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How Much Will WGA Strike Hurt?

As the Writers Guild of America (WGA) prepared to go on strike at 12:01 a.m. Monday, two critical issues emerged: How long can the networks hold out? And how much of the damage be irreparable?

The writers voted to walk last week in their contract dispute with TV networks and studios, as well as the movie business. Issues center around better compensation for content migrating to new platforms and better residuals from the sale of DVDs.

Barring an unexpected turn of events over the weekend, the long-anticipated writers strike is now on.

“In the past you'd figure you'd just wait it out, take a hit, and then get back to where you were before,” says one studio chief. “Now you don't know if that will be the case.”

The 12,000-member WGA called for the strike after talks broke down Wednesday with the Alliance of Motion Picture & Television Producers. The current contract expired last Thursday. Neither side reported being close on any major issue.

A fundamental disagreement over payments to writers for DVD sales caused the sides to stop talking last week, but a long and rabid negotiating run-up had already made a work stoppage a foregone conclusion for many in the industry.

While the guild was preparing to hunker down, the network and studios were putting on their bravest faces that they could wait for the right deal.

“We continue to engage in serious negotiations and hope that an agreement is reached soon,” said Leslie Moonves, president and CEO of CBS Corp. earlier in the week. “But make no mistake, we are prepared.”

Some industry executives wondered quietly late last week if this would be a chance for the industry to bring costs under control and actually help the business in the long term (see Left Coast Bias, page 6).

But if history provides a guide, the strike will likely be costly to everyone involved.

Enduring pain

The last time WGA members went on strike, networks lost an estimated $500 million and 9% of their audience. That was in 1988 before there was a digital superhighway that was moving at warp speed with the potential to make real-time road kill of traditional media.

The 1988 strike lasted 22 weeks—from March into August. Some “bubble shows” never really recovered. Moonlighting is one of the more noteworthy examples and Hill Street Blues also took a hit that it never really shook off. But the strike occurred near the end of the broadcast network's high season and during the summer Olympics (which ran on NBC).

Also significant: Viewers had few alternatives then. Broadband and streaming video were just telecom pipe dreams.

Cable was still in its nascent stages with only 78 nationally delivered cable channels in 1988. There were 531 in 2005, according to the most recent data from the FCC, and Nielsen says the average home receives 104.2 of them. In 1988, the average home received just 27.7.

With such a vast and esoteric media landscape, and YouTube and other Web diversions, this time if large networks lose viewers it will be that much harder to lure them back.

In 1988 networks filled their schedules with reruns, news hours and hastily produced variety shows.

“There were a surprising number of Bugs Bunny and Garfield cartoons in primetime,” says Tim Brooks, television historian and author.

One of the main sticking points in the current tussle between the WGA and producers is the proliferating platforms on which writers' work appears. Writers want payment for online distribution of TV shows as well as union representation for Webisodes and other new-media content writers.

Producers contend those platforms have yet to generate significant revenue. The irony of the argument over the digital domain, of course, is the very real threat that digital will fill at least some part of the content void generated by a strike.

“Digital media may be the one [medium] that stands to gain the most from all of this,” said Brad Adgate, director of research at Horizon Media.

Indeed, consumers have more choice than ever and they may just turn their sets off and opt instead for their laptops, iPods or video phones.

Says Adgate: “This could be the tipping point.”

Where the networks stand

The networks have enough episodes of scripted series in the can to take them to January and they may spread original episodes out to take them even further, which means viewers may see a rerun or two in November where traditionally all original episodes of weekly shows aired. December is always an unimportant month marked by re-runs and holiday specials. But whatever the networks' strategy for spreading out original content, if the strike persists into early next year, the cash and viewer hemorrhage will be considerable.

CBS, NBC and ABC are enlisting their news divisions, readying more installments of newsmagazines and specials, which have always been used to plug holes in primetime schedules.

Look for reality and game shows to proliferate—they don't fall under the WGA umbrella for now.

ABC has Oprah's Big Give and Dancing With the Stars spinoff Dance X. NBC has its celebrity edition of The Apprentice ready for January and could possibly cherry-pick fare from its stable of cable networks including Project Runway from Bravo. And with a little creative editing, CBS could extend the run for the sixth installment of Amazing Race (which debuted Sunday).

Fox is perhaps in the best position. With American Idol set to return in January, the network could easily milk the franchise for more hours of the always-popular audition episodes.

Daytime syndication should continue, and perhaps thrive in a landscape largely populated by reruns. Soap operas will face real script cliffhangers by December. The genre is already struggling and weeks of reruns or “best of” installments could be the death knell.

Late-night comedy shows including NBC's Tonight Show with Jay Leno, CBS's Late Show with David Letterman, Comedy Central's The Daily Show and The Colbert Report would go into reruns immediately. (In 1988 then-Tonight Show host Johnny Carson was able to cut a deal with the Writers Guild so that he could return to the airwaves in May. David Letterman's Late Night soon followed, coming back in June—without writers.)

Last week, Letterman warned viewers that if there was a strike, Late Show would be dismal with him writing it. (In fact, the show will air reruns.)

A strike would be particularly damaging to new shows that have yet to build a core audience and anthology series that rely on a weekly fix to keep viewers hinged to their intricate plot lines. If last season's winter hiatus strategy is any indication (CBS' Jericho and ABC's Lost never really recovered their post-hiatus viewer levels), long breaks do nothing to generate anticipation. And with such intricate plot turns, crashing scripts has not been a viable option.

“We never prepared for” a strike, Heroes creator Tim Kring said in a recent conference call with reporters. “Once that train starts rolling, there's not a whole lot you can do to speed it up or slow it down.”