Pressure to Show Profits : Future of Network News: Is the Signal Weakening?

Fred Friendly, former president of CBS News, caused quite a stir last August when he told the Radio and Television News Directors Assn. in Salt Lake City that after years of being an outspoken critic of local TV news, he now thinks that if he were starting his career over again, he’d do it in local news.

“That’s where the news audience, the technology and certainly the air time are,” he said. “Those who care desperately about the mission of the networks wonder about the depth and the permanence of the networks’ news commitment.”

Two weeks later, over lunch in New York, where he is a professor of journalism at Columbia University, Friendly made an even bolder statement.

“We’re watching the end of networks as we know them,” he said.

How about the network news divisions? Will they exist in 15 or 20 years?

“I don’t think so,” Friendly said.

No networks? No network news? That might seem wildly unlikely given the stranglehold television seems to have on the typical American household and the central role network news has played in bringing the nation together during most of the major events of the past 25 years. But who would have forecast the deaths of Life magazine or Look or the Saturday Evening Post, or of the New York Herald Tribune, the Washington Star and the Chicago Daily News? All were vital, important, fixtures on the American scene for years. All died.

Cable television is already available in 48.1% of all American homes, and competition from cable, independent stations, videocassettes and other leisure-time activities are beginning to take a significant toll on network television. Advertising on cable television soared from $58 million in 1980 to $767 million last year, while network ad revenues, after years of rising steadily, dropped from $8.5 billion in 1984 to an estimated $8.2 billion in 1986.

In 1980, 90% of all television sets turned on in American households during prime time were tuned to network shows; that penetration level dropped to 76% last year, and CBS’s own internal pr1869243747by 1990. Other analyses suggest an even steeper decline. Meanwhile, the networks’ evening news shows, which reached 76% of all homes with their sets on in 1980, reached only 62% of the homes during the first 10 weeks of the current season.

Friendly has made a second career of late as a gadfly-cum-doomsayer, but he is not alone in his judgments. Though few people in television expect the collapse of the entire network structure, some do think the networks’ news divisions could perish.

Reuven Frank, former president of NBC News and now an executive producer at the network, said network news could “disappear altogether” in 10 to 20 years; others agree.

Morning News Program

The proximate cause of much of the current teeth-gnashing about the future of network news was the announcement by CBS, in August, that it would abandon its floundering morning news program740324456estimated $10 million a year. CBS will replace the program, starting Jan. 12, with a new show, 90 minutes of news and 90 minutes of entertainment (the latter to be produced by the network’s entertainment division).

Since the morning news shows on all three networks have always been at least half entertainment--and since ABC’s “Good Morning America” has always been produced by ABC Entertainment--it’s difficult to understand why many critics reacted to the CBS announcement with a rage that would have been more appropriate to an announcement that J. R. Ewing would henceforth anchor the evening news.

But there’s more to the current, widespread worry about the future of network news than the demise of the “CBS Morning News.” The glitz and glitter of CBS’s “West 57th Street” and, in some quarters, the overheated and heavily promoted CBS documentary “48 Hours on Crack Street” also triggered questions about the network’s continuing commitment to solid, serious news coverage.

Richard Salant, former president of CBS News, dismissed “Crack Street” as “pure titillation,” and Frank said, “I cannot be the only person who felt that he learned nothing new” from it.

Neither ABC nor NBC started from the same lofty peak as CBS so there has been much less talk about their possible fall than about the plight of CBS. Nevertheless, there was substantial criticism of all three networks when they, for the first time, abandoned gavel-to-gavel coverage of the last Republican and Democratic presidential nominating conventions.

Criticism of the networks intensified last month when NBC and ABC decided to stick with their regular prime-time entertainment schedules on Election Day, providing only periodic election updates and a final wrap-up, rather than the traditional, continuing coverage throughout prime time (as CBS did).

Robert Northshield, executive producer of “CBS Sunday Morning,” called this decision “lousy, stupid, greedy, unfair . . . part of the terrible move toward the trivialization (and) . . . diminution” of network news.

Increasingly Cost-Conscious

But networks, like most other businesses, are increasingly cost-conscious these days, and this cost-consciousness has inevitably resulted in programming decisions, layoffs, cutbacks, promotion campaigns, audience-building gimmicks and other practices not designed to make Edward R. Murrow rest easily in his grave.

Perhaps the greatest problem Van Gordon Sauter had during his recent tenure as president of CBS News was that, unlike his predecessors, he was perceived as being more interested in cutting costs than in getting stories, more determined to please his corporate superiors than his journalistic employees. Some of these employees even banded together to make a quixotic (and quickly rejected) offer to buy the news division from CBS earlier this year.

In previous generations, the news divisions were largely insulated from the struggles of the marketplace. No more. The success of “60 Minutes” (estimated annual profits: $50 million to $70 million) and, more recently, “20/20” (estimated annual profits: $18 million to $20 million), combined with the substantial profits of many local news operations in the early 1970s, prompted a rethinking about news-as-product at the networks.

Suddenly, networks decided that news programs did not have to be loss leaders, providing prestige but no profits. Perhaps they could make money--and if they could, they should, the corporate bosses reasoned.

NBC News is widely expected to lose about $50 million this year. Howard Stringer, president of CBS News, said his division will lose about $20 million. Roone Arledge, president of ABC News, said his division will make a “substantial” profit (although the network is expected to lose $60 million).

Profit is “a very important element in terms of your own sense of integrity and strength,” said David Burke, vice president of ABC News. “It’s a bad thing (for a news division to lose money). It’s unhealthy . . . to be a supplicant in a corporate setup.

“News can be a prestige item and make money.”

Because accounting procedures vary from network to network, it’s difficult to compare the financial performances of their respective news divisions. Although ABC’s “Good Morning America” is produced by the network’s entertainment division, for example, NBC’s “Today” show is produced by the news division. But all three networks seem clearly determined that their news divisions improve their financial performance.

1,500 Laid Off

CBS--which last year saw its broadcast division profits drop 12% and which also engaged in a costly fight against a would-be takeover by Ted Turner--has laid off more than 1,500 people since mid-1985; in the news division alone, 215 jobs have been eliminated--144 of them through layoffs. ABC, purchased last year by cost-conscious Capital Cities Communications, has cut more than 1,300 jobs, including 140 members of its news division, in the same period.

NBC, currently the most successful of the networks in the prime-time ratings wars, expects pretax profits of about $400 million this year, but NBC is now owned by General Electric, a conglomerate long known for vigorous economizing; many NBC jobs have been eliminated by attrition this year, and about 300 more--including about 30 in the news division--are being eliminated now as part of what Lawrence Grossman, president of NBC News, calls “a continuing process.”

Earlier this month, Grossman announced cancellation of “1986,” the network’s magazine show, and while Grossman said the cancellation was not a budgetary decision, the move could save the network $15 million to $20 million a year.

“The dreadful dilemma,” said Howard Stringer, president of CBS News, “is that we want to cover the news as effectively and comprehensively as before, but . . . you feel the hot breath of debtor’s prison.”

Does all this really mean an end to network news as we’ve come to know it, an end to the evening news shows, shows that Esquire magazine four years ago called “the closest thing we have to a shared national communion?” If so, what--if anything--would replace these programs for the 29 million Americans who watch them every night and for the millions of others who watch other network news programs?

Network news has been changing and evolving since the day it began. The pace of that change accelerated dramatically with the launching of the first communications satellite in 1975, the skyrocketing salaries of television journalists that began a few years later and, most important, the growing bottom line orientation of the last two or three years.

So the question, really, is whether (or when) the evolution will become a revolution.

Range of Possible Answers

The people who run the networks, work for the networks, compete with the networks and study the networks are all discussing a wide range of possible answers to that question these days.

The most common answer is that no one can predict what will happen to network news more than two or three years ahead of time.

“I don’t know, and I don’t know anybody who does know,” said Dan Rather, anchor for the CBS “Evening News.” “With television news . . . overnight’s a long time, and a week is forever.”

Some people are more willing than Rather to speculate, though, and they are widely divided in their opinions.

On one side are people like Av Westin, vice president for program development at ABC, who says television is on the verge of “the most far-reaching change” since its birth. On the other side are people like Neil Postman, a professor of communications at New York University, who argues that the very structure of television news makes radical change impossible.

“Because it’s television, the availability of film footage will (always) be crucial in what is defined as news,” Postman said. “Because it’s advertiser-supported . . . there has to be some sort of ratings war. . . . Because that is the case, there has to be a conception of news that is not easily separable from entertainment. Because in the ratings competition, celebrity is a key factor, all network news will try to amplify or heighten the celebrity value of their anchorman. . . . Those things will be more or less constant as long as you have this sort of system.”

But the satellite technology now available to local stations is a new factor in this equation, Westin said, and--as with personal computers--the technology is bound to get smaller, faster and cheaper.

If networks don’t change to meet this challenge, “more and more stations will be able to send their ‘live-eye-porta-laser-maxi-van-cams’ out and cover major national stories,” said Lane Vernardos, former executive producer of the “CBS Evening News” and now an executive producer for special events at CBS News.

Even so, most network executives (and their competitors) say local stations, ultimately, have neither the resources nor the incentive to provide regular, comprehensive national and international coverage.

‘Wonderful Capability’

“I don’t know of a single station, independent or affiliate, that’s willing or able to cover national or international news itself on a sustained, daily basis,” said Joel Chaseman, president of Post-Newsweek Stations, owner of four network affiliates. “We can focus for our viewers on a given story that might be of special interest to them. If there’s a new Pope and we have a large Catholic population, we might want to assign someone to that and go live. That’s a wonderful capability to have . . . and, I have to admit, highly promotable. But we couldn’t afford the people or technology or time--and we don’t have the editorial expertise--to do that every day.”

KU-Band trucks equipped to transmit to and from satellites are marvelous innovations, but they’re also expensive--$300,000 to $500,000 apiece, fully equipped, plus the costs of satellite time and salary for the staff to operate and maintain the equipment. That can add up to a lot of money for a local television station, even with the networks contributing about $150,000 for each truck an affiliate purchases. The expense may seem even larger at a time when many local stations, like the networks themselves, are cutting expenses (and when at least one network, ABC, is talking about reducing the overall compensation that networks traditionally pay their affiliates for broadcasting network programs).

With the boom period apparently over for many local stations, Bill Baker, president of Group W Broadcasting, said some stations now offer “only . . . minimal news coverage . . . making them . . . more than ever reliant on the networks for the national news.”

Thus, most network executives think the likelihood of full-scale revolution in network news, with local stations storming the network Bastille, is minimal. They think network news will simply continue to evolve along the lines it has in recent years, toward a more eclectic blend of news, increasingly dominated by longer, explanatory stories, rather than the old formula of an illustrated headline service.

The best-case scenario advanced by those most deeply committed to serious news coverage on television is an idea that’s been bandied about for years--expanding the evening news to one hour, perhaps even moving it to prime time, as Rather (among others) has been urging.

With an hour--say at 10 p.m.--Rather and others argue, television could cover more stories, provide more depth on the major stories of the day and still have time for special reports, features and investigative stories.

‘High-Viewership Time’

“I think there’s an audience for that,” Rather said. “It’s a high-viewership time. . . .The rhythm of most people’s day puts them in a frame of mind, a mood, to watch, listen, think and absorb.”

Roone Arledge, president of ABC News, said his network already has a one-hour nightly news program; it’s just split into two parts--”World News Tonight” at 6:30 p.m. or 7 p.m. (like the CBS and NBC evening news programs, its time varies from city to city) and “Nightline” at 11:30 p.m.

An hour of news in prime time is “a good possibility,” Arledge said. “Not in the immediate future . . . (but) I can see the day where that could happen.”

Most network executives have reluctantly concluded that it won’t happen, though. Even Arledge’s vice president, David Burke, said, “There is no chance in hell” it will happen.

News isn’t likely be shifted to prime time because the networks don’t want to replace highly rated entertainment programs with news programs that are almost certain to draw fewer viewers--and, as a result, lower ratings, lower advertising revenue and smaller audiences for the programs that follow.

(Yes, “60 Minutes” is consistently one of the most highly rated shows in television--and an enormous moneymaker for CBS. But “60 Minutes” is an anomaly, a rare blend of news and entertainment that all three networks have tried, unsuccessfully, to replicate. When NBC canceled “1986” this month, it marked the network’s 14th unsuccessful attempt to produce a magazine show.)

ABC is experimenting this season with a news-oriented program, “Our World,” in prime time. Av Westin, vice president for program development at ABC, said the network was spending more than $750,000 per episode on the entertainment program it aired last year opposite “The Cosby Show” at 8 p.m. Thursday. “Cosby” was (and is) the top-rated show on television; no entertainment program seemed likely to challenge it. So ABC came up with “Our World,” which each week looks at the major events in a given year in recent history.

Ratings Disaster

“Our World” has been a ratings disaster--the lowest rated prime-time show of the entire week eight times in its nine appearances (and next to last in its other appearance)--but it’s a relatively inexpensive disaster; officially, it’s said to cost only about $350,000 per episode (the actual cost may be closer to $260,000 per episode).

“Our World” isn’t daily news live from Libya, of course, but it isn’t “The A-Team” either, and if the networks aren’t likely to shift their evening news programs into prime time, they could create new, prime-time, news-oriented programs like “Our World” that would at least extend, if not exactly revolutionize, both the news franchise and the range (and quality) of prime-time programming.

But what about expanding the current network news time to an hour--air it from 6:30 p.m. to 7:30 p.m. or from 7 p.m. to 8 p.m.?

That’s even less likely. It would require the local affiliates to surrender the time they now control--the time during which they can run game shows, syndicated entertainment programs, local news or anything else for which they sell the advertising time and collect all the revenue.

If the best-case scenario for the future of the evening news is unlikely, how about the worse-case scenario--that serious network news will trivialize itself to death?

When television was in its infancy, the networks provided news and public-interest programming largely because the Federal Communications Commission required them to. The highly regarded “CBS Reports,” for example, was born of the network’s fear that it might be severely disciplined--perhaps even lose the licenses for its owned and operated affiliate stations--in the immediate aftermath of the quiz show scandals of the late 1950s. But most people in broadcasting say the FCC has become more lap dog than watchdog in recent years.

‘Most Permissive FCC’

“It’s the most permissive FCC in history,” said Burton Benjamin, former director of news at CBS and now a senior fellow at the Gannett Center for Media Studies at Columbia University.

Without pressure from the FCC, the network bosses--who are, after all, businessmen reporting to boards of directors and stockholders--are disinclined to schedule programs they know won’t make money.

“I’m not absolutely certain . . . the capitalist system . . . always produces what it ought to without some regulation,” said Andy Rooney of “60 Minutes.”

Sooner or later, Rooney warned, one network (either an existing network or some brash, new challenger) will start “putting out television news that’s the equivalent of the publications you see by the supermarket checkout counters.

“If some schlock television network starts attracting a bigger audience by doing two-headed baby stories, sooner or later, other network executives will lower their own standards to meet the competition,” Rooney said.

This may seem a needlessly dour and cynical view, but it would not be unprecedented in television--as witness both the plague-like spread of the “happy talk” syndrome in local news shows in the 1970s and the networks’ head-over-Nielson rush to various prime-time trends virtually every season. Cop shows, Westerns, doctor shows, mini-series, single-woman-with-kids shows, situation comedies, soap operas. “Dallas” begets “Knots Landing,” “Dynasty” begets “The Colbys,” “Cosby” begets so many half-hour, family-oriented situation comedies that half the prime-time schedule now seems to have sprung from his lucrative loins.

Experience has clearly shown that if television were to have an industry-wide theme song, that song would be “Send in the Clones.”

Nevertheless, is it realistic to assume that one successful tumble into trivial pursuit on a network news show would, ineluctably, drag the heirs of Murrow and Walter Cronkite along with them? Possible? Yes. Likely? No.

Other dramatic changes seem much more likely.

‘News Wheel’

Lawrence Grossman, president of NBC News, has raised the possibility of a new kind of nightly news program--a “news wheel,” essentially a partnership between the network and its local affiliates. For this newscast, each affiliate would integrate portions of Tom Brokaw’s “Nightly News” broadcast with its own local stories. If the most important story on a given day originated from Washington, Brokaw might lead off the broadcast; if the most important story were local, that would come first.

Such an approach would almost surely undermine network identity, but Joel Chaseman, president of Post-Newsweek Stations, said the news wheel concept is “awful” for another reason.

“One of the functions of the evening news . . . is to provide a kind of focused review of the day’s events on a national and international scale,” Chaseman said. “To entrust (that) to various teams of people in various cities around the country and let them make the judgments of what goes where would be a serious mistake.”

Many in broadcasting fear that if local news directors were making these judgments, most would inevitably give top priority to local stories (and light feature stories) over important national and international stories--much as most newspaper editors, except at a very few of the nation’s best papers, tend to fill their front pages with local stories, rather than with national and international stories.

Other television news executives say they can envision a step beyond the news wheel to a format in which the networks serve as little more than video wire services. The networks would provide pictures and reports that local news directors would choose from (or reject) along with their own staff work, footage from CNN and other regional and independent services--much as a newspaper editor assembles his paper from the Associated Press, United Press International, other news services and his own staff’s work. The news director, not the network, would make all the decisions--just as the local editor, not the wire service, makes the decisions on a newspaper.

Clearly, neither of these alternatives would be the networks ‘ first choice. But the new technology has so strengthened the local stations that the networks may no longer have the power to choose.

The affiliates now “hold the trump cards,” said Don Hewitt, executive producer of “60 Minutes.”

When WABC in New York decided last month that it wanted to move the network’s “World News Tonight” from its traditional 7 o’clock time slot to 6:30 to make room for a game show, that’s exactly what WABC did, the network’s preference for 7 p.m. notwithstanding.

Effect of Lead-in

In most cities, local news immediately precedes network news, and the networks have belatedly come to realize that, for most viewers, “the most significant factor” in selecting a network news program is the local news lead-in, said William Wheatley, executive producer of “NBC Nightly News.” “The second most significant factor is the anchor; the third most significant factor is the content.”

Most people tend to identify with their local news more than with network news. When an NBC survey earlier this year asked viewers whether they would watch network news or local news if they could watch only one, they chose local news by a margin of 52% to 45%.

The networks can boast all they want about their experienced reporters and anchors and their prestige and performance over the years, but the truth is that, in most homes, if the television set is tuned to one channel for local news, it will probably stay on that channel for network news. The law of inertia generally prevails over all else.

So the networks, once arrogantly dismissive in their treatment of their affiliates, now can’t do enough for them. Not only do the networks send them early film by satellite, they also send their anchors out periodically to broadcast live from affiliate stations--as Rather broadcast for a week in September from KCBS in Los Angeles. This burnishes the local station’s image and, the networks hope, bolsters the local station’s ratings (and, thus, the network’s ratings).

The networks also provide satellite links between their headquarters and their affiliates and among the affiliates themselves so that, for example, if a Boston man were murdered in Houston, the Boston station could get immediate live coverage from Houston.

ABC’s NewsOne and CBS’s NewsNet gather stories from affiliates in each of six regions of the country and re-transmit the stories to affiliates in the other regions--more than 150 stories a day for each service.

NBC has two affiliate services--Affiliate News Service (which provides four network satellite feeds a day to affiliates nationwide) and SkyCom (a system in which NBC books satellite time on request to enable one affiliate to send a story to another).

Hewitt, among others, can see the day when affiliates might demand not only the network’s pictures but the words and wisdom of its top reporters, too.

“If you’ve got an affiliate that’s No. 1 in the market somewhere, and he says, ‘Listen, you want to keep me, you do it my way,’ What do you do--tell them to go screw? No, you don’t tell them to go screw. Without them, you ain’t got a network.”

Hewitt suggests the day may even come when a “super” local station might hire away the network’s top stars--or when these stars might, individually or collectively, sell their services to the highest bidders among the local stations.

“Why network news?” he asked. “Because we (the networks) had the wires to bring the news from obscure places to somebody’s living room. You don’t need those wires anymore. . . . Satellites have proven that. . . . What is it that the network does for somebody today that a good (local) news director (couldn’t do)?”

Does Hewitt really think network news is doomed or is he just speculating--playing the agent provocateur ?

He smiles.

“Well, I bet you $100 it doesn’t happen.”

He smiles again.

“But I wouldn’t bet the farm against it. . . .”

Susanna Shuster of The Times editorial library assisted with the research for this story.