Long-term problems threaten networks' future

August 19, 1991|By John Carman | John Carman,San Francisco Chronicle

Gary David Goldberg, the TV producer who created "Family Ties" and other network series, brought reporters up short with an offhand comment during a recent interview.

"Clearly there aren't going to be three networks five years from now, 10 years from now," Goldberg said matter-of-factly.

"That's clear, and whether there will be two networks, or whether there will be any network as we understand it now is also, I think, up for real discussion."

Only two days earlier, the head of programming at ABC, Robert Iger, dropped a bombshell with his remark that "we are going to see possibly fewer networks, probably fewer networks. I'm not sure that all of us will survive a new age."

Could it be? Americans are so accustomed to an alphabet soup of television reality -- ABC, CBS, NBC -- that the thought of one or more of them disappearing is almost heretical.

Yet the possibility exists, as the three major networks are beset by the short-term difficulty of a foundering economy and an even more alarming array of long-term problems.

What happened, aside from the soft advertising market that plagues all media?

* Competition. Although cable channels individually account for small slices of the viewing pie, there are more than 175 basic cable channels siphoning viewers away from the networks. The networks have lost a third of their viewers in the past decade.

Cable advertising revenues are increasing far faster than the networks'. In 1990, network advertising revenues were $9.4 billion to $10.1 billion, up about 19 percent since 1987. The national cable networks took in $1.4 billion to $1.8 billion last year, up about 16 percent in one year.

More independent stations, such as KBHK (Channel 44) in San Francisco, are also competing for advertiser dollars. There were 115 independent TV stations in the United States in 1980. A decade later, there were 345.

The burgeoning home video market is also cutting into ratings, especially on weekends. Network ratings on Saturday nights have plunged dramatically in recent years.

* Increased costs. The cost of producing and acquiring programs has risen across the board. To make matters worse, the networks are now paying princely sums for veteran hit series -- amounts that wipe out profits.

NBC is reportedly paying a license fee of $65 million to $70 million to the producers of "Cheers" for a single season, after the producers threatened to move the show to another network. Although the networks used to depend on advertising windfalls from hit shows to offset losses incurred by low-rated programs, they are now being forced to use programs such as "Cheers" and "The Cosby Show" as "loss leaders" to attract viewers to the network.

The networks have paid big fees to keep glossy sports packages; CBS in 1989 agreed to lay out $1.1 billion for an exclusive, four-year major league baseball package which, so far, has been a losing proposition.

The costs of news coverage have also skyrocketed, and the high salaries to star correspondents are only a small part of it. The Persian Gulf war reportedly cost each network about $1.5 million a day to cover, and in the early going deprived each network of an estimated $6 million a day in advertising revenue.

The networks have tried to compensate with payroll reductions. Each network had about 8,000 employees five years ago. Today, after hiring freezes, layoffs and buyouts, each employs 5,000 to 6,000. The networks' images have been darkened because of bad publicity accompanying the painful reductions. (Fox Broadcasting, with its limited schedule and absence of sports and news, carries a workforce of only 230.)

* Changing lifestyles. Daytime television was long regarded as a dependable bonanza for the networks -- their most profitable time period. As more women have joined the workforce, particularly the younger women most cherished by advertisers, the value of daytime schedules has diminished.

Remote control devices are another thorny "lifestyle" concern for the networks. Viewers in the 1990s are freely "zapping" from one channel to another, rather than settling into the flow of programming on any one network. Advertisers worry aloud that their messages are being "zapped" by impatient viewers.

* Rebel affiliates. Local stations are feeling bolder about pre-empting network shows for their own programming, weakening their network's national reach. Meanwhile, the networks continue to pay $130 million to $160 million a year in compensation to affiliates for carrying network shows. Cable networks benefit from a reverse relationship with their "affiliates"; local cable operators pay them to carry their programming, giving cable networks a secure second source of income in addition to advertising.

* New technology. Cable, now in 60 percent of the nation's households, was one challenge. But if the telephone companies are admitted, en masse, into the television business, electronic communications could be totally revolutionized. Viewers could choose from hundreds of programming choices snaking into their homes on phone lines. The entire notion of set program schedules, on which the networks built their fortunes, could become obsolete.

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