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Must Sell TV?

NBC deal-seeking reflects changing face of TV

Web posted on: Friday, July 24, 1998 5:20:57 PM

A NewsStand: CNN & Entertainment Weekly report
From Correspondent Judd Rose

NEW YORK (CNN) -- NBC might live up to its slogan as "Must See TV," topping ratings from morning to night, but it doesn't have something other, less successful networks like UPN have -- a connection to a major movie studio.

However, it soon may. In a move towards what is widely viewed as network broadcasting's future, the peacock network's parent company, General Electric, is reportedly looking to merge with a company that offers the Hollywood link.

Why? Programming costs are going up, something that's affecting all networks. But NBC is in an especially tough spot. While it's still first in the ratings, and last year made a $500 million profit, some analysts predict its profits may be half that by next year.

The cost tag for one dose of "E.R." is $13 million

May Pay Television

"NBC is looking for strategic partners who can help them with a tough situation," says J. Max Robins, senior editor at "TV Guide." "Their programming costs are going up. Meanwhile, audiences are in decline."

NBC starts the fall season without "Seinfeld" or broadcasting rights to NFL pro football games. And what it kept didn't come cheap. For instance, it's paying $13 million an episode for "E.R.," and $1 million an episode each to Paul Reiser and Helen Hunt of "Mad About You."

"That's before they pay for anything else in the show," says Robins. "That's a lot of money. You need some help."

Such help would likely come in the form of a deal with a movie studio or a cable entertainment channel.

Other networks are owned by larger, more diverse media companies

Other networks are doing it

"ABC owns ESPN; ABC in turn is owned by Disney," Irving Gottlieb, senior vice president of Televest, explains. "So you've got the studio. You've got a major network. You have cable network interests. You're diversified."

Like Disney, Warner has the WB, Paramount has UPN, and Fox has the Fox Network, which gives all four networks a steady stream of programming from the studios that own them. CBS is the only other network that doesn't have studio affiliation.

"The Walt Disney Company, for instance, is very heavily involved in distributing programs worldwide in a variety of distribution forms. So ownership gives us the ability to exploit across the globe," says Bob Iger, president of ABC Television.

But even though NBC might be heading into a new ratings battle this fall without the weapons of the other networks, no one is panicking at NBC's New York studios.

"They can go along for quite a while without doing anything," says Harold L. Vogel, managing director of SG Cowen Securities. "They are still a very strong network. They've got tremendous resources. They have no need to do a deal today or tomorrow. There is absolutely no sense of kind of a desperation move."

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