Couric Talks Are Worry to Networks

By the time NBC celebrates the 50th anniversary of the “Today” show Jan. 14, the network hopes to have signed a new contract with the show’s co-anchor, Katie Couric. But as negotiations heat up, budget keepers at NBC and the other networks have reason to be watching nervously.

If history is a guide, a major salary increase to keep Couric at NBC, as is anticipated, will also drive up pay demands of many others in the TV news anchor and correspondent corps.

Couric may be one of the most coveted anchors on television, meriting top pay, but any new salary high for her could set off a ripple effect that eventually leads to bigger salaries for those under her as well as highly competitive rivals at ABC and CBS.

Conversely, any network that subsequently attempts to hold the line on salaries--as broadcasters are trying to do in the face of an economic downturn--risks alienating those who don’t get raises.

“For anchors, a rising tide lifts all ships, that is the historical trend,” said Shelley Ross, executive producer of ABC’s “Good Morning America.”

Some network executives insist the pattern will be broken this time; others are more cautious. “It’s a concern,” said one senior NBC executive.

Indeed, a new round of salary inflation couldn’t come at a worse time, as network news divisions grapple with budget woes due to continued soft advertising revenues and the soaring expense of covering developments overseas.

ABC News, which has been the most aggressive about cutting costs, shed about 125 positions earlier in the year in a move that predated the war in Afghanistan. NBC News and CBS News have also eliminated a number of production jobs.

Couric, whose contract expires in May, has spent the last several months entertaining offers from suitors eager to lure her away from NBC. Some are offering her a daytime talk show, which would provide better working hours.

But with first-place “Today” uncharacteristically wobbling in the ratings since September, many in the industry expect the anchor to stay right where she is as NBC does what’s necessary to keep her, which means a considerable raise from the $7million to $10 million per year she makes now.

NBC has denied reports that it has offered her a package worth $100 million, which would include financing for her own production company, but many expect that Couric could easily end up taking home $13 million or more annually.

An NBC spokesman would say only, “We love Katie, and we hope she’ll stay.”

Couric, who was named co-anchor of “Today” in 1991--when the program was two hours long, not the current three--is at the top of what one network executive calls the “golden circle” of news anchors who make $7 million or more annually--a group that includes ABC’s Barbara Walters, Diane Sawyer and Ted Koppel, and nightly newscast anchors Tom Brokaw, Peter Jennings and Dan Rather.

Those anchors are the most likely to benefit when their contracts come up for renewal, many in the industry say, although some disagree. Advertisers are paying a premium for morning television, while evening newscasts and prime-time magazines aren’t bringing in the money they used to, noted one news industry insider.

Moreover, the TV news business today is a far cry from the era when then-ABC News President Roone Arledge sought to build a creditable operation by luring talent such as Walters and Sawyer from other networks, contributing to the salary boom.

There’s widespread speculation that the three nightly newscasts will lose much of their cachet once their long-tenured anchors, all of whom are older than 60, retire.

While current salaries may sound excessive, most top people are worth every penny, executives say. The “Today” show, for example, brings in an estimated $420 million in annual revenue to NBC.

ABC’s Ross said despite the historical pattern, she’s not nervous about a new round of salary inflation following any Couric deal. “We’re very pleased about the progress we’re making,” she said, referring to the ratings gains that “Good Morning America” has made in recent weeks, narrowing the gap with “Today,” which has been in first place for an unprecedented six years, to its smallest since 1996. “I don’t know what price you can put on anything or where it stops, but I just know we have the best anchors for this news cycle.”

At most, top anchor salaries still account for less than 10% of a news division’s annual budget, estimates media analyst Tom Wolzien of Sanford C. Bernstein, who adds that talent’s ability to draw audiences probably generates more than 10% of news revenue, “so if you make the right choices, they are worth it. Top people are probably always worth what you pay them.”

The real danger, Wolzien said, lies in “the next person down the chain. If there’s someone who is not of as much value and you jack their salary up, that’s where you break the bank and don’t get the return. You must clearly define ‘A’ talent.”

Across the industry, news executives have been trying to hold the line on salaries for the less-than-top-tier talent. ABC News cut loose a number of correspondents over the summer when they weren’t willing to take pay cuts, while others who stayed did agree to cuts, say industry executives familiar with talent deals.

NBC is believed to have asked a “handful” of employees to take pay cuts.

“Top signature talent anchors are worth a lot,” said CBS News President Andrew Heyward, “but they make a lot, and I think they understand they make what they make because of the rules of the marketplace. And that marketplace is more challenging now than it was a few years ago, and any negotiation over salary is going to be rooted in reality as opposed to mindless competition.”

Heyward said his guess is that gains by Couric, assuming she gets them, won’t reverberate through the industry. “The ‘Today’ show is extremely important to NBC and is one of the most profitable--if not the most profitable--news programs of all time. It’s pretty easy to quantify the value of the program to the network and see why she is in a unique position to make a very good deal,” he said.

As for the levels below star anchors, he said, “there is already tremendous scrutiny, not only on raises but on salaries themselves,” resulting in “tough negotiations” with talent.

“The fact is that given that the state of the economy and the challenges facing the industry, runaway talent inflation has been earmarked as a critical issue, something that has to be reined in for our success,” Heyward said. “And to a surprising extent, so far, on-air people and their agents seem to understand this too.”