FLASHBACK: Troubled Times for the Networks 1983

Troubled Times for the Networks
Faced with new competition, they fight to hold their viewers

By Richard Corliss, Peter Ainslie and Alessandra Stanley
TIME Magazine
February 7, 1983

Click, click, click. Let your magic channel selector take you on a ramble through the satellite night. Three basketball games fill the sports stations: one pro, one college, one high school. Cable News Network is airing its 30-min. business report. With Mick Jagger and Joan Jett setting the tempo, MTV rocks all night. PBS has opera in German and soap opera in the Queen's English. In the free-for-all called cable access, gurus and do-gooders are proselytizing for churches without disciples, causes without effect. A raunchier access channel offers the spectacle of a young man tap dancing as he undresses to the theme from Star Wars. Click.

Hearst/ABC 's ARTS is devoting 75 minutes to a leisurely documentary on Caravaggio. HBO and Showtime make capital out of new movies, and the nationwide "superstations" beam Greta Garbo and John Wayne to more than 25 million homes. The local independent channels thrive on TV reruns: you can catch MARY TYLER MOORE every night and M-A-S-H ten times a week. On the 24-hr. Cable Health Network, a psychiatrist is either preventing or precipitating a woman's emotional collapse. On an ad hoc network formed by Mobil Oil, the Royal Shakespeare Company revives Nicholas Nickleby and the sagging post-holiday spirits of 10 million viewers. And on each of the three "major" networks, a cop is still chasing a crook, another teenager outsmarts her sitcom dad, a nest of vipers buzzes in the bosom of one more TV dynasty. Click, click, click.

The Satellite Age of Television has arrived. With it has come a riot of options for the home viewer and a daunting challenge for the three commercial networks. Since the late 1940s, the networks have held a virtual monopoly on the viewer's prime time. Now that hammer lock may be breaking. In the next few years ABC, CBS and NBC will be vying—with one another and with some increasingly confident adversaries—for the lion's share of $16.7 billion and more in annual advertising revenue.

The numbers by which the networks measure their power—ratings, share points, Homes Using Television, demographics and the rest of the adspeak lexicon—are confusing and conflicting, but few network executives can take solace in them. The networks' portion of the total viewing audience has fallen from more than 90% in 1977 to 78% today, and a further drop of 8 to 14 points is expected by 1990. That is almost a quarter of the total market in twelve years. CBS, the prime-time champ since 1980, saw its 1982 ratings fall 5% from the year before; ABC lost 5%, and last-place NBC 7%.

Where have all the ratings gone? Some to the independent stations (whose share of viewers in the 18-to-49 age group has jumped 71% since 1978); some to PBS (whose audience has more than doubled in three years, to 5.3%), some to Home Box Office and Showtime (whose combined subscription base is now 15 million, up 50% from 1981), some to the burgeoning number of cable households (30 million strong, with 350,000 new homes each month), and doubtless some to video games, video discs and other plug-in software. Yet the raw number of network viewers has barely declined, because more Americans are spending more time watching television: the typical TV set is in use almost seven hours a day.

The network balance sheets can also be read several ways. NBC, plagued for the past five years by streaks of bad management and bad luck, lost $40 million in 1981, according to Television Digest, though the figures for 1982 should be more encouraging. ABC benefited from a skein of prime-tune comedies watched by the young urban audiences so attractive to advertisers, and from a dominant afternoon soap-opera schedule that accounts for perhaps half the network's income. It won the 1981 profit sweepstakes: $215 million to CBS's $160 million. In real-dollar terms, however, all three networks have lost ground ABC since 1977, the peak year for profits.

In the ratings recession, network programmers have chosen to stay the course. Says Bud Grant, president of CBS Entertainment: "The best thing we can do is what we've done best in the past." Lee Rich, president of Lorimar Productions, calls this new passivity "a death wish." But it does mean that low-rated shows that once would have been quickly canceled are now given a few more months of life. Economics, not generosity, is the reason. A canceled hourlong show can cost the networks $1 million for each unaired episode; they lose less money continuing to air it than they would by buying a new series that might do no better.

As the number of potential genres for hit series becomes more limited—remember variety shows? westerns? wall-to-wall theatrical movies?—the networks have turned increasingly to two virtual guarantors of healthy ratings: the mini-series and the made-for-TV movie. When Hollywood movies began, in the past decade, their near exclusive courtship of the youth market, they abandoned two narrative forms that had served them long and honorably, the multigenerational saga and the social-problem drama. So beginning with ABC's 1976 version of Irwin Shaw's RICH MAN, POOR MAN, the networks stepped in and cleaned up.

In plot outline the minis may be as predictable as any sitcom: an extended family faces decisions of heart and conscience to the martial beat of a nation, nay a world, in turmoil. As works of popular art they may lack the vigor, star power and lush craftsmanship of their real-movie predecessors. But the minis found a new audience for purveyors of the noble potboiler and offered home viewers the chance to see characters who actually developed, crises that were not resolved in 51 minutes. The made-for-TV movies followed the same prescription writ small: liberal melodramas in which ordinary folks rise to heroic stature while battling an incurable malady or a bunkered social outlook. The TV movies have become consistent ratings winners at a time when overexposure on the pay movie channels has made even the most popular Hollywood film a risky network proposition. One made-for-TV movie, Drop-Out Father, a sort of Kramer Hits the Road starring Dick Van Dyke, won a larger audience share (37%) than any theatrical movie shown on free TV this season.

Meanwhile, network programmers are failing to produce any new blockbuster series. A mini-series like The Winds of War may earn ratings and prestige, but it has a fatal flaw as a piece of merchandise: it cannot be duplicated ad infinitum. The megabit series remains the most efficient kind of money machine, generating huge profits for the network in its initial run and even larger sums for the show's producer when it is later syndicated to local stations: All in the Family stands to bring in about $100 million in syndication fees. This season, Dynasty (Dallas in Denver) has hit its form, and Bob Newhart's new comedy series broke into the top ten, but the networks have not come up with a superhit since DALLAS and MORK AND MINDY, both of which premiered in 1978. Says former TV Producer Norman Lear (ALL IN THE FAMILY, MARY HARTMAN): "A show becomes a big hit because it is dynamically different. But the networks are afraid of different. They want carbon-copy television." To the programming chiefs, says Washington Post TV Critic Tom Shales, "a new idea looks like a foreign object—it's something to run away from. So they clone whatever was successful elsewhere. Just watch: next year's surefire hit will be called Magnum E.T. They'll have a hairy guy with a mustache come in from outer space. Me, I'd rather watch a rerun of THE HONEYMOONERS."

So would millions of other viewers, and their choice has serious repercussions. Sitcom hits that have gone to syndication heaven have come back to haunt the networks. MASH, whose first ten seasons are spinning out on local stations, consistently wins higher ratings in New York City than the networks' nightly news shows. One recent Thursday in the Los Angeles market, a rerun of THREE'S COMPANY on a local independent station was the top-rated show of the night, higher than HILL STREET BLUES, SIMON & SIMON or MAGNUM, P.I. Says Frederick S. Pierce, president and chief operating officer of ABC, Inc.: "The impact on our ratings is less from the pay movie channels than from the independent stations."

So anxious are the networks to exorcise these ghosts from seasons past that last week they petitioned the Federal Communications Commission to restore to them the syndication rights that the FCC had awarded to the series' producers in 1970. The networks argue that without the revenue from syndication it will be more difficult to commission adventurous, expensive programming. The producers counter that the licensing fee the networks pay for two airings of a series often does not cover production costs (more than $750,000 for an hour show, $400,000 for a half-hour). The profits from syndication do, though: $800 million a year. Both sides are arming themselves for the FCC decision, and the sniper fire has already begun. Says Chester Midgen, executive director of the Association of Talent Agents: "Now that the networks feel the breath of competition on their backs, they want the FCC, Congress and everyone else to bail them out."

As recently as a decade ago, there was virtually no competition in sight. The networks were fat and happy, with surging ratings and profits, and a flock of series that melded quality and popularity into the Golden Age of Sitcoms: ALL IN THE FAMILY, MASH, MARY TYLER MOORE. Then, in 1975, two little-noted events conspired to trigger the revolution. Time Inc.'s fledgling pay-TV company, Home Box Office, bounced a clear video signal off a satellite orbiting 22,300 miles above the earth, paving the way for national cable networks; and Sony introduced the U.S. consumer to the first successful home videocassette recorder, the Betamax, thus freeing the viewer from indentured servitude to network scheduling whims. By 1977 the portents were becoming clear: HBO broke into the black, and the networks suffered the first erosions in their share of the total audience.

Few network people read these tea leaves; they were too busy sipping champagne. This was, after all, the year of Roots, the twelve-hour mini-series that earned the highest ratings in TV history and helped propel ABC to No. 1 status for the first time ever. It was quite a coup for Fred Silverman, ABC'S programming chief, and in 1978 NBC, which had slipped to a gentleman's third place in the ratings, hired him as network president. By 1981 Silverman had pulled off an even more spectacular feat. He had demonstrated that with enough hard work, even a TV network could lose money. In his three years, NBC's earnings plunged from $51 million in profits to a $40 million loss.

Enter NBC's second putative savior: Grant Tinker, former president of the MTM production shop (MARY TYLER MOORE, LOU GRANT, WKRP IN CINCINNATI, HILL STREET BLUES). Tinker had made his reputation at MTM as THE the velvet-gloved champion of creative personnel, but at NBC he was unable to stanch defections by Newsman David Brinkley (to ABC) and Sports Chief Don Ohlmeyer (to independent production). He did woo many of his old MTM employees to develop relatively sophisticated new series, like the sitcom CHEERS and the hospital drama ST. ELSEWHERE. With these shows NBC has asserted its image as the "quality network," though the one new NBC show to perform reasonably well against tough competition — KNIGHT RIDER, in the suicide slot opposite DALLAS — is just another burning-rubber melodrama, a CHIPS of Hazzard.

Daytime is a disaster area at the network; the TODAY show and NBC NIGHTLY NEWS continue to lose ground to the competition; and NBC's prime-time ratings are still in the slough, with only one show in the top 20 (18th-ranked HILL STREET BLUES, which Silverman had commissioned from Source: MTM), and twelve in the bottom 20. Still, the network is attracting more trend-setting urban viewers with shows like the dramatic musical series FAME. This "narrowcasting" approach may win NBC an unusual distinction: it could become the first boutique network.

"Tinker has thought a lot about programming," notes Paul Klein, the curmudgeonly sage who was an NBC vice president before joining the Playboy Cable Network. "He's very good at that. He should be doing it at NBC. Instead he delegates it to a swami like Brandon Tartikoff [president of NBC Entertainment]." So why was Tinker hired? Says Klein: "His boss at RCA, Thornton Bradshaw, said Tinker has 'bearing.' I think the stockholders might be happier if he was a hunchback with a bad mole, and put them in No. 1. But even if NBC gets there, it won't mean as much as it used to. Now it's just a bigger slice of a smaller pie."

Network executives counter with results of a Nielsen cable survey of homes plugged in to 20 or more channels. Only eight of those channels are watched more than an hour a week. As Gene Jankowski, president of the CBS Broadcast Group, notes: "Nobody buys technology for its own sake. You buy the new video technology because it provides a message you can't receive through other means. But it's not the only message, or even the most important one. The networks are. They are the only national instantaneous distribution system, and are likely to remain so."

Jankowski is not talking about quality entertainment here. He is defining the networks' primary function: to make money, not by selling programs to viewers but by selling viewers—in bulk, watching a prime-time show—to advertisers. The ad agencies are still buying, despite skyrocketing rates ($91,000 for the average 30-sec. spot in prime time, up 125% since 1975). Says Louis Dorkin, senior vice president at the Dancer Fitzgerald agency: "The advertisers will keep paying these prices until they decide there's a better game in town."

Anthony Hoffman, media analyst for A.G. Becker, an investment banking firm, thinks that, on balance, the networks have done a good job. "The reason profits evened out in the late '70s," he maintains, "is not because the ratings dropped but because production costs were increasing, about 20% annually. In the past couple of years the networks have let some air out of their shows' ballooning budgets. And even if the overall share of the audience drops to 65% or so, they'll do O.K. Of course they'd like to get back into series syndication. Of course they'd like to see a couple more cable services fail. And they'd rather not see Ted Turner at the bargaining table every time they want to pick up a sports package. But they've still got the store pretty well locked up. People will soon get the word: the network business is coming back."

It will keep coming, and spreading, as the networks cover a few bets with incursions into alien territory. ABC has joined in various video enterprises with Getty Oil, Cox Cable and the Hearst Corp. CBS is teamed with A T & T in a field test of videotext, and with HBO and Columbia Pictures in the formation of a major Hollywood studio. NBC's parent, RCA, is co-owner of the Entertainment Channel, a pay cable service, and involved with Columbia to produce and distribute programming. "The networks will benefit from this proliferation of technologies," Anthony Hoffman predicts. "They could stock a decent cable channel just with series ideas they turn down each year due to insufficient popular appeal. And by competing with themselves, they'll simply be executing the Procter & Gamble philosophy: if you have two or three products in the same category, your combined market share will be bigger than if you have just one."

Steven Bell of KTLA, the leading independent station in Los Angeles, believes the rule applies in reverse to the prime-time competition. "There aren't three networks," he argues. "There's only one, pushing the same bland product under three different names. It's an entertainment vacuum that cable and the independents can't help filling." For three decades, the networks have relied on the home viewer's receptive passivity to keep him hypnotized in front of the blue haze with only three choices that are often no choice at all. Now, with everything from high art to the stupefying banalities of Access Amateur Night available to him, the viewer is free to scan the frequencies for programs that enter his private universe. The next generation—the one growing up now in 20-channel cable homes—may not even have a network habit to break. If that happens, the networks will have lost not only share points but their crucial role in shaping America's entertainment tastes and social beliefs.

Grant Tinker wonders if it has not happened already. "People may simply have lost patience with network fare," he says. "Maybe they're looking for something new on cable, or something old and good on the independents. Maybe they're reading books or going to sleep or doing things in the privacy of their bedrooms—something other than watching CHEERS. Yeah, you could worry about that. I do." Tinker knows what the other network chiefs may be coming to fear: the set clicks off too.