L.A. screenings split many different ways.

As usual, the Los Angeles Screenings (May 15-27) evolved in a multi-faceted context that made for a busy May for the U.S. TV industry: the upfronts in New York, affiliate meetings (excluding NBC), the cable financial association conference and the sweeps. Plus, at the wider entertainment level, there was E3, the Electronic Entertainment Expo (videoagames are a $27 billion business!), which took place May 13-16 at the Los Angeles Convention Center, and the Cannes Film Festival, May 14-24.

Following its traditional script, the L.A. Screenings was split between the studios screening on their lots, and the independents setting up shop at the hotels. This year, however, the independents were dramatically further split, with 54 distributors at the Park Hyatt, 26 at the Century Plaza, two at the St. Regis and one at the Peninsula, all located in the Century City area (these 83 distributors compare with a total of 84 last year).

But the drama that unfolded among the indie distributors went totally undetected by most of the 1,000 acquisition executives (a studio executive would not call them "buyers") from 60 countries that flocked to Los Angeles. Their business was to screen the new pilots selected by the U.S. TV networks and, somehow, try to avoid the determined indies that pursued them. There is no question that the studios continue to dominate the international market. In the 2002-2003 season, independents provided 17 hours of the primetime fare, down from 47 hours a decade ago, while for the new season there is just a total of one hour of scripted shows from one independent.

Out of a total of 138 pilots (59 dramas, 76 sitcoms, two animated shows and one "not-a-reality-format" game show, plus around 30 reality pilots), 51 made the final cut. This compares to 57 pilots picked up last year (out of a total of 125) and 63 in 2001. It is certain that for the next primetime schedule, the nets turned their back on reality because there is no back end (no resale value).

According to a report by Morgan Stanley, profits from scripted shows (before syndication) have risen 36 percent over the last five years to $3 billion this season from $2.2 billion in 1998-99. According to an MPAA report leaked by Variety, last year the seven major U.S. studios generated $3.7 billion with international program sales to terrestrial TV and $1.7 billion to Pay-TV services outside the U.S.

For their part, the nets complain that their primetime program costs increase six percent a year and that, in the 2001-2002 season, only two of the six terrestrial networks made a profit on their primetime schedules.

Advertisers, too, complain about everything, especially the increased costs (CPM on primetime can reach $22) despite the continuing decline of broadcast ratings. Season to date the six nets combined are down two percent in adult 1849 ratings and down two percent in total viewing. In the 18-49 range, NBC is down 13 percent and UPN down 19 percent. Up are Fox (+5 percent), CBS (+2 percent) and ABC (+3 percent). CBS, which targets the 25-54 demos, is up two percent in total viewers.

Plus, advertisers say, fewer than 1.1 percent of the programs attract more than five percent of the adult population. In addition, 47 percent of the primetime viewers watch TV alone, 44 percent watch TV with people of the same age and only nine percent of adults and children watch together. The increased number of commercial minutes per primetime hour (now varying from 9' 03" at CBS to 10' 15" at ABC) and the increased clutter (non-programming time) are also a source of complaints. Some advertisers are not even happy about the upfronts, since what they purchased in the 2002-2003 upfront was often not in the final schedule, replaced with reality shows.

So when the nets present their new-line ups each year at the upfronts, with spectacular shows (that can cost up to $2 million to set up), advertisers try not to laugh or enjoy them too much because they will end up paying more for their exuberance for the pilots.

It is clear that the nets place a lot of importance on the upfronts. Each network even has an operative to dig up information about upcoming program moves by rivals. This could explain why, this year, both NBC and Fox limited the number of reporters at their upfronts. However, the nets fed the upfronts via satellite to Los Angeles for the press, ad agencies and the few international buyers who arrived ahead of the L.A. Screenings.

Despite their groans, advertisers continue to value the ability of networks to attract a mass audience they cannot find elsewhere. Network viewership is still considered amazing, considering the number of channels available. "In a land of midgets, a five foot man is a giant," said News Corp. president Peter Chernin, to the FT.

PricewaterhouseCoopers predicts that broadcast and cable TV networks' ad spending will grow by four percent in 2003 and at a seven percent annual rate through 2006.

Networks expected to sell 80 to 85 percent of their upfront inventory since some scatter money could move to the upfront. This is because the scatter market has been strong lately (up to a 50 percent premium), so advertisers that did not get the bargains they expected with scatter wanted to secure time at better prices. This season, the broadcast upfront could top $8.8 billion. Last year the six broadcast networks raked in $8.2 billion.

Cable networks expect to get a 16 percent increase over the 2002 upfront to $5.35 billion, but a CPM parity with broadcast is still a long way off for cable.

In syndication, last year's momentum was expected to continue with their upfront with an estimated take of $2.3 billion, a 15 percent hike over last year. It is said that 17 of the 25 top-priced shows came from off-net series last year, but it is unclear if that trend is expected to continue in the near future. Also, according to analysts, the Hispanic media is poised for another winning year.

Back at the Screenings, there were a good number of new faces among the buying contingent, plus a record number of channels, even though the total number of acquisition executives did not increase from last year, partially because of SARS.

"We've had an unbelievable amount of last minute cancellations," acknowledged Gavin Reardon, of GRB Entertainment. "Since so few buyers came to MIP, we were really hoping to see them at the Screenings," he said. "However, their lack of attendance could simply be a result of the current Asian financial crisis as well," Reardon noted. On the bright side, Canada has had fewer SARS outbreaks, which is good news, said Reardon, "We have a full roster of Canadian buyers here." But buying decisions are slowing down, noted Vision Films' Lise Romanoff. "A broadcaster from China just told me SARS was slowing down their programming decisions, which is really problematic," Romanoff said. "Plus, with Cannes taking place at the same time as the Screenings, we miss seeing the Asian buyers that have made the decision to travel at this time," she said.

With buyers busy with the majors during the day, independent distributors are implementing creative strategies to keep business flowing. "I'm prepared to do whatever it takes to get the buyers' attention," said Melissa Wohl of Harmony Gold. "Even doing networking business in an elevator!" she quipped.

At the annual L.A. Screenings VideoAge breakfast, no one among the 50-plus participants raised the question of this year's split between the Park Hyatt and the Century Plaza hotels for the indies. This situation, spearheaded by the "noveleros" companies, which, with the exception of Venevision International, seem to prefer Century Plaza, was one of the main topics of private conversation and a concern to the Park Hyatt hotel management.

Of greatest interest was the appearance by Rick Feldman, new president of NATPE. He agreed that, at the January market, it would he better if both major and independent booths were scattered throughout the exhibit floor instead of segregated in a bunch. One of his agendas would be to reinvigorate the convention floor. "You need the energy an exhibition floor generates. And several distributors who have chosen to be in suites the last few years say that they are ready to go back to the floor." Hearst's Tom Devlin expressed concern over NATPE's practice of charging buyers to attend and believed that was one reason it was difficult to get buyers to the floor. "Why should they go to the exhibit floor if they can go to the hotel suites for free?" he asked. Feldman agreed it was important to get the buyers on the floor, but noted: "It costs what it costs to run a convention, so he couldn't promise a free ride for buyers.

Feldman also revealed that the location and the exacts dates of NATPE 2005 were still undecided. "Some people I've talked to like Miami; some like San Francisco. Now that the convention is smaller, we have more options and more places we can go."

(By Dom Serafini. Valerie Milano, Susan Hornik and Kathy Tracy contributed to this story)