ABC Woos Jilted News Division

Spurned by late-night host David Letterman, ABC on Tuesday began the process of damage control, starting with its demoralized news staffers.

Among other things, Walt Disney Co. Chairman Michael Eisner called “Nightline” anchor Ted Koppel. The veteran newsman would have been bumped from the time slot he has held for two decades if Letterman had jumped from CBS to ABC, which is owned by Disney.

A person familiar with the Tuesday morning conversation called it “warm and friendly.” Koppel declined to comment, but Monday urged Disney to send a “clear and unmistakable signal ... that ‘Nightline’ can count on serious corporate backing.”

On Tuesday, ABC News President David Westin tried to rally the troops in a phone call, saying he would make sure the corporation has a full understanding of the value of ABC News, according to network sources.

Westin also asked his staff to avoid feeling beaten down by the events and use them as a challenge to take a close look at all ABC News programming and make sure it is as “competitive and innovative and bold” as possible.

“It wasn’t a chastisement, but the sense that we can’t rest on our laurels here,” said one news-division source.

Westin also said he hoped the division would be able to produce more prime-time specials for the network such as Monday’s program on Osama bin Laden, which drew respectable ratings.

The issue was one of pure economics, according to ABC officials. Although “Nightline” is profitable, it does not pull in the ad revenues of the big two entertainment talk shows: “The Tonight Show With Jay Leno” on General Electric Co.’s NBC, and “Late Night With David Letterman” on Viacom Inc.’s CBS.

“First and foremost, our mission is to make the network as strong as it can be,” said Zenia Mucha, a spokeswoman for ABC. “Our strategy is to look to improve our overall performance.”

The residue of bad feelings extends beyond the news staff. Some affiliates Tuesday said they too were disappointed with Disney’s handling of the Letterman affair.

“I have no problem with ABC trying to better themselves in late night,” said Alan Bell, president of Freedom Broadcasting, which owns five CBS and three ABC station affiliates. “What I fault them for is their failure to anticipate the consequences.

“Their chances of getting Letterman were never great, and now they have a bunch of demoralized people in news. They have to sell advertising in a show that they’ve damaged. Their immediate task is to reassure advertisers, affiliates and the news department that it was all worthwhile.”

Another TV executive said Disney had boxed itself in, having to renew its commitment to “Nightline” even though the ratings have been slipping steadily.

“Fixing this is like asking someone to jump and not land,” said Stephen Unger, managing partner of media and entertainment at executive search firm Heidrick & Struggles.

“There is no easy solution to this,” Unger said. “Disney took a gamble and lost. What’s needed now is more than just eating crow. Management has to make specific financial and marketing commitments to ‘Nightline’ to demonstrate their support of the show, the absence of which will be an invitation for Mr. Koppel and crew to move on.”

“This was severely undermining not only to ABC but to the other parts of Disney,” he said, calling the environment “very shaky now.”

Wall Street, meanwhile, seemed unfazed by the news that Letterman was remaining at CBS.

“Nobody raised or lowered their earnings estimates [for Disney] in anticipation of Letterman happening, and no one on Wall Street is crying because it didn’t happen,” said Jeffrey Logsdon, an analyst at Gerard Klauer Mattison.

Bruised egos aside, Logsdon suggested that big-talent deals negotiated in secret at the top levels of major media companies are not unusual and not confined to entertainment. “You have Fox going around Dodger management” when it comes to talk of trading players, Logsdon said.

“The economic reality is that this is a world driven by profits, “ Logsdon said. Although Letterman would have been “a nice acquisition, on a dollars-and-cents basis Disney is no worse off today than they were three weeks ago.”

The problems ABC faces stem from a variety of factors and won’t be easily fixed.

The success of “Who Wants to Be a Millionaire” briefly masked a shortage of new hits at the network, and ABC officials have stressed that it will take only one or two shows to provide the makings of a turnaround.

That said, launching those shows won’t be easy, especially with the smaller audiences the network is attracting. Last week, for example, ABC averaged 7.7 million viewers in prime time--down 36% versus the corresponding period in 2001, and 4.6 million viewers behind second-place NBC.

For the season, ABC is down more than 20% among adults age 18 to 49, a key demographic.

Disney shares Tuesday fell 21 cents to $23.71 on the New York Stock Exchange.

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Times staff writer Brian Lowry contributed to this report.