dark days for maptaniic tie1inistan not -the -usual …...1990/07/16 · freddy krueger's...

Dark Days for Maptaniic Tie1InistanNot -the -usual Suspects Talk Pay TV

CHANNELSJULY 16,1990 THE BUSINESS OF COMMUNICATIONS moo

MAKE -OVER

'ISISA blow-by-

blow accountof how a new

team turned astagnant cable

net calledMovietime

into E:

The E! crew

m left): Fian Shea,Lee Masters,

Sheri Herman.

Point them in a different direction.

At one time all pay services were alike. Subscribers saw the same movies everywhere they looked. Then

running, SHOWTIME has presented more exclusive movies than HBO.' That means more options foryour

you. So, if increasing pay units is your inclination, direct your attention to SHOWTIME. We've got the

1 Average non -duplicated titles, 3/88-3/90, THE PAY TV NEWSLETTER/April 24,1990, Paul Kagan Assoc., Inc., Carmel, Ca. ®1990 SHOWTIME NETWORKS INC. All rights

SHOWTIME differentiated its service with movies that couldn't be seen on HBO®. Now, and for two years

multi -pay subscribers and a real multi -pay sales opportunity for

difference that will keep subscribers heading in your direction. SHOWTIMEIT PAYS TO BE DIFFERENT'""

reserved. SHOWTIME and IT PAYS TO BE DIFFERENT are service marks of SHOWTIME NETWORKS INC. HBO is a registered service mark of Home Box Office, Inc.

CHANN E LSTHE BUSINESS OF COMMUNICATIONS

VOLUME 10, NUMBER 10

FEATURES

NETWORKS

THE MISSING POT OF GOLD

JULY 16, 1990

30The Hispanic market looked like a good place for the Anglo owners of Univision and

Telemundo to strike it rich. Will Spanish -language TV turn out to be their El Dorado?BY STEVEN BESCH LOSS

IN FOCUS: REINVENTING THE CABLE NETWORK

DIARY OF A RELAUNCHAn inside look at how a new management team, with the help of

seven Elvis impersonators, transformed Movietime into E!BY RAY RICHMOND

COVERSTORY

)'-TIIVIE FOR A TUNE-UPFive television executives from different parts of the business talk

about how they'd fix pay cable if they were running a network

38

42

OPERATIONS

RATINGS & RESEARCH 16Sweeping StuntsBack when he owned an FM radio station, Jim Gabbertgot a sticker on the front of every ratings book. The ownerof independent KOFY-TV San Francisco still enjoys givingthe ratings services a tweak BY MICHAEL COUZENS

SALES 20Satisfaction Guaranteed?The TvB's first -ever sales -training video conference was asuccess, with more planned for the future, but people arestill talking about what Don Beveridge said.... .BY AL JAFFE

NEWS CHANNELS 22When More Is Really MoreThievision stations that add local -news shows in place ofsyndicated programming often watch their ratingsdecrease, but more local news can mean higher revenueand higher ratings if stations are willing to give it the timeto grow BY JANET STILSON

COVER PHOTOGRAPH BY Amy ET RA

DEPARTMENTS

REPORTS 8A New Line of products . . . Cox's calling C-ARDS.

WHAT'S ON 12A monthly calendar.

WASHINGTON 26Policy GridlockA "vacuum of power" at the White House is hurting U.S.telecommunications policy BY PIENNY PAGANO

MARKET EYE 45"The Market From Hell"A year and a half after switching affiliation, Miami's CBSand NBC O&Os are still reeling BY STEVEN BESCHLOSS

MEDIA DEALS 46Residual ResentmentBasic cable doesn't pay the same residuals as broadcast,but writers and actors want to change that. BY NEAL KOCH

DATABASE 47RUNNING THE NUMBERS 48Beaming Into Europe's MarketCan U.S. suppliers compete in a crowded Continent?

2 CHANNELS / JULY 16,1990

Satisfy the craving.

Wry MN Sally

There's only one way to satisfy the ravenous appetite of movie -hungry consumers.

Start with an endless supply of comedies, dramas, and tcp blockbusters. Add a heapEng portion

of action and adventure and stir in an abundarce of classics and romance. Spice k up with

movie news and behind -the -scenes special features. Arrange them at set times during the week for

easy picking. And top it all off by serving a delicious hit every night after midnight for

maximum taping convenience. Package it well and label it THE MOVIE CHANNEL.

Once your subscribers try it, they're sure to be back for more.

THERE'S NEVER BEEN A BEI IER TIME -

(0 1990 SHOWTIME NETWORKS INC. All rights reserves. I iE MOVIE CHANNEL and There's Never been A Better Time are service marks of SHOWT ME NETWORKS INC_Who Flame& Roger Rabbit © Touchstore Pictures and Amblin Entertainment, Inc.

AFTER ALL YOUR VIEWERS HAVE BEEN THROUGH,

THEY DESERVE THEIR OWN CHANNEL.

g9

When you've seen it all. c 1990 MTV Networks. All rights reserved. VH-1 is a egistered trademark owned by MTV Networks. a division of Viacom International Inc.

CHANNELS

Editor -in -ChiefJOHN FLINNManaging EditorMARK SCHONESenior EditorsSTEVEN BESCHLOSSANDREW GROSSMANCHERYL HEUTONNEAL KOCH (West Coast)JANET STILSONAssociate EditorMICHAEL BURGIAssistant EditorRICHARD KATZWashington EditorPENNY PAGANOContributing EditorsJOHN F. BERRY, ALEX BEN BLOCKDAVID BOLLIER, CECILIA CAPUZZIMICHAEL COUZENS, L.J. DAVISMERYL GORDON, WILLIAM A. HENRY IIIDAVID LACHENBRUCHMICHAEL POLLAN, JAY ROSENHARVEY D. SHAPIROADAM SNYDER, JAMES TRAUBInternsLUCIA BOZZOLA, ALEC JOHNSON

Art DirectorSUE NGAssistant Art DirectorDAVID SPERANZAPhoto ResearchLAURIE WINFREY/CAROUSEL INC.

PublisherJOEL A. BERGERAdvertising Sales ManagersNELDA H. CHAMBERS,ISAAC DANNER JR.RICHARD J. PETRALIAAdvertising Services ManagerJEANMARIE McFADDENAssistant to the PublisherJACQUELINE ALTAMOREAdvertising Sales AssistantsJULIE HARRIS, STACEY ROSOFF

Production ManagerRACHEL COHEN

Advertising Sales OfficesNew York: 401 Park Avenue South, New York, NY 10016,212-545-5100; Fax 212-696-4215, West Coast: 19725 Sher-man Way, Suite 380, Canoga Park, CA 91306, 818-709-9816;Fax 818-709-5314.

ACT III PUBLISHINGPresidentPAUL DAVID SCHAEFFERChief Operating OfficerROBERT C. GARDNERSenior Vice President & Group Publisher,Media & Television GroupsDAVID PERSSONSenior Vice President,Operations & PlanningMARTHA A. LORINIVice President, Finance & AdministrationSAM SCHECTERDirector of Marketing & CommunicationsJENNIFER WAREDirector of CirculationSTEPHEN F. WIGGINTONDirector of ManufacturingCRAIG C. BALICK

CHANNELS The Business of Communications (ISSN 0895413X) is published twice monthly except monthly in July and August by C.C. Publishing L.P., an affiliate of Act III Publishing, 401 ParkAvenue South, New York, NY 10016. Second class postage paid New York, NY and additional mailing offices. Volume 10, Number 10, July 16,1990. Copyright 1990 by C.C. Publishing Inc. All rights reserved.Subscriptions: $65 per year, all foreign countries add $18. Please address all subscription mail to CHANNELS The Business of Communications, Subscription ServiceDept., P.O. Box 6438, Duluth, MN 55806, or call 218-723-9202. Postmaster: Send address changes to CHANNELS, The Business of Conmiunications, Subscription Services Dept., PO.Box 6438, Duluth, MN 55806. Editorial and business offices: 401 Park Avenue South, New York, NY 10016; 212-545-5100. Unsolicited manuscripts cannot be considered or returnedunlessaccompanied by a stamped, self-addressed envelope. No part of this magazine may be reproduced in any form without written consent.

R. E.-.

Bernard Baruch Winston Churchill Carl Sandburg

Harry Truman

FaG'rfiFraiinaRoosevelthoW! A SERIES CF INSPIRINGPUBLIC SERVICE SPOTS FOR THEBENEFIT OF SENIOR CITIZENS

Youth is a leeling... FREE60 -second and30 -second spots fortelevision and radio.Order your copies.NOT an age!

What did thesefamous people allhave in common?Each of these famous people gained theirgreatest accomplishments and satisfaction outof life during their senior years. They areproof that senior citizens have an importantcontribution to make to society, provided theykeep active, keep interested and keep healthy.

Older people must be told how to gain a satisfyinglife, and younger people must be told how toprepare for the retirement years.

Help do this important job of public education.Please preview the broadcast campaign.

117: American Chiropractic Association1701 Clarendon Blvd.Arlington, VA 22209-2712

Please send me copies of "YOUTH IS A FEELING...NOT AN AGE"public service spots for:

1 Television (One 60 sec. & one 30 sec. spot on 3/4" videocassette)Radio (Six 60 sec. & five 30 sec. taped spots)

I understand the spots will be sent without cost or obligation.

85/90-71

Public Service Director

Station

Street AddressCity State Zip

LI I Please Send Me Additional Health Campaigns That Are Available

6 CHANNELS / JULY 16, 1990

THE LARGEST COMMITMENT TO ORIGINALPROGRAMMING IN BASIC CABLE CONTINUES.

Premiering July 27 AMERICA'S FAVORITE CABLE NETWORK

IIIIIIREPORTS11111New Line's NewDream Is TelevisionFreddy Krueger's friends buy into RHI Ent.

The success of the filmTeenage Mutant NinjaTurtles gave New Line

Cinema Corp. the money andstatus it needed for a splashyentrance into TV Instead, NewLine, best known for its Night-mare on Elm Street movies,spent a modest $7.5 million foran interest in a respected pro-ducer of miniseries and made -for -TV movies-a companythat also happens to own alibrary ripe for syndication.

New Line purchased roughly20 percent of RHI Entertain-ment Inc., formed by TV pro-ducer Robert Halmi and hisson to regain control of RobertHalmi Co., acquired in 1988 byQintex Entertainment. Qintexdeclared bankruptcy last Octo-

ber. RHI last month struck adeal to buy all Qintex's assetsexcept two TV stations, for

$42.4 million, and will syndicateall former Qintex products.

The Qintex library is com-posed of the Hahnis' miniseriesand movies of the week, as wellas the Hal Roach Studiolibrary: 1,000 silents and shortsand 13 features. Recent Qintextitles include several withtremendous syndication poten-tial, notably the miniseriesLonesome Dove.

RHI Entertainment now owns such Qintex titles as Lonesome Dove.

New Line's deal gives it theoption of entering TV as both asyndicator and producer. Butfirst, the company wants timeto scrutinize the market, ac-cording to spokesman JosephJaffoni. New Line's agreementwith RHI gives it the opportu-nity to increase its stake in theTV production company duringthe next three to five years;New Line could even take acontrolling interest.

The careful hedging is typicalof New Line founder and presi-dent, Robert Shaye. "One rea-son this company is particu-larly attractive is that it has acoherent strategy, it sticks toits knitting and it's conserva-tive," says Christopher Dixon,an entertainment industry ana-lyst for Kidder Peabody. "NewLine needs to expand its base,and TV is the fastest -growingsector, considering syndicatedproduction and TV sales inEurope. This deal gets theminto that sector in keeping withthat conservative approach."

CHERYL HEUTON

Keeping Track

Of TrucksA new technology cuts cable repair time.

The dispatcher at CoxCable of Cleveland doesn'thave to wait for his techni-

cians to get on their truckradios to direct them to thenext install or repair. Usingthe C-ARDS computer sys-tem, marketed by CNGEnergy Company, a subsidiaryof Consolidated Natural GasCompany, the dispatcherradios the next order to amobile data terminal in thetruck. When the techniciangets back, he knows where togo next.

"It saves my dispatcher a lotof time," says Vince DiGen-naro, technical support repre-sentative for Cox, so far theonly cable system to invest inthe C-ARDS system, althoughCGN marketing specialistDennis Giancola expectsanother sale next month.

'With one stroke of a key, hecan find out where his entirestaff is and pick the personclosest to that job."

Although C-ARDS, devel-oped by The East Ohio GasCompany, a Cleveland -basedCNG subsidiary, has been pro-moted as a time and moneysaver, DiGennaro says Coxbought it mainly to keep sub-scribers happy: "You can getinto the saving time and savingtruck rolls theory, but we'reinto it for customer serviceand customer relations."

One of C-ARDS' chief sellingpoints, and one that helps cus-tomer -service representativesbetter deal with subscriberproblems, is its real-timeinterface with the cable opera-tor's billing system. DiGen-naro offers this example: Atechnician on a call determines

a subscriber's bad reception isdue to a faulty tuner in the TVHe goes to his truck andpunches this information intothe C-ARDS terminal. Whenthe unsatisfied sub phones Coxagain that afternoon, therepair representative calls thefile up on a computer and tells

the sub that the problem is inhis set, not the cable hookup."It's positive reinforcement,"says DiGennaro. "We don'thave to tell the customer tohold on and try to track downthe technician to find out whatthe problem is."

C-ARDS costs $80,000 forthe central system and $2,300

for each truck terminal (Coxhas 35 trucks). DiGennaro ishappy with the system, butsays it still has a few bugs. Forexample, one C-ARDS featureautomatically calls the nexthome a repairman is scheduledto visit, playing a recordedmessage that someone is on

The C-ARDS

system saves

cable technicianstime and trouble.Now it just has tofigure out howansweringmachines work.

the way. If no one answers, itnotifies the technician to skipthat stop. However, the systemcan't distinguish answeringmachines and disconnectednumbers from a live voice, andsometimes sends the techni-cian to an empty house. CNGis trying to fix the glitch.

RICHARD KATZ


Fin-synis not

the networks'1 problem...

mo ons. Mg. Reurviral

1RPID

The face of television has changed.

Columbia Pictures TelevisionA of ofl olumbla Viaures LrIterteInnlent

WHAT'S ON

RockOf Ages

BY RICHARD KATZ

JULY 5 -SEPTEMBER 15: Attention old-timerock 'n' roll fanatics-want to see the firstBeatles appearances on The Ed SullivanShow, John Lennon and Yoko Ono co -host-ing a week of The Mike Douglas Show in1972 and tons more? Make sure you hit thenew exhibit at Chicago's Museum of Broad-cast Communications, "Rock 'n' roll on Tele-vision." On September 11, as part of theexhibit, the museum hosts "An Evening withRobert Pittman." Pittman, who revolutionizedtelevised rock with his creation of MTV, is cur-rently president and CEO of Time WarnerEnterprises.

JULY 15-18: The Cable Television Adminis-tration and Marketing Society cruises intoSan Diego for its annual conference. Attendeesthis year have four thematic tracks to choosefrom. The "Base Business" track, whichincludes a "state of the industry" presentationby CNN's Bernard Shaw, concerns thedecline in basic and pay cable growth and fea-tures panel appearances by Showtime chair-man and CEO Tony Cox and HBO chairmanand CEO Michael Fuchs. "New Business"explores DBS, pay -per -view and internationaldevelopment. "Human Resources" looks at thechanging cable work force, and "Service Man-agement" provides participants with evidencethat the quality of customer service has adirect correlation to the operator's bottom line.

JULY 19: As athletes from around the globeconverge on Seattle for Turner BroadcastingSystem's Goodwill Games, one local TV sta-tion is running a promotion in conjunction witha local retailer and Eastman Kodak that willsend a little piece of the Pacific Northwesthome with each of the visiting teams. For thepast five weeks, Bonneville International'sKIRO-TV, a CBS affiliate, has been runningspots starring Washington governor Booth

Gardner urging viewers to bring their bestphotos of the Pacific Northwest to local Pay 'nSave stores to create the world's largest photoalbum. During today's opening ceremonies,Gov. Gardner will be presented with the album.In addition, a three -minute vignette of the 100best photos will be aired on TBS and dubbedonto videotapes given to each participatingcountry to take home. Atlanta -based publicrelations firm Cohn & Wolfe designed thepromotion for Kodak. "Of course they wantedhundreds of thousands of dollars worth of air-time and they had 50 grand to spend," saysJohn Steckler, local sales manager for KIRO,"so we brought in the local retailer to helpdefer the cost and be assured of having enoughlocations, 41 Pay 'n Save stores, to get the pho-tos in."

JULY 26: Diane Weingart, vice president ofaffiliate marketing for USA Network, bringsher traveling road show, known as the USANetwork Local Ad Sales/Marketing Seminar,to the Marriott Research Triangle Park inMorrisville, N.C. The seminars, which Wein-gart has been conducting since 1985, aredesigned to help USA affiliates sell local inven-tory more effectively. Weingart's approach thisyear is geared to help affiliates sell what havetraditionally been local cable's hard -to -get cat-egories. Fast-food franchises, departmentstores and, in many cases, supermarkets anddrug store chains are typically big -budgetadvertisers that spend their money on broad-cast. "You just can't expect the local retailer tokeep doubling and tripling his advertising bud-get," says Weingart. "The growth has to comefrom broadening and widening the categoriesand the advertising base each system has."

Channels welcomes contributions to "What'sOn." Material must be received at least 60days in advance of the event to meet deadlines.Send to the attention of Richard Katz.

JULY CALENDAR

July 18-19: Wisconsin Broad-casters Association an-nual summer convention.Landmark Resort, EggHarbor, Wis. Contact:John Laabs, (608) 255-2600.

July 22-27: NAB 1990 Manage-ment Development Semi-nar for Television Execu-tives, sponsored by theNational Association ofBroadcasters and the J.L.Kellog Graduate School ofManagement at North-western University.Northwestern's Evanston,Ill., campus. Contact: Car-olyn Wilkens, (202) 429-5366.

July 26-28: Louisiana Associa-tion of Broadcasters radioand television manage-ment session. HyattRegency, New Orleans.Contact: Louise Lowman,(504) 383-7486.

July 29 -August 1: 1990 NewEngland Cable TelevisionAssociation annual con-vention and exhibition.Newport Marriott andSheraton Islander Hotels,Newport, R.I. Contact:William Durand, (617)843-3418.

August 1-5: National Associa-tion of Black Journalists15th annual convention.Century Plaza Hotel, LosAngeles. Contact: CarlMorris, (703) 648-1270.

August 2-4: Michigan Associa-tion of Broadcastersannual convention andawards banquet. ShantyCreek, Bellaire, Mich.Contact: Karole White,(517) 484-7444.

August 11-13: Georgia Associa-tion of Broadcastersannual convention. JekyllIsland, Ga. Contact: BillSanders, (404) 993-2200.


Is LocalAdvertising

Becoming anIssue After Issue?

Winning over local newspaper advertiserscan be an important new source of revenue foryour television station. The Local MultimediaReport is a new tool to help you target news-paper advertising dollars and move theminto television.

With the Local Multimedia Report, you canidentify which advertisers are concentratingtheir buys in newspaper, how much they'respending and when they advertise. Using trendsprovided in the Report, you can time your salesproposal to get to advertisers before they make

their media plans.The Local Multimedia Report is just one

more example of the Arbitron commitment tothe business of local market television. So whenyou want local market tools that solve localmarket problems, turn to the champion who'sbeen at it since 1949. Contact your local Arbitronrepresentative for answers to the issues.

ARB f i RONThe Local Market Champion

Lethal Weapon 2.Another HBG/Cinerax exclusive.

When it comes to getting your message across, nobodytargets your consumers more efficiently cr more effectivelythan HBO and Cinemax. This year alone, 95% of allU.S. households are learning more about the merits andvalue of Cable TV through our extensive image advertisingand highly impactful marketing programs. And affiliateseverywhere are reaching more and more consumers withHBO's unmatched marketing suppo-t at the local level.

And nobody rivals the HBO/Cinemax Car for bringinghome more of the movies people want to see. This year'smovie lineup is the strongest in our history, with a hit list ofexclusives* like Batman, Licence to Kill, Black Rain, TheFabulous Baker Boys and, of course, Lethal Weapon 2.

So team up with HBO* and Cinemax' today. With marketingand programming support like this to draw from, there'snever been a better time to set your sights on greaterincremental profits with HBO/Cinemax and Basic.

Exclusive titles are exclusive on national pay cable TV to HBO and/or Cinemax during the terms of their license.

0?).990 Home Box Office, Inc. All Fights reserved.

RATINGS & RESEARCH

SweepingStunts

How a San Francisco indie makes mischiefwith ratings by getting out the "vote."

BY MICHAEL COUZENS

My sweeps were here and Jimfibbert was at it again. The acer-ic owner -operator (and stationditorial writer and dance -party

host) of San Francisco indepen-dent KOFY rolled out a new line of 15 -second house advertorials. In one, awoman stands beside an open binder onthe counter and speaks into the tele-phone: "... Well, because I want them towin. We watch TV -20 all the time, so Iwant to help them be number one. Hey,I've got an idea. You can help them too.Just write down, `KOFY TV -20.' " Anannouncer then intones, "Help KOFYTV -20 win. Remember, vote for KOFY."His words are underscored with agraphic reading: "WRITE IT DOWN."

Obviously Gabbert enjoys giving theratings process a tweak. "Back when Iowned KIOI [FM, San Francisco], from1957 to 1980, I got a sticker [from Arbi-tron denoting a ratings distortion] on thefront cover of every book." For KOFY,he wanted to try something "as close tothe edge as you can get." So Gabbertasked a vice president at Arbitron to tellhim the sweeps buzzwords. He learnedthat stations could note that a "sweep"period is under way and could use theterm "vote." That wouldn't be consid-ered "distortion," and would not triggera negative comment on page three of theratings book. Yet heaven forbid any sta-tion should mention such terms as"diary" or "rating" or make a directappeal to the ratings panel members.

Evidently Gabbert saw in this fine dis-tinction a sly opportunity to stay inbounds while at the same time exhortingpeople to vote with their feelings and notnecessarily by their actual viewing. Inthe process, he, like Nielsen itself, has

blurred the line of objectivity. "Wethought of doing a whole, huge campaignfor the November sweep," he says, "witha broom shown sweeping out the old pro-gramming." By May, he had progressedonly to the get -out -the -vote spots:"Remember, vote for KOFY."

Has it helped the station's ratingsshare? Impossible, maintains RoyAnderson, executive vice president ofthe Nielsen Station Index, which oper-ates its own panel of diary -keepers forlocal sweeps that competes, very effec-tively, with Arbitron. Anderson explainsthat the San Francisco Bay area is a

Though KOFY'sJim Gabbert likes

giving the ratings rulesa tweak, there are

some words even hewon't say on TV.

locally metered market, where the over-all estimates of homes using television,and the ratings and shares of programsand stations, are determined by passiveset meters. In the metered household, noone writes down KOFY-or any view-ing. During a sweep month, the 3,000 orso diaries sent out by the two servicesare only used to supplement the meteredviewing, providing a breakdown of theage and sex of the programs' audiences.

Anderson says that campaigns likeKOFY's still can garner a disciplinarylisting, if another station writes in tocomplain. Gabbert's new mini -campaign

did prompt an inquiry from a competitor,but Anderson says Nielsen investigatedit and discussed it with that local client.Since KOFY had not specifically men-tioned diary households, Nielsen orArbitron, the station was satisfied that acomplaint was not warranted. "This onefell in that gray area," Anderson says."They don't really come out and mentionthe diary. More often, when we get acomplaint, the station actually askssomebody to make a diary entry."

Unless television moves to year-roundmeasurement, as in radio, a certainamount of stunting during sweeps isinevitable; it will affect program choicesbefore, during and after. Nielsen saysthat the frequency of complaints has notchanged in the past two years, althoughsome contests and promotions mountedfor the sweeps do anger competitors andtrigger complaints.

For its part, Nielsen takes responsibil-ity for reporting actual distortion, yet italso approaches a gray area by askingpeople to vote what they like rather thansimply register what they view. In Maythe initial contact with a diary householdwas a postcard from Nielsen TelevisionResearch that asserted, "The survey willgive you the chance to express yourviews about television programming tothe executives who plan TV programs."Diaries come with a crisp dollar bill anda letter that begins, "Please accept theenclosed money as a token of our appre-ciation. You may wish to use it tobrighten the day of a child you know.However, the real reward for makingDiary entries is getting more of the TVprograms you like to watch."

Nielsen's mailings to panel membersadopt this tack, Anderson says, "to getthe person interested enough that theyactually will fill out the diary and returnit." But by planting the idea that thediary -keeper has a certain power, mightNielsen be encouraging panel membersto mix a report of their beliefs into areport of their actions? Anderson deniesthat this is a problem, and this confidentassumption may explain why Gabbert'sspots pass muster. Nielsen must assumethat an exhortation to vote, whether byGabbert or by Nielsen, is an exhortationto vote truthfully.

Gabbert enjoys pushing that envelope,and comparing his own approach tothose of other broadcasters leaves himwith few qualms. On a recent trip to LosAngeles, he viewed the mother lode ofsweep stunting from his hotel room."How to get laid," reports Gabbert, onlymildly caricaturing what he saw. "How todouble your breast size. News at 11."

Michael Couzens is a freelance writerbased in San Francisco.


All

Long -Running

Sitcom Strips

Have One Thing

In Common...

GREAT W"Critics praised the witty writing!'

Electronic Media, June 25, 1990

THANK YOU TO THE CRITICS IN THEELECTRONIC MEDIA CRITICS' POLL FOR SELECTING

"MURPHY BROWN" AS THE BEST SERIES.

AND THANK YOU TO ALL OF THE OTHER CRITICS WHOHAVE GIVEN US SUCH KIND WORDS OF PRAISE...

"The sitcom doesn't get any better than this...'Murphy Brown' has evolved from a clearlypromising idea, developed by Diane English,into a landmark series. The casting is inspired.Barnet Kellman's direction has become a mastercourse in comic timing. And the scripts can besimultaneously, thoughtful and hilarious.In short, everything comes together withuncanny precision..."

JOHN!. O'CONNOR, NEW YORK TIMES, NOVEMBER 27, 1989

"'Murphy Brown' has become indispensable.Monday night would seem empty without it.In terms of writing, direction, and acting, it'ssterling craftmanship."

TOM SHALES, WASHINGTON POST, SEPTEMBER 21, 1989

"A season in which its acting and writing jumpedfrom very good to just about the best inTV comedy...`Murphy' is now required viewing."

ENTERTAINMENT WEEKLY, MAY 18,1990

AVAILABLE FALL '92.

RIFTING!

"Cheers to the supporting cast of CBS's'Murphy Brown.' The show is undeniably agreat comic vehicle for star Candice Bergen,but it's the rest of the cast that constantlykeeps us in stitches. Grant Shaud (Miles),Faith Ford (Corky), Charles Kimbrough (Jim),Robert Pastorelli (Eldin), Joe Regalbuto (Frank),and Pat Corley (Phil) form one of the funniestensembles in sitcom history."

TV GUIDE, JANUARY 6, 1990

"Each network that has come back from ratingsfailure in recent years has done so by buildingon a trademark show - the kind of series thatepitomizes the quality of programming it wantsto be known for. With NBC, it was 'Hill StreetBlues.' With ABC, it was 'Moonlighting''Murphy Brown' is the now and future hope ofCBS -a trademark show that any networkwould be proud of."

RICK DU BROW, LOS ANGELES TIMES, JANUARY 13, 1990

A SHUKOVSKY/ENGLISH PRODUCTION

MURPHY BROWN WARNER BROS.DOMESTIC TELEVISION

DISTRIBUTIONA Time Warner Company

SALES

SatisfactionGuaranteed?

A controversial sales concept stole theshow at TvB's first -ever video conference.

BY AL JAFFE

It was the first sales -training confer-ence the Television Bureau ofAdvertising had ever mounted viasatellite, and it threw off some unex-

pected sparks that continue to burn.The February 20 transmission elicited

more pros than cons from the 200 -oddTV stations in the U.S. and Canadathat paid $500 to $1,500 to pick it up.The unexpected part emerged from theunscheduled introduction of the contro-versial issue of "guaranteed results" byDon Beveridge, president of BeveridgeBusiness Systems and one of the threesales trainers who appeared front andcenter in the four -and -a -half hour videoconference.

Ironically, Beveridge, who admits tohaving a compulsion about guaranteedresults, intended to duck the issue inthe video conference, feeling it wasn'tproper to skew the thrust of TvB's pio-neering effort. But it came up anywayin the question -and -answer portion ofthe two-way transmission.

To Beveridge, guaranteed resultsmean just that-the TV station guaran-tees the advertiser specific results, onpain of give -backs. In its most sophisti-cated form, the guarantees would applyto the client's level of product sales, asopposed to, say, some agreed -on audi-ence level.

Guaranteed results is a controversialconcept to many station salespeople,who feel the risks of marketing shouldbe borne by the marketer. At least twostations, however, saw enough merit inthe idea to give it a try.

Howard Zeiden, vice president ofsales and marketing for WMAR-TVBaltimore, was initially among theskeptics. He challenged Beveridge to

win his station's sales staff over. Bev-eridge accepted the challenge and paida visit to the NBC affiliate on April 23.At the outset, Beveridge made clear

that a station salesperson can't justbreeze into a client's office waving aguarantee. Recalls Zeiden, "He talkedabout a comprehensive partnershipand an in-depth needs analysis. Theclient must be honest and so must thestation. Also, the client must knowwhat he wants and must set realisticgoals." The people at WMAR wereconvinced enough to talk to a clientabout a guarantee.

Beveridge's ground rules suggestthat it takes a major -market stationwith considerable resources and mar -

Don Beveridge won the WMAR staff over.

keting know-how to pull off a guaran-teed sales commitment. Nevertheless,KCOY-TVin Santa Barbara -SantaMaria -San Luis Obispo, Calif., certainlynot one of the big boys, decided tomake a college try. First, the CBS affil-iate tested the idea on three accounts,each one representing a differentindustry category. Getting a positiveresponse, the station then hired a mar-keting consultant to work out thedetails.

Setting up a proposal, explainsKCOY general sales manager CliffWilliams, turned out to be not so sim-ple. For one thing, the consultant hadno experience selling TV time. Also,admits Williams, "We learned by mak-ing mistakes." Among the mistakeswere the early assumptions that thestation would be guaranteeing willy-nilly such results as specific productsales, foot traffic, or gross retail rev-enue. "That would make us responsiblefor the store's reputation," Williamspoints out, as well as other aspects ofthe client's operation over which thestation has no control.

So KCOY settled on starting withsome guarantee of gross audiencereach. A "second tier" type of guaran-tee would involve actual retail sales,providing the station could supervisemarketing, including sales training.While second -tier details are beingworked out, KCOY is treading water.

Even if the guaranteed results con-cept doesn't catch fire with stations,TvB's first video conference hasalready proved its financial worth. Formost participants, the conference,which also featured Dave Schmidt ofManagement Development Associatesand Beveridge's son and partner Dirk,was a godsend budgetwise. Cost effi-ciency was the whole reason for usingvideo: Smaller stations find sendingsales troops and/or sales managementto an out-of-town training event aheavy financial burden even beforecomputing the cost of lost selling time.

The replaying and dubbing possibili-ties inherent in the video conferencewere not lost on the subscribing sta-tions, another reason it was widelyapplauded. Because of the pluses notedabove, TvB, obviously pleased, intendsto present not one but two videoconferences next year. Barbara AnnZeiger, TvB's senior vice pres-ident/marketing services, who super-vises the bureau's sales -training activi-ties, says the 1991 events will likely bemore applications -oriented and morehands-on.

Al Jaffe is a New York -based freelancewriter who specializes in TV sales.


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NEWS CHANNELS

When More IsReally More

With a roll of the dice and a 'delicatecalculus,' increased news can pay off.

BY JANET STILSON

If yesterday teaches anything tothose in the breaking -news business,it's that the odds are against sta-tions' increasing their ratings by

adding more local news programming.The belly flops can be real bruisers.

That's how some see the situation atindependent KCAL in Los Angeles,which plowed $30 million into a three-hour prime -time news block this springbut has failed to lift ratings above theprogramming previously in place.

But the bottom -line potential-and thestories of sensational ratings suc-cesses-make the expanded news gam-ble appealing to some. Because ofhigher CPMs and lower program costs,stations don't necessarily have to equalthe ratings they earned with syndicatedproduct to make more money with localnews. The challenge is to hang tough."You have to earn the audience's trustwith news over a period of time," saysKCAL news director Bob Henry.

KCAL's persevering attitude is sharedby other stations that have increasednews without increasing ratings. Infact, despite the results so far, manyexpress a desire to expand their newseven further.

Nielsen numbers from the last twoFebruary sweeps reveal that ten stationsin the top 50 markets increased weekdaynews in early fringe between February'89 and February '90. Five lost viewers,one remained stable, one had mixedresults, and three had higher ratings.

Standing out as a real eyesore isWUSA-TV Washington. Last Septem-ber, when The Oprah Winfrey Showjumped ship for ABC affiliate WJLA,WUSA counterattacked by filling the 4EM. void with a news show, nudging The

CBS Evening News with Dan Ratherup to 7 EM. to make way for three hoursof continuous local news. WUSA lostapproximately four rating points andnine share points, according to Nielsenhourly averages over the three-hourperiod, falling from an 8.7/26 to a 4/13 inthe 4 to 5 EM. Oprah slot. Things didn'timprove in May.

Because it isn't an Arbitron subscriber,WUSA can't tout that ratings service'sbrighter picture. In the 5 to 7 EM. block,for example, while Nielsen has WUSAvying for first place with the other net-work affiliates, Arbitron has it a clearwinner. WUSA g.m. and president HankYaggi says the station's own commis-sioned research indicates the audienceinterest is there, and cost efficienciesearn the news block a profit.

"It's not only economical, but responsi-ble" to add news, comments SteveSmith, news director at Atlanta'sWXIA. That NBC affiliate increased itsearly evening local coverage to 90 min-utes last year by replacing anothermoney -eating syndicated program, TheCosby Show, with an extra half-hour ofnews at 5 EM.The effort cost it about four rating

points and six share points in the 5 to 7P.M. period (which includes a half-hour ofJeopardy!), when comparing February'89 to February '90. Yet the news is stillin the black.

If a station actually makes ratingsheadway with added news, the profitscan be substantial. Such is the case withMiami's WSVN, which swelled its localcoverage to six -and -a -half hours a daylast year after it lost its NBC affiliationand became an independent. The stationbeat all three network morning showswith its own local variation and rankednumber two in early evening news,according to Arbitron's May figures.

"By everybody's account, this is avery profitable station as a result of ...the news," says WSVN news directorMark Toney.

Finding bottom -line joy with additionalnews isn't a simple matter. "It takes adelicate calculus" of weighing the ratingsand ad revenue potential of syndicatedprogramming against the lowered costsand higher CPMs of news, says DavidBartlett, president of the Radio -Televi-sion News Directors Association.

Given the industry track record, it'slittle wonder that stations today arelengthening their news cautiously-par-ticularly in the early evening. In sharpcontrast to the big news expansion ofthe mid -70s, "We've reached a state ofequilibrium," Bartlett says.

Disney's independent KCAL -TV in Los Angeles has yet to improve its ratings with a prime -time news block.


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WASHINGTON

PolicyGridlock

Why hasn't the Bush administrationdeveloped a clear communications agenda?

BY PENNY PAGANO

In January 1989, when George Bushwas busy moving into the WhiteHouse, the nation's television indus-try was grappling with unsettling

changes in its structure, programmingand audience makeup. While the presi-dent and his advisers have engaged anynumber of the nation's various troublesin the 18 months since inauguration, lit-tle has been done to sort out the coun-try's jumbled telecommunicationsagenda.

Bush took office at a time of uncer-tainty in the TV business: Cable wascontinuing its redistribution of viewersfrom the broadcast networks to cablechannels; the production community wasrecovering from a strike by Hollywoodwriters; and a languishing economy wasthreatening to undo much of what thedeal -driven '80s had built.

At the same time, interest was perco-lating in new technologies such as highdefinition television (HDTV) and directbroadcast satellites (DBS). Potentialrivals such as the telephone companieswere intensifying efforts to remove thelegal and regulatory hurdles that barthem from directly competing withcable. Stoking the regulatory fire wasthe rekindled furor between the TV net-works and Hollywood over financialinterest and syndication regulations (fin-syn), plus budding concern on CapitolHifi over cable's expanding power.

Some of these issues have a directeffect on the day-to-day operations oflocal TV stations and cable systems; oth-ers are primarily of concern to thepower -brokers on both coasts. But thedecisions on these issues-when, how,and by whom they are made-will dra-matically change U.S. television.

A year and a half into a new era, ittherefore seems fair to ask: Why hasn'tthe Bush administration developed aclear communications policy?

For a growing number of people, thelack of a cohesive national policy is start-ing to raise concerns about the U.S. rolein the rapidly changing telecommunica-tions arena. They see mounting gridlockin telecommunications policy.

"What is alarming is that we are start-ing to see other countries leapfrog aheadof us from the tech-nology and regula-tory standpoint,"says former ReaganFCC chairman MarkFowler. Fowler citesefforts to use cable,satellites and wire-less local exchangesin the United King-dom, fiber optics inFrance and DBS inJapan as someexamples of newtechnologies alreadyat work elsewhere.As for the U.S.,

"We muddle along,"he says, and "wecannot afford towhile there are othercountries movingrapidly and aggres-sively to implementnew technologies. When you have a vac-uum of power in the White House, thatproblem of gridlock is exacerbated."

Fowler believes the policy gridlockstymies new developments from severalsides. "Programming has become tied upin a regulatory morass," he says, "mak-

First NTIA head Henry Geller.

ing access to programming uncertainand making the DBS business plan amore risky proposal."

Other observers, such as Henry Geller,a communications fellow at the MarkleFoundation, suggest that a key to thetelecommunications problem is that "thepresident has no real interest in it. Idon't think there is any high-level con-sideration at the White House ontelecommunications."

There is a vehicle in place for suchattention. The Nixon White Houseformed the Office of TelecommunicationsPolicy (OTP) to advise the president oncommunications policy. When chargeswere made that the OTP had becomepoliticized, and its location so close to theOval Office was challenged, it was movedduring the Carter administration to theCommerce Department and renamedthe National Telecommunications andInformation Administration.

Geller, who was the first head of NTIA,says he has offered a bit of proceduraladvice to current commerce secretaryRobert Mosbacher."I told him that on the big issues you

need to involve the president. You can'tdo it often, but people don't pay atten-tion to the NTIA," Geller says. "I believethat telecommunications is of greatimportance, and occasionally you shouldinvolve the president in sending presi-dential messages drafted by the NTIA.You ought to say that this has beenfocused on at the highest level.

"This hasn'toccurred," Gellersays, but he adds,"we're still in theearly innings."

In the past, therehave been occa-sional legislativeproposals for atype of telecom-munications czarin the WhiteHouse, but Con-gress has neveracted on them. InDecember 1988,Geller urged theWhite House toconvene a commis-sion that wouldmap out a com-prehensive tele-communicationsagenda for the

final decade of this century. "You won'tget anywhere," he says, "until you get anational consensus."

Over the years, the White House rolein telecommunications has tended to be areactive one, says Frank Lloyd, an attor-ney with Mintz, Levin, Cohn, Ferris,


Glovsky and Popeo in Washington.Lloyd, who worked at OTP and later forthen -FCC chairman Charles Ferris,helped write the Public BroadcastingAct of 1978. He points to that statute asthe last piece of legislation that was initi-ated by the White House: "Carter actu-ally met with the staff and said, 'This is

Former Reagan FCC chairman Mark Fowler sees a power vacuum.

what I want to do.' "Building on the efforts of his predeces-

sor, Gerald Ford, Carter intensified theexecutive branch focus on regulatoryoversight. The Reagan administration,armed with an ideology of marketplacerule, then offered deregulation as itsmajor policy initiative.While the Reagan White House did

step into the earlier fray over the FCC'sproposed changes to the controversialfinsyn rules, it was the former actor'slinks to the Hollywood community andhis broadcast background that triggeredhis sensitivity and spurred White Houseinvolvement.

Reagan did not orchestrate what theFCC-an independent agency-did, buthis appointments of Fowler and DennisPatrick, who shared his ideology, madecertain that his goals would be met.

"There are plenty of people in townwho vilified Mark and Dennis," saysHarry Shooshan, vice president ofNational Economic Research Associates,a Washington, D.C., economic consultingfirm. "But they made a difference andthey got things done."

When it comes to a Bush administra-tion telecommunications policy,Shooshan says it may still be "too soonto tell." Even so, he adds, "there don'tseem to be any strong indications ofwhat that policy might be."

He cites, for example, the issue of spec-trum allocation. "There is a lot ofpromising technology out there that willbenefit from freeing up additional spec-trum. How hard this administration willpush remains to be seen." As Shooshanputs it, the real question is, "What is thisFCC or administration going to do that

is groundbreaking?"Others, such as former FCC chairman

Richard Wiley, now of Wiley, Rein &Fielding, don't see any major problemswith the way the Bush administration ishandling telecommunications. "If it ain'tbroke, don't fix it," Wiley says.

He points to the ability of FCC chair-man Alfred Sikes, NTIAhead Janice Obuchowskiand Bradley Holmes,U.S. coordinator anddirector of the Bureaufor International Com-munication and Informa-tion Policy at the StateDepartment (whoseoffice is responsible foradministration positionson international telecom-munications matters), tocooperate as a big plusfor the administration.In the past, these agen-cies have had bumpyrelationships.

"I get the feeling that Sikes, Holmesand Obuchowski work together andunderstand each other's agencies. Ithink that it's rather harmonious andeffective," Wiley says. "I really think thishas been a success story for the Bushadministration." Others argue thatbenign neglect of telecommunicationspolicy by the White House, and its eco-nomic policy council, leaves Obuchowskito formulate domestic telecommunica-tions policy by default.To her credit, Obuchowski has

launched several omnibus inquiries deal-ing with spectrum management, thenation's telecommunications infrastruc-ture and the ramifications of media glob-alization. But she has limited staff andresources for the effort. Inside Com-merce, officials say privately that "itwould be a real plus if there were anadministration agenda." Until then, theyadd, telecommunications policy will con-tinue to "merely limp along."

Critical, too, is what priority Secretaryof Commerce Mosbacher will assign tothe NTIA findings. Mosbacher, once akey public proponent of HDTV, cooledhis support and interest after the WhiteHouse indicated its skepticism aboutgovernment support for the commercialventure.

Another barrier to developing anational telecommunications policy maybe the FCC itself. The FCC is an inde-pendent agency that reports toCongress, not the White House.

"As we become a more and more infor-mation -based economy, and it becomesapparent that our comparative advan-tage in the world is in the information -related fields, it becomes more impor-

tant for us to have a clear and consistentset of policies," says former FCC chair-man Dennis Patrick. However, he adds,"it's pretty hard to have a cohesive pol-icy when the FCC is an independentagency."

The lack of cohesive national telecom-munications policy at the White Housedoes not stop the march of technology. Infact, changes in technology are alreadyovertaking current regulations. And thelack of a national policy, along with theseeming inability of the administrationto identify and act on critical issues, cando real harm in the long run.

For example, the economic policycouncil at the White House-which setsthe president's economic policyagenda-has been unable to formulatean administration position on the Modi-fied Final Judgment (MFJ), the court -approved consent decree that governsthe business of the seven regional Bellholding companies. Changes in the MFJwill determine, for example, whether theBell companies can directly enter the TVbusiness. It wasn't until the day beforethe House subcommittee marked up itscable bill that Mosbacher spoke out

Dennis Patrick: Is the FCC part of the problem?

favoring telco entry into TVToday, George Bush has an opportu-

nity to help lay the foundation for atelecommunications policy that willguide the nation into the 21st century.But perhaps it is unfair to ask Bush todo more than his predecessors.

"No president in history has personallyever cared about telecommunication pol-icy," asserts Brian Lamb, founder andchairman of cable network C -SPAN, whoalso worked at OTP during the Nixonadministration. "It's hard to believe thatpresidents don't care about something asimportant as telecommunications."

Penny Pagano is Channels' Washingtoneditor.

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NETWORKS

His Spanish is terrible, but that didn't stophim before. Now, after almost four yearsas an overseer and chairman of the Tele-mundo television network, Saul Stein-berg is jumping in as its chief executive,and he intends to play a more "creative"

Ailib,...4111b.....ift. role in running the company. On a recentWest Coast trip to visit Telemundo'sKVEA in Los Angeles and KSTS in SanJose/San Francisco, Steinberg sat on theplane and watched five-minute video clipsfor shows based on his ideas.

"I'm not saying any of my ideas aregoing to be any good," Steinberg says,seated in his 29th -floor Park Avenueoffice. "I just think I can make a positivecontribution in that area and I'm tryingto do it.... I hope it will be constructive."Where does Steinberg-the principal

The MissinPot of Gold

Saul Steinberg and Bill Grimes got into

Spanish -language TV believing

the Big Money would come. They're still waiting.

By Steven Beschloss

owner and chairman of the multi -billiondollar Reliance Group Holdings, one ofthe Forbes 400 richest people in Americaand a Manhattan society player-get hisideas? He talks to his executives, andasks Hispanics what they like to watch."I try to put myself in the buyer's shoes,"he says. "I think I have as good a senseas anyone about what people are allabout." One Steinberg idea: A novelabased on the life of Carlos Barba, Tele-mundo's Cuban -born programming chief,who has made millions in Spanish -lan-guage television. ("Carlos thought it wasa great idea," Steinberg notes. "I'm notsure that Don [Raider, Telemundo chiefoperating officer] thinks it's such a greatidea.")

It's an audacious move from the 50 -

year -old Steinberg, whose reputationdates back to the 1960s as the enfant ter-rible who aimed to take over mightyChemical Bank. With a presence largelyas the money man behind the birth anddevelopment of Telemundo, Steinbergjoins the long line of financiers drawn inby the glamorous potential of televisionand its promise of swift gratification. Butthere is more: Steinberg wants to involveother Reliance executives in Telemundo,including his brother and Reliance presi-dent Robert Steinberg, Reliance invest-ment head James Yacobucci and Reliancechief financial officer Lowell Freiberg.

"Look, I'm dragging these people tomeetings because I want to get the juicesflowing," Steinberg says. "They're verysmart people and I'd like to get some ofthat intellect working on the opportuni-ties of Telemundo."

Several weeks later, Steinberg's maincompetitor, Univision chief executive BillGrimes, is hunkered down in a narrowauditorium chair in Miami, his head in hishands. He turns once to whisper in theear of Hallmark Cards legal counsel JudyWhittaker, and again to confer with DaleBills, manager of corporate planning forHallmark, Univision's parent. Restless,athletic, Grimes seems unable to sit still,especially on this spring night, dressed ina tuxedo. The former chief executive ofESPN is in town for the Latin MusicAwards, the Hispanic version of theGrammys sponsored by Univision andBillboard Magazine and the kind of glit-tery live showcase to which such majornational advertisers as AT&T, McDon-ald's and Sears Roebuck attach theirnames.

Teenage girls in the audience scream asLuis Enrique, a charismatic youngNicaraguan living in Miami, croons a popballad onstage. The response has to begratifying to Pepsi -Cola's Hernand Gon-zalez; he presented Enrique to the pressearlier in the day as the new Latincelebrity sponsor of Diet Pepsi. While thegirls swooned, BM Grimes yawned, but itprobably wasn't because he hadn'tgrasped how critical emerging Hispanicpop stars like Enrique-and the awardsceremony itself-are to enriching thenetwork's connection with U.S. Hispan-ics, assimilated and assimilating.

Grimes, brought in two years ago totake Univision mainstream, is countingon a deepening symbiotic relationshipwith advertisers. If the programminggets better, more advertisers will come.If the advertising dollars flow morefreely, better programming-and more ofit-will be produced. It's exactly thedevelopment process that was critical tothe eventual success of ESPN and othercable outlets. Grimes remembers how E


Telemundo's Don Raider (I.) and Saul Steinberg were seen as leaders of a temporary irritant. No more.

much tougher it was to sell cannedwrestling tapes to advertisers thanalmost any live production. "Even if it gota lower rating, advertisers would want tobe in on it," Grimes recalls, "because it'soriginal, it's live, it's crisp-and that'swhat is happening here."

It makes sense that Grimes and Stein-berg are focusing their optimism on thefuture. These are the Anglo businessmenwho entered into the Hispanic market,convinced of its financial potential andconfident that their business acumenwould compensate for being strangers tothe language and the manner of Hispanicculture. At their most hopeful, theyfondly imagined they had landed on aget -rich -quick scheme and its languagewas Spanish. Yet only in the last year orso, as both the dominant Univision andupstart rival Telemundo suffered sub-stantial losses and increasing pressure tospend more money, have they fully gath-ered that the multi -colored path to thepot of gold may stretch farther and exacta higher price than they originallyassumed.

Last year the publicly traded Telemun-do registered a net loss of $39 million,and only met its debt obligations afterReliance Insurance and Reliance Capi-tal-divisions of parent RelianceGroup-and another investor infused thecompany with $73 million in exchange for

newly created common stock. Univision,meanwhile, suffered a $52 million loss in1989 and earlier this year defaulted onthe interest payments of its junk bonds,inciting Hallmark to threaten letting thenetwork slip into bankruptcy. Hallmarkeventually orchestrated a $270 millionbond buy-out at about 55 cents on thedollar, but the move by several accountscreated a "ragged" atmosphere withinUnivision and added to the uncertaintyabout the Hispanic market's vibrance.

Some three -and -a -half years havepassed since Henry Silverman, then Tele-mundo's chief executive, orchestrated thepurchase of English -language KVEA inL.A. and relaunched it as a Spanishoutlet. Flush with its better-than-expected performance, he began piecingtogether a Spanish -language network,including WSCV in Miami and WKAQ inPuerto Rico (through Reliance Capital'spurchase of John Blair & Co.) andWNJU New York. ("It'll be like StarWars!" roared the Marine -stiff Silvermanin early '87. "We're going to maketremendous amounts of money.") Twoyears ago Hallmark Cards and ChicagoFirst Venture Capital completed a $629million funding to acquire the nine -sta-tion group of Spanish International Com-munications Corp. and the Univision net-work. Yet despite double-digit annualgrowth, creating a nearly $270 millionHispanic TV market, profitability

remains a matter of statistical conjecture.Both camps-Steinberg/Silverman, and

Grimes and Hallmark chairman IryHockaday-knew the statistical projec-tions when they got into this business.The nation's 20 million -plus Hispanics,about 8 percent of the total U.S. popula-tion and already accounting for $170 bil-lion in combined purchasing power, willrepresent the fastest growing demo-graphic group for decades to come. WithSpanish TV attracting an estimated one-third of Hispanic viewing, they reasoned,how hard could it be to expand the baseof advertisers and the scale of advertis-ing dollars beyond 1 percent of TV'stotal? How hard indeed.

"They are really fighting for a verysmall piece of the media dollar," saysHernand Gonzalez, national manager ofHispanic marketing for Pepsi -Cola Co.

"It is an outright war for the Hispanicadvertising dollar," adds Phil Fernandez,senior vice president of Castor G.S.& B.,an Hispanic ad agency with billings of$64 million, all of it from Hispanic busi-ness. "I think the ones who have beenlagging behind are the American market-ing companies, whose marketers are stillnot comfortable dealing in this market."

Today, Silverman, who joined theinvesting Blackstone Group in Februarybut remains on the Telemundo board, isstill optimistic about eventual profitabil-ity. Yet experience-call it "Anglo busi-nessman learns about managing a minor-ity business"-has moderated hisjudgment: "What I didn't understand,because it just didn't occur to me, wasthat a lot of advertisers who were suchlogical advertisers would say to me, 'Idon't want your people in my stores,' Idon't want your people in my showrooms'or 'I don't really care about whether His-panics buy my products.'... We went to amajor consumer -products company and Itold this person, 'You know, one out ofevery two children born in Los Angeles isHispanic,' and this person said to me,

The product's in view on Telemundo's Cocina Crisco.


`Isn't that appalling?' We weren't going towalk out of there with an order."

Cultural prejudice is perhaps the mostfrustrating explanation for why advertis-ers have refrained from entering the His-panic market or spending more than atoken amount to reach Spanish -languageviewers. There are other assumptionsthat dim the market's prospects ofbecoming the billion -dollar business thatUnivision and Telemundo executivesanticipate: The Hispanic market is notsingular, but rather is made up of a num-ber of subcultures; Hispanic viewers canbe reached through popular Anglo shows;ad agencies lack the internal resources todevelop Spanish spots; Spanish TV maybe only a transitory medium that unas-

fall in L.A. and a national people -metersurvey by the end of 1991. "It's so hard,"says Peter Housman, Telemundo chieffinancial officer, "to get advertisers whoare so used to buying off the Nielsenbook."

Convinced that Hispanic viewers will nolonger settle for only imported novelas,they have expanded their U.S.-producedofferings, creating shows largely deriva-tive of general -market television andstuffed with product placements toenrich the alliance with advertisers,much like English -language TV in itsearly days. Univision has gone the far-thest, at least in dollar terms, spendingmore than $40 million in the last year onU.S.-produced programming, nearly

Chief executive Bill Grimes calls his first year at Univision the toughest in his business life.

similated Hispanics watch before switch-ing over. But both networks have tailoredtheir efforts toward the most manageablecriticisms.

In response to advertisers' doubtsabout the reliability of research fromMiami -based Strategy Research Corp.,which both networks use to obtainnational ratings, the two companies arejointly paying A.C. Nielsen & Co. $38million for Hispanic viewership data this

triple its expenditures in 1987. Earlierthis year it began shelling out nearly$50,000 an episode-relatively inexpen-sive for Anglo TV but unheard-of forSpanish-for an hour show with PaulRodriguez, hoping that the Mexican -American comic will be a ticket to assimi-lated and semi -assimilated Hispanics whoturned away from (or never watched) thenetwork. Rodriguez's show has alreadymotivated Mazda and Coors to sign up

for half its inventory.Telemundo, which spent $10 million to

open a Miami production center in 1988and nearly $20 million on U.S.-producedprogramming last year, has kept atighter lid on programming outlays."How much does Paul Rodriguez cost?"asks Don Raider, Telemundo's chief oper-ating officer with the basso profundovoice and patrician air. "Probably threetimes anything we do." Yet Saul Stein-berg acknowledges that Telemundo mayhave to up the ante to create program-ming germane to the experience of U.S.Hispanics.

Expanding U.S. production hasstretched the limited resources of bothcompanies. But as their financial invest-ment has grown, so has their resolve tostick around until the profits flow. "Itmay take longer than we originallythought," concedes Hallmark's Hocka-day. "We believed long-term this com-pany would reach its potential only whenmajor advertisers supported it. I hadunderestimated what all of this involved."

These are not words to ease themind of Bill Grimes, Univi-sion's president and chief exec-utive since late 1988. But after20 months, they come as no

..--...- .. ...... surprise. From his first day onthe job, the former cable executive beganthe process of discovery that would eataway at his initial optimism. Convincedby Hockaday to leave Cap Cities/ABC,Grimes inherited a company strappedwith debt and suffering deeper financialdisarray than he ever imagined. He alsoquickly learned that Univision was sad-dled with a misguided programmingstrategy-that the ten-year, fixed -costcontract for Televisa's Mexican novelasand other program offerings was not asvaluable an asset as Hockaday hadassumed when he urged the purchase ofUnivision.At their first meeting, Grimes recalls,

Joaquin Blaya, Univision's Chilean -bornnetwork president and general managerof WLTV in Miami for 14 years, told him,"Bill, if you came here thinking we aregoing to have a low-cost product byputting all the Mexican stuff on, it isn'tgonna work. Yes, they have some verygood novelas. Yes, we get first call ontheir best programming. But we aren'tgoing to be able to make it that waybecause the U.S. Hispanic has a differentexperience." If Grimes had any lingeringdoubts about Blaya's assertion, a conver-sation in early '89 with Neal Comber andhis boss Bob Wheling at Procter & Gam-ble, Univision's biggest advertiser, putthem to rest. They told him theyintended to spend the lion's share of theirmoney on U.S.-produced shows and not alot on novelas. "That was a pretty clearmessage to me," says Grimes, reinforcinghis commitment to expand production in


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the U.S., whichtoday representsnearly 40 percent ofall the company'sprogramming.

Grimes had quick-ly surmised that hecould lean on Blaya-credited with cre-ating the successfulU.S. version ofthe Chilean week-ly variety showSabado Gigante andsaid to see himselfas the Brandon Tar-tikoff of Spanish -language TV-tohandle program-ming. Had he notdone that, says onestation executive,"A lot of executiveswould have walked." But the sales andfinancial side of the business was anothermatter, confronting Grimes with thefiercest test of his professional life. Hehad entered a business where "blood"was the fluid that mobilized deals, somelongtime salesmen didn't know what rat-ings were, and sales pitches were gearedmore toward the corner bodega than theGeneral Motors showroom.

Grimes details what he found: "Herewas a station business that doesn't haveany financial controls, no historical rev-enue information to speak of, an inabilityto forecast and people who'd never beenasked to forecast revenues, sales presen-tations that are shabby, a strategy thatour revenue growth will come from theold base of advertisers we've had for 20years and the assumption that if we justkeep trying, things will get better. Well,they don't get better unless you changeyour strategy." His mission was clear: torevamp the sales organization, replacemany of the owned stations' general man-agers and create more sophisticated mar-keting presentations. But would he havethe resources and support necessary toaccomplish it?

Grimes had joined a televisionnetwork that was founded at asingle station in San Antonioin 1961. Spanish InternationalNetwork had been built into

......, -..--. an $85 million business by itsprincipal owner, Mexican media baronEmilio Azcarraga Milmo, and chief exec-utive Rene Anselmo before they sold outto Hallmark in 1986. But SIN executiveshad assumed they could program Mexi-can imports and U.S. Hispanics wouldkeep watching-simply because they hadno other Spanish language alternative.By the time Hallmark completed its dealfor the network in mid -1988, there wasreal competition in the shape of Telemun-do, although few people treated this

Paul Rodriguez: a ticket to younger Hispanics?

fledgling presenceas anything morethan a temporaryirritant. "There wasan attitude out ofKansas City that wewere bullshit, weweren't competi-tion," Silvermansays, "that this wasa quick trade forReliance and Stein-berg and Silver-man." Grimes ac-knowledges, "Therewas this feeling thatthe other guy didn'treally exist."

That mind -set wasnot easily overcomeafter so many yearsas the only Spanishitem on the menu.

Nor did a Telemundo personified bySteinberg and Silverman seem to neces-sitate that. Steinberg, the principalowner of Reliance Group Holdings Inc.,with assets of $10.4 billion, had attractednotoriety in the early '80s as a "green -mailer" for exacting a $30 million profiton his shares of Walt Disney stock inexchange for dropping his buy-out bid.Silverman, energetically involved in sta-tion acquisitions, had earned a reputationas a shrewd dealmaker more than a man-ager. Says Steinberg: "Henry is a finan-cial guy. With Henry, everything is for

sale." Of course the start-up of Telemu-ndo was just another investment by busi-nessmen less interested in operating acompany than buying and selling one.Right?

If that assumption still held sway whenGrimes arrived at Univision, it could nothave lasted. Telemundo was reaching 58percent of Hispanic households in Jan-uary 1988; that would climb to 78 percenttwo years later (with Univision at 90).Telemundo was only drawing a rating of3 in its Hispanic households in the fall of1988 versus Univision's 14 rating, accord-ing to Strategy Research, but by Febru-ary of this year had narrowed the gapwith a rating of 7 versus Univision's 13.

The market was not expanding fastenough for both networks to maintainrevenue growth exceeding 20 percentannually. Telemundo's sales staff was vis-iting the same advertisers Univisioncounted on-often undercutting themand "grinding down the rates," complainsone Univision salesman-and was suc-ceeding at getting itself an increasinglybigger piece of the business. "I saw thatTelemundo was not going to go away,"Grimes says. And he realized that hold-ing down costs to ameliorate a drop incash flow-the plan that he inher-ited-could leave the network in the pre-carious position of continuing to lose rat-ings and revenue.

By May of last year, Grimes could seethe future. It was time to share his vision.'We've got to spend more money, guys,"

-.1411V-...$111....711111v -411110."-I011r.- --guiW-Adik-14111P'

On the Local FrontWhen Mikhail Gorbachev visitedGeorge Bush in Washington,D.C., in May, the news crew

for Univision's Spanish -languageWLTV Miami stayed home. But theweek that Daniel Ortega was voted outof office in Nicaragua, WLTV newsdirector Alina Falcon sent two reportersand a crew to Managua; then sent themback for Violeta Chamorro's presiden-tial inauguration. "We'll cover most ofwhat the general -market newscastscover," says Falcon. "But we challengeourselves to think about what our view-ers would be most interested in."That's sometimes an easy call, as

when Cuban -American leaders traveledto Poland last November to meet Soli-darity's Lech Walesa-Cubans repre-sent the large majority of Miami's His-panic population, Nicaraguans the nextlargest group-less so when the storymight take WLTV to Peru, the Domini-can Republic or another Latin Ameri-can locale that a smaller number ofviewers call home. Falcon also faces the

daily dilemma of balancing the dis-parate needs of recent immigrants andAmerican -born Hispanics.

It helps that Falcon has a budgetexceeding $3 million, the highly -ratedNoticiero Univision national news topiggyback on, a staff of 53-small byAnglo network standards, but thelargest among all Spanish stations-andthat network president Joaquin Blayawas general manager of WLTV for overa dozen years. Clearly, the strategy ofmixing breaking news and features thata recent arrival can use has been work-ing: In the May sweeps the station'snewscast ranked third overall in theMiami ADI, with a 7 Arbitron rating.

Now, with the just -completed moveinto a new centralized production facil-ity, the daily trials of putting out a news-cast have lessened. For the last decadeanchors and reporters gathered news inoffices 18 miles away from the broad-cast studio. On occasion, Falcon herselfshuttled the anchors so they could prac-tice their scripts en route. S.B.


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COMMUNICATIONS

Grimes told his corporate parents. "If wedon't do that, you're not going to havemuch of a business. The problem is wehave this heavy debt and a highly lever-aged company and the shit's going to hitthe wall here in about a year." Hallmark,aware that repaying its debt depended onachieving its financial goals, wanted toknow if Univision could achieve the rev-enue projections by spending moremoney.

By July, Grimes knew that the answerwas no, yet there was no alternative butto carry on. He had already embarked onincreased spending for U.S. programsand capital investments-including plansto build a Miami studio complex forentertainment programs and relocate itsnational news operations there fromLaguna Niguel, outside L.A.-and thecompany's long-term viability depended

maneuverings of the past year: "Whilethe Spanish television market has somevibrancy, it's fragile enough that itdoesn't need the number -one network todefault on their bonds."

This is only the latest chapter in a deep-ening rivalry. Despite occasional jointefforts such as the deal withNielsen-call them partnerships ofnecessity-there is clearly no love lostbetween the two companies. "Are they aworthy competitor?" asks Grimes,responding to a question. "They certainlyhave taken a lot of money that used toflow into our pockets. That's a fact. Isthat a worthy competitor? Yeah, I guess.In my opinion, however, they have done itby the cannibalization of current adver-tisers rather than the development ofnew business."

Saul Steinberg does not doubt that in

Univision Telemundo

Owner: Hallmark Cards Inc. and Reliance Capital GroupFirst Chicago Venture Capital

Owned Stations: 9 full power, 6 low power 6 full power, 1 low power

Affiliates: 8 full power, 7 low power and 9 full power, 13 low power and511 cable systems 250 cable systems

Gross Revenue (1989): $176 million $116 millionNet Loss: $52 million $38.2 millionCash Flow: $40 million $17 million

Network Universe: 5,945,100 Hispanic 5,231,800 Hispanichouseholds households

Top 3 Rated Shows: Sabado Gigante, Abigail, Cino Millionario,Siempre En Domingo, Rubi Maria Maria

Average Rating for 3(within network universe): 37 209 A.M.-midnight Mon. -Sun. rating: 13 7

Sources: Financial figures from networks. Ratings from Strategy Research Corp. Ratings are expressed as a percentage of the indi-vidual network's universe.

on it. "I told them I couldn't manage itany other way," Grimes says, and shakeshis head. "It wasn't a happy day."

The year-end results only confirmedhis dark expectations. Revenues climbed12 percent to $176 million, but cash flowwas down from $48 million in 1988 to $40million. Moreover, with its debt obliga-tions factored in, Univision lost $52 mil-lion. By Grimes' own account, the net-work's returns were 30 percent underbudget. "I set a personal record for amissed goal," says the highly goal -ori-ented chief executive.

Telemundo, meanwhile, upped its netrevenues 19 percent to $103 million,including $40 million from its Puerto Ricostation, with a cash flow of $17 million. Itregistered a net loss of $38 million,including an interest expense of $39 mil-lion and a one-time gain of $9.4 millionfrom a write-off of deferred costs. Twiceduring 1989 Reliance had infused thecompany with equity capital adding up to$73 million, pushing off its next majorfinancial test to 1992 when the first oftwo debt payments totaling $220 millionare due.

Adding fuel to the fire, Steinberg givesa grim assessment of his rival's financial

the battle for limited dollars some salespeople have simply gunned for a piece ofthe competition's action. But he believesthe competitive pressures between thetwo companies are far outweighed by thebattle the market itself has in attractingad dollars.

That battle has intensified since Marchwhen Galavision, owned by Emilio Azcar-raga's Univisa, announced plans to createa broadcast network for the West Coastand the Southwest. Targeting Mexicansand Central Americans, who representabout 75 percent of all U.S. Hispanics,Galavision has already begun transmit-ting in Los Angeles and Houston, draw-ing on its 40,000 -plus hours of Mexican -produced programming. So far the movehas not hurt Telemundo or Univision, afact that pleases Jaime Davila, divisionpresident of Univisa broadcasting andmarketing. "We want them to do well,"says Davila, who was president of SINbefore Hallmark's purchase. "They arecustomers of ours."

Galavision's performance will providefresh evidence for the competitors' insis-tence that U.S. Hispanics prefer U.S.-produced programming. Any doubtsabout Galavision, they contend, are medi-

ated by their optimism over whatNielsen's findings will yield.

"If Nielsen shows that a third of His-panic viewing is to Spanish TV and wecan get about 1.8 percent of the rev-enues," says Grimes, "we're going tohave a very wonderful business."

"If the market grows to a billion and ahalf or $750 million," adds Telemundo'sPeter Housman, "those numbers wouldprovide two or three companies to bevery successful."

Still if.

s a May rain falls on Miami,Jose Cancela stands at themuddy edge of Univision'snew $23 million productionfacility in Miami. Bare cin-derblock, sand floors and

naked girders belie the approaching com-pletion date of the 112,000 square -footcomplex. Already, Cancela, general man-ager of WLTV in Miami, can envisionhundreds of Hispanics waiting outsidefor the top -rated Sabado Gigante, thethree -and -a -half hour weekly entertain-ment extravaganza.

Surveying the neighboring Doral golfcourse dotted with half -a -million -dollarhomes, Cancela-his jet-black hairmoussed to perfection-laughs the laughof understanding. He can already hearthe noisy enthusiasm of the crowd asthey prepare to enter the 400 -seat sound-stage-and he can imagine the irritationof the Anglo residents living nearby.

Cuban -born Cancela is sensitive to theuneasy relationship between Hispanicsand Anglos in Miami and other Americancities. Bill Grimes may have toughenedup sales operations and made "hard anal-ysis" a watchword, but that doesn't meannational advertisers are ready to treatSpanish TV like a member of the club.

Cancela is not exactly paranoid, but thelast year has worn down the typicallycocky executive; he, like Bill Grimes, callsit the toughest year of his professionallife. Faced with a retrenched economy,the loss of longtime local advertisers anda tough fight to land new ones, Cancelahas wondered whether his station willever attract the advertising it deserves.WLTV is rated number one in metroMiami and third in the entire Miami ADIfor its local news-benefiting fromMiami's majority Hispanic population-yet it still struggles to gain the supportof advertisers aiming for a more "elite"customer.

Several months ago, a local retailer hadplanned to provide clothing for newsanchors in exchange for a mention at theend of the broadcast. She changed hermind, worried that WLTV's viewers werenot the right customers for her stores."We're not talking about $200 shirtshere," Cancela says. "With all the ele-ments in place, it will always be an uphillbattle."


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IN FOCUSREINVENTING THE CABLE NETWORK

InsideIN FOCUS

Figuring out how toput a new spin on afledgling cable net-work-or an agingone-is no easy trick.At E! EntertainmentTelevision this pastspring, it meant em-bracing new pro-gramming and mar-keting concepts andtrashing others asthe network drewever

closerto a Junerelaunch.Amongpay net-works,questionsabouthow torevitalizes u b -scriber

growth continue toloom. In our secondstory, some freshideas are offered upby a group of TVexecutives looking inat pay from theoutside.

PAGE 42

DIARY OF ARELAUNCH

Inside Movietime's make -over into E!By Ray Richmond

Masters: "The came for this network is going tobe outrageous if we do our job right."Shea: "What if we do our job wrong?"Masters: "Then we all learn to say-repeatafter me-Do those loafers fit, sir?"

Tn the final, crucial months, planning the relaunch ofthe Movietime cable network while maintaining theold identity on -air was sort of like keeping a sputter-ing prop plane aloft while preparing to unleash a new-fangled jet. Or as one staffer put it, "maintaining the

dead organism while birthing the new one."With new managerial control from Home Box Office and a

$43 million spending allowance, the channel's top officialswere under the gun to make the transformation into E!Entertainment Television a hit with cable operators and theircustomers when it relaunched June 1.

E!, it was agreed, would be a glorious short -form networkembracing the full spectrum of entertainment. A news -wheelformat segmented into hour-long programs would replace anunfocused hodgepodge of movie -oriented segments. Theanchors would be at once hip and credible. It would be bold.It would be new. It would be different. Or would it?

The handwringing, brainstorms and mounting excitementas plans solidified at the channel were observed from theinside over a three-month period. What follows is a firsthandaccount of the transformation in progress.

MARCH 4: In a telephone conversation lasting well into thenight, E's senior vice president of programming, Fran Shea,and senior vice president of marketing, Sheri Herman, pon-der what the name of their new TV network will be.

"We kicked around 4,000 different variations of the wordentertainment," Herman recalls. TE NN (Total Entertain-ment News Network) was popular for a while. ENT was thechoice at one point. Then there was ENTV, ETV, even TVE.

"All we really knew was the name Movietime had to go. Itwas never clearly descriptive of [the multi -entertainment net -


E!'s chief brainstormers, Sheri Herman, Fran Shea and Lee Masters.

work] we wanted to be," says Herman, 35, the only high-ranking official to be retained from Movietime's previousadministration.

A few days earlier, Movietime's design firm, Big Fat TV, hadpresented the idea of a logo featuring a giant E inside anexclamation point. Herman's initial reaction was a combina-tion of revulsion and disbelief. She ultimately found a certainmagic in the idea when talking over the phone with the 32 -year -old Shea, a ten-year HBO veteran and the sole remain-ing member of an HBO executive S.WA.T. team sent to thechannel last year. "Graphically," maintains Herman, "nothingcould say what we are better than E!"

MARCH 6: To help get the word-or at least the letter-outabout the name change, Herman puts in a call to Ron SmithProductions and hires seven Elvis impersonators to deliverthe news to the press and key multiple system operators infive cities. The "Big E" look-alikes are to belt out a rewrittenversion of "Heartbreak Hotel" with the E! message. "Wehad to let everyone know from day one to expect the unex-

pected from us," says Herman.That philosophy soon stretched to include E!'s trade adver-

tising, notably the print ad featuring a clean-shaven LeeMasters, E!'s newly appointed president and chief executive,sporting a shiny bald head, save for a hairy E! logo sculpteddown the middle. A veteran of two decades in radio, the 38 -year -old Masters is best-known for revitalizing MTV: MusicTelevision during a four-year stint (1986-1989) at the channel.For the cable industry, seeing Masters-as well-known forhis mass of curly hair and beard as for his recent role as exec-utive vice president and general manager of MTV and VH-3-the advertisement prompted the question: "Did he reallyshave his head?" Answer: No, but he did lop off his beard. Ittook three hours for a make-up artist to apply a skullcap andfake hair to Masters' pate.

MARCH 16: The notebook reads "Movietime" on the front.Inside is the development report for every E! program seg-ment concept to date. It's labeled "Confidential" and brokendown into an A -List and a B -List.



Virtually all of the segments are new save for a fewholdovers from Movietime, like "Soap Dish." Among the A-listers is "Shameless Plug" (an unusually honest bit of pack-aging, allowing celebrities to pitch their latest projects),"Global E!" (stars and the environment) and one dubbed"Tabloid Busters" (giving rumor -plagued celebrities a chanceto refute scuttlebutt about their lives).

It's on the B -List, however, that the truly entertainingreading begins. Among the lot: "TV Warm -Up Guys" (aboutthe people who tell jokes to loosen up studio audiences),"Elvis Report" (a look at the latest Elvis sightings), "Mutualof Hollywood's Wild World of Stardom" (a tongue-in-cheeksegment series in the form of a wildlife documentary study-ing celebrities in their natural habitat), "Star Spotters" (fea-turing average Americans using their camcorders to docu-ment celebrity activity in their various hometowns) and "Geta Job" (offering weekly reports from unemployed actors andactresses searching desperately for work).

MARCH 26: Women and gossip becomes the focus of discus-sion at this afternoon's creative meeting. Every piece ofresearch the E! team has seen indicates females are thebiggest consumers of entertainment news, leading Mastersand company to expect about 65 percent of their audience willbe female. But what do women think about dishing the dirt?

Associate producer Leanne Knight tells the assembledabout new findings from a pair of focus groups, one withwomen aged 18-34 and the other with women 38-44. Youngerwomen tend to lie about how much they enjoy gossip, Knightconcludes. But with both groups, there is little or no negativ-

In fact, it is considered agood thing, particularly if it's juicy and centers on availablecelebrity men.

MARCH 30: At a planning meeting, Masters decides thatnews must play at the top of each hour, since gossip-whilethe appeal is high-isn't visually compelling enough to grabviewers. Gossip will be teased up front, however.

The conversation soon shifts to commercials. Movietimehad been running ads for products like hearing aids and con-tour chairs, but Masters scotches any talk of allowing them tocontinue. "It's not our audience," he says. No one disputes

what Masters says, even though the channel's red ink runsdeep. (In 1989, its negative cash flow was estimated at $9.5million by Paul Kagan Associates.)

Masters also stresses that E! will need to strike a carefulbalance between celebrity news and entertainment informa-tion. "Famous faces will make people feel good about the net-work, but information is what keeps them coming back. Wealso have to make sure that we're not just about movies."

'We're trying to get celebrities of TV and music," repliesDebbie Adler, v.p. of programming and development.

Masters: "I understand, but my feeling is we're going to bereally movie -star oriented."

Adler: 'We're very sensitive to that. We know the mix we'reaiming for: 45 percent movies, 35 percent TV, 15 percentmusic, 5 percent everything else."

APRIL 6: There's take-out Chinese in the middle of the tableand excitement in the air. Out of some 1,000 tapes receivedfor anchor positions on E!, vice president of talent and devel-opment Marta Tracy reports that the list has been narroweddown to 30. That field will ultimately be pared to six, or threetwo -person teams.

"The good news is they can all read," reports Shea onlyhalf -jokingly. She doesn't say what the bad news is.

"Some people listed appearances on The Dating Game asTV experience," adds Tracy.

This programming meeting also happens to be the firstattended by the newly hired Danila Koverman, E! newsdirector. As a sort of orientation exercise, Shea helps laydown the ground rules for what makes an E! story. 'We'repositioning ourselves to be very friendly with celebrities,"explains Shea. 'We want to give support to the star on thenews if, say, we find he's been caught with heroin in his car. Iknow it's bending journalism, but all entertainment news isbending journalism.

"I'm not asking us to do puff pieces on everything," contin-ues Shea, "but if Sean Penn punches a photographer, we wantto ask why. . . . We need to ask the extra question. But I don'twant any Miss America kinds of questions, either."

Staff writer James "Big Boy" Medlin explains that animportant distinction in writing for E!-as opposed to Movi-etime-is that while Movietime was interested in developing

Sending out the message tooperators to "expect the

unexpected" from E!involved not only Elvis Pres-

ley impersonators, but giv-ing the network's president

and chief executive LeeMasters a special -effects

haircut.


IN FOCUSREINVENTING THE EARLE NETWORK

BEFORE THE FACELIFTis no secret that Movietime operated in deep red inkthroughout most of its troubled three year existence.But looking back, industry executives say it was bur-

dened not only with a lack of finances, but an under-developed basic -cable concept.

The channel debuted in July 1987 as, essentially, a 24 -hour movie-trailer/clip service. It was founded by LarryNamer, a former vice president and general manager ofValley Cable Television in Los Angeles, and Alan Mruvka,a one-time real-estate developer. The pair pooled a fewhundred thousand dollars of their own money to getMovietime off the ground in some 2 million homes atlaunch. The service grew quickly, expanding throughout1988 at the rate of some 600,000 households a month. Butin early 1989, the network stalled at about 13 million.Gains have been tiny ever since.

Making things all the harder, Movietime didn't receiveany per -subscriber revenue from MSOs until the start of'90, relying solely on advertising as a revenue stream."They were undercapitalized from day one," says DennisMcAlpine, a senior vice president at Oppenheimer & Co.

The channel did receive around $10 million from theNew York investment firm Mabon, Nugent & Co. in 1988.Further cash infusions, estimated at $10 million for 1989,have come from the seven cable companies that boughtinto the service. Four Time Warner companies hold abouta 40 percent stake: HBO, Warner Communications,Warner Cable Communications and American Televisionand Communications. Five other firms, all MSOs, own 10

percent each: Comcast Cable, Cox Cable Communica-tions, Continental Cablevision, NewChannels Corp. andUnited Cable Television.

Some theorize that Movietime tried to grow too quickly.It was barely a year old before Namer and Mruvkaexpanded the channel beyond its movie niche to includecoverage of the cable TV and music scenes. And before itturned two, the channel had started several ancillary ven-tures, including a radio network, an interactive film hot-line service, a magazine and a Spanish -language series.All that changed when Namer and Mruvka relinquishedmanagerial control of the network last August, and HBOreturned the focus to programming.

It was feedback from operators that helped E!'s staffdetermine that Movietime's short -form programmingwasn't working. "It just didn't click," says Bob Russman,senior vice president of marketing and sales for SimmonsCommunications. "The tendency with short -form is towatch a segment for a couple of minutes and then moveon." But initial reaction to the new channel appears posi-tive. "It's a different -looking product," observes LarryGerbrandt, a senior analyst at Paul Kagan Associates."The people behind it appear to be taking some veryinnovative chances with the programming."

The E! staff contends that their new network will hitbig, since it has a far clearer direction than its oftenunwieldy predecessor. To that, McAlpine replies, "It'seasier to have direction when you have $43 million toplay with." R.R.

a host's personality, anchors at E! are treated as end points ofa relay team. Adjectives are also encouraged more on E! It'snot Michael J. Fox but "the five -foot -four Michael J. Fox."It's not Bruce Willis but "new father Bruce Willis."

It was unclear how much time had to pass before Willis'fatherhood was no longer considered new.

APRIL 17: Shea announces that she has thrown down thegauntlet. It's time to begin taking things seriousl-E! 'Westarted out with 50 pretty solid segment ideas," she stresses."It's no longer, 'Does it work?' but, 'If it does work, how canwe do it and get it on the air by June 1?' " Among those ideasShea has tossed are the buzz -on -the -street segment 'Word ofMouth" ("It didn't go anywhere") and the theater exit -pollsurvey "Is It Worth It?" ("People tended to say what theythought you wanted them to say").

The "Elvis Report" has been assigned to "backburner pur-gatory." Elvis, she insists, isn't dead. At least the segmentisn't. "Things may stay on the B -List forever, but they don'tdie until they're killed." Sounds logical.

APRIL 20: Herman pulls out a 14 -page E! sales presentationand launches into a dissertation on why the 1990s will be "thedecade of entertainment" and "the era of E!"

"The Entertainment section is the second most widely readnewspaper section, with TV and radio listings the third.Entertainment magazines are among tke top in circulation.

"VCR penetration will stand at 98 percent by the end of thedecade." Herman is clearly beginning to build momentum."Shows about entertainment consistently pull huge ratings."

Yet after three years, Movietime/E! is in barely more than14 million households, Herman is reminded. "Yes, that's

true," she acknowledges. "From what we gather, most of theincreases will be occurring after launch."

And why is it that Movietime couldn't claim this allegedlywide-open niche for itself? Herman cites Movietime's focuson "a younger male audience," rather than women, and thelack of a strong, unified look.

JUNE 1, 3:02 EM.: Masters, Shea and a roomful of E! staffershave gathered around a TV monitor at the network's brand-new Hollywood production studio. They're all raising glassesas their new channel breathes its first seconds of life.

Suddenly, squiggling lines begin passing over the screen.The sound grows weak. Within moments, the picture hasgone dark. Audible gasping is heard; blood vessels constrict;hackles rise. A check of the monitors in other offices confirmseveryone's worst fears. They have technical difficultiesbefore the channel is even five minutes old. Or so it seems.

"There we all are, watching our careers dissolve," recallsMasters. But in actuality, the problem was confined to thebuilding; a technician was just doing a little maintenance. Hewas asked to stop and take lunch.

JUNE 11: The word is already out that the "Health andBeauty Tips" segment isn't cutting it. The inevitable post -launch fine-tuning has begun. Masters and Shea delve intotheir segment stockpile and come up with "Recasting Call,"in which people on the street would be asked, for example,who they would cast in a new version of Citizen Kane.

Five -foot -four Michael J. Fox?

Ray Richmond is a television critic for the Orange CountyRegister in Santa Ana, Calif.



TIME FORA TUNE-UP

Channels asks some unlikely experts how they would fix pay cable.

Tn 1989, pay-cable subscribergrowth was the smallest since1986. Intense application of theusual marketing strategies-dis-

counting, free previews, etc.-hasonly slowed pay's decline. While mil-lions of new subscribers sign up everyyear, almost as many are cancelingtheir service. Can pay cable be saved?

To get a fresh perspective, Channels'editors asked five television executivesfrom outside the pay-cable industrywhat they would do if they ran ageneric pay service. Panel memberswere picked to represent a cross-sec-tion of the television business and fortheir programming and marketingexpertise.

The five, who talked with Channelseditor -in -chief John Flinn and senioreditors Andrew Grossman and JanetStilson, are:

Jack Clifford, chairman and CEO ofColony Communications Inc., a342,000 -subscriber multiple systemoperator, and vice president of broad-casting for the Providence JournalCo., which owns four TV stations;Roger Colloff, vice president and gen-eral manager of WCBS-TV New York;Bob Gutkowski, executive vice presi-dent of the Madison Square GardenCommunications Group, which runsthe MSG Network; John Ryan, presi-dent of Worldvision Enterprises, aprogram syndicator; and MauryPovich, currently host of Twentieth -Century Fox Corp.'s A Current Affairand, as of September 1991, host of aParamount Television daytime talkshow.

CHANNELS: What are pay televi-sion's problems as you see them?CLIFFORD: Pay television fueled thegrowth of cable TV HBO literally wasthe thing that pulled it out of the darkages. People wanted to see HBO sothey bought cable. But subsequent tothat era .. . things developed on regu-lar cable that are equally attractive tothe subscriber and they don't have topay as much for them.RYAN: The key to success whetheryou're talking about a pay channel,basic network, or broadcast televisionis the uniqueness of your program-ming. The more the charge, the moreunique it has to be and . . . the paychannels are getting lost a little bitbecause what used to be unique is nolonger so unique.GUTKOWSKI: When having breakfastwith my wife this morning, my wife[said she] has no idea whatsoever whatis on Showtime. Showtime is not get-ting to my wife.

One of the things that I think madepay very interesting in the beginningand I think they've forgotten about andI think they have to market that fact isthat there are no commercials.

I never see any commercials on thelocal breaks on [my local] Cablevision[Systems Corp. system] telling mewhat I'm missing by not having HBOor Showtime or Cinemax, and I thinkthat very much goes into the localcable operator who can really use itsassets to promote that category.CLIFFORD: We finally in the cablebusiness have passed through the pointof the early adopter and we are into

the individual who's buying cable for avery specific purpose, and pay isn'tnecessarily part of their lives. We'retalking about a different demographic,too. We're talking about the personwho said no, no, a thousand times, no,either by age or education or whateveror lifestyle, they didn't want cable.

Now we're dealing with a group ofpeople who had had access to it buthaven't wanted it. But now they arebeginning to buy it because the basicservices have something on them.RYAN: What's happening to the paycable networks is that since [there's]more competition, big cable channelshave to develop niches and ... [they've]had much success when [they] were theonly one or two services available. Nowthere are more. They offer similarthings.CHANNELS: Say you suddenly havebecome head of a pay television net-work, and it's a fairly generic network.How would you change it?CLIFFORD: I would increase the ben-efit to the cable operator, and I woulddecrease the cost to the subscriber, andI would add to that a requirement onthe cable operator, much as the net-works do. I also operate TV sta-tions-much as the networks do, Iwould require of my "affiliates" a cer-tain promotional level of activity.

I would think that there is a signifi-cant opportunity if we can worktogether to reduce the cost to the ulti-mate subscriber, still motivate the dis-tributor, and have the distributor uti-lize the additional revenues in a form ofpromotional activity and marketing

1


IN FOCUSREINVENTING THE GABLE NETWORK

expense on behalf of the pay tier.CHANNELS: How much more moneydo you think the networks can afford toallow the operators to keep?CLIFFORD: If their volume increasessignificantly, it will be transparent tothem. If we are going to get thistougher consumer, we're going to haveto give them a perception of value, andI don't know of any quick way to dothat except at a lower price.We're meeting two price barriers in

our business. Basic rates are nowapproaching 20 bucks and the totalmonthly bill is averaging over $30.

Now, maybe for all of us in this roomthat isn't a problem, but when you startgetting out on the average person,that's a pretty significant chunk of theirdiscretionary funds for entertainment.CHANNELS: Shouldn't it be your jobto market pay as aggressively as youcan without an incentive?CLIFFORD: You're preaching in thewrong church. I'm already converted,and I'm doing it. But I'm talkingabout-maybe arrogantly-but I'mtalking industry -wide. By and large,cable operators are not very tuned into promotion and marketing skills.

In fact, in the early days of pay televi-sion, HBO literally single-handedlymarketed the business.GUTKOWSKI: The marketing is cer-tainly the key. When I was atParamount [Television as vice presi-dent of advertising sales for domesticdistribution], one of the things whenthey went out to try and sell a show,they tried to get promotional guaran-tees from the stations. It's a tremen-dous, tremendous asset. And a lot oftimes, one station would get [a show]because they said they were going topromote more than any other station.RYAN: There are a lot of lessons to belearned from the earlier underdogs,the independents, who had lesser prod-uct in many cases, and it's fartherdown the line anyway in terms ofrelease of movies and so on and soforth, and they developed all kinds ofinnovative marketing things.

They developed theme weeks. Theywere very creative in trying to out-maneuver the big guns, the networksand the affiliates.

Well, the pay channels are certainlyin a better position . . . and maybe it'stime to look at doing all those thingsjust because the competition is sotough.CLIFFORD: I would not be critical ofwhat HBO does on its own. I am criti-cal of what the cable industry does

underneath that. The operators havebeen negligent in grasping the idea ofcross -promotion.

It's changing. Everybody is jumpingtowards that goal. They're now hiringa promotion manager. I never ran atelevision station where the promotiondepartment wasn't an essential andimportant cog in the whole system.Cable operations don't even know whatpromotion manager means.COLLOFF: I think a lot of promotionis a mixture of creativity and repetitionand I think repetition is an awfullyimportant part of it. You can have themost creative spot in the world and ifyou hear it once or twice, it's not goingto have an impact.

I mean, a lot of it is showing your

specific or image advertising to thepoint when you, the operator ... are sosick and tired of it that you want to getrid of it. That's something that's notgoing to be done for nothing by thesystem operator, so that comes back tothe trade-off between where that payservice is spending its dollars and if it'schoosing to spend its dollars in areasother than giving incentives to thecable -system operator to promote itsservice.GUTKOWSKI: Do you see the [pay]networks doing a lot of tune -in [adver-tising]?CLIFFORD: No, no.GUTKOWSKI: It doesn't strike methat they do anywhere near the level ofNBC or CBS ...CLIFFORD: Oh, absolutely not.GUTKOWSKI: [That's] the best wayto get to the customer. It's a little bitmore difficult ... it's a little hard, whenyou buy an area paper and you've goteight or nine different cable [systems],to say, "Time in tonight to Channel 6."

COLLOFF: One of the ironies here,obviously, is that over -the -air broad-casting is still the most efficientmedium in which to promote pay cableservices. You talk about promotion. Alot of this promotion is on over -the -airtelevision because we're the mass mar-keters, and there is the sense of whatis the ultimate wisdom in terms ofallowing your competitor to use yourproduct to advertise its product in avery direct way.

I think [a problem] that the pay net-works are going to have over time, andI don't mean tomorrow or the next day,is as standards on over -the -air televi-sion become looser in terms of what isbeing accepted in terms of content, thegap between what pay networks offer

and what over -the -air networks offerwill continue to narrow. I mean, Mar-ried . . . With Children is not a showthat would have been on commercialtelevision ten years ago. It is now, andthere will be more and more of that,and I don't see the HBOs and Show -times of the world moving to show X-rated movies.CHANNELS: For a while, it was con-sidered essential to have exclusiverights to certain movies, and HBO andShowtime bid against each other.Prices went through the roof. Is that amistake?GUTKOWSKI: Developing exclusivityis obviously the key ... but if you don'tmarket the fact, if you don't get itdown the line to the consumer thatthese movies are exclusive and youcan't get them anyplace else, then it'snot effective.CLIFFORD: Is it as large a plus,though, when that window comes afterthe VCR window?GUTKOWSKI: The plus is less. It's

CHANNELS / JULY 16, 1990 43


not a lay-up, but I think anything thatyou can have exclusively and market itcorrectly-and certainly it has impactdepending upon when your window isthere-has a positive effect.COLLOFF: But isn't the questionthough if we're talking about wherepay cable networks are going, what thecost -benefit ratio is for a pay cable net-work to pay that premium for exclusiv-ity now that there is this VCR window,as opposed to putting that money intoco-op marketing with these cable sys-tems? That's the issue.CHANNELS: Besides movies andsports, any speculation about otherprogram areas that could work as apay channel that haven't been triedyet?GUTKOWSKI: What two areas areyou going to pay ten bucks for otherthan movies or sports? I'm not so surethat there is one.COLLOFF: It's made particularly dif-ficult by the fact that you now haveniche programming among all the basicservices. The question is, is therereally a lot of room for pay services todo the same thing? Probably not.POVICH: In terms of programming, ifI had a pay -TV channel, I would thinkcompletely differently in that 6 P.M. to 8P.M. block, for instance. I would not runa movie. I know it's easy to run amovie. It's cheap to run a movie. It'sjust filling up two hours. But I wouldgo after the over -the -air TV viewer andI would try an A Current Affair typeshow. I would try a magazine. You don'thave to give it up with whatever theyrun or a B -movie or a C -movie thatthey throw in there at 6 to 8 becausethey don't know what audience they'vegot watching it.RYAN: What you're hitting on is build-ing loyalty.POVICH: Right. And you don't buildloyalty by just eclectic programming.You may have some good things. Youmay have some hits and misses. Butthe earlier you get that viewer in theevening, the better chance you're goingto keep him instead of hoping he'sgoing to come in at 9 o'clock or 10o'clock.RYAN: We're fortunate enough to beinvolved in a program called TwinPeaks, which is on ABC. Now, let's talkabout uniqueness. Would this sort ofthing work on a pay channel?Maybe-we've seen what can be donehere, and it literally is not a networkkind of show. . . . It seems to be build-ing a loyalty that won't quit and that'sexactly what you're trying to do to

avoid churn.CHANNELS: [Showtime] did GarryShandling and Paper Chase.POVICH: But they threw it up right inthat same time period that the net-works were throwing up theirs. Thenetwork news numbers are goingdown. No one feels saddled in terms ofwatching that news anchored at thatset. That loyalty is missing and I thinkthe pay -TV people have a shot at get-ting these people because they'researching in a lot of different areasbetween those hours.

What you say about the no commer-cial, unedited stuff is just very appetiz-ing because you're talking on a half -an -hour show eight more minutes whenyou don't have to leave subjects. Youreally have a chance of offering some-thing a little more penetrating to theviewer than you have on commercialTVCHANNELS: HBO has consistentlyscheduled documentaries.POVICH: I think they haven't done agood enough job marketing it. If Iwere HBO, I'd market it against thenews networks and say, "This is whatthey won't tell you."GUTKOWSKI: If you're a broadcaststation, whatever, a basic channel,you're constantly running promoswithin the product that representswhat time, what's on next week, what'son next month. What you're trying toget through to the subscriber is, "Staywith us because we've got some realgood stuff on this network." Now, [thepay networks] do it in blocks, but neverwithin the movie.POVICH: Those blocks seem to be aturn-off because a lot of those blocksare too long.GUTKOWSKI: If I were [running anetwork], I may take two of these sug-gestions. I'm going to let the operatorkeep more money. I'm going to spendmore for marketing, but in return Ineed some advertising revenues. SoI'm not going to break up movies, butwe're going to have sponsorships, sotonight Field of Dreams is sponsoredby Coca-Cola with a spot at the begin-ning and end. It's still an uncut moviein the middle.CHANNELS: Do you think the viewerwould be more amenable to that if youdropped their rates?COLLOFF: When we are beaten upconstantly about zapping-I'd love tosee what the reaction of agencies wouldbe to commercials that are in blocksbetween programs. It would be a verytough sell.

POVICH: On a billboard, it might beall right.CLIFFORD: An interior is much morevaluable. It would be initially a prettytough sell because we've promoted thewhole thing as noncommercial. Strictly,you pay for it, you get it.COLLOFF: I think the nature of whatHBO does, which is very successfuldespite its problems, an entertainmentnetwork that basically shows moviesthat have previously appeared in the-aters and some original programming,what would a Mobil think it would getfrom that as image advertising that itcould not get to a greater extent fromcontinuing its PBS association?CHANNELS: One of the main market-ing mechanisms is discounting the ser-vices. Is this a good way to marketpay?CLIFFORD: When we do have areduction in price, we do get a substan-tial bump in the numbers. People willtry it and, you're right, following thatthere is usually a drop-off. But the neteffect is you're ahead of where youwere before.GUTKOWSKI: You know, one of thequestions we always had is, is there away to market where you can get thesubscriber to buy on a yearly basiscompared to a monthly basis? Is thereany way you can come in where aShowtime or an HBO or a Cinemax isbought on a yearly basis, 12 months?There's a tremendous discount becauseit's 12 months, or six months.CLIFFORD: You sell on an annualbasis and you discount it and then itdoesn't show up on your monthly bill,because ... when you get your monthlybill and you've got all those networks,you're reminded every month you'regetting every network ...POVICH: I think that that would beattractive to a viewer.CLIFFORD: I think every cable com-pany has done that and does it to somedegree primarily in tourist areas. Forexample, we have a system on CapeCod and we sold annual agreementsthere because it's a seasonal kind ofmarketplace.

But the biggest problem . . . is theretaining of the existing market. Theybought it. They wanted it. They'reusing it. Now the job is to keep themand reduce churn, and I think you cando that through promotion, betterscheduling and having the cable opera-tors be more aggressive in their pro-motion and their contact with the sub-scriber; letting them know of the realvalue that's available to them.


MARKETMARKET EYE

"The MarketFrom Hell"

Miami's CBS and NBC O&Os continue tostruggle 18 months after the switch.

BY STEVEN BESCHLOSS

To look at the ratings, WCIX mightseem like a struggling indepen-dent-which is what it was. Eigh-teen months after this Miami sta-

tion was transformed into a CBS O&O,general manager Allen Shaldan is stilllearning more about the virtues of

than the pleasuresof success. "One thing drove me crazy,"says Shaklan. "People thought we'dcome in and quickly would be like a CBSstation that has been here for 40 years."

It hasn't happened, despite more thandoubling the news staff, spending $6 mil-lion on live trucks, news cars and state-of-the-art production equipment, andanother $5 million to promote the sta-tion. Even the purchase of a low -powersatellite station in northern BrowardCounty, a deal with Sears Roebuck & Co.to install antennas for viewers gratis andanother with local cable systems to sub-sidize new hookups-unheard of for amajor -market network affiliate-has notresolved the station's signal deficiencies.

So much for Tiffany -shaded arrogance.A year and a half after CBS and NBCswitched their affiliation, both stationsare still struggling to regain their foot-ing. The easiest explanation would cen-ter on lingering viewer confusion, butboth spent millions last year to informthe public about the switches that turnedWCIX into a CBS -owned station, WTVJinto an NBC O&O and WSVN from anNBC affiliate into a VHF independent.The answer has more to do with thecompetitive frenzy that inspired WTVJpresident and g.m. Dick Lobo to de-scribe Miami as the "market from hell."

ABC affiliate WPLG, the one networkstation that stayed out of the switchingfray, has sustained its market domi-

nance, both in local news and sign -on tosign -off ratings. But the unexpectedstrength of independent WSVN-whichowner Edward Ansin failed to sell toCBS-and the success of Spanish lan-guage WLTV in drawing a sizable His-panic audience has only intensified thedilemma of WCIX and WTVJ.

Indeed, WTVJ has experienced some-thing of a ratings free -fall in recentmonths, which Lobo blames heavily onthe network. He has an argument:Nationally, since last year's May sweeps,The Today Show has fallen four sharepoints and prime -time programming hasdropped four share points in the Nielsenbook.

Yet the station has also been hit by aparade of news directors (four in the lastthree years), musical anchors and come-

WCIX general manager Allen Shaklan.

and -go strategies to target viewers."This station has made some majorchanges and experienced a lot of trau-mas," concedes Lobo, who is adding twonew anchors this summer. "All of this isunsettling and destabilizing."

Despite a 32 percent ratings drop sincethe affiliate switch in January last year,Lobo is quick to note he has upped view-ership since the affiliation switch in bothprime time and late news, critical day -parts from which WTVJ derives abouthalf of its revenues. "Before the switchWTVJ was number three in prime timeand not a good one," he says. Now it'snumber one in prime time, but justbarely, edging ABC's WPLG by .4 of aratings point in the May Nielsen book.

But what may be most unsettling forWCIX and WTVJ is the hard-core deci-sion of Edward Ansin to pump up hisnews organization to six and a half hoursa day. Using a hyped -up tabloid style,WSVN's news pushed the station intosecond place sign -on to sign -off duringthe May sweeps, beating all the networkmorning shows and both NBC and CBSstations with its local evening news. Dur-ing May the competition was under-standably quick to jump on WSVN foran errant lead 10 EM. report in which theanchor said an Eastern Airlines jet wasattempting to avoid "exploding onimpact" after one of its ten tires blewout; but the close scrutiny by competingstations clearly dramatizes their ner-vousness. "The truth is there's neverbeen such a strong independent in SouthFlorida," says Lobo.

It's a position that Allen Shaldan canonly envy. After CBS chief executive andprincipal owner Larry Tisch unexpect-edly failed to make a deal with Ansin, hepaid $59 million for WC1X, saddling thenew g.m. with a weak indie and serioussignal problems created by a tower 38miles south of the competitors' towers.

Since arriving from New York, the for-mer v.p. of programming, news adminis-tration and station services for CBSTelevision Stations has added four morelive trucks, 13 news cars and upped thenews staff from 28 to 67. He has encour-aged live cut -ins for important breakingstories and occasionally preempted net, -work programming for local initiatives,such as airing a WCIX-sponsored townmeeting on Miami race relations.

Slowly, the station's overall ratingshave risen, climbing 27 percent since theaffiliation switch, according to MayNielsen data. WCIX started, however,from a 3 rating/9 share. That's whyShaldan believes it could take three tofive years to turn the station around. Inthe market from hell, Shaldan can onlyhope that the viewers are learning to bepatient, too.


MEDIA DEALS

Residual Resentment by Neal Koch

Syndicators are at odds with writers and actors over basic -cable residuals.

Fans and even some industry exec-utives were surprised this pastspring when offbeat comedian

Tracey Ullman abruptly announced herdeparture from the critically praised FoxBroadcasting program bearing hername, a show that helped launch the net-work. It was never a ratings power-house, averaging a 4.8 rating/8 share,but the Emmy-winning Tracey UllmanShow gave FBC an important dose ofcreative respectability.

Equally surprising to some was theannouncement that quickly-and morequietly-followed: The show's distribu-tor, Fox's Twentieth Television Corp.,had sold rerun rights to the Lifetimecable network. But distributors andsome union representatives say there'sno real surprise there at all. With a weakbroadcast -syndication market and alower cost structure in cable for residualpayments to talent, they argue, the costsof selling a poor ratings performer tostations often don't make sense. "Thereare many shows you can't afford to bringinto broadcast syndication," contendsthe head of one major syndication eam-pany, "because the license fees wouldn'tmatch the residuals."

Many union officials, however, labelthis argument-increasingly heard inHollywood-a ploy to deflect attentionfrom the soft broadcast -syndication mar-ket and basic cable's growing programbudgets. Remembering that syndicationresiduals were a central issue on whichthe Writers Guild of America gaveground following its lengthy 1988 strike,some suggest the current finger -point-ing at residuals might later be used bystudios to make a run at further reduc-ing payments in the 1992 WGA andScreen Actors Guild negotiations."Residuals become a scapegoat.," arguesCharles Slocum, director of industryanalysis for the Writers Guild of Amer-ica, West, "a convenient scapegoat."

Both sides agree on this mach: By thetime a series is ready for syndication, allof a producer's costs have been sunk,save three-actual distribution ex-

penses, marketing costs and residuals. Asyndicator selling to broadcast stationsmust pay for multiple copies of a show'sepisodes, expenses for the sales force onthe road, marketing support for theshow once it starts airing, and presetper -episode payments to actors, direc-tors and other talent.

A sale to cable, however, means onedeal, one set of negatives and less mar-keting support. Moreover, because dif-ferent contract provisions in Hollywoodguild agreements apply, cable residualsare paid on a variable scale, totaling just10 percent of the sale price. In broadcastsyndication, higher, specified rates mustbe paid, regardless of the total revenuesgarnered from sales to stations. For

Tracey Ullman's cable deal neant lower residuals.

hour shows, the guilds have given somerelief, placing them on sliding scales. Butthey still remain higher than for cable.Estimates of broadcast -syndicationresiduals payments range from 20 to 40percent of gross sales.

In the case of Tracey Ullman, Slocumestimates that domestic distributionexpenses would have run $50,000 anepisode for sales to 150 stations, withresiduals at about $40,000 per episode.Instead, based on a Lifetime purchaseprice estimated at $250,000 an episodeby Paul Kagan Associates, residuals willbe only $25,000 an episode for Ullman,for a savings to Fox of about $15,000 perepisode.

Such savings are possible because in1981 the guilds first agreed to a lowerresiduals scale for the nascent basic -cable market, but mainly for failed serieswith only a few episodes. As the decadeprogressed, studios used their leveragein collective bargaining to spread thediscounts to almost all off -networkreruns on basic cable. They also gainedconcessions in the broadcast -syndicationmarket on hour shows.

But that doesn't mean it's somethingguild members are happy about. "Wehear people saying all the time that theygot a check for 75 cents," says MarkLocher, a spokesman for the ScreenActors Guild. "It's a subject that comesup in our boardroom regularly."

And now some studio executives areusing the results of past union conces-sions to argue that the residuals pay-ment structure is out of line for the half-hour broadcast -syndication market.With depressed prices in that marketright now as a result of a product glut,the studios may see a limited window ofopportunity to press that point further.To maintain credibility, they'll probablyhave to do it soon, before rapidly grow-ing cable program budgets catch up tothose in the broadcast -syndication mar-ketplace-precisely what some peopleare expecting. In 1992, says the WGRsSlocum, "It could become a real focalpoint for the industry."

46 CHANNELS / JULY 16,1)0

I),..kTA BASEEDITED BY MICHAEL BURGI

Dish User ProfileH

0Home

ME

With the announcement of Sky Cable and K Prime, such corporate heavyweightsas ICI and GE have placed their considerable financial resources behind

the direct -broadcast satellite business. But who will their customers be? A surveyby Simmons Market Research Bureau in late 1989 sketches a demographic

portrait of this still tiny delivery system (about 2.5 million users as of late 1989).

SH

Some highlights follow:

E

SMean householc income 1989: $64,200 1985: $44,180Percent earning $50,000

or more 1989: 43.8% 1985: 31.6%College education Dish owners: 45.6% Total populatior: :37.5%

Equipment Diish owners Total populagoi Percent difference

Giant screen projection TV

VCR

10.8%

75.7

1.7%

68.0

5355,

11

Camcorder 21.7 10.0 117

Laser disc player 7.2 3.8 e9

Compact disc player 22.1 19.0 16

Home computer 35.5 23.0 54

Source: Simmons Market Research Bureau, Electronic Industries Association

C

AB

L

E

What Counts at Systems?Original programminc, s supposed to be the future of cable, but a surveyof cable operators conducted last year by Myers Marketing & Research

reveals a difference in opinion about original fare between ad -salesmanagement and marketing management. Respondents were asked

to rank the value of each program type to the system. The ad -sales sideplaces greater value on off -net programming, while marketing considers

made -for -cable productions more important.

Category(Network)

System SystemMSO System Marketing Ad Sales

Overall Management Manager Manager Manager

Major League 3aseball (ESPN) 1 1 1 1 1

NBA (TNT) 2 2 3 3 2

Theatrical first -run films 3 3 2 2 6

Made -for -cable series 4 4' 4 5 8

Entertainment programming 5 4* 5 4 9

Major event specials (TNT) 6 6 6 7 7

Major event specials (USA) 7 7 7 10 3

Cultural, performing arts,informational programming 8 8 8 6 11

New productions: off -net series 9 9* 10 9 5

Off -net high -profile series 10 11 11 12' 4

Business, consumer,financial programming 11 9" 9 8 10

Classic off -net series 12 12 12 12' 12

Source: Myers Marketing S Research. Tie.

* RATINGS *TOP NETWORK SERIES

First 38 weeks of season, Sept. 18, 1989, through lune 10, 1990

SERIES / NETWORK RATING / SHARE

1 Roseanne/ABC 22.3/342 Cheers/NBC 22.1/353 The Cosby Show/ NBC 21.9/374 America's Funniest

Home Videos/ABC 20.5/335 A Different World /NBC 20.2 /33

6 Golden Girls/NBC 19.1 /34

7 60 Minutes/CBS 18.9/338 Empty Nest/ NBC 18.5/339 The Wonder Years/ABC 18.4 /28

10 Grand/NBC 17.6/28

TOP BARTER SERIESFirst 37 weeks of season, Sept. 18, 1989, through June 3,1990

SERIES/SYNDICATOR RATING

1 Wheel of Fortune/King World 14.22 Jeopardy! / King World 12.5

3 Star Trek: The NextGeneration! Paramount 9.9

4 The Cosby Show/Viacom 9.3

5 The Oprah Winfrey Show/King World 9.3

6 Universal Pictures DebutNetwork/ MCA TV 8.8

7 A Current Affair/20th Century Fox 8.6

8 Wheel of Fortune (weekend) /King World 8.5

9 Entertainment Tonight/Paramount 8.3

10 Columbia Night at the Movies/Columbia 7.4

TOP CABLE NETWORKSAverage ratings / projected households, May 1990

NETWORK 7 A.M. TO 1 A.M. PRIME TIME

1 TBS 1.6/873,000 1.9/1,036,000

2 USA 1.4/740,000 2.5/1,321,000

3 TNT 1.2 / 553,000 2.5/1,152,000

4 ESPN .9 / 505,000 1.7 / 953,000

5 Nickelodeon .9/464,000 .8/412,000

6 MTV .7/361,000 .7/361,000

7 CNN .6/331,000 1.0 / 551,000

8 FamilyChannel .6/298,000 .8 /397,000

9 TNN .5/272,000' 1.0 / 523,000

10 Discovery .4/202,000' .9/453,000

'9 A.M. to 3 A.M. Note: cable ratings are percentages within thevarying populations that con receive each network. Networksore ranked by projected number of households rather thanratings. Source: Nielsen Media Research data.


Beam

ing Into Europe's M

arketT

he explosion of European T

V channels has m

eant a surge in the hours ofprogram

ming aired. W

hile program suppliers, particularly A

mericans, w

illcontinue to benefit, U

.S. suppliers should tern .er their optimism

-sales will be good,

but not fantastic. The

ar e cu ura

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th abroough U

.S. and domestic purchases corn

total $4billion

percent of hours aired in Europe by 1999, increased de

will spur

d. tic production. Individual E

uropean Com

munity m

arkets remain far

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ay: Cosby sold at $12,500 an episode to tJ.K

. netwo

Channel 4, com

pared to a top per -station price of $300,000 an episode stateside.

(In millions)

TV

householdsW

ired TV

households

Self -produced

Independent/Coproduced

Purchased

Repeats

Total T

V hours aired

(Dollars in m

illions)S

elf -produced

Independent/Coproduced

Purchased

Total T

V program

costs

(Dollars in m

illions)License fees

Advertising

Program

salesO

ther

Total Incom

eS

_.iications

(,I

) Research Ltd

included inthis chart: T

he 12 EC

countries (West G

ermany, the U

.K.

France, Italy, S

pain, Portugal,

Denm

ark, Belgium

, Greece, the N

etherlands, Luxembourg and Ireland), plus S

witzerland,

'Austria, F

inland, Sw

eden and Norw

ay.

EU

RO

PE

'S T

V M

AR

KE

".1989

126.3127.7

129.4131.2

132.4133.2

53.457.2

59.360.9

62.063.0

33%

30%

29%

28%

27%

27%

56

67

77

3639

3940

4040

2525

2525

2626

483,670602,285

616,635624,585

630,160636,735

$7,510$8,345

S8,330$8,125

S7,92057,140

1,8202,560

2,8403,075

3,2903,540

2,9253,790

3,8353,925

3,9854,050

$12,255$14,695

$15,005$15,125

$15,195$15,330

$7,260$7,775

$8,10558,345

$8,555$8,760

10,19512,505

14,45016,075

17,29518,330

565760

9301,045

1,1351,225

1,2351,460

1,6101,180

1,9252,015

$19,255$22,500

S25,095$27,245

$28,910$30,330

ILL

UST

RA

TIO

N B

Y JIM

LU

DT

KE

HOANG NHU IRAN was one of thousands of homeless "boat people" who

came to America from Saigon in 1975. He was only nine years old at the time

and didn't speak a word of English. But Hoang was determined to make

something out of his new life in this country. And so he has. In 1987

he graduated at the top of his class from the Air Force Academy. He

then went to Oxford University as a Rhodes Scholar. Now he

is attending Harvard Medical School on a full scholarship to train as a

surgeon. Hoang has vowed to serve mankind and pay back "many times

more" what America has given to him. The story of Hoang Nhu Tran should

be a reminder that America remains the greatest nation on earth, where

boundless opportunities still exist for each and every one of us.

BA Dane., 3200 Cne, Deek South Dme Surle 500 Denver. Colorado 80209

STAY TUNEDFOR SUCCESS.

Night after night,. FNN brings you primetime programming that demonstratesthat dreams don't have to remain dreams.

THE INSIDERS WITH JACK ANDERSONPulitzer prize winning journalist JackAnderson takes you to meet economicmovers and shakers and exposes scandalswith the expertise that has made him aWashington legend.

AMERICAN ENTREPRENEURHost Bill Griffeth introduces you to Ameri-cans from across the country who'veturned their dreams into reality.

FNN FOCUSHost Bob Berkowitz goes below the supface of the news to reveal aspects ofstories that the media often misses.

FNN BUSINESS TONIGHTAnchor Doug Ramsey gives you a recap ofthe day's business news and a preview ofwhat it means for tomorrow. It's a runningstart for people who prefer a fast track.

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RIGHT ON THE MONEY"

dark days for maptaniic tie1inistan not -the -usual …...1990/07/16 · freddy krueger's...

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