ABC postpones launch of 24-hour news channel TV network calls cost of gaining subscribers on cable excessive

May 24, 1996|By NEW YORK TIMES NEWS SERVICE

NEW YORK -- In a decision that marked a full-blown retreat for the leading network news division, ABC announced yesterday that it is indefinitely postponing its plans to begin a 24-hour all-news cable channel.

The decision, which ABC executives attributed to the excessive cost of distributing the channel and Rupert Murdoch's willingness to pay enormous distribution fees for his own all-news channel, is the first sign that three broadcast networks may have oversold their ambitious plans to start cable news channels to compete with Turner Broadcasting System's Cable News Network.

The main beneficiary of ABC's move will be NBC News, which will initiate its own 24-hour news channel in July. ABC News executives acknowledged that the competitive advantage that NBC News would gain by having a news channel on cable could threaten ABC's leadership position in television news.

The ABC executives directly in charge of the news channel, Disney/Cable Networks President Geraldine Laybourne and ABC News President Roone Arledge, said they decided to back away from starting the channel because of the escalating cost of finding distribution for the channel on already crowded cable systems.

But mainly they blamed Murdoch, who controls Fox network's parent, News Corp., because of the offer he has made to buy distribution for his all-news cable channel for $10 or more for each subscriber to a cable system.

Other television industry executives said yesterday that another reason ABC's plans were scuttled was that the network's new owner, Walt Disney Co., had become concerned about the sharp declines in revenue this year at ABC's TV network and stations.

Although top Disney executives were consulted about the decision, Laybourne said, "this was an internal ABC decision." She added that "if things were different at ABC right now, we might not be quite as cautious."

ABC just finished a severely disappointing television season that saw the network slide back more than 10 percent from a year ago. The season was capped by ABC's performance in the just-completed May ratings sweep competition, in which ABC was off 19 percent and finished third behind NBC, a division of General Electric Co., and CBS, a unit of Westinghouse Corp.

Still, Arledge said that Disney executives, including its chairman, Michael Eisner, had been supportive of the news channel. "Michael Eisner has been championing this channel from the beginning," he said.

"It became more and more apparent as we looked at the numbers that there was no light at the end of the tunnel," Arledge said. "Not in this economic environment for cable. We couldn't believe that offer of $10 a subscriber."

He added that Murdoch's offer made it clear that the strategy he was using to get a new channel onto cable was similar to the strategy he had employed in building his broadcast network -- paying huge prices for something he felt he needed.

"It's the same thing he did in escalating the costs of football rights and station values," Arledge said.

Pub Date: 5/24/96

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