Last summer, The Closer became the highest premiering cable show ever in June. This year, ABC didn't premiere one of its midseason replacements, The Traveler until May. NBC pulled the plug on several shows within three weeks of premiere this year, while ABC was criticized by angry fans of both Desperate Housewives and Lost for the long periods between the airing of original shows, which were held to artificially inflate sweeps periods. Even Heroes, which has been a breakout, still could not give NBC a full victory on Monday nights when Nielsen data was analyzed; it helped NBC win the night during the fall and early winter, but it's not been able to bolster the network's programming through the spring, where it repeatedly lost the night to ABC (Dancing With the Stars) and Fox (24 and Prison Break).
SLS: In Gail Berman's last year as the head of entertainment for FOX television, she unveiled a progressive plan to move out of the traditional season and develop year-round
programming. That year, the FOX presentation stood out among others as the most confusing and complicated schedule ever presented. Not only was the industry confused, but so was the audience. The experiment failed miserably and Gail left to helm Paramount before the season was completed. Regardless, I applauded the effort, having proven through audience research that cable gained significantly in periods where the broadcast networks aired more repeats of established series. Sweeps stunts have been diminishing over the years - and this is an issue we will cover at some length in the course. The existence of sweeps is largely to gauge and set ad rates for individual stations in markets where there is not continuous measurement. Complicated network affiliate agreements that involve station compensation by the networks are at risk - and one might argue that digital viewing windows for content strain the relationship even further. While stations - owned or affiliated - pour millions into upgraded station equipment for HD transmission, their back-end is less and less secure...
The issue here is thus a good economic exploration of the business on multiple fronts. It costs a lot of money to produce television series, particularly fictional (although non-fiction costs are significant for series like, Survivor). It's not possible to produce the same quality of content every week of the year.. and networks depend on repeat windows to actually break-even on the cost of producing shows. When the FCC repealed the Financial Interest in Syndication Rules in the early 90's (which led to the expansion of the FOX network and the launch of the WB and UPN networks among other things), most believed that networks would take financial interest in the series they picked up for the schedule - and would thus benefit financially in the lucrative syndication marketplace. While we do have a much greater portion of the schedule owned by the networks (an increase from 20 - 60+% over the past 15 years), the declining trend of success and new digital distribution streams have significantly limited the syndication windfall. Three years ago, John Wells pre-empted the network in canceling his own series after only a handful of episodes, knowing full well that the cost of production would never be re-gained because the network would soon shut them down and there would be no pot of gold in syndication. And while the promise of digital distribution is tempting, no one has figured out how to properly monetize it and keep digital rights issues in check at the same time.
AC: My sense is that the traditional "tent-pole" programming strategies of creating an entire evening for a particular audience or demographic target have eroded dramatically in the past few years. It's hard to sit down and commit to one network's slate of shows. During the research we did around American Idol a few years ago, when I observed a single family week after week during the winter and spring, it was interesting to note that the minute the show ended, the kids were chased from the family room so the parents could settle in for 24, which was then in its second season, I think. The parents didn't necessarily watch American Idol with the kids, but rather entered the room 15 minutes before the transition to prepare the kids for the "chase." During our regular "design squad" research groups with about 65 teens for a "news for education" project this winter and spring, only a handful reported that they watched any television at all -- most surfed for entertainment content online, especially YouTube.
SLS: The bonds created by good audience flow are definitely diminishing, and yet, when we look at audience viewing clusters, we typically find that the shows which hold
together the strongest are those which fall on the same night on the same network. These bonds confound our common sense further because their linkages are stronger than linkages of genre. So there is a significant population of couch potatoes out there who settle into a night of TV, on basically the same channel. I believe that this is a phenomenon that may be explained by both generational and lifestyle gaps. A frequent urge in the media community is to want to study the habits of teenagers and young adults in order to forecast the eventual behavior of the population. While I agree that younger folks grow up in different circumstances and bring new expectations to experiences with technology (how long do I have to wait for x?), the life factors - children, job pressures, physical exhaustion, etc... provide a balancing factor (of how much we don't know) to the technological glee of earlier behaviors. Also, one of the hardest things to do in evaluating programming is to remove yourself from the audience and consider the overall complexion of the nation ... it may not be appealing to you the analyst, but it really plays in Peoria... It's the same with new technologies ... rapid adoption in some sectors doesn't always balance out laggard adoption rates in others...
On Changing TV Business Models...
AC: This year's upfront presentations were reportedly lean and mean, suggesting that all networks learned some lessons after last year's bloated and extended pitch fests. I didn't attend any but followed events and announcements on blogs and through popular and
industry media while I was traveling. Both TV Week and Variety reported that many in the industry thought the length and pitches were just right, a good compromise between total glitz and eliminating the upfront presentations altogether. The general observation is that television executives, long considered immune to criticism of excessive glitz in the business world, are now having to tighten their belts and be held more accountable for the businesses they steward; it seems the message that television executives need to respond to shareholders not just studio and network chiefs, has gotten through (General Electric, for example, constantly needs to "qualify" earnings per share limits given NBC Universal's performance; and, last year saw Viacom split CBS from its cable operations).
SLS: While certainly longer than this year's pitches, last year's bloated pitch-fests were actually shorter than years past... when I first began in the business each network presented for three-four hours a piece... and some of them were still doing that as of
last year. The debate around the upfront presentations is actually just the easiest target to hit first. What the industry really wants to debate is whether there should be an upfront marketplace AT ALL. Some marketers like J&J have taken strong positions to step out of the market, opting instead to negotiate throughout the year in the scatter market. Others are tried and true believers in the power of television. What becomes interesting is how we define "television" and whether marketers are best served with upfront dollar commitments to take advantage of new bells and whistles ... or not...
AC: The ouster of Kevin Reilly as head of NBC Entertainment over the Memorial Day weekend is perhaps the most immediate sign of how turbulent things have become at the "longtime-first-place-now-fourth- place" network as executives scramble to optimize development and business models. Reilly was released less than two weeks after the upfronts at a time when he should be one of the biggest champions of the new season's schedule and potential. Ben Silverman, owner of the company that produces The Office and The Biggest Loser for NBC, will replace Reilly, a sign that NBC is committed to following through on a strategy to create slates of reality programming across the board for the 8:00-9:00 p.m. and focus on high- quality dramatic/comedy program for 9:00-11:00 p.m. - Jeff Zucker outlined this strategy in October 2006, even before he rose to CEO. This strategy is having a ripple effect across the networks.
Indeed, only Fox touted a new comedy this year as a big chip in its line up ( Back toYou with Kelsey Grammar and Patricia Heaton); the rest of the networks buried anything new as replacement fare and actually cancelled most of the 30-minute sitcoms that
premiered and failed to impress this past season. What implications do business realities have on the development of new creative content? I'd love to do some case studies on how economics have long been part of the "culture machine," from Shakespeare's work at The Globe to Dickens's publication of stories in serial form in Victorian papers. I want to show that this business influence doesn't so much create a crisis of creativity but forces artists to, well, be more "creative," that it's not simply a matter of producing "art for art's sake" in many instances.
SLS: The ups and downs of entertainment executives is just part of the cycle... most don't last more than than 2-3 years (better than CMOs of late, but not by much). Ben's
appointment is interesting having grown up out of the talent agency business in London and making his mark by successfully importing formats to the US. This is a 33 1/3 proposition -- sometimes it really works (American/Pop Idol), sometimes it works marginally (The Office / Ugly Betty - critically acclaimed, but not a MASS audience
vehicle or time-period winner) and other times it disappoints (Big Brother - never as big as European success, Coupling -- ugh, remember that?). It will be interesting to see Ben in a true development role that isn't about harvesting success across the pond, but
is steeped in real scheduling and programming needs... Zucker's strategy wasn't exactly played out in the schedule that was announced, either... The creativity case studies are an excellent idea on Alex's part .. particularly in recent times relative to the FinSyn Repeal and the jockeying for schedule slots among Independent and Established producers. As networks demanded financial interest in order to get picked up, more independent voices emerged because established ones wouldn't play. Only the most celebrated producers and show-runners could make demands over the last 15 years creating a marketplace of hi and lo- end talent exposure with very little middle...
On Capitalizing on Fan Forums
AC: Finally, another interesting development this year was the acquisition of Television Without Pity by Bravo, an NBC Universal cable network. It will be interesting to see if the neutrality and honesty -- the brutality we've come to know and love -- of the site will be retained as NBC "absorbs" it into the machine. I'm concerned, especially since we've seen other really cool sites wither as they are consumed by their conglomerate owners. Still, it will be great to see what the Aggregated Television Fan Site 2.0 looks like when the next "buzz" site pops up as the answer to what TWOP used to be.
SLS: Totally agree. Lame way for Bravo to capitalize on the fan movement without putting the work in to create it organically for themselves... but a great asset if NBC leaves it alone and mines it for insight, but I doubt they'll go that route...
Our Course
AC: Stacey and I have worked together, along with Henry and others at MIT and in New
York and Los Angeles, to explore new ways to evaluate audience engagement with media content. It's been a great partnership because we bring some very complementary perspectives to bear on both the quantitative and qualitative research methods needed to better analyze what's happening in the market. We're creating a course syllabus and lab experience that will, we hope, immerse students in the fall 2007 television season in a unique way, celebrating the great new content to come to market, critically evaluating what's not working, and exploring the business issues of the successes and failures as they emerge in real time. Hope to see some folks in the fall. If you're not able to take the course at MIT, we may open our Facebook group to a larger set of networks for people to engage in our online conversations. As they say, please stay tuned!
SLS: Having spent so many years in the television business, it's hard to take a step back and have an "outsider looking in" perspective. The only way to do that is to explore the landscape with great thinkers like Alex and Henry -- or get out of your market altogether and observe how other cultures do it. This course is going to give a strong foundation in the metrics and processes that make the US TV market work today while simultaneously inviting students to challenge what has developed as business-as-usual - all with the tapestry of the network TV fall season to draw from. We hope you'll be a part of it!
If you have comments on the above dialogue or questions for Stacey or Alex, you can
e-mail them directly to or .
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Stacey Lynn Schulman is CEO, Chief Insight Officer of Hi: Human Insight, a media consultancy practice that specializes in unearthing insights that drive better connections between consumers and content. A recognized expert in fan culture behavior, Ms. Schulman was the president of The Interpublic Group of Co.'s fully-dedicated Consumer Experience Practice through January 2007. The practice advised marketers on how to effectively connect with consumers in the evolving media landscape, conducting proprietary research across the wide array of business sectors that reflected Interpublic's client roster. Insights led marketers to better understand the essence of the consumer experience in three distinct areas - brands, media technologies and content. Clients benefited from insight on emerging trends as well as customized advice on how to communicate with the consumer of the future.
Prior to her appointment at Interpublic, Stacey served as executive vice president, director of global research integration for Initiative, a media agency within the Interpublic family. Stacey was a key member of the global research team and applied her broad research skills to a wide array of critical research issues, with an emphasis on understanding consumer media behavior. She joined Initiative in August 2001 when TN Media merged with Initiative. Stacey played an integral role in Initiative's exclusive research partnership with the Massachusetts Institute of Technology (MIT), which resulted in breakthrough research on a number of key industry issues, including consumer behavior, interactivity and media convergence.
Before joining TN Media in 1997, Stacey conducted television and print research for D'Arcy Masius Benton & Bowles (DMB&B) while concurrently earning her master's in media studies from New York University. Stacey began her career at Katz Communications after completing her undergraduate degree from Northwestern University. At Katz, she conducted programming and local market research before moving on to spend several years at CBS.
Stacey is a former president of the Radio and Television Research Council (RTRC) and is a member of the Media Rating Council (MRC). Widely respected in the industry, she is routinely quoted in trade and consumer media outlets, and regularly appears on CNN, CNBC and FOX News Channel to discuss media trends. Stacey was honored in 2005 as a "Wonder Woman" in the cable industry by Multichannel News, one of the cable industry's most prestigious awards. In 2005 and 2003 she was named the most quoted executive in the industry by Advertising Age in the publication's annual "Media Talk" survey. In 2004, she was inducted into the American Advertising Federation (AAF) Advertising Hall of Achievement, the industry's premier award for outstanding advertising professionals under age 40. Stacey was the first research professional to be inducted into the Hall of Achievement in the AAF's history. Also in 2004, Stacey was named "Media All Star" in the research category by Mediaweek. In 2003, she was honored as a "Media Maven" by Advertising Age. In that same year, Stacey was profiled in Crain's New York Business as part of the prestigious "40 Under 40 - New York's Rising Stars" feature.
Stacey maintains an alternate career as a studio vocalist lending her voice to various projects in the New York City area. She resides in Harlem.
Alex Chisholm is founder of [ICE]^3 Studios, a media research and development consultancy that creates transmedia entertainment and educational properties, and is currently developing several projects with NBC News, NBC Olympics-Beijing 2008, and The Children's Hospital Trust. As Co-Director of the Education Arcade at MIT, Chisholm manages a variety of "games in education" projects, coordinates university-industry partnerships, and produces MIT's Games in Education conferences.
Previously, he organized the NBC Olympics Presents the Visa Championships-Torino 2006,
an "Olympics for the rest of us" experience that ran alongside NBC's coverage from Italy. As part of his ongoing work with MIT Comparative Media Studies and as a contributor to The Expression Lab, a research partnership with Interpublic Group's Consumer Experience Practice, Chisholm co- authored the third in a series of papers on the "expression," a new research model to better define consumer engagement with content across today's multiple media channels; this work was presented in Shanghai at ESOMAR's Wordwide Multi-Media Measurement Conference and was awarded Best Paper honors (June 2006).
Over the past seven years, he has collaborated on research, product, and program development with Microsoft, Electronic Arts, Sony Pictures Imageworks, Interpublic Group, LeapFrog, NBC Universal, Children's Hospital Boston, and the MacArthur Foundation. While Director of External Relations and Special Projects for MIT Comparative Media Studies between 1999-2003, Chisholm oversaw creative development efforts and research with the Royal Shakespeare Company, producing a computer game concept inspired by The Tempest, and managed research with Initiative Media around American Idol; as part of this work, he co-authored the first two papers on the "expression," which were presented at the ESOMAR/ARF Audience Measurement Conferences in 2002 (Cannes, France) and 2003 (Los Angeles, California).
Chisholm is the author and producer of Earthen Vessels, an independent storytelling project that emerges from a novel, film, and web site. He is currently working with
Sarah Smith, author of Chasing Shakespeares, to adapt her novel to the stage. Chisholm earned his B.S. in General Studies from Cornell University.
Henry Jenkins is the co-founder of the MIT Comparative Media Studies Program.
All the articles on your site are so recondited.The auther is so respectful.How many hours will it take to perform such an article?
I'm moved at your aticle.
It's really good!
Thanks so much for this synopsis of the state of TV programming today. Looks like a great class - by any chance, would you offer it via distance learning? I'm a Ph.D. student in Anthropology who is desperate for more media-related courses, and this sounds like one I'd love to take! If not, please post info on the Facebook group, as I've got a lot of questions and theories I'm mulling over in this area, and would like to discuss them with other like-minded souls.