TV networks defy portents of doom

December 05, 1993|By Ian Johnson | Ian Johnson,New York Bureau

NEW YORK -- Like mainframe computers and gas guzzlers, television networks were supposed to be extinct by now. Dogged by aggressive cable companies for most of the 1980s, (( networks were said to be spiraling toward broadcast oblivion.

But an afternoon stroll past the renovated Ed Sullivan Theater on Broadway offers another view of the networks' prospects. The area, once a decrepit strip of shops north of Times Square, has been transformed -- thanks largely to the theater's new tenant, late-night television celebrity David Letterman, and the hundreds fans he attracts.

At noon, when standby tickets become available, and again before the 5:30 p.m. taping, long lines snake along the sidewalk as natives and tourists wait for a peek at the popular variety show host. Delis, gift shops and even a tuxedo-rental shop have benefited from the show's wild popularity.

"We're doing better business than ever," said Bart Dadon, owner of Academy Clothes. "People stop in from all over the country."

Network executives are also thanking the likes of Mr. Letterman for having halted a decade-long slide in their ratings. Buoyed by steady ratings for the third year in a row, the big networks have attracted increased ad revenue and plaudits from investors. Both Madison Avenue and Wall Street seem to believe that the networks hold the key to survival in tomorrow's entertainment world: programming that appeals to mass audiences instead of ultra-specialized niches.

"The networks' death had been very much hyped," said Audrey Steele, a researcher of television trends for Saatchi & Saatchi Advertising Inc. "They're still the only medium that can deliver a mass audience. They're still the one unifying force in broadcast media."

The networks are also victims of the sincerest form of flattery: imitation. Warner Bros. and Paramount Communications recently announced plans to start networks within 15 months. Although both have links to cable television -- Paramount owns the USA Network, and Warner's parent, Time Warner Inc., owns HBO -- they want some of the viewers and ad dollars that the big networks still command.

Even interactive television -- which would allow viewers to order shows and movies -- now seems a little less threatening to the broadcast networks. Many analysts believe that interactive television might not be widespread for another decade. And when it does come, networks could serve as oases of popular programming in a confusing 500-channel world.

Bolstered by popular shows like Mr. Letterman's, the networks have stabilized their "share" -- their percentage of the televisions turned on -- during prime time. Since the season began Sept. 20, the three largest networks -- ABC, CBS and NBC -- gained a point over last year, for a combined share of 62 percent, according to Nielsen Media Research. Fox, the 7-year-old upstart, slipped a notch, to 12 percent. But together, the four broadcast networks retained a 74 percent share -- or about 68 million TV sets each evening.

The remaining 24 million television sets -- were split among 32 basic-cable stations -- including ESPN, CNN, TNT, USA and Arts & Entertainment -- and a myriad of small cable stations.

The gap between cable and broadcast is huge. The hottest network show, "Home Improvement," has a 30.8 percent share. Cable's top show, TNT's "NFL Football," had an average 5.8 percent share over the season's first 11 weeks.

The networks' ratings dominance translates into big advertising dollars. According to Adweek, advertisers will spend nearly $11 billion buying air time on the Big Four in the 1993-94 season, compared with $2.7 billion on cable. For a 30-second spot, that works out to $325,000 for "Home Improvement" vs. $40,000 for TNT's football game.

New networks

The prospect of skimming ad dollars from cable and the Big Four spurred Warner and Paramount to form their own networks, said Ken Auletta, an author who writes about the networks. Each could spend about $50 million to put the new networks in place, he said.

Warner Bros. and Paramount announced their plans last month; Warner intends to start broadcasting next fall, Paramount in January 1995. Both companies plan to start with just a few hours of prime-time programming a week -- compared with 22 hours for the major networks. And they will initially be carried on about 40 television stations around the nation -- compared with 200 each for ABC, CBS and NBC, and 140 for Fox.

The new networks' challenge, analysts say, will be to sign up some of the 280 stations that are not affiliated with the Big Four. This will allow them to reach homes without cable, says Paul Bortz, a television expert at Bortz & Co. Inc., a consultancy in Denver. Paramount, for example, will use Washington-based WDCA, which it owns, as one of the first 10 stations in its network.

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