Why New Television Networks Are Born
NEW YORK — MORE for business considerations than for the urgency of public demand, two more national television networks are on the horizon. On Nov. 3, the huge Time Warner combine announced plans for a sixth network next fall. Paramount Communications, currently at the heart of a $10-billion takeover battle, unveiled plans for a fifth network last week.
The addition of two networks comes at a time when the four established ones - ABC, CBS, NBC, and Fox Broadcasting - are slowly regaining strength after a slump in viewership.
The two new networks face problems from the start. Their operational base must be independent affiliates. In the case of Paramount, which is partnered with Chris-Craft Industries, this involves four Paramount-owned stations plus half-a-dozen independents operated by Chris-Craft.
Time Warner has chosen the Tribune Company of Chicago as its network partner. Tribune owns seven key independents, including WPIX in New York and KTLA in Los Angeles. (Its WGN station in Chicago may not participate in the new network.)
Ironically, and very likely a signpost for the future development of TV, Time Warner will have to depend on cable to stitch together a sixth network. Time Warner is the second-biggest cable operator in the United States.
While Time Warner and Tribune have the basic stations for a network, they will need cable to establish a viable operation, since most independent stations in the US are already affiliated with one network or another.
Fox Broadcasting, which set up the fourth network in 1987 in the face of much industry skepticism, signed up many of the key independent stations as affiliates. The network has been doing very well, pitching its programs largely to a younger audience.
PROGRAM producers welcome the new networks. ``We couldn't be happier,'' says Frank Agrama, an independent Hollywood producer. ``More outlets for us means more business. What worries me is how the major advertisers are going to split their dollars.'' Some observers also question the economics of a future TV universe that could accommodate 500 or more cable channels and wonder whether there will be enough advertizing dollars to go around. Pay TV will be a key factor.
Why are Paramount and Warner Bros. doing this?
``A fifth and sixth network make sense for the studios, which are fighting for space on the established networks,'' says Michael Yudin, a Viacom vice president. ``But they will have to battle for the 70 to 80 percent of the country - outside the key cities - where there are only two or three stations in a city.''
Bruce Johansen, president of the National Association of Television Program Executives, a major TV trade group, also sees logic in the studios' recent move: ``They have the resources and the deep pockets,'' he notes, adding: ``It will take a long time to get the new networks established.'' If the programs are attractive, though, the studios stand to make a lot of money.
Basically, the studios are defending their interests in the face of new freedoms granted them by the Federal Communications Commission (FCC). For the past two decades, the broadcast networks operated under severe government-imposed restrictions that did not allow them to own most of the programs they aired. They were also sharply restricted in the number of shows they could produce themselves.
Under new rulings by the FCC, following years of heavy lobbying by the networks, the broadcasters' shackles have been removed. Despite movie-studio opposition, the networks now can produce most of their programs in-house if they choose.
The implication for the studios is clear: A network producing its own programs is likely to favor its own show over a program it acquires from a studio. That means less space for the Hollywood-produced product. By running their own networks, the studios ensure themselves a guaranteed outlet not only for their new features, but also for their vast and valuable libraries.