NBC Says It’s Not Looking for a Partner for Proposed Cable Service

National Broadcasting Co. said Wednesday that it was not seeking any partners for its proposed competitor to Turner Broadcasting Co.’s Cable News Network, although Reuters news service said it had been approached by NBC at one point.

In addition, NBC said now-defunct negotiations with Turner over a possible investment in CNN had delayed its timetable for making a decision on launching a new cable news service for several weeks.

The Wall Street Journal reported in Wednesday’s editions that NBC decided to delay its decision on establishing a CNN competitor to better gauge response to the idea from cable operators, NBC affiliates and the board of its parent, RCA Corp.

Quoting an internal NBC business memo, the Journal also said NBC had considered several options for setting up the new cable service, including a possible partnership with Reuters.

Mary Lou O’Callaghan, director of news information for NBC, said the business plan mentioned in the story apparently was based on an early draft copy of a plan prepared last summer for internal review.

In a statement, NBC said the plan was “dated in substantial respects. For example, NBC is not considering any partnership arrangement for its proposed cable news venture.”

O’Callaghan said the network would not elaborate further on its plans for the cable service.

Talks With Reuters

Michael Reilly, investor relations manager for Reuters, said that NBC and Reuters had been discussing the new cable service since last summer but that Reuters “indicated it was not interested in taking an equity position.”

Reilly said in a telephone interview that Reuters would be interested in providing news film to the new venture. Reuters’ Visnews subsidiary already provides international film to NBC.

Reuters still was involved in talks with NBC on the proposed new cable service, Reilly said, but he declined to give details of the discussions.

NBC and Turner recently ended negotiations over a possible NBC investment in CNN, which offers 24-hour news and information programming.

According to the business memo quoted by the Journal, NBC estimated that the new cable news service would cost an estimated $60 million in its first year and would not break even for three to five years.

The memo stated that NBC planned to capture 40% to 50% of CNN’s market in two to five years and would sharply undercut CNN’s prices to cable operators to do so. Although launching a CNN competitor would be costly, NBC believed that it eventually could be a new profit center and customer base, the network said in the memo.

Possible Joint Venture

Under the plan outlined in the memo, the cable news venture possibly could be set up as a limited partnership or joint venture. Under one scenario, NBC would have owned 45% to 55% of the operation, Reuters 30% to 35% and an unidentified cable operator the remaining 10% to 20%, the memo stated.

The business plan also said NBC was counting on “central involvement” in the new cable service by Reece Schoenfeld, a former Turner official instrumental in starting CNN. However, the memo did not state whether NBC had made any arrangements with Schoenfeld.

Lawrence Grossman, president of NBC News, told the Journal that NBC previously had set a Dec. 15 internal deadline for making a decision on the cable news station. But the network decided to delay the decision until January in order to gauge response from its affiliates, cable operators and the RCA board, Grossman said.

O’Callaghan said letters asking NBC’s top multisystem operators for commitments to the new cable service had been sent out this week. Although the network originally had sought responses by mid-December, the possibility of reaching a deal with Turner over CNN had delayed the process, she said.

Grossman said most of NBC’s 200 broadcast affiliates “expressed a good deal of enthusiasm” over the proposed cable network, in which they would contribute coverage and other resources in return for access to the service’s footage.

Grossman also said NBC broke off talks with Turner because Turner was unwilling to give control of CNN’s news operations to NBC.