5th web woes: No O&Os

HOLLYWOOD Will the world soon have the “Babylon Five” network?

That answer probably depends on Chris-Craft Industries and Tribune Broadcasting. Warner Bros. will need one of the two to launch its proposed fifth network, a broadcast-cable hybrid, but sources say WB will want an equity interest in the station group that signs on as the core of the weblet.

Investors in the station groups also appear to agree that it would make sense for WB to share in the upside. When news of the proposed network broke Aug. 26, Chris-Craft hit a new 52-week high of $ 39.75 a share, before closing at $ 39, up 5/8. Trib climbed 3/4 to $ 51.75 per share.

Without an ownership stake in the stations, many question whether it would be worth it for WB and its debt-ridden parent, Time Warner, to invest a couple hundred million dollars into a new network in the midst of a soft ad market.

The Big Three and Fox make their money from stations they own in the major markets, not from the networks themselves. In fact, all of the existing broadcast webs have had lean years recently.

“I don’t think that they are that stupid” to launch a network without some ownership interest in the major market stations, says Gotham station broker Howard Stark. “The networks themselves don’t make a lot of money, so what’s the point?”

But unlike ABC, CBS and NBC, the planned WB network would not include such loss leaders as sports and news, sources say. It would be strictly a programming service.

Bishop Cheen, an analyst for Paul Kagan Associates, notes that if WB wanted to start a conventional network, with product like its upcoming “Babylon Five” sci-fi series, it would be easier to plunk down $ 3 billion on NBC than to deal with the headache of starting a new “fifth force” in broadcasting and cable.

Perhaps no one better knows how to build a network than former FBC prez Jamie Kellner, who is an adviser for the WB project.

When WB decides whether it will go ahead with the new network within the next two months, it will also have to decide on its scope. If the studio goes with Trib, the best it could initially hope for is two or three nights of programming because of the station group’s large commitment to sports — particularly on flagship WGN-TV in Chicago, which covers nearly every major sports franchise in town.

A WB-Trib combo would likely lead to a pairing with the Gaylord stations, because that would give the network many major-market stations without any overlap.

Should the studio opt to go with Chris-Craft, then it would probably go after the Paramount stations, since those two key groups have no overlaps.

WB and Chris-Craft are already partners on the Prime Time Entertainment Network (PTEN), a two-hour block of syndicated fare that is expanding to a second night in mid-January.

Question of commitment

But questions remain about whether Paramount would want to commit its stations to a WB weblet when it has long kicked around the idea of forming its own, possibly in association with Chris-Craft.

In the third of the country that only has network and Fox affiliates, WB will likely need the parent Time Warner cable systems to create local origination stations to fill it out. That could possibly give the weblet about 85% coverage to start, which would satisfy advertisers’ requirements.

But WB will also likely need the cooperation of the nation’s largest cable system operator, Tele-Communications Inc., and its participation is far from assured.

TCI and former Fox chairman Barry Diller are owners of QVC Network Inc., which is reportedly contemplating a new network of its own with 12 UHF stations (formed when Home Shopping Network recently spun off the outlets into Silver King Communications. HSN could wind up combining with QVC).

Another issue is scarcity of available channels. With retransmission consent agreements, many broadcast stations have been awarded their own second cable system channels.

There are also questions about the feasibility of another general programming channel in a TV universe that is expected to grow to 500 channels this decade.

“If anyone else fools around doing general programming, it’s going to be a disaster,” says one high-ranking industry exec. “The last thing the world needs is another general programmer.”

The exec claims that Fox Broadcasting “has lost its way” by moving into more mainstream programming, but others argue that the fourth web had to broaden its demographic appeal to stay competitive in the broadcasting arena.

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