In response to the health threat posed by the coronavirus, programmers are pivoting from large-scale in-person upfront presentations to virtual events.
Given the production shutdown in Hollywood, it is difficult to know what the major programmers, including NBCUniversal Media LLC, ViacomCBS Inc., AT&T Inc.'s WarnerMedia, The Walt Disney Co., Discovery Inc. and Fox Corp., will be able to digitally showcase in May and how much those offerings may generate in advertising sales.
During the upfront negotiating season, content providers look to sell linear and digital schedules to advertisers ahead of the upcoming TV season. Media Dynamics, which provides analyses and forecasts for the media and advertising industries, estimated combined upfront spending against content on broadcast and national cable networks for the 2019-20 season at just under $21.9 billion, up 5.4% from the prior cycle.
But the upheaval caused by the coronavirus has left many industry observers wondering exactly how this year's upfront selling season will play out.
Many TV lineups are already in flux. For instance, the halt in production has postponed the 10th-season finale of AMC (US)'s hit zombie series "The Walking Dead," delayed the start of the fourth installment of FX (US)'s "Fargo" franchise indefinitely and cut short the sixth and final season of FOX (US)'s hip-hop drama "Empire" by two episodes.
Deana Myers, an analyst at Kagan, a research unit within S&P Global Market Intelligence, noted the coronavirus also has essentially curtailed pilot production, which serves a way to test a show's potential with a stand-alone episode. David Levy, the founder and CEO of investment firm and consultancy Back Nine Ventures LLC and former president of Turner Broadcasting System, said executives are instead going to have to "make gut decisions, hard choices" based on the quality of scripts and available talent in determining straight-to-series selections.
Jack Myers, a media ecologist and author of The Myers Report forecasts, thinks programmers could look to steer some two-year pricing models and deals to provide a hedge against audience projections, which will be lower in the upcoming season in the face of the pandemic. The situation is exacerbated, he said, by questions surrounding a sports calendar that also has been put on hold.
Levy said that without knowing more about production and scheduling, "it's going to be hard to have an upfront selling season." Levy expects "far more calendar deals" through which marketers secure time within a particular year instead of the traditional 2020-21 TV season.
Kagan's Myers does not believe there will be a true upfront. Rather as production resumes and schedules are announced, there will be a flurry of fourth-quarter scatter buying activity. In the scatter market, advertisers purchase commercial time closer to air date.
Fox Entertainment CEO Charlie Collier at a 2019 upfront presentation.
Wells Fargo analyst Steven Cahall foresees a COVID-19-connected recession on the horizon, with about half of marketers significantly exposed to a cyclical downturn. That could lead to a reset of the national TV ad market, which sees 70% to 80% of the broadcast and sports inventory purchased during the upfront.
There could be a penalty, though, if longtime upfront clients eschew the negotiations entirely, as they could forfeit the lower pricing bases they have secured over the years. Newer entrants, such as streaming services and direct-to-consumer marketers, have paid higher upfront rates than the more seasoned clients.
Kagan estimates that FOX, ABC (US), NBC (US), CBS (US) and The CW (US) garnered about $9.60 billion in upfront ad sales ahead of the 2018-19 TV season, and $10.2 billion for the 2019-20 campaign. Media Dynamics had similar estimates on the broadcast side and pegged upfront ad sales by national cable networks at some $11.7 billion and $11.1 billion for the last two cycles, respectively.
Marc Berman, editor of the Programming Insider website, thinks if the pandemic allows for production this summer, the 2020-21 season could start in November. The narratives for scripted shows are likely to be shaped by smaller episode orders, he said, and reality fare may take an even more prominent place on the dial.
"If and when they get the go-ahead, the networks will have to move quickly,” he said, noting that reality shows are quicker and cheaper to create.
Kagan’s Myers also foresees larger doses of reality TV, while expressing concerns about the ability for production to resume on any programming soon.
"With continued consideration for social distancing, production won’t be easy, even on a sound stage," she said.