Network News: An Endangered Species? : Broadcasting: Competition from CNN, a changing economy and the cost of covering the Gulf War have conspired against network evening news programs.

Imagine one of the three broadcast-TV networks deciding to get out of the evening news business.

Citing losses on many fronts, from shrinking ad dollars to the huge expenditures required to cover global crises live in an unsettled world, the network announces that it will no longer produce a nightly newscast. The familiar anchor goes off to front a profitable news magazine show. The reporters, producers and other staff become “packaging” operations for local TV stations, with the network feeding news footage to its affiliates, for use on their own newscasts.

It’s a doomsday scenario, and while network officials say that no such plans are in the works, some broadcasting observers believe recent events--including the war in the Persian Gulf--are conspiring to make the unthinkable thinkable.

“I don’t think there’s any question that in the next several years, there will not be three evening newscasts,” said Lawrence Grossman, a former NBC News president who is now a senior fellow at the Gannett Foundation Media Center. “With CNN becoming the place where viewers turn for breaking news in a crisis, and local news also assuming a stronger role, the traditional dinner-hour network news is becoming an anachronism.”

He and others say that CNN’s strong ratings during the war--many broadcast affiliates preempted their own networks to run CNN on the first night of bombing in Baghdad--coupled with the changing economy will force network managers at least to question the viability of news.

“I believe that, by the end of the decade, one--and possibly two--of the broadcast networks in effect will get out of the news-gathering business,” said Ed Joyce, a former president of CBS News.

For now, however, network executives cite their combined increased ratings during the Gulf War and what they see as their unmatched experience and depth in arguing that they’ll be around for years to come.

“‘News programs evolve, but we expect the ‘CBS Evening News’ to continue for a long time,” said CBS News spokesman Tom Goodman. “The nightly newscasts provide experienced coverage and are an important part of broadcast journalism.”

Grossman, however, maintains that the times have changed. “It used to be that the nightly newscast was the profitable flagship enterprise for the networks. But when a crisis such as the Persian Gulf War comes, the profit from advertising goes out the window.

“ABC News (which has the top-rated newscast and a number of other successful news programs) has positioned itself as the dominant network news force. But NBC and CBS are bound to be coming under pressure from their managements, asking, ‘Why do we need this huge factory with staff and news-gathering facilities around the world?’ ”

Among the three networks, only ABC’s news division reports a profit. “In the long run,” said one network news executive, “this is a great business for two (broadcast news divisions). I’m not sure it’s such a great business for three.”

The network news divisions are incurring huge costs in covering the Persian Gulf War. NBC News President Michael Gartner recently issued a memo saying that covering the war has cost NBC $37 million so far in canceled advertising and news-gathering costs. The other broadcast networks are believed to be incurring similar costs, with news gathering alone running at $1.5 million a week.

At the same time, the broadcast networks are experiencing losses due to the recession and other factors. Earlier this week, CBS reported a fourth-quarter loss of $156 million, largely due to losses from a $1.06-billion major league baseball contract but also to the recession and to uncertainty about news-gathering costs for the war.

In this climate, CNN is putting additional pressure on the network news divisions.

“CNN clearly changes the equation for network news,” said Av Westin, a former ABC News vice president who is now in charge of reality programming for the King World syndication company, which produces “Inside Edition.” “With CNN providing round-the-clock, breaking coverage more cheaply than the networks, the network managements surely will examine the expense--and the role--of the nightly newscasts.”

During the first three quarters of 1990, CNN spent just under $200 million for both Cable News Network and CNN Headline News, according to CNN executives. The broadcast networks each have an annual budget of roughly $250 million, according to news executives. (In terms of staffing, CNN has roughly 1,700 people worldwide. ABC News has about 1,200 employees, while CBS and NBC each have about 1,000 employees in their news divisions.)

CNN’s current news-gathering budget now is running close to those of the broadcast networks, but CNN spreads those costs over its main 24-hour cable channel as well as the secondary headline service.

Although producers of the nightly newscasts maintain that they are charged for overhead and other costs that relate to all of a network’s news shows--such as “60 Minutes” at CBS, the “Today” show at NBC and “Nightline” at ABC--networks traditionally have devoted the bulk of their spending to news-gathering for the 22-minute (minus commercials) evening newscasts. But with increased competition and costs, they have been cutting back on bureaus and staff. At the same time, they’ve been expanding in other areas, looking for prime-time news magazines that can be far more profitable than the evening newscasts. NBC, for example, recently added 100 staffers to produce “Real Life With Jane Pauley” and “Expose.”

“I think you’re going to see the networks devoting more of their resources and assets into areas like daytime and nighttime news programming,” said Grossman. “The emphasis will shift away from the dinner-hour news.”

ABC and NBC already have arrangements with foreign news-gathering organizations to share news footage, and NBC is starting an overnight news service for its affiliates that may provide “packages” of material along with the regular “feed” of news footage that all three networks already provide. In theory, affiliate stations could use such stories to expand their own local news operations to replace the network newscast, which would create more local advertising time for them to sell.

“We depend on the network evening newscasts to provide us with depth of coverage and reporting that we could not have without them,” said Hank Price, president and general manager at WFMY-TV, a CBS affiliate in Greensboro, N.C. But would the local stations help pay for the costs of news-gathering on the nightly network news? “Absolutely not.”

However pragmatic financially, dropping the evening newscast might have dangerous long-term repercussions for a network, some observers warn.

“In numerous audience-research surveys, viewers cite network news as a major factor in the identity of the broadcast networks,” said former CBS executive Joyce. “It’s what separates broadcasters from TV syndicators and entertainment studios.”

Such an action could also jeopardize their standing in Washington, where the networks currently are lobbying for increased ownership in programming that they now license from outside producers in order to bolster their revenues and remain competitive.

“Purely from a strict financial standpoint, it might make sense for the networks to eliminate their news organizations in a bad year for news-gathering,” said Ed Atarino, a media analyst at the investment banking firm Salomon Brothers, “but it certainly wouldn’t help the networks in Washington, where they’re screaming for a level playing field (in entertainment). And what would they put on instead--game shows?”

Robert Baker, an attorney at the Federal Communications Commission, said that doing away with the traditional evening newscast probably would not violate any current FCC standards, since it is stations, not the networks, that are licensed to serve the public interest. “So long as individual stations tell the FCC that they’re meeting the community needs, in theory, there would be nothing to stop” the networks from discontinuing their a newscast, he explained.