Fewer Films in Hopper Mean Upfront Worries

May 2, 2005  •  Post A Comment

Movie studios may not deliver a good upper-cut upfront advertising punch for television networks next year.

The first goal for network TV executives before the upfront television market typically is to set prices as high as possible. Then they call the movie studios.

But with fewer theatrical releases expected next year and an overall softer TV advertising market, network sales executives are concerned they won’t get the same kick-start results.

The purchase of Metro-Goldwyn-Mayer by a consortium including Sony Pictures Entertainment and Comcast Corp., as well as question marks concerning the future of a slate of movies from Disney’s newly organized Miramax Films could mean fewer overall dollars for TV networks in the upfront.

“The overall number of theatrical releases will probably be down,” said one veteran network advertising sales executive. “MGM doesn’t exist as a company anymore [being bought by Sony]. Over the last few years, MGM’s releases have gone down.”

Major studio executives are just now evaluating the marketplace.

“I’m not necessarily getting a sense it’s up,” said Dawn Taubin, president of domestic marketing for Warner Bros. Pictures. “Our slate is roughly the same. We are just getting into evaluating that right now. “

Studios Think Young

Typically movie studios look to strike deals with young-skewing networks, such as Fox, for high-profile, high-rated, young-skewing programming such as “American Idol” as well as other top network shows such as CBS’s “Survivor” and “CSI.” Sometimes, in an effort to get better deals, movie studios move separately from their media agencies.

“Fox has always tried to get the movies to move separately,” said Steve Siskind, executive VP of marketing for Paramount Pictures. “But this year I’m not sure they can do that. Will studios separate their media buying from their agencies? There will be some debates over that the next month.”

Historically, movie studios pay the highest price for spots on TV network programs because unlike other consumer products, films need particularly strong sales around one specific time period-their opening weekend. If a film does not open strongly, the studio might pull it from release soon afterwards. To attract the most attention to a film before it opens, a studio might need to buy additional inventory on short notice-and pay dearly.

“For movie studios, you focus on getting the proper number [of spots in] tentpole programming, like ‘American Idol,’ as well as [in] season finales and season premieres,” said Roger Schaffner, president of Palisades Media Group, a Santa Monica, Calif.-based agency whose clients include Miramax Films, Lions Gate Entertainment and a number of specialty movie studio divisions.

Theatrical movie media strategy is far different from that used for other consumer products. Imagine if Procter & Gamble had only one shot to sell a new toothpaste on a particular Friday in April, said analysts. If it failed to hit its goal, P&G would have to pull the toothpaste. That’s the predicament unique to movie studios.

Movie sales goals are so crucial that before the upfront season, a studio sometimes will buy TV commercial time separately from its media agency’s regular upfront buys. Media agencies typically do deals for all their clients at the same time during the May/June upfront buying market.

Sony Pictures Entertainment is just one of many studios that has purchased TV time this way. While Sony may move early, it does so with the negotiating help of its media agency, Universal McCann.

“Every single time we moved early, we did better in the market than waiting to move with the rest of McCann’s clients,” said Cherie Crane, president of Perspective Consulting, who was a senior media executive at Sony Pictures Entertainment from 1998 to 2004. “We got in before [networks and agencies] know what the market was going to be, before inventory started disappearing, while it’s still laying on the table and the networks are a little anxious. So they sell off aggressively and you can do a better deal.”

Paramount’s Mr. Siskind added: “Sometimes studios think they can beat the market because they are worried about getting individual dates-say, for example, Thanksgiving or Memorial Day. Sometimes the studios feel since ‘I’m changing my spending, I can get a better deal regardless what my agency is doing.'”

Movie marketers must lock in commercial time for season-ending TV programs because of their high-profile tentpole summer pictures that begin to see release in mid-May. Once the season gets under way, a movie company may need to buy additional inventory to help market the movie. For all this, movies pay a premium over other network advertisers-sometimes as high as 15 percent to 20 percent. But Palisades’ Mr. Schaffner doesn’t believe movie studios pay higher year-to-year increases for programs versus other network advertisers.

Even before the moves of Sony/MGM and Disney/Miramax, movie spending had been slowing. Theatrical media revenues, according to advertising research company, TNS Media Intelligence/CMR, were virtually flat in 2004, rising just 0.3 percent to $2.20 billion.

Broadcast Buys Down

The real concern has been on the part of broadcast networks. Last year, movie studios’ broadcast network buying dropped 2 percent, to $1.20 billion in 2004 from $1.23 billion in 2003. Local spot TV buying fell faster-by 11 percent to $338 million from $380 million in 2003.

Movie media buying on cable networks, however, climbed about 10 percent to $513.4 million in 2004 over the year before. Syndicated television also rose 11 percent to $147.1 million.

The big change this year will be which broadcast networks sell the most time. For the first time in many years, ABC will be a strong competitor for movie dollars with Fox and CBS because of its hit shows “Desperate Housewives,” “Grey’s Anatomy,” “Lost” and “Extreme Makeover: Home Edition,” industry executives said.

NBC, on the other hand, will be at a disadvantage because of its drop in prime-time ratings, especially for its Thursday night lineup. Thursday night is a key marketing time for the movie companies as they tout films for the all-important weekend sales.