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For many in the media and entertainment industries, the past 12 months could be described as a year of everything everywhere all at once, a period of tumult and correction. And that’s before you factor in the writers strike.
Last May, Jeff Shell and Bob Chapek bounced onto the stages of New York’s Radio City Music Hall and Pier 36, respectively, as CEOs of their respective kingdoms, NBCUniversal and Disney. Nearly a year later, both men are out of the job. In fact, most of the top executives who led last year’s upfronts for NBCUniversal, Disney, Paramount, Fox, YouTube, Warner Bros. Discovery and The CW will not be onstage this time around (YouTube and The CW have also replaced their CEOs since then, and Paramount is skipping the week altogether).
Those who are holding events from May 15 to 18 will find themselves grappling with what is likely to be hundreds of striking writers right outside the doors of Radio City Music Hall and Madison Square Garden. Netflix will join the upfront fray for the first time as it seeks to grow its advertising business. But it, too, has seen its share of tumult, culminating with a decision to abandon its planned in-person presentation on May 17 for a virtual event.
“I thought COVID threw a wrench in the upfront presentations, but [the strike] might make those [COVID disruptions] seem tame,” quips one high-level advertising source at a major entertainment company.
It’s not just former CEOs who will be missing from this year’s upfronts; if the strike continues, there’s a risk of diminished star power, as well. It goes without saying that comedic monologues from Seth Meyers and Jimmy Kimmel will be missing, but key talent wanting to signal allyship with writers could also play a role.
Already, Bupkis star Edie Falco skipped Peacock’s Newfront on May 2 (the day of the strike’s first picket line), and Law & Order: SVU showrunner Warren Leight suggested on May 3 that others will follow suit. “Spoke to several more high profile actors — I don’t think that many actors will be showing up at Upfronts next week,” Leight shared on his social accounts. “Grateful for the staunch support of SAG-AFTRA and its members.”
It’s common for stars to appear onstage and introduce clips or performances, but the picket lines expected at the upfronts throw a wrench in those plans. Similarly, many of the venues that will host the upfronts rely on IATSE and Teamsters labor for lights, sound and stage management. If those unions refuse to cross the picket lines, anything could happen.
“I don’t envy any of the companies that have to put on a happy face, and with that sort of cloud hanging over their business,” says a top executive at another media company that is not hosting an upfront. “One big presentation event, and then a huge party after, is not really effective anymore for the day,” Paramount CEO Bob Bakish told analysts May 4 about his company’s decision to skip the upfronts in favor of smaller, brand-specific meetings, in what now seems like a prescient decision, particularly after their dismal earnings report.
The strike will also cause some mayhem with broadcast’s fall TV schedule, with uncertainty around what will be available and what won’t.
“The timing of the strike, obviously with the upfronts next week creates some — what’s the word– hesitancy,” Fox CEO Lachlan Murdoch said on his company’s latest earnings call May 9. “It’s hard to present an exact schedule, right?”
And the strike comes at the same moment when the industry finds itself in what Warner Bros. Discovery ad sales chief Jon Steinlauf describes as a “lackluster ad market,” and what another ad sales chief describes as “tough” and “unpredictable.” On May 4, Paramount reported that its TV advertising revenue fell by 11 percent year-over-year, citing “weakness in the global advertising market.” NBCUniversal, similarly, reported that its advertising revenue fell by more than 6 percent in the first quarter (when excluding the Super Bowl).
It’s a market where a steady hand atop the ad business could help soothe marketer concerns. Of course, on Friday morning, NBCUniversal’s ad sales chief Linda Yaccarino (who also presented last year) exited the company “effective immediately” despite being in “back to back rehearsals” for the upfront on Thursday. In other words, NBCU is going to need to pivot by Monday morning once more.
That hard-to-predict ad market, combined with what appear to be continued secular headwinds facing the traditional TV business, has led to quite a bit of disruption, including mass layoffs across the tech and entertainment sectors, and creative accounting techniques to reduce costs.
It was a year ago that Discovery and WarnerMedia merged to create Warner Bros. Discovery. What followed was a wave of cost-cutting and content write-downs unlike anything the media sector had seen, and it sparked something of a trend in the industry, which, writ large, pivoted to chasing cash flows and streaming profitability after years of chasing growth. Paramount in the first quarter took a nearly $1.7 billion charge on content write-downs tied to its merger of Showtime and Paramount+.
At AMC Networks, the company has had three CEOs since the last upfront and saw significant layoffs last year. “It was our belief that cord-cutting losses would be offset by gains in streaming. This has not been the case,” AMC Networks chairman Jim Dolan wrote at the time. “We are primarily a content company and the mechanisms for the monetization of content are in disarray.”
As it relates to traditional TV’s declining trajectory, for the first time since Fox Corp. spun out as its own company, it reported cable revenue to be down year-over-year last quarter, as cord-cutting outpaced higher carriage fees. The company is hoping that new deals can return it to growth. Of course, Fox Corp. has also had some other challenges this year that made national headlines (to put it mildly, see: Dominion), with potential for more to come.
Not every entertainment company lost its CEO in the past year (though certainly more of them did than one would have expected in April 2022, with cable giants Charter and Altice also swapping out CEOs, and the WWE’s Vince McMahon mayhem), but between the advertising crunch, cost-cutting measures and layoffs, no company has been left unscathed.
There’s a difficult macroeconomic environment causing an ad pullback; a slew of top executives out the door; a writers strike that threatens to cripple the scripted entertainment market; continued cord-cutting biting into linear TV profit margins; and a cutthroat streaming market preventing the rise of a sustainable business model. Still, if the upfronts are on, expect plenty of new smiling faces onstage, touting their vast streaming offerings and, of course, live sports — offerings that happen to be advertiser-friendly in an otherwise tough market, and that also happen to be relatively insulated from the strike.
What happens next is still unscripted.
A version of this story appears in the May 10 issue of The Hollywood Reporter magazine. Click here to subscribe.
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