NBC Leaps Into Cable Market With FNN Clone

It doesn’t sound particularly jazzy, but one may hear murmurs of “Gentlemen, start your cables” in February, when NBC begins its most ambitious venture yet in cable programming.

That’s when the company will launch CNBC, or Consumer News and Business Channel, a 24-hour-a-day, 7-day-a-week service that will offer financial news on weekdays and sports attractions on weekends.

CNBC will face the 7-year-old Financial News Network in a key test of whether today’s cable market, even though thriving, can support two major, similar, advertiser-supported program services.

FNN’s feisty president, David Meister, thinks not. He further thinks that his service, which he says now reaches 32 million homes and plans to expand its operating hours next month, will prevail, partly because it’s so established already. CNBC will have 9 1/2 million homes initially.

Cable executives won’t be the only ones watching keenly to see what happens. So will executives of NBC’s 200-plus affiliated stations, some of whom view CNBC as a competitor. Others say NBC needs it to remain financially strong.

NBC has been wading into cable for the past several years. Rebuffed three years ago in a bid to buy 51% and editorial control of Ted Turner’s Cable News Network, the company signed on in 1986 as a partner--with the Hearst Corp. and rival ABC--in the 24-hour Arts & Entertainment Cable Network, which says it currently reaches 36 million homes.

Earlier this year, with NBC president Robert C. Wright leading a corporate charge in a search for new sources of revenue, NBC took its first step into cable production by agreeing to make a comedy series, “Good Morning, Miss Bliss,” for the Disney Channel.

Then NBC leased the Tempo Television cable channel to form CNBC.

Michael L. Eskridge, president of CNBC, declines to disclose how much it will cost to start, staff and run his new operation. But he says the service will need to reach more than 30 million homes to break even.

With a staff of between 150 and 200, CNBC won’t be based at NBC headquarters at the Rockefeller Building here because of cost reasons, Eskridge says. It may locate elsewhere in town or even to a nearby New Jersey location, he adds. “It depends on the financial arrangements and how fast we could put together a facility in one of the buildings we’re looking at.”

The cable operation’s technical staff will be non-union, unlike NBC, whose technicians are in the National Assn. of Broadcast Employees and Technicians. Again, costs are the reason, at least in part, Eskridge says.

“If we had to live with our company-wide union contract,” he says, referring to NABET’s contract with CNBC’s parent company, “we don’t survive. It’s actually two things. It’s cost and flexibility of (union) work rules, and probably more of the latter than the former.”

CNBC’s arrival comes at a time when NBC, owned by cost-conscious General Electric, has quietly and steadily cut staff for two years. But those axed by NBC probably shouldn’t look at CNBC with hopes of a new full-time job.

Generally speaking, “we won’t have our own staff of production people,” Eskridge said shortly before leaving for South Korea in his second job as executive vice president of NBC’s Olympics telecast unit. “We’ll put together groups of free-lance people from time to time. We’ll hire other people to do productions for us.”

While CNBC will be a separate company, he says, “We’ll take advantage, to the extent we can, of NBC News people on an irregular basis.”

As for the weekend sports programming, “We hope to be able to use some recognizeable people from NBC Sports,” he says. “But we haven’t made any arrangements yet.”

The new kid on the cable block has a formidable rival in FNN, which after a shaky first four years has been profitable since 1986 and now has a staff of 200.

Although FNN chief Meister says his operation’s coming expansion is mainly to broaden its appeal and is not in response to CNBC, FNN nonetheless will up its daily 14-hour business-news offerings to 18 hours on Oct. 31, and will add features about personal finance and major business figures.

FNN, whose midweek-weekend SCORE service of sports information and events will ultimately move to a 2 p.m.-midnight EDT schedule on Saturdays and Sundays, also is putting $40 million into new facilities, including new studios here and in Los Angeles.

NBC’s big push into cable this year makes it the second major network actively in the game. CBS isn’t playing right now.

That network, whose 1981 cultural cable effort died a year later after critical cheers and little ad revenue, doesn’t plan an imminent return to cable, says CBS spokesman George Schweitzer.

ABC, the first in cable, arrived in 1980 and has stayed. Besides its stake in Arts & Entertainment, it owns 80% of the all-sports, 24-hour ESPN network, which by some estimates earned nearly $80 million last year, and one-third of Lifetime.

Herb Granath, president of Capital Cities/ABC Video Enterprises, Inc., won’t say how much ESPN or ABC’s two other cable ventures are making. But all are profitable, he says, and ABC “has the objective of expanding” with new projects.

“But it’s not that easy anymore,” he adds. “Start ups are very difficult, and buying into existing cable networks is an expensive hobby.”

What about affiliates’ worries that their own networks are competing with them?

“I remember the network affiliate meeting when we announced that we were going to get into some cable programming, Granath says. “There were a lot of screams.”

There has been relatively little fuming since, he adds.

“You’ll still hear an occasional holler from some guy who’s having problems with a local cable competitor, and he hollers about our being in the cable business,” he says. “But I must say, that’s yesterday’s issue.”

NBC affiliates, Eskridge notes, have been told repeatedly by NBC chief Wright that NBC is planning cable activities. Eskridge doubts they’ll fret about CNBC:

“I think that when we get it off the ground, they won’t find us directly competitive, because it’s different from what we put on on our regular network. So I don’t think they’ll have any problem with it.”

A sampling of senior executives at some NBC affiliates shows mixed reactions.

“It doesn’t bother me,” says Harvey Mars of WXIA-TV in Atlanta. “These are the things NBC and the other networks alike have to look at to keep themselves strong in the future.”

“They’re another competitor,” says John Spinola of WBZ-TV in Boston. “And they’re certainly going to be able to put a product out there that’s going to be an alternative, and . . . I’m concerned about that.”

However, he adds, “we can feel reasonably comfortable that they (NBC) are going to try to protect their economic base, which is network time.”

In Palm Springs, Calif., one of the nation’s wealthiest communities even though only No. 178 in size of TV market, John Conte of KMIR-TV Channel 36 is resigned to the arrival of CNBC.

“I don’t know how it (CNBC) is going to affect us as far as viewership is concerned, because I don’t know what else could happen to my station in this market. We’re peppered from the heavens with cable competition,” he says.