State of the Industry – Luncheon Recap

State of the Industry panel shot

Picture if you will a dimension not only of sight and sound but of mind, a place where content meets revenue through a door which may be locked by young viewers and unlocked with the key of multiple platforms. There’s a signpost up ahead, your next stop: the Beverly Hilton.

The 2012 State of the Industry luncheon took place on June 7th and serving as our guides into the new dimension were five panelists representing a cross-section of our industry: Lloyd Braun, Co-Owner and Founding Partner, BermanBraun; Nancy Dubuc, President and General Manager, History and Lifetime Networks; Cliff Gilbert-Lurie, Partner, Ziffren Brittenham LLP; Gary Newman, Chairman, Twentieth Century Fox Television; and Rick Rosen — Head of the Television Department, WME

Alex Ben Block - State of the Industry 2012

Alex Ben Block

Moderating this panel of industry heavyweights was The Hollywood Reporter’s Alex Ben Block, who started with a tip of the hat to the record-setting success of HATFIELDS & MCCOYS, saying of Dubuc “it’s appropriate that she’s wearing red because her network is on fire”. Block asked “how do you follow that, what does this mean to your network going forward?” and Dubuc thought for a moment then drew a big laugh by quipping “oh shit”. She then pointed out that it’s the further building of their success, that they’ve had a great three years and were already the #1 network for Adults 25-54 in cable and that their mantra is “build it and they will come”.

Gary Numan - State of the Industry 2012

Gary Newman

Turning next to Newman, Block said that 20th “has been a hit factory in many ways”, going on to ask how they generate that kind of success, what is the magic? Newman said that “you try to get very lucky, since it’s as much about luck and good timing as it is about intention”. He added that “our mantra is to try and be bold, specific, try and do what others aren’t” and this is how shows like 24, GLEE and HOMELAND result.

How do you negotiate good deals in an era of shrinking budgets and general contraction of the industry? Gilbert-Lurie drew a knowing laugh when he joked that “none of us ever have any pressure in any of this”, adding that “the business has changed a lot where studios are now looking at budgets where they’re saying ‘this is how much we’re spending on the movie, regardless of who the elements are’ and so sometimes the back end deals come from the fact that you have a 20 million dollar actor or actress who doesn’t fit into the 40 million dollar budget”. Given these realities, it’s not uncommon for A-list talent to take a smaller upfront fee in exchange for a more generous piece of the backend.

Lloyd Braun at the annual HRTS State of the Industry luncheon

Lloyd Braun

Looking toward the 21st-century business model, Block next turned to Braun and said that he likes how his company is designed to look at “all of the different parts of the media landscape, from digital to traditional movies and cable”, asking how he and his team pick the right platform for a project. Braun replied that “it’s critically important that you’re doing the right work for whatever platform you’re developing for”, adding that “our approach really is that when we’re creating content, we’re looking at it in a variety of ways. What is this content or brand that we’re talking about doing and where does it belong? It’s a very different analysis if we’re thinking about it in the digital world than if we’re thinking about it in the television and movie world”. These sorts of analyses are critical since digital is quite different, as different from television as radio and print were from television.

Rick Rosen at the annual HRTS State of the Industry luncheon

Rick Rosen

The world is changing rapidly and so Block asked Rosen about keeping tabs on all of the changes, about doing research and trying to predict trends, asking “what do you see in the research field and do you think it’s going to change?” Rosen said that “from my perspective it’s probably the most critical issue in the television business today” since “there’s more content being consumed, more television being watched than ever before and the problem is that it’s not being accounted for in an accurate way”. The problem seems to be generational since traditional television ratings don’t account for everyone watching the show, and since “younger people, especially, our kids are watching shows differently. They watch shows a week later, they watch seven episodes in a row, they’re consuming enormous amounts of television. They’re watching either on their DVR or Netflix, all different ways but the networks are not getting compensated for that” and so showrunners, staff writers, actors and directors are not being properly compensated.

Nancy Dubuc at the annual HRTS State of the Industry luncheon

Nancy Dubuc

Block asked Dubuc a follow-up question about the compensation issue, how she sees it from the network viewpoint and she said of Rosen’s concerns: “I couldn’t agree more, we have to have measurement across alternative platforms, it’s going to be how people are consuming television”. Whenever and wherever an audience consumes content, it needs to be measured so that the content creators can be compensated, content is not created for free. Braun concurred, adding that “it’s maybe the biggest problem facing the television business, the way we all watch TV has changed”, adding how television content consumption has become more like books where people want to consume many chapters/episodes sequentially, not having to wait a week in between. Rosen gave an example of the generational differences, of how “you look at late-night television, you look at THE TONIGHT SHOW, you look at Letterman, they have a demo which is north of 50, so those ratings pretty accurately reflect who watches that show” whereas “Jimmy Fallon is a little bit younger than Dave , Jimmy has a strong online component to his show. Conan on TBS, his median age is 34” and so people from different generations are not watching the show in the same way and for the younger-skewing shows “the ratings reflect a fraction of the audience”.

Given that the old models are eroding and the new models aren’t really quite solid yet, what happens next? Braun said that things must be demand-driven and not supply-side, that “in my view, it has to start with what the audience is going to demand. We in the media business do a huge disservice to ourselves if….we don’t distribute and exploit the content in a way that the audience is begging for it to be exploited”. The music industry is the classic example, Steve Jobs provided what people wanted and had a hit. Braun hailed Netflix as an example of a good way to do things, saying “one of the reasons I have so much respect for Netflix is that those guys invested in a technology that on paper was going to kill their business” – a company that ships DVDs should not be so interested in having people watch online streams but Netflix saw the future and took the opportunity to move forward.

Cliff Gilbert-Lurie at the annual HRTS State of the Industry luncheon

Cliff Gilbert-Lurie

If the audience is decreasing as programming costs rise then how will we survive? On the demand side, Rosen said that “I’m not sure they’re getting less audience, it goes back to the ratings issue that we discussed. I think if there was a true measurement, an honest measurement, I think you would find out that the compensation for these programs would be more realistic”. On the supply side, Newman said that “we don’t want to be the boy who cried ‘wolf’, the truth is that our business is very healthy, our hit shows are as successful as ever financially”, however “it feels as if the entire industry is being built up on these stilts that are not very secure”. Dubuc said that they try to keep programming costs in check by looking at creative ways to make deals with top talent in both the scripted and unscripted realms.

In closing, Block asked the panel about the toughest negotiations they’ve ever been in and if there are any deals or shows that got away. Newman took a deep breath then said “there’ve been many…one of the most enjoyable, painful negotiations I ever had was actually with Lloyd over Jim Belushi, it was one of the first deals Lloyd and I ever did together”, adding that it was particularly memorable since “it was the beginning of a great friendship”. Gilbert-Lurie said “I guess the one that got away was Dave Chappelle, we put together this enormous deal with Comedy Central” and then he disappeared. Dubuc said “I sort of look at it the other way, there have been two projects recently that we’re particularly proud of”, specifically praising THE CLIENT LIST and HATFIELDS & MCCOYS. Braun said that “one of the most difficult [negotiations] was one I had with Rick, we’re very close friends but we didn’t talk to each other for about six months” in an argument over having JJ Abrams do another show at ABC. Rosen said that his toughest negotiation was in late-night, since “the whole episode at NBC with Conan was both unnecessary and painful”.

Charles Darwin said that it is not the strongest of the species that survive but rather those most responsive to change. It’s clear that the business is changing, evolving, into what is not yet clear but it is clear that the business will continue to survive and even thrive. No matter the platform or business model or measurement metric, there will always be a strong appetite for content and so the future is bright.

Photos by Chyna Photography

HRTS and JHRTS members – view the video of this luncheon, along with many others in our video archives.