NETWORK DIFFICULTIES. Fast changing channels. The Future of TV News. Part 1

As the 20th century wanes, television network news faces its most serious crisis since journalism entered the video age about 40 years ago. Such insiders as Howard Stringer, president of CBS News, and former news anchor Walter Cronkite agree that the final three years of this decade may prove to be the most crucial in the history of network television news. According to Mr. Stringer, those years will be ``exciting, dangerous, exhilarating, troubling all at the same time.''

A series of Monitor interviews with anchors, news division presidents, corporate chief executive officers, and influential media-watchers reveals that American society is viewing the first phase of an adjustment by the networks to a harsh new reality - a life-or-death struggle for survival in a changing news-delivery environment co-inhabited by newspapers, specialized magazines, radio and TV news bulletins, 24-hour cable and radio news services, satellite transmissions to local stations, and video-cassette recorders.

It has become clear that network news must radically revise its concept of its mission as well as its presentation of the news to maintain its current position as the public's No. 1 source of information.

This crisis comes on screen at a time when other elements in the climate surrounding broadcasting in the United States have changed dramatically:

Many Federal Communications Commission (FCC) controls have been lifted under deregulation, relieving stations of much of the need to provide public-service programming.

The recent corporate network takeovers of all three networks placed hardheaded, layoff-minded, profit-motivated businessmen in charge.

Overall network viewership and advertising revenues are down, and projections are for worse years ahead.

By the time the dinner-hour national news airs, most viewers have already been informed of the headline news through other sources.

Yearly news budgets of some $200 million to $300 million per network have grown out of all proportion to news income. Like a gangling adolescent who has been the recipient of a lordly allowance for many years, network news divisions are being told by their corporate ``stepfathers'' that they have reached maturity, must ``find a job,'' and prove themselves self-supporting.

Yet the CBS newsmagazine ``60 Minutes'' has proved to be a virtual money machine, earning $70 million to $100 million in profit this year for CBS and whetting the appetites of all the networks for more ``entertaining'' news programming.

These and other developments are forcing both evolutionary and revolutionary changes in the network news watched by about 50 million Americans every night.

The corporate executives who took control of the networks in 1986 and '87 - Thomas S. Murphy at Capital Cities/ABC, Robert C. Wright at General Electric/NBC, and Laurence A. Tisch at CBS - have made it clear they regard news as a business - an enterprise that must keep an eye on the bottom line.

No longer are they willing or able to treat news operations as a ``loss leader,'' a costly imagemaker meant to lure both viewers and entertainment advertisers to the network, as the news was treated for 30 years or more.

Back in its early history, in fact, network news came to be regarded as a nearly sacred public trust in the United States, performing a vital service. Requirements for license renewal and such FCC regulations as the (now-discarded) ``fairness doctrine'' made it essential that stations be able to document their commitment to a balanced presentation of public-service programming.

It was the entertainment area, conventional wisdom dictated, that had to bear the burden of profitability.

``In the beginning, there was the feeling that this enormously powerful medium owed the audience more than entertainment,'' recalls network pioneer Frank Stanton, former president of CBS.

``People like David Sarnoff of RCA Corporation talked about its great potential force for education and information,'' Mr. Stanton continues. ``And, of course, the FCC was laying down some pretty strong guidance on what the obligations of the licensees were; for a long time license renewals were based on the mix that you had in your schedule.''

Stanton doesn't attribute the shape of TV news to altruism, however. ``While I think [founder] Bill Paley, in the early days of CBS, felt that he wanted a balanced schedule, I doubt that he ever sat down and said, `If we do news, we'll have a different halo than if we do just entertainment.''

News budgets that had hovered around the $1 million mark in the 1950s, began to rise as competition for viewers became heated.

Mr. Tisch tells the Monitor that the CBS News budget soared from about $85 million in 1978 to $300 million last year, in increase of more than 300 percent in eight years.

Although exact figures for last year at the other networks are still hard to obtain, it is generally agreed that each spent between $200 million and $300 million on its news operation.

Howard Stringer says that as recently as 1981 the CBS News division was making money. But costs escalated, only in part because of the kind of competition for charismatic anchors that has driven Dan Rather's salary up to an estimated $2.5 million, Tom Brokaw's to $1.5 million, and Barbara Walters's to $1.3 million, according to figures from Channels, a respected industry magazine.

When the costs first started to rise dramatically, nobody at the networks paid much attention. Until a few years ago television industry profits were so enormous that insiders referred to stations only half jokingly as ``licenses to manufacture money.'' Even heavy costs were tolerated until the corporate takeovers, because it was an accepted truism that as news went, so went the whole network:

``It's not possible for an evening news program to be No. 1 for long, if the entertainment division isn't also No. 1,'' says Dan Rather, under fire in recent months as the ``CBS Evening News'' see-sawed in the ratings before regaining its No. 1 spot - at least temporarily.

And the converse theory is also voiced:

``ABC will never be the No. 1 network until it is No. 1 in the news,'' says Mr. Murphy.

Not all news programming, however, slipped into the red. ``60 Minutes,'' a profitmaker for years, will net CBS roughly one-third this year of what the network spends on its entire news operations.

``60 Minutes'' executive producer Don Hewitt is not very sympathetic to the less-profitable areas of CBS News. ``News could not go on being a loss leader indefinitely,'' he says. ``When TV was a mom-and-pop business, maybe the networks could afford it, but now news has to stand on its own two feet.''

Many observers, including former CBS News president Richard Salant, contend that the success of ``60 Minutes'' has affected the way management looks at news. ``60 Minutes,'' says Mr. Salant, ``proved to the networks that news can make money.''

``The Today Show'' (NBC) and ``Nightline'' (ABC) are also moneymakers. But how much they make isn't easy to pin down. As Walter Cronkite explains, ``It's hard to know whether the news makes money or loses money. There are lots of people who claim there's a kind of Chinese bookkeeping taking place and that probably all the newses are making a buck or two.''

The profit motive is said to have swayed an influential pillar of the broadcast fraternity. Both Frank Stanton and Fred Friendly, executive producer of Edward R. Murrow's ``See It Now,'' told the Monitor that Murrow agreed to do ``Person To Person,'' that 1953 series, which was attacked by some professionals for compromising the line between news and entertainment, only because it was financially advantageous.

Today nobody - not even the network news presidents - claim that there is no fat at all to be cut from network news payrolls. It is generally agreed that the burgeoning staffs of the past few years have been blown out of proportion.

``NBC Nightly News'' commentator and former anchor John Chancellor tells the Monitor, ``Costs need to be cut. When Bob Wright said he'd like us to consider how to cut 5 percent from our budget, nobody here in the news division had a quarrel with that. We all recognized that when the networks had been great machines for making money, we were allowed to get fatter than we should have been. Our only answer is, `Well, they let us do it.'''

ABC's Murphy told the Monitor: ``Just like the bushes around your house occasionally need pruning, it's not a bad idea for a network to revisit how things are run. I think that's what has happened in all three networks.

``I just don't buy the idea, however, that there have been dramatic cuts in the fiber of the three network news departments,'' Murphy continues. ``It's pure business logic that demands we all maintain the highest-quality news operations, since we all realize that news is the glue that keeps the network together.''

Tisch points to the enormous jump in the CBS News budget. ``If all that budget increase went on the screen and the American people got the benefit of it,'' he says, ``I wouldn't have objected one iota. But it didn't.

``I doubt that CBS News will be profitable this year,'' Tisch continues, ``and that's unimportant. CBS is one company - sports, entertainment, news are all integrated.''

He doesn't believe that CBS News is letting the public down, since it spends more than three times as much money as the New York Times and five times as much as the Washington Post to cover the news.

``I am interested, like every businessman,'' Tisch continues ``in running a semblance of an efficient operation. We know we cannot achieve manufacturing efficiency, but at least we should have an operation where there is no abject waste.''

Stringer at CBS News, whose department has already cut 200 people from a staff of 1,400, faces the reality of the changing situation: ``Now the trick is to find ways to cut our costs and enhance our creativity, because if we don't do both in a parallel fashion we'll die for different reasons. We must cut costs, and there's no way to make it palatable.

``But we are trying to do it without losing things which are intrinsically valuable to CBS News - things like integrity and value systems and news quality,'' Stringer adds.

Almost all news executives agree that judicious cost-cutting, if made in an atmosphere of careful trimming rather than hysteria, might even improve the efficiency of their operations.

General Electric officials insist that, as in all organizations, ``streamlining'' is an ongoing procedure.

When NBC's Wright made clear that 200 members of the National Association of Broadcast Employees and Technicians would be dismissed upon settlement of their recent five-month-long strike, around half of those fired came from the news division, which at its peak numbered 1,330. Wright had shrewdly observed the fact that NBC News as well as the rest of NBC was able to make do fairly well with skeleton crews instead of the strikers.

So word was circulated that the trim-down would go even further than the initial 200 - allegedly it is planned that 500 more employees will be let go by the end of 1988.

How many of those would come from the payroll of NBC News remains to be seen, although it is generally believed that the coming election year coverage would, of necessity, hold firings to a minimum. But after that, the feeling is said to be very pessimistic among NBC News employees with an eye on the future.

ABC has already cut its news staff of 1,470 by about 200 since the Capital Cities takeover, while CBS has trimmed about the same number after the Tisch takeover.

How will all of this cutting affect the newscasts viewers see on their screens?

If the executives are to be believed, all that will be trimmed is fat and gristle. But anxious electronic newsmen, distrustful of soothing words from knife-wielding executives, worry that the knife may slice off critical muscle by mistake.

Governmental deregulation of the broadcast industry makes that easier now than in the past, according some observers. Frank Stanton says, ``Now, as there's less emphasis by the FCC on a balanced schedule, as deregulation allows local stations to put on entertainment instead of public affairs, changes are coming about, because the men who were originally dedicated to broadcasting are now off the scene and bottom-line-oriented MBA types, largely out of sales and business management, are taking over.''

An observation from commentator Chancellor sums up the difference between the old and new philosophies:

``In the 1950s a lot of television organizations were operated out of a system of paternal ownership. When CBS was Bill Paley's network and NBC David Sarnoff's network, they held them in the palm of their hands, and there was that link of personal accountability that no longer exists. It has now been replaced by boards of directors who have a fiduciary responsibility under the law not to run risks, and to maximize profits. They can be sued by stockholders if they do certain things you and I might regard as courageous.

``So I say, without prejudice to Larry Tisch or Tom Murphy or Bob Wright, who are people of their times,'' Mr. Chancellor continues, ``it is the times that bother me more than the players. GE is a good company, but it's a different relationship than we had when General Sarnoff was living above the store.''

This report is based to a great extent on interviews with Walter Cronkite, Laurence A. Tisch, Thomas S. Murphy, Robert C. Wright, Howard Stringer, Lawrence Grossman, Roone Arledge, Dan Rather, Peter Jennings, John Chancellor, Ted Koppel, Frank Stanton, Richard Salant, Fred Friendly, Bill Moyers, Pamela Hill, Richard Richter, Don Hewitt, Av Westin, Ted Turner, Ed Turner, Stanley E. Hubbard II, and Steve Friedman.

Arthur Unger is the Monitor's television critic. Tomorrow: Why wait till 7 - news when you want it.

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