Warner Bros. making deals to launch a fifth television network

August 27, 1993|By John Lippman | John Lippman,Los Angeles Times

Warner Bros., the Hollywood studio owned by media giant Time Warner Inc., plans to launch a fifth TV network to compete RTC with ABC, CBS, NBC and Fox, knowledgeable sources said late Wednesday.

The new network would be built on a nationwide foundation of local broadcast and cable systems, sources said. It would be the first to take advantage of the convergence of broadcast and cable television, which until recently have been in fierce competition.

Warner's has recruited former Fox Broadcasting Co. President Jamie Kellner to head the project -- the launch could cost as much as $2 billion. Mr. Kellner was instrumental in the successful debut of the Fox network until he resigned earlier this year.

Warner's move comes at a time when broadcasters and entertainment companies are grappling with ways to compete in the coming 500- channel TV universe, which threatens to erode even further the already shrinking audience of the traditional networks. Rapid changes in technology and programming economics are bringing together movie studios, cable operators and broadcasters to form new, so-called "hybrid" networks that would appear on both cable and over-the-air TV. In the last several months, companies as wide ranging as Paramount Communications, Chris-Craft Industries and QVC Networks have discussed similar plans. Some see the Warner move as a preemptive strike against those companies. Mr. Kellner and Warner declined comment Wednesday, but sources said the new network's programming would be drawn from Warner's large film and television libraries. The studio's stable of writers and producers might also contribute new programming.

According to people familiar with the plan, Warner Bros. hopes to pull together a nationwide distribution system consisting of both local TV stations and cable systems. Typically, broadcast networks have relied solely on broadcast TV stations to serve as local affiliates.

Cable is now widespread enough in many cities to ensure viewership that will attract sufficient advertising support, Warner Bros. believes.

But people familiar with the plan say there are still several obstacles to a successful launch. They range from getting enough independent stations to affiliate with a new network to attracting the support of cable systems run by Time Warner competitors.

"This has only a 50-50 chance of succeeding," one knowledgeable executive cautioned. In addition, it isn't clear exactly how the new Warner Bros. network will be able to distinguish itself in the flood of already existing channels and additional networks due to debut.

One other factor driving Warner's decision to launch a fifth network is a concern among studio executives that the traditional networks -- ABC, CBS, NBC and Fox -- will buy less studio-supplied programming as they begin to produce more of their own shows in the future.

Warner Bros. is the only major studio that does not have a cable channel or TV network to serve as an outlet for its programming. Fox owns the fourth network FBC, while Paramount and MCA jointly own the cable channel USA Network and Columbia is planning to launch a new, interactive cable TV game show channel. Disney owns TV station KCAL-TV in Los Angeles and is frequently rumored to be interested in buying a broadcast network.

According to people familiar with the conversations, Mr. Kellner and Warner Bros. executives Barry Meyer and John Schulman made proposals this week to Paramount Communications, Chris-Craft Industries and Combined Communications, all owners of TV station groups that would serve as anchors for the new network. They were joined by Time Warner Inc. Chief Executive Gerald Levin.

Warner Bros.' plan comes at a time when several other major entertainment companies, including Paramount, Chris-Craft, cable giant Tele-Communications Inc. and home shopping channel QVC Networks have all explored the possibility of starting fifth broadcast networks.

Chris-Craft, for example, which owns several TV stations in the ,, country's largest markets, earlier this year explored launching a new broadcast network with the help of former NBC President Fred Silverman. QVC Networks, which plans to merge with rival Home Shopping Network, is looking at starting a fifth broadcasting network, using HSN's 12 owned TV stations as an anchor.

Warner Bros. already has experience with an unofficial "mini-network" of sorts. Its TV syndication division already distributes a three-hour block of action shows every Wednesday night over an ad-hoc network of about 150 independent stations.

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