In the first week of the Writers Guild of America strike, I offered a solution that has been gaining momentum over the past two weeks. “It’s time to think out of the box in more ways than one,” I wrote in November. So here’s the solution. Let the advertisers step up and agree to pay a tax on all network television ad expenditures for the next three years, beginning in September 2008, to fund a pool for distribution to writers, actors, directors, and related unions. This pool of funds will provide compensation for the writers’, directors’ and actors’ contributions to the digital rights expansion producers need and want, without requiring long –term economic valuation of the new media marketplace. A one percent tax on broadcast and cable network spending represents an estimated $400 million annually, $1.2 billion over three years. Two percent equals $2.4 billion. The networks and studios can’t complain about this solution. The unions can’t complain. While advertisers and agencies might protest at first, this Strike Tax will actually be self liquidating. As Sarah Fay, CEO of Carat U.S. and Isobar pointed out, “the strike is a huge issue for advertisers.”
If the WGA strike stretches into the summer and is joined by Screen Actors Guild and Directors Guild members, then the recent gains experienced by the networks as a result of returning late night hosts will be lost. This has the potential to destroy network television as advertisers know and love it. By ending the strike, advertisers will avoid suffering losses to their business resulting from under delivery on their required advertising exposure. They will assure the sustained viability of network television as a powerful medium for their messages, and they will support the industry as it transforms to a digital marketplace. In last year’s Upfront, advertisers agreed to pay substantially increased costs because network television is worth it. An additional one or two percent in costs might ultimately be extracted from the networks in negotiations, but networks will make it up by avoiding the substantial ratings declines the strike is causing and will continue to cause.
This strike already has only losers. What’s finally beginning to be realized is the real losers are the advertisers who underwrite the network television business because they need it for their own business well-being. Ultimately, they stand to be the biggest long-term losers. Their history suggests they will stay neutral and stay above the battle. That would be a mistake. Advertisers need to get involved. They need to get involved now. They need to determine if the Strike Tax or an alternative is a viable solution to bring the AMPTP and the WGA back into a new three way conversation. They need to take fiduciary responsibility for the nearly $40 billion they invest annually in the broadcast and cable network television industry.
Plus, advertisers can take credit in the critical eyes of American consumers for helping to bring back their favorite television shows and saving some marginal series from almost certain oblivion. Media agency executives including Fay, Group M’s Rino Scanzoni, and MPG’s Charlie Rutman have expressed their desire for reasonable negotiation and an early settlement.
Following last week’s exclusive JackMyers report that advertisers and agencies were in active discussions with members of the writers’ negotiating groups, additional media agencies have stepped up and expressed an interest in participating in the solution. The one to two percent Strike Tax provides an opportunity for these agencies to introduce a relevant new issue into the discussions. Of course, agencies can’t speak for their clients, but they can urge the American Association of Advertising Agencies media committee to engage with both the WGA and AMPTP (Alliance of Motion Picture and Television Producers). Agency executives can ask their clients to push the Association of National Advertisers to become involved. The two trade groups can poll their members to gain consensus regarding the Strike Tax. If the consensus favors advertiser involvement in the negotiations, each trade group should identify two representatives who can join the negotiations and facilitate bringing the AMPTP back to the negotiating table now.
.gif){kind=icon}
