Here’s a scenario that’s making the rounds from Hollywood to Wall Street.
The log line: Marty Davis, chairman of Paramount, wants Brandon Tartikoff to jump NBC and become his new production czar. Davis gets his man. But he gets the network, too. Or what was the network.
For Paramount to acquire all or part of NBC without spinning off its lucrative syndication business, NBC has to stop – at least technically – being a network.
That’s not as farfetched as it was just a couple of weeks ago, before the Federal Communications Commission made its April 9 ruling on financial interest and syndication. In a fit of generosity toward the fledgling Fox web, the FCC redefined a network as an entity that programs more than 15 hours of primetime. As long as Fox stays below 15 hours, the weblet and its parent company can continue to deal in the domestic syndication biz.
Since the ruling, industry insiders have been unable to resist the question: If just seven hours of programming a week is all that now stands between the nets and the syndication business they want so desperately, why not sacrifice the seven hours?
NBC execs are taking it seriously enough, sources say, to put network numbers crunchers to work figuring out the implications of downsizing as part of a merger with a major studio.
“Quite an intriguing idea,” says a senior NBC executive.
Unless, of course, the courts upset the FCC applecart. Legal challenges to the finsyn ruling are expected to be unleashed from several sides before the ink is dry on the still-to-come published version of the ruling. And there’s no telling whether a network test of the new definition would prompt the FCC itself to reconsider the 15 hours.
Still, Wall Street is paying attention.
Rumors on the Street center on a joint venture between Paramount and GE in which Paramount would get a 50% interest in NBC. The network is usually valued at $3 billion to $4 billion.
“NBC is putting the data together to show Marty Davis at Paramount how he could trim back NBC primetime and finesse the FCC regulations to make owning the network a very profitable enterprise,” says one Wall Street media analyst.
“Paramount and NBC are a lot closer than people think,” says another.
ABC topper Dan Burke discussed the general issue of network downsizing at last week’s Capital Cities/ABC powwow with the financial community, sources said.
“It was obvious Burke had given the idea a lot of thought and decided it didn’t make sense for ABC,” says an analyst who was at the confab. “He discussed the pitfalls for a network that did scale back, arguing that it could hurt a network’s coverage and cause defections of affiliates to a competitor.”
The analyst added, “But while Burke might have dismissed it as an option for ABC, he didn’t dismiss the possibility that one of his competitors might give it a try.”
CBS is also cited as a prime candidate for a 15-hour gambit. CBS prez of affiliate relations Tony Malara admits the idea has been bandied about in the executive suites at Black Rock but he hastens to add it’s purely talk.
“I assure you there’s a lot more discussion about the possibility of this happening outside the building than in,” he says.
Malara adds that any discussions of substance on the matter are premature, given that full details of the FCC’s finsyn ruling have yet to come out and a protracted legal battle over the commission’s actions is in the offing.
The upside to the downsizing is simple:
It would allow a web to excise the bottom third of its lineup – the shows that lose money. Networks, which currently program 22 hours a week of primetime shows – three hours per night with four on Sunday – could back out of two weak nights and trim one more hour from another to slip below the cap. Or program from 8 p.m. to 10 p.m. Monday through Saturday, and 8 p.m. to 11 p.m. Sunday.
Programming costs would plummet, and tightened advertising inventories might drive up rates. And in theory, the downsized web could cut back its compensation payments to affils.
The affils, the theory goes, would then more than make up for the lost revenue by flooding the newly opened primetime slots with syndicated shows, which traditionally give stations much more ad time to sell.
And the wheels, of course, are greased for a network/studio merger, since a studio too could keep its profitable firstrun syndication biz if paired with a downsized network. Substantial staffing cutbacks at CBS and NBC have fueled speculation that mergers are in the offing.
A merger of NBC and Paramount would include the web’s powerful o& o stations to test out new syndicated fare. It could even be a major provider of syndicated shows to its affils that would have seven hours of primetime to fill.
Critics say it could devastate network/affiliate relations. And any network giving up almost a third of its primetime lineup would create a window of opportunity for a major studio to launch a fifth network.
If, for example, a web dropped out of Saturday and Sunday night, a major studio could gear up as a “weekend network”; affiliates would cherrypick the best programs from each supplier.
But to some observers, those are all conflicts with workable solutions. For them, following the Fox model may be a network’s post-finsyn salvation.
Jim Benson and Judy Brennan in Hollywood contributed to this report.