Webs are alive, well and spending (too?) freely

IT WASN’T ALL THAT LONG AGO that pundits were talking about the prospect of a network going out of business. CBS, NBC and ABC all engaged in major cutbacks during the late 1980s and early ’90s. The networks lost millions on too-rich sports rights deals, and the entertainment divisions were bleeding red ink as well — an economic collapse having rendered the perennial increase in advertising revenue a thing of the past, while cable networks whittled away at what seemed to be a dwindling pie. Both NBC and CBS were the subject of chronic sales rumors, and some discussed the possibility of a network being dismantled and sold off piecemeal. Meanwhile, Fox Broadcasting Co. — unfettered by a dense corporate hierarchy enmeshed in the past — crowed about its own steady growth and said flatly that the Big Three were dinosaurs. If the networks look like dinosaurs lately, it’s the kind we’ve seen in “Jurassic Park.” CBS and ABC have both been putting up record numbers in their quarterly earning statements, and though NBC doesn’t break out its figures separately from parent General Electric , even the Peacock web is said to be financially healthy despite its third-place status. The networks remain prime acquisition targets, but that’s largely due to relaxation of the financial interest and syndication rules, which has made them more attractive by expanding options for owning and cashing in on programs they broadcast. Capital Cities/ABC, at least, has itself been on the acquisitions trail, drawing favorable notices for its strategy of increasing production and gradually acquiring interests in overseas broadcast outlets.

For all the obsessing that’s done about its older demographics, CBS can point with pride to record earnings — figures attributable in part to its own savvy forays into production with shows like “Rescue 911” and “Dr. Quinn, Medicine Woman.” The networks have also put on a number of record-setting events , from recent Super Bowls and Oscarcasts to the Winter Olympics, reinforcing their ability to attract an audience that offers the scope and immediacy of no other medium.

PART OF THIS TURNAROUND can be attributed to an improved economy, but much of the newfound network financial strength was won at considerable expense in the form of layoffs and a different approach to the business. Unfortunately, the industry has never been known for its elephantine memory, and there are warnings that the networks — particularly via their news divisions — may be slinking back toward the sort of hubris that helped get them into trouble in the first place. Tell-tale signs include the crazed courtship of news talent Diane Sawyer and, on a local level, KABC-TV’s Ann Martin, as well as the massive rights fees paid out after Fox turned the National Football League bidding process on its ear by ousting CBS. The news largess is especially puzzling, since executives have stated — and history has demonstrated time and again — that a single anchor, no matter how popular, can’t easily change established viewing patterns. That was discovered by KNBC-TV when it nabbed Paul Moyer and KCAL-TV when it wooed away Jerry Dunphy. Indeed, KABC-TV’s continued success, as well as the lengthy frustration of CBS’ owned stations in New York and Los Angeles, is a testimonial to the fact that changing talent isn’t enough to shake up a struggling news operation. Just as the Oscars survived the absence of Billy Crystal, so too can most existing network franchises survive the loss of a single piece of talent. “60 Minutes” has rolled along despite additions and defections, and it’s doubtful “PrimeTime Live” would have collapsed without Sawyer; nevertheless, her much-publicized pay raise will now be taken into every high-level talent negotiation, in the same way Jose Canseco’s baseball contract became a litmus test for major leaguers a few seasons back. One has to wonder whether business sense or testosterone and pride guides these decisions — the bragging rights of stealing a major talent or, worse, the shame of losing someone perceived to have star power. The new “X” factor in that equation is Fox , which, faced with its own primetime declines and proposed competition from other studios, bought its way into the NFL franchise — reestablishing its credentials to be a regular bidder in such matters, including an unsuccessful run at Sawyer.

WITH CASH FLOWING AGAIN at the Big Three, and Fox joining in the hunt, the networks will need courage to prevent their cost structure from escalating dangerously into the stratosphere. The people who should view this trend most carefully aren’t the Dan Rathers and Tom Brokaws of the world, by the way, but the technicians and staffers who seem most apt to wind up unemployed when the “cut costs” mandate is delivered from on high. For all the talk about a 500-channel universe, it’s worth remembering that three outlets still control more than 60% of eyeballs in primetime and 50% or more in most other dayparts. That those companies have found a way to make money again should be encouraging to all those who rely on their business. Even so, the aforementioned deals provide ample reason for caution, lest the business again find itself overextended as it turns to face a future as uncertain and murky as the term “information superhighway.” To cite a well-known adage, those who forget the past are often doomed to repeat it — hardly a comforting thought for those who toil in a business that always dealt in reruns.

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