The Annual Survey of the 90 Fastest -Growing Media Companies

Home , Channel 75, Fred Roggin, New World Pictures, Times Mirror Company, Tom Jarriel, Western Publishing

What's Hot in Television Marketing CHANN EIS JUNE THE BUSINESS OF COMMUNICATIONS 1987 ACHI EV ERS The Annual Survey of the 90 Fastest -Growing Media Companies

A. H. BELO CORPORATION AARON SPELLING PRODUCTIONS INC ADAMS -RUSSELL CO. INC ADELPHIA COMMUNICATIONS CORPORATION AMERICAN CABLE - fAH7fl)o SYSTEMS CORPORATION AMERICAN FAMILY CORPORATION ATC (AMERICAN có3C0 TELEVISION AND COMMUNICATIONS COR- 00 C PORATION) BARRIS INDUSTRIES C.O.M.B. CO t-+ `r1 O r) f.+ CABLEVI SION SYSTEMS CORPORATION CAPITAL < Or, CITIES/ABC INC CBS CENTEL CORPORATION CEN- rItl el O HZ H TURY COMMUNICATIONS CORPORATION CHRIS-CRAFT yy r'i INDUSTRIES INC CLEAR CHANNEL COMMUNICATIONS INC -CC THE COCA -CO _A COMPANY COMCAST 4 D O CORPORATION COX 230 ENTERPRISES INC DELAURENTIIS ENTERTAINMENT GROUP INC DICK O CLARK PRODUCTIONS INC THE WALT DISNEY COMPANY EMMIS b ~ BROADCASTING CCRPORATION FINANCIAL NEWS NETWORK FRIES EN- TERTAINMENT INC GANNETT CO. INC GE (GENERAL ELECTRIC) GENCORP J GRAY COMMUNICATIONS SYSTEMS INC GULF+WESTERN NC HAL ROACH H STUDIOS INC HERITAGE COMMUNICATIONS INC HERITAGE ENTERTAINMENT INC CT] rr HOME SHOPPING NETWCRK INC INFINITY BROADCASTING CORPORATION JACOR Or+ COMMUNICATIONS INC JOHN BLAIR & COMPANY JONES INTERCABLE INC KING WORLD QO PRODUCTIONS INC KNIGHT-RIDDER INCORPORATED LEE ENTERPRISES INC THE LIBERTY COR- D PORATION LIN BROADCASTING CORPORATION LORIMAR-TELEPICTURES CORPORATION MACLEAN HUNTER LIMITED MAI CITE COMMUNICATIONS GROUP INC MCA INC McGRAW-HILL INC p MEDIA GENERAL INC MEREDITH CORPORATION MGM/UA COMMUNICATIONS CO MULTIMEDIA INC NEW WORLD PICTURES LTD THE NEW YORK TIMES COMPANY THE NEWS CORPORATION LIMITED ORION PICTURES CORPORATION OUTLET COMMUNICATIONS INC PARK COMMUNICATIONS INC PEREGRINE ENTERTAINMENT LTD PLAYBOY ENTERPRISES INC PRICE COMMUNICATIONS CORPORATION QVC NETWORK INC REEVES COMMUNICATIONS CORPORATION ROBERT HALMI INC ROGERS COMMUNICATIONS INC SCOTT CABLE COMN I., NICATIONS INC SCRIPPS HOWARD BROADCASTING COMPANY SELKIRK COMMUNICATIONS LIMITED STAUF- FER COMMUNICATIONS INC SUN GROUP INC TAFT BROADCASTING COMPANY TCA CABLE TV TELE -COMMUNICATIONS INC TEMPO ENTERPRISES INC TIME INC TIMES MIRROR COMPANY TRI -STAR PICTURES INC TRIBUNE COMPANY TURNER BROADCASTING SYSTEM INC TVX BROADCAST GROUP INC UNITED ARTISTS COMMUNICATIONS INC UNITED CABLE TELEVISION CORPORATION UNITED TELEVISION INC VESTRON INC VIACOM INTERNATIONAL INC WARNER COMMUNICATIONS INC THE fVASHINGTON POST COMPANY WESTERN WORLD TV INC WESTINGHOUSE ELECTRIC CORPORATION WESTWOOD ONE INC

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www.americanradiohistory.com CI-IANNEI.S THE BUSINESS OF COMMUNICATIONS

VOL. 7, NO. 6 JUNE 1987

REPORTS The show goes on in Baltimore despite anchor's serious illness ... Hard times for CBS' four o-and- 8 o's ... NBC's checkerboard gambit ... FCC fed up with false fronts ... New life for Justice Department cable investigation ... Pay TV goes after illegal chips.

MARKETING/PROMOTION THE COPYCAT FACTOR At the judging for the annual BPME gold 17 A. H. BELO medallion marketing awards, imitation was the CORPORATION sincerest form of flattery, but it didn't turn many AARON SPELLING judges heads. PRODUCTIONS INC BY RINKER BUCK ADAMS -RUSSELL CO. INC THE CHANNELS ACHIEVERS 4 EDITOR'S NOTE 25 A year for the entrepreneur. 25 Introduction 25 26 Arrivals, Departures; Glossary 29 Reaching the Top: Risk and Reward 6 BY CECILIA CAPUZZI LETTERS 30 Channels Achievers: The Top 90 Media Companies 13 33 The Best -Performing Stocks WHAT'S ON 36 25 Big Companies: How They Do It A monthly calendar 39 Performance of The Channels Achievers 49 What's Ahead: Industry Forecasts 54 Media's Hot Moneymen 15 AUDIENCE Perfecting the Body IN FOCUS: WHAT'S HOT IN Count MARKETING 57 BY RICH BARBIERI 58 Making Localism Count BY JEAN BERGANTINI 20 GRILLO PUBLIC EYE 60 Selling the Children BY CECILIA CAPUZZI A Quantity of Quality BY PATRICIA E. BAUER 62 What Makes Geraldo Run BY LES BROWN

PRODUCTION 22 THE MAN THEY LOVE TO HATE THE BUSINESS SIDE Hollywood calls it low-grade extortion. Agent 66 New Season Blues? Marty Hurwitz calls it television packaging. BY MERRILL BROWN Whatever it's called, Hollywood wishes it would go away. 75 BY JAMES TRAUB PRIVATE EYE Wimbledon: Hold the MARKET EYE Berries BY WILLIAM A. HENRY III WHEN BOSSY WAS BOSS How milk cows made for crazy TV in 71 Indianapolis. 78 SOUN DB IT ES BY JEAN BERGANTINI GRILLO From an interview with Frank Biondi, MEDIA DEALS chairman of BANDING TOGETHER Coca-Cola Television In the past, small investors had a tough time 73 owning TV or radio stations. A new offering by 80 Malrite and E.F. Hutton may change all that. RUNNING THE NUMBERS Cover illustration: Darryl Zudeck BY ELLEN BERLAND GIBBS

2 CHANNELS / JUNE 1987

www.americanradiohistory.com All Hours are not the same. In today's marketplace, the differences are real and measurable -and can be counted in dollars and cents. That's what makes T.J. Hooker an undeniable value.

TJ. Hooker The Hour COLUMBIA/EMBASSY TELEVISION A und of Ceera á .9wum

www.americanradiohistory.com PLEASE COME AND ENJOY OUR EXQUISITE THAI CUISINE The Nature of Things KHUN AKORN Television's calendar is somewhat out of phase with nature's. Nature is in THAI RESTAURANT full flower in June, its big season only beginning. Just the opposite with TIME OUT: By Lindsey Bareham 'It's the food the makes this new television: Its season has just ended and the planting begun for the next. restaurant an ABSOLUTE MUST to visit. Nature bids us to look forward in June; television has us looking back to what The food is so complex, rich, tasty and delicious that it is quite unlike any other just happened. Thai food I've tried in London. This is Thai So we look back, with this issue of Channels, on the companies that did best food at its most regal.' in the last year from a financial point of view, because these are likely to be the HARPERS & QUEEN: by Lloyd Grossman companies that shape the near future of electronic communications. 'A fine example of upmarket ethnicity. I look forward to a return visit.' Which ones hit the jackpot in 1986? Which ones came out of obscurity to Also recommended By: WHATS ON become formidable players? Which are most attractive to investors, and why? 3 -course set Lunch £9.50 Lunch Menu £5.80 We call these The Channels Achievers. This special section is topped with OPEN 7 DAYS A WEEK FOR LUNCH AND DINNER profiles of four chief financial officers, the men behind the scenes who 136 Brompton Road implement their CEOs' ambitious plans. Knightsbridge Top 90 -related companies, as measured by London SW3 1HY The tabulations on the television Tel: 01-225 2688 revenue growth, are a Channels exclusive, initiated last year. Compiled under the guidance of our executive editor, Merrill Brown, the listing of Achievers is a regular June feature in this magazine-making it the only place where companies in the field can see how well they're doing and where they rank in relation to others in the industry. With the phenomenal Home Shopping Network in the lead, based on its 1986 performance, this year's Top 10 of growth achievers includes four independent production companies, a network corporation, one media group owner, a radio syndicator and two of the front -running TV syndication firms. The listings and 3 breakouts are highly revealing of where the money and power in television lie today. Also notable in this issue are two new departments: Jean Bergantini Grillo's erred &a4óetie Market Eye, a close-up study of the competition in significant television markets, and Ellen Berland Gibbs' Media Deals, in which the veteran Wall TANDOORI RESTAURANT Street observer analyzes the significant business transactions of the moment. FULLY LICENCED Our In Focus section is keyed this month to the Broadcast Promotion & Marketing Executives' conference in Atlanta, highlighting some of the most 1 BRECKNOCK ROAD effective promotional campaigns of the past season. LONDON N7 And as for looking forward from June, since that is when the real work for Tel: 01.267.7550 the new television season gets underway, we offer what we believe to be the Opening Hours: most penetrating article ever written on the role of the talent agent in network

12 noon - 2.30 p.m. programming. It's by James Traub, one of the most stylish writers among our

6 p.m. - 12 midnight contributing editors, who focuses his entertaining story on Marty Hurwitz, a hot young packaging agent at ICM. As you will see, Channels is in full flower in June. In that respect, we're in perfect sync with nature.

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18 YORK WAY LONDON W1 Tel: 01.837.8042

4 CHANNELS / JUNE 1987

www.americanradiohistory.com CHANNELS A investment Editor in Chief smart media LES BROWN Publisher GEORGE M. DILLEHAY takes more than Executive Editor MERRILL BROWN Managing Editor a broker or a banker. PETER AINSLIE Art Director It takes both. in producing efficient, analytical TRACI CHURCHILL solutions Senior Editors A media broker who knows to complex problems. Our knowledge of STEVE BEHRENS, RINKER BUCK, JERI BAKER broadcasting, from mergers, acquisitions current market values and trends and our Associate Editors and divestitures to station operations. comprehensive approach to marketing JOSEPH VITALE, CECILIA CAPUZZI An investment banker who (including preparation of a detailed Mem- West Coast Editor knows finance, from capital markets to law orandum of Information) assure success. PATRICIA E. BAUER Assistant West Coast Editor and taxation. Why choose between a broker or JOAN VON HERRMANN The smartest media investment a banker when you can put the best of Washington Editor takes the expertise, professionalism and both to work on your next transaction? PATRICIA HERSCH integrity of Gammon & Ninowski and our For a confidential discussion, call Assistant Art Director associates. our Washington office or one of grow- CAROLYN ZJAWIN our Editorial Assistant You'll profit from our experience ing number of regional offices. CHERYL GERBER Contributing Editors JOHN F. BERRY, DAVID BOLLIER, L.J. DAVIS MARK FRANKEL, MERYL GORDON WILLIAM A. HENRY III DAVID LACHENBRUCH, MICHAEL POLLAN JAY ROSEN, JOEL SWERDLOW, JAMES TRAUB GAMMON Interns NINOWcSId MICHAEL BURGI, FRANCINE COHEN MEDIA INVEA1MENTS, INC. MATI LASZLO, FRANCESCA LAPRELLE MATTHEW MURABITO, PAUL NOGLOWS 1925 K Street, NW Washington, DC 20Ó06 Member: National Association o1 Media Brokers (NAMB), NAB, INTV Associate Publisher BRONNA A. BUTLER Washington: Ronald J. Ninowski, James A. Gammon, Donald R. Russell (202) 862-2020. Production Manager Kansas City: Richard T. Wane11(913) 681-2901. Denver: Marc O. Hand (303) 733-5637; Al Perry (303) 239-6670. SUSAN C. TURK Philadelphia: Jack F. Satterfield (215) 525-8767. Los Angeles: Carl J. Fielstra (714) 583-0366. Circulation Manager LAWRENCE M. MCKENNA Controller CATHERINE PAONE Office Manager CARLTON HILL Administrative Assistant DEBORAH GERMAN Associate Publisher-Advertising Sales JOEL A. BERGER Eastern Advertising Manager JONATHAN BLINKEN Western Advertising Manager NELDA H. CHAMBERS Advertising Sales Coordinator BRIAN FUORRY Advertising Sales Offices New York: 19 West 44th St., New York, NY 10036, 212-302-2680 West Coast: 1800 Century Park East. Suite 200 Los Angeles, CA 90067 213-556-8220 England: Jack Durkin & Co. 55 Hatton Garden, London EC1N 8HP England Tel: 011-441-831-1131 John McLaughlin fuels the f re while respected journalists Jack Germond, Morton Kondracke, and Robert C.C. Publishing Inc. President Novak provide informative and often explosive opinions. PAUL DAVID SCHAEFFER Join them all on the McLaughlin Group. It just might be the CHANNELS The Business of Communications (ISSN freshest, boldest, most incisive political show on the air. 0276-1572) is published eleven times a year by C.C. Publishing Inc., 19 West 44th Street, New York, NY 10036. Application Don't miss it. The people who run this country never do. to mail at second class postage rates is pending at New York, NY and additional mailing offices. Volume 7, Number 6, June 1987. Copyright ° 1987 by C.C. Publishing Inc. All rights The McLaughlin Group reserved. Subscriptions: $65 per year; all foreign countries add $8. Please address all subscription mail to CHANNELS The Business of Communications, Subscription Ser- Made possible by a grant from GE. vice Dept., Box 2001, Mahopac, NY 10541, or call 914-628- 1154. Postmaster: Send address changes to CHANNELS The Business of Communications, Subscription Service Dept., Box 2001, Mahopac, NY 10541. Editorial and business offices: 19 West 44th Street, New York, NY 10036; 212-302- 2680. Unsolicited manuscripts cannot be considered or Check local listings for station and time. REGISTERED TRADEMARK OF GENERAL ELECTRIC COMPANY returned unless accompanied by a stamped, self-addressed envelope. No part of this magazine may be reproduced in any form without written consent. ABC membership applied for.

CHANNELS / JUNE 1987 5

www.americanradiohistory.com Unencountered Reginette Enemies Restaurant It would appear that producer Gary 16 GARWAY ROAD, David Goldberg, as quoted by LONDON W2 Patricia E. Bauer in "How to Win Friends and Influence TV" 01-229 0457 [January], is anxious to be admired by all sides. French and Yugoslavian cuisine Responding to the assertion that right- wing groups are irked at liberal access to recommended by City Limits network decision -makers and that right- (Lyn Gardner) wingers may be putting greater pressure on the creative community, Starters all at £1.35 Goldberg voices his anger and states that he "has a right to put his ideas into Main Dishes all at £3.75 the marketplace." Indeed he does. But it would appear Desserts all at £1.25 that as the producer of the only prime Rethinking time entertainment show (Family Ties) Large selection of that continually espouses conservative an Investment political and economic theories (let's French and Yugoslavian wines Iread your December Field Guide hear it for Reagan, Nixon and Milton article on Elton Rule and Martin Friedman), he has very little to fear from Fresh Fish a speciality daily Pompadur ["Ten to Watch in '87"] such groups. But I can sympathize with with great excitement. Suddenly Goldberg's position. I know the here was an opportunity for a person of paranoids are after me too. OPENING HOURS: moderate means to own an interest in Clayton Baxter television stations and cable systems, to Malibu, Calif 12 noon -3 p.m. participate in the fabulous wealth 6.30 p.m. -Midnight of our industry. But after reading the prospectus of Peerless Bayles Parties Welcome Merrill Lynch Media Partners and In the sidebar to the article on Tom talking with one of the people from Shales ["Whose Afraid of Tom whom they purchased one of their Shales?" February], which dealt properties, the glamour of this venture with the other TV critics of note, I quickly faded. As part of their plan to was startled at the omission of Martha Channels run spartan operations, I was told that Bayles of The Wall Street Journal. ML Media Partners had terminated the Your writer said that her colleague, Subscribers: retirement program at one of their new George Higgins, was witty and urbane. I Should you properties, KATC-TV in Lafayette, La. agree. But if you want real wit and real at any Their interest (they will sell their urbanity, you should read Bayles. I can't properties in five to eight years) help but think your writer or editors time have apparently does not include supporting may have made an honest mistake a question employee pension plans. Some of the catching only Higgins' byline and profits their investors will realize will overlooking Bayles'. about your apparently come at the direct expense of R.S. Marandino subscription, their employees. New York, N.Y. you can call I have seen great extravagance in television, and it is something that can our customer certainly be trimmed. I know that many Chastening Words service de- people are highly paid, and there is room Mark Frankel's convoluted for cutting there as well. A retirement and illogical reasoning on the partment plan, however, is something that has subject of comparative directly for always struck me as a basic obligation of renewal in the April Reports a quick an employer. section does a disservice to all over -the- David Shapiro air broadcasters. To say that the reason answer. The WWL for our interest in a public -interest number to New Orleans, La. standard is to discourage new investment in over -the -air broadcasting call is (914) The retirement plan at KATC was and somehow to hurt "new independents 628-1154. canceled by the station's previous owner, and weaker affiliates" is ridiculous. Loyola University, as a precondition of It not only ignores the clear and If you would like to notify us of a change of address, sale to another buyer. When that deal overriding argument that local please write to us at PO fell through, ML Media Partners bought broadcasters uniquely earn their Box 2001, Mahopac, New the station. ML's Martin Pompadur licenses by meeting the "public -interest, York, 10541, enclosing the address label from your says his group will meet with employees convenience and necessity," but it most recent issue of next month to talk about a retirement gratuitously omits the history of Channels. program, pension plan and "other comparative renewal's crippling of some matters." -Ed. of the best broadcasters by those

6 CHANNELS / JUNE 1987

www.americanradiohistory.com politically motivated segments of the to achieve office is certainly not new. community most damaged when Eddie Fritts merely joins our last two Announcing courageous broadcasters devote presidents and countless other who have themselves to crusading news and public employed the technique. BPME/BDA '87 affairs. Or, as in the case of Post - Shaun M. Sheehan Newsweek, when their parent Vice President companies incur the wrath of an Tribune Broadcasting Co. administration determined to cripple a Washington, D.C. news company that happens to operate broadcast stations and thus is vulnerable to the kind of unprincipled attack Television and Gays uniquely afforded by the comparative- Thank you very much for William renewal statute. A. Henry III's excellent article, For Channels, of all publications, to "That Certain Subject" [April]. ATLANTA miss the point and to distort the effort is As a gay man I have long been SEMINAR truly unfortunate. frustrated by the unfairness of the JUNE 10-14 Joel Chaseman broadcasting media. 33rd annual SEMINAR/EXPOSITION... President Stations all over the country allow A JDint production of Broadcast Post -Newsweek Stations fundamentalist TV preachers like Jimmy Promotion & Marketing Executives and Washington, D.C. Swaggart and Jerry Falwell to gay -bash the Broadcast Designers' Association in the name of religion, allowing them to air tired stereotypes (gays as child - FEATURING Coming to molesters) as scare tactics to raise NAB's Defense money. - More than 80 exhibitors & Furthermore, on TV any discussion of hospitality suites. Mark Frankel's highly critical gay issues always has to be "balanced" - More than 70 workshops and assessment of NAB's by an antigay bigot, therefore insuring general sessions. Washington effectiveness that all such shows never get beyond the - More than 160 expert industry ["The NAB's Low-Power "mopping up" stage, with gays spending leaders and speakers. March] Signal," contains two quotes the whole show correcting the usual - Complete agendas for radio from me that deserve amplification. As misinformation. It's like insisting that :tations & cable systems. printed, their context is misleading shows about the black community - Complete agenda for The analogy I gave characterizing the always include a KKK member for Independent TV. NAB as a "Chevy" as opposed to a balance. Complete agenda for broadcast "Cadillac" referred to NAB's breadth of News reports frequently use the terms membership-from small -market radio "gay murder," "homosexual rape," etc., designers. to network television. It had nothing to but never "straight murder" or - 15 station Idea -sharing do with performance and was in direct "heterosexual rape." And you never see workshops. response to a question on why NAB a positive profile of a gay person to offset - Five -hour advanced course In doesn't exhibit the glitter of the motion this. Indeed, when the local leadership. picture lobby. NAB does appropriately philanthropist or volunteer who happens - Five -hour advanced course In reflect its constituency. Its rank and file to be gay is profiled, he's called a post production. is middle America. "bachelor" (if anything). Maybe it's not - Galleries of BPME & BDA award The second quote is similarly off the the media's fault (such people are usually finalist video and print. mark. I was asked if withdrawal from closeted by their own choice), but - Gala BPME and BDA awards membership by a major company was nevertheless the effect on the public is to ceremonies. NAB's greatest institutional fear. My always hear about gays in a negative - 'Siskel & Ebert & The Promos' answer, based on experience, was given context. - 'TV Advertising: State of the Art' as a constant potential problem and not Even though, as your article stated, - 'History of European Design' as a fait accompli. The hypothetical gays are a far bigger minority than - Attended by more than 2,000 challenge, as I posed it, is: Will blacks, we are expected to be grateful promoters and designers. broadcasters belong to NAB for the for the few crumbs thrown our way, like - Thousands of promotion/design "good of the order," similar to a Dynasty's gay -today, straight -tomorrow ideas & resources) chamber of commerce, or as their first Steven Carrington. And in most other and most effective line of defense? It cases the networks and local stations seems to me that the record speaks for allow the community's vocal bigots to Don't miss this one. itself. control what the public sees, or more One good idea could be In the decade that I have proudly been appropriately doesn't see, about gay worth a fortune! associated with NAB, massive people. deregulation and license -extension William Stosine WESTIN PEACHTREE PLAZA & legislation occurred, while no serious Moline, Ill. HYATT REGENCY HOTELS outside threats, from mandated ATLANTA MERCHANDISE MART & programming quotas to beer and wine ad MARKET CENTER bans, were successful. These achievements are dismissed in your report as For registration Information and inconsequential. I disagree. forms, call BPME at (717) 397-5727 Several unattributed negative CORRECTION CALL TODAY. assessments are liberally quoted. As one The Ford Foundation's Ted Anderson Designers call BDA at of the few "on the record," I hope this was inadvertantly omitted from Febru- (415) 788-2324. sets my comments straight. ary's media analysts chart. Channels Finally, running against Washington regrets the error.

CHANNELS / JUNE 1987 7

www.americanradiohistory.com REPORTS

WJZ's evening newscasts with Turner have dominated the market for a decade and still draw as many viewers as the two competing programs combined.

for WMAR. And those larger audiences translate to ad rates 80 percent higher Baltimore's Favorite Anchorman than those charged by the closest com- petitor at 11 P.M. Despite Serious Malady Turner, Sanders and weatherman Returns Bob Turk have been bringing Baltimor- eans the news for years, and familiarity Jerry Turner goes on the air when his health permits. has bred a comfort level that is immediately apparent to viewers. Turner says he dislikes "happy talk," but admits erry Turner has been the main news In the meantime, WJZ, an ABC affili- that he and his team do their share of anchor at WJZ-TV in Baltimore ate owned by Group W, has put in ad-libbing-and asserts that, unlike the since 1968 and one of the nation's Denise Koch to coanchor with Sanders conversation heard on some other sta- top -rated local newscasters for the past at 6 P.M. or with Sanders or Turner at tions, theirs is believable. "You can't decade. But last November it was his 11. (Turner previously anchored the 11 force it," he says. "It's real or it's not longtime coanchor, Al Sanders, who P.M. show alone.) "Jerry's situation is real." reported one of the city's biggest media difficult to handle," says general man- The patter may be easy but it's not stories of the year: Jerry Turner, 57, ager Jonathan Klein. "Our concern is slick. Ron Shapiro, a lawyer who repre- has cancer of the esophagus, a disease that he gets the proper time off for sents a number of media figures includ- that is usually fatal. treatment. We're doing it day by day." ing Turner, says local viewers go for the Turner was in the hospital that day Turner and the station's news team tall, slim anchorman because he has "a and didn't watch the newscast, but he are a major reason for WJZ's domi- very down-to-earth style that appeals to has missed only a few broadcasts since nance in Baltimore's local TV news. a town like Baltimore." As Turner him- his illness was diagnosed. His silver hair Though WJZ's ratings have slipped self says, "No one here tries to look like thinned by chemotherapy, Turner slightly since Turner's illness was a TV clone anchorman." returned as soon as possible to his usual announced-perhaps due in part to Once a trumpeter in Woody Herman's post for the 6 and 11 P.M. newscasts. ABC's generally poor showing-the sta- band and later a newspaperman, Since November the side effects of this tion's evening newscasts still far outdis- Turner has covered his share of national treatment have forced him off the air for tance their rivals. The 6 P.M. program party conventions and space shots. a total of nine weeks; radiation some- draws as many viewers as the two com- Now, he notes ruefully, he's staying times left him slightly raspy or even peting newscasts combined: WJZ aver- closer to home-he had to abandon plans speechless for several days. "I don't aged a 21 rating and 36 share in Febru- to go to Russia with the Baltimore Sym- like to go on hoarse, because it makes ary, compared to a 12/20 for WBAL, the phony Orchestra. And other reporters the audience uncomfortable," Turner CBS affiliate, and a 9/15 for WMAR, the are coming to him with questions about says. On those days, Turner comes into NBC outlet. WJZ's lead among the late his health. "It's not very enjoyable. But the office to help write the scripts for newscasts was almost as great: 17/40, I understand. I'd do the same thing both broadcasts. compared to 10/23 for WBAL and 8/19 myself." SANDRA SALMANS

8 CHANNELS / JUNE 1987

www.americanradiohistory.com REPORTS

most apparent at KCBS. In the last ten The Trouble With CBS' Stations years, it has had ten general managers and ten news directors. It also had its own home-grown programming disas- Corporate chaos has thrown the once elite onto hard times. ter: the attempt to recapture the local news lead with its "news wheel" format last fall. The show was canceled after Mention the A.C. Nielsen Co. to daytime lineup and a floundering late - five weeks and executives associated CBS station group president night schedule, the stations-in the with it fired. Eric Ober and prepare for an ear- country's top metro markets where the Turnover at the station has been so ful. With all four CBS owned -and -oper- rural -skewing CBS has problems to high observers call it "general man- ated TV stations in third place accord- begin with-had scant support from the agers' wheel." ing to Nielsen, Ober rages about the network, while the network was crying CBS management's tendency to clean ratings service, claiming Arbitron Rat- for high returns from the stations' early house at signs of ratings weakness is not ings' numbers are a truer reflection of fringe and local news hours to bolster unique to KCBS. WBBM and WCAU the group's performance. prime time lead-ins. have had frequent upper -level staff The fact is, though, that Arbitron To help drive viewing during those changes as well. Critics charge that does little more for the beleaguered sta- hours, CBS acquired America, a vari - CBS GMs and news directors are tion group. It ranks KCBS Los Angeles, WBBM Chicago and WCAU Philadel- phia third overall in their markets, and CBS' Stagnant Stations has WCBS New York tied for second. Once the elite of the field, CBS' owned MARKETS* ARBITRON NIELSEN qqQQ $gIG-QFF 43 stations have fallen on hard times, their PM. PM M3t M drop in popularity paralleling the New York advent of the network's own troubles. WCBS 8/17** 6/18 7/14 7/17 WABC 9/19 7/20 11/21 8/21 KCBS has been for 12 years trying to WNBC 6/13 6/18 8/16 8/19 regain top billing in Los Angeles. But Los Angeles for the other CBS stations, battling for KCBS 4/8 5/14 5/9 6/15 second place in highly charged markets KABC 8/17 7/19 9/17 8/19 is a relatively recent phenomenon. KNBC 6/12 6/17 8/15 8/19 Wall Street is also showing wariness. Chicago (one hour earlier) WBBM (CBS) 5/11 5/14 6/14 6/15 Although CBS station revenue W LS (ABC) 11/26 10/26 12/26 11/27 increased 5 percent during the first WMAQ (NBC) 8/18 7/18 8/17 7/18 quarter of 1987, according to a First Philadelphia Boston report, all but WCBS gave up WCAU (CBS) 7/13 7/17 6/12 7/17 revenue and ratings share to competi- WPVI (ABC) 18/34 10/27 17/33 11/26 Boston KYW 8/16 7/19 9/17 8/20 tors-a trend First expects to (Group W, NBC affiliate) continue. And as Butcher & ana- Singer ' February 1987 sweeps "rating/share lyst Ken Berents points out, Capital Cities' purchase of ABC has pitted both NBC and CBS against a formidable foe ety program it encouraged stations to given little time to turn ratings around whose new management made its repu- carry. The show landed with a thud in and that new programs have no chance tation running stations. September '85 and was canceled by Jan- to develop. Critics also say that CBS CBS corporate troubles started three uary '86. Of the owned stations, only stations, except for Phiadelphia, years ago with Ted Turner's takeover WCAU didn't carry it. "America was are not involved in their communities bid and set the tone for the stations. To the key disaster that set up the prob- (last year Chicago blacks boycotted help it out of financial straits brought on lems with the station group," says a WBBM, and KCBS is having problems by Turner, CBS was forced to sell its St. CBS insider who estimates the financial with L.A.'s Hispanics), and staffers Louis station. The move contributed to loss at $25 million. "The worse loss is resent CBS dispatching New York a deflating company morale, put CBS at that it murdered stations' news opera- executives with "New York attitudes a competitive disadvantage with its o - tions: News lead-in numbers dropped and answers" to fix what they see as and -o national coverage reduced to 19 by as much as 50 percent." The lapse local problems. percent and, with owned stations the also set stations back in acquiring high- What will it take to turn the group heart of the broadcast group (expected rated syndicated shows such as Wheel around? For the CBS stations, it may to contribute a reported $380 million in of Fortune (only WCBS has Wheel). take stronger programming and leader- revenues this year), put pressure on the During this time, the CBS Evening ship. Says an insider: "The need for net- remaining stations to perform. News started its ratings descent, and work profitability is great now, and the In the meantime, CBS' leading prime Oprah Winfrey was helping to secure station group is the lynchpin. It's dicey time schedule headed south as NBC first place for ABC early fringe, espe- and as far as I can see, there's not a sin- came on strong. With a problem -ridden cially in Chicago and New York. gle statesman in the crowd." morning program, an underperforming CBS' o -and -o problems have been CECILIA CAPUZZI

CHANNELS / JUNE 1987 9

www.americanradiohistory.com REPORTS

"We'll deal with laughter-every night will be laughter," says Manze. Will Checkerboarding Survive? "We're packaging the time period as something completely different." The heat is on for KNBC-TV promotion chief Vince Manze. The third phase, produced in coordi- nation with the five syndicators, will feature original teaser spots using the Sometime next month, NBC's five mar-Telepictures' Suddenly Sheriff, sitcoms' stars. Rather than air clips owned -and -operated stations will Fred Silverman's We've Got It Made from the shows themselves-which launch an expensive and risky cam- and LBS's You Can't Take it With Manze considers too ho-hum-the spots paign to promote their fall lineup of You-were selected from an offering of will pull an interesting theme from each checkerboard sitcoms, hoping to scotch 74 sitcoms. This allowed the stations to show and emphasize its importance for critics' predictions that checkerboard- choose shows that have strong appeal in the program's entire image. A spot for ing is a doomed format for prime time all five markets and to steer the demo- Out of This World, for instance, might access. While the results of the cam- graphics toward the desirable 18 -to -34 talk about why the star has supernatu- paign will not be known until the fall, age group. ral powers. they could make or break the career of Manze thrives on wacky antics and It may take more than supernatural the man NBC chose to create the check- MTV-like graphics, and he promises a powers, however, for the NBC o and o's erboard promos for all five stations. humorous, "breakthrough" campaign to succeed. Unlike the networks, which He is Vince Manze, director of broad- that will make viewers sit up and take essentially checkerboard sitcoms casting and promotion at KNBC-TV in notice. The campaign's initial phase will against other sitcoms, the NBC stations Los Angeles, whose off-beat, often con- be "generic," says Wes Harris, vice will be competing against strips. That troversial promos have helped KNBC president of programs for the NBC sta- makes the strategy especially difficult, climb out of third place and challenge tions. "We'll make the point that prime and skeptics abound from many quar- market leader KABC over the past sev- time will begin on the NBC stations at ters. "It's not impossible to succeed," eral years. Manze, 39, a Philadelphia 7:30 P.M." The second phase will pro- says Robert Jacquemin, senior vice native and former stand-up comic, is mote the five shows as a horizontal strip president of Disney's Buena Vista Tele- intensely aware that a skeptical indus- that builds excitement as the schedule vision. "It's just not likely." try is watching his every move. "Noth- progresses through the week. PAMELA ELLIS-SIMONS ing is more important to me than this campaign," he says. "It's not the shows but the promos that will determine the success of the experiment." About ten stations across the country Who Are These Guys, Anyway? have introduced checkerboard schedules during the past two seasons, generally to mixed results. Perhaps the most The FCC cracks down on false -front license applicants. successful was Los Angeles independent KTLA, which climbed from sixth At least a few key officials at the Evergreen, Colo., and Garden City, to third place during the 7:30 time slot Federal Communications Commis- N.Y., finding patterns indicating the after it introduced checkerboarding. sion are fed up with "false fronts" applicants were actually controlled by For affiliates, the development sym- applying for broadcast licenses and supposed silent partners. bolizes an important trend in program- aren't going to take them anymore. The Controversies now in the FCC pipe- ming that stations in other markets will crackdown has been noticed over sev- line may also force the commission to be following closely. The phenomenal eral months in various FCC decisions. tackle an issue it has avoided for more success of Wheel of Fortune has forced In a typical false -front situation, the than a decade: the incursion of profit- rival affiliates to come up with alterna- prime mover behind a license applica- able religious broadcasters, using non- tive program strategies in early -eve- tion hides behind a partner or another profit false fronts, into channels set ning access. Because the Federal Com- company that, because of FCC rules, aside for public TV and radio. Family munications Commission's Prime Time has a better shot at getting the license. Stations, for instance, is said to be the Access Rule prohibits affiliates in the Communications attorney Peter Tan- center of a religious consortium with 17 top 50 markets from running off-net- nenwald estimates that at least half the radio licenses, 21 construction permits work shows, many have been forced applicants in competitive hearings are for radio and one for TV, and 43 pending into the first-run syndication market. false fronts. applications. The NBC stations' plans for this fall The commission crackdown has been The commission is also taking greater are by far the most ambitious attempt detected most often in rulings from the interest in the money behind applicants. to apply the concept in major markets, influential three judge review board It announced in March that it would and they will embark on checkerboard- that handles appeals of decisions by the start spot-checking applicants' financial ing with several advantages that other FCC's frontline administrative law ability to put a station on the air-six stations do not have. The programs in judges. Condemning "corporate leger- years after putting applicants on an their lineup-Paramount's Marblehead demain," the board knocked out appli- honor system. Manor, MCA's Out of This World, Lori- cants for FM licenses in Newark, N.J., MICHAEL COUZENS

10 CHANNELS / JUNE 1987

www.americanradiohistory.com REPORTS

"We have no reason to believe the Feds Pursue Cable Probe Justice Department's heart is in it," Antitrust says Roy Neel, legislative director for Sen. Albert Gore Jr. (D -Tenn.). Yet, he Do cable operators have a lock on program services? says, the existence of the probe delayed attempts at legislation last year. "When The Justice Department's two -year - by MSOs-including HBO and Show - we had an amendment up for vote last old investigation of the cable TV time. New York Law School professor September, Republican senators industry is moving into new terri- Robert Perry sees a vertical -integra- repeatedly referred to the investigation tory this spring, months after many had tion case similar to Hollywood's owner- as an excuse not to act legislatively." assumed it was kaput. Antitrust staff- ship of theater chains before govern- Again this year Gore is cosponsoring a ers are trying to determine whether ment -required divestiture in 1948. bill to ensure backyard dish owners' cable operators' investments in national "Forty years later," Perry says, "the equitable access to programming. program services have squelched com- same thing is happening again." That was the focus of the antitrust petition and inflated consumer prices in This time, however, many observers probe when it began in 1985, but investi- TV distribution, according to execu- expect the investigation to come to gators are now looking into complaints tives who have been interviewed. nothing. Cable industry spokesmen say from SMATV and MMDS operators. Justice staffers are asking in particu- there's no antitrust violation to investi- The conflicts that arise when MSOs affil- lar whether the recent purchase of a 35 gate. And critics of the cable industry iate with program services have been percent interest in Turner Broadcast- say Reagan appointees are lax in anti- highlighted already in several private ing by 17 or more major MSOs will give trust enforcement. "My judgment is antitrust suits. In one, a small SMATV cable an unfair advantage over satellite that they're going to do nothing," says operator in Rochester, N.Y., Monroe master antenna (SMATV) and MMDS Jack Valenti, president of the Motion Satellite TV Corp., is suing Time Inc. to microwave TV operators. Under TBS's Picture Association of America. Indeed, get access to HBO. When Monroe asked present policies, they can buy its net- antitrust challenges to mergers in all to carry the movie service, HBO works, but usually at higher rates than industries has fallen by three quarters, referred it to the local cable company paid by cable operators of similar size. even though mergers have quadrupled, against which it competes-and which Turner's three program services are according to New York state attorney is, like HBO, a corporate child of Time but the latest of 27 part or wholly owned general Robert Abrams. Inc. STEVE BEHRENS

sight News, a weekly newscast for dish owners produced by Network Produc- Pay N's Descrambling Wars tions, promoted the summit and encouraged viewers to alter the Video -Cipher Four cable giants take home dish advocates to court. II. Shaun Kenny, the president of Net- work Productions, and journalist Karen While the advent of cable scram- users. They charge Network Produc- J.P. Howes are the coanchors of Bore - bling stalled home satellite -dish tions with violating the Communica- sight News and both have been named sales, it only provoked efforts by tions Act and infringing on the copy- as defendants in the case. During one several groups to thwart the highly right of the Video -Cipher II. They are segment last December, Kenny demon- sophisticated scrambling technology seeking $5 million in punitive damages. strated how to install a socket that introduced last year by the cable pro- General Instruments claims that Net- houses a pirate chip, even offering to do grammers. Now one of the most visible work Productions illegally promoted it himself for $39. of these groups, a small New Jersey sat- "pirate" chips which, when installed in "That's a violation of the Communica- ellite programming service called Net- the Video -Cipher II, permit dish own- tions Act," says Alan Blankenheimer of work Productions Inc., has been taken ers to receive cable programming with- Phoenix, one of the attorneys for the to court for encouraging dish owners to out paying. The manufacturer also cable plaintiffs. "You can't induce any- alter their equipment in order to receive charges that Network Productions par- one to infringe upon a copyright." cable programming free of charge. ticipated in a "descrambling summit" in Kenny denies that he was involved in The list of plaintiffs in the civil suit the British West Indies in January, importing the chips and will base his filed before a U.S. District Court in where more than 300 of the chips were defense on his First Amendment rights. Florida this spring reads like a Who's distributed to participants. "My clients have a right to disseminate Who of the pay -TV industry. The com- It is illegal to import such chips into information on the industry they plaint was filed by General Instru- the U.S., and the Customs Service was cover," says Washington attorney Joel ments, which manufactures the Video - alerted by a General Instruments Wolfson, who is defending Network Cipher II box that descrambles the employee who attended the conference. Productions. "The jury will have to signals of the cable programmers; MIA - Returning to Florida, participants' decide whether they acted as journal- Corn, which invented the device; and chips were seized by customs agents. ists or white-collar criminals." HBO and Showtime, two of its major The plaintiffs also charge that Bore - CHERYL GERBER

CHANNELS / JUNE 1987 11

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www.americanradiohistory.com N E

Shop Till You 1)rop by Cecilia Capuzzi

JUNE 15: MCA Television Enter- nicians-as it is with others in almost clearing 70 percent of the country. With prises and Home Shopping Network's every sector of television. "They want to some four million Americans infected by Home Shopping Game show debuts. know how not to spend a lot of money and AIDS, Conus' Charles Dutcher says the Cohosted by former Let's Make a Deal still get a great job done," says NATPE's company, with its capabilities, felt an obli- announcer Dean Goss and HSN host Bob Andy Duca. Sessions focus on low -budget gation to act as a "clearinghouse" for Circosta, the half-hour show is carried remotes and cost efficiencies associated information on the disease. The program on all four CBS owned -and -operated sta- with animation, labor, set design and com- is targeted to 16 -to -34 year olds and is tions and reaches 70 percent of the coun- puter editing. Brower Assocs.' Bill Bro- being sold by Syndicast, which is looking try. Ken Kragen Productions produces wer gives a special seminar on manage- for four corporate sponsors to purchase the program's five -day -a -week, 52 -week ment techniques. The three -year -old the show's 40 minutes of ad time for a total run. Like HSN, the game show splits conference differs from NATPE's spring $480,000. The $200,000 venture ties proceeds with the station, turning over programming show because it showcases together taped inserts from participating 3 percent of revenues from all merchan- production equipment. stations with live broadcasts from safe sex dise sold in the station's market, says clubs, prisons, brothels and AIDS hos- MCA TV Enterprises president Shelly pices along with celebrity eulogies. Liz Schwab. The show is barter syndicated: JULY 24: Conus Communications' live, Taylor, for example, could talk about three minutes for national sponsors and five -hour special on AIDS, The AIDS Rock Hudson. "It's a touchy-feely kind of four for local. Connection: An All -Night Dialogue, is show," explains executive producer. aired 11:30 P.M. to 4:30 A.M. on 80 stations Anita Kleever.

JUNE 15: Cable networks CBN. Life- time, MTV, Nickelodeon and USA dis- tribute fully scrambled signals and charge CALENDAR backyard dish owners for their services. Now 27 services scramble their signals June 14-17: Southern Educational Com- Media Studies. Gannett Center, and charge for it, some available individu- munications Assn. conference and Columbia Univ. New York. Contact: ally and others available only in packages. board meeting. Marriott's Harbor Jane Coleman, (212) 280-8392. USA Network and Viacom Interna- Beach Resort. Fort Lauderdale. Con- June 22-25: Fiber optics and satellite tional services Lifetime, MTV and Nick- tact: Linda Cothran, (803) 799-5517. technology seminars sponsored by elodeon can be received by dish owners in June 16-20: Beijing '87 International Phillips Publishing. Back Bay Hilton. Advertising and Marketing Con- Boston. Contact: Brian Bigalke, (301) a package of 12 basic services plus Show - gress. Seminar titled "The Media and 340-2100. time for $11 a month. CBN alone costs $15 the Message: The Latest Develop- June 24-26: American Assn. of Advertis- a year. Today there are more than two mil- ments in World Communications" ing Agencies media seminar. lion dish owners in the country. When features Turner Broadcasting's Ted Helmsley Hotel. New York. Contact: HBO scrambled its signal last year, the Turner, Michael Jay Solomon of Lori- Beverley Plyer, (212) 682-2500. dish industry, which looked like a boom mar-Telepictures and Roger Enrico of June 25: "Employment: How Bleak is the business (90,000 units a month sold), came PepsiCo. Great Hall of the People. Picture?" part three of the New York to a virtual halt, sales plummeting to Beijing, China. Contact: Jack Television Academy's Television in 10,000 a month. Now they've rebounded to Fogarty, (212) 682-8714. Crisis? series. Mark Goodson The- 25,000, and dish owners have buckled June 17: IRTS meeting and presentation atre. New York. Contact: Debbie of Broadcaster of the Year award to Feldstein, (212) under cable's pressure and the govern- 765-2450. the late William B. Williams. Waldorf- June 26: Radio -Television News Direc- ment's assurance that picking program- Astoria. New York. Contact: Marilyn tors Assn. regional conference coming off satellites without paying is theft: Ellis, (212) 867-6650. sponsored with Society of Profes- "You'll always get a small segment who June 18-20: Univ. of Texas and Howard sional Journalists. Hyatt Regency plead 'free my airwaves,' " says Satellite Univ. conference on minorities and Capitol Hill. Washington, D.C. Con- Broadcasting and Communications communications. Howard Univ. cam- tact: Jane Rulon, (202) 659-6510. Association's Christine Gliozzo. "But pus. Washington, D.C. Contact: Mary July 12-17: National Assn. of Broadcast- the majority now say 'Give me a fair Carter Williams, (202) 636-7491. ers management development semi- price.' " June 18-23: American Film & Video Fes- nar for radio executives. Univ. of tival sponsored by Educational Film Notre Dame. South Bend, Ind. Con- Library Assn. Vista Int. Hotel. New tact: Ed Huse, (202) 429-5374. York. Contact: Sandy Mandelberger, July 15: Deadline for replies to FCC pro- JUNE 18-21: NATPE's Annual Produc- (212) 227-5599. ceeding proposing relaxation of provi- tion Conference, at the Opryland Hotel June 21-26: Leadership Institute for sions of broadcast multiple ownership in Nashville, focuses on ways to get Journalism Education conference rules. Contact: Andrew Rhodes, (202) around the high cost of TV production, the sponsored by Gannett Center for 632-7792. chief concern of local producers and tech -

CHANNELS / JUNE 1987 13

www.americanradiohistory.com i

Issues of the Information Age: The way beyond Babel.

magine trying to build a railroad system if every locomotive manufacturer used a different track gauge. Every local stretch of railroad had its own code of signals. And in order to ride a train, you needed to know the gauges and the signals and the switching procedures and the route and the conductor's process, and act on informa- information in any form- odd pronunciation of the tion automatically. conversation, data, images, station names. AT&T is working with text-as easily as they make a The business of moving national, international, and phone call today. and managing information is industry-wide organizations The science is here now. in a similar state today. to set up comprehensive, The technology is coming Machines can't always talk to international standards to be along rapidly. But only with each other. Proprietary sys- shared by everyone who uses compatibility will the barriers tems and networks abound, and provides information to Telecommunity recede. with suppliers often jockey- technology. We think it's time Telecommunity is our goal. ing to make theirs the de for everyone in our industry Technology is our means: facto standard. The enormous to commit to developing firm, We're committed to leading potential of the Information far-reaching standards. The the way. Age is being dissipated by goal: to provide our customers incompatibility. with maximum flexibility and The solution, as we see it, is utility. Then, they can decide common standards which how and with whom to work. would allow electronic systems We foresee a time when the in one or many locations to promise of the Information work together. People will be Age will be realized. People informed and in control, will participate in a world- while the systems exchange, wide Telecommunity through a vast, global network of networks, the merging of communications and computers. ©1987 ATItT They'll be able to handle AT&T

www.americanradiohistory.com ALTDIF

Perfecting the Body Count by Rich Barbieri The latest people meters know how many folks are viewing, but can only ask who they are.

No one watches what's happening on television as closely as R.D. Percy and Co.," brags the research firm's motto. And few in the TV ratings industry are being watched ...... sífLr. . as closely as Roger Percy, as he begins offering the first -ever audience estimates for TV commercials this summer. Says Helen Johnston, media analysis director at Grey Advertising: "Every- body is very, very curious." Percy, a high-energy former McCann- Erickson adman who set up a small qualitative ratings service in Seattle 11 years ago, will tell clients how many viewers in the New York market stay in front of their sets for each commercial and how many walk out immediately or half way through. Percy plans to install 1,200 meters in New York area homes and let clients tap into the computer database before the fall. He expects to ber of warm human bodies differs from still requires viewers to push buttons, begin installing meters in Los Angeles the number of buttons pushed, the but it's "a good first step" toward the this fall and in Chicago early next year. meter generates an on -screen question: ultimate passive meter, according to If Percy can actually deliver credible "Who is in the room?" research executives. The ratings indus- ratings for ads as short as 15 seconds, Researchers believe viewers in sam- try's "prize," says AGB's Stephan advertisers will know more precisely ple households need the reminder Buck, will be a fully passive meter that who's watching their ads, and maybe because some, especially teens and chil- will know who's watching, with no ques- even which ads hold their attention, dren, are throwing off ratings by failing tions asked, no buttons pushed. Percy says Robert Warrens, senior vice presi- to punch their personal buttons on Niel- believes that fully passive meters will dent at J. Walter Thompson. It may also sen people meters that lack heat sen- be developed within five years. give broadcasters added incentive to sors. "We know we are not getting but- The problem is finding a way to make place ads where they'll be watched-for ton -pushing by children," says NBC them work. If anyone has a simple and instance, not in the last moments of a vice president George Hooper. "Any; manifestly effective scheme, he's not show, he says. thing that would say to the kids, 'Hey, revealing it. One researcher thinks In the short run, however, the big dis- you forgot to push that button' would viewers could be identified by the distinction of Percy's service is in the com- help." tinctive chemical makeup of their pany's hardware. Other people meters breath. AGB tried putting detectable have two ways of measuring viewing, As NBC, CBS, Fox Broadcast- medallions in viewers' wristwatches, which can be checked against each ing's New York station and a but people often forgot to strap on their other: recording the channel tuned as number of large advertising timepieces before watching TV. well as the personal buttons pushed by agencies signed up for Percy's service, If technology provides a foolproof individuals in the sample household. they sent a signal to Nielsen. The sensor way to identify viewers in sample Percy's Voxbox 1200 meter adds a third is "the one feature that we're trying to households, however, the resulting rat- monitoring device, a heat sensor that promote by supporting the Percy ser- ings ironically may be even less accu- searches the room for 55 seconds after vice," says Warrens at J. Walter rate in representing the total audience. viewers have checked in by pushing Thompson. Now the three firms plan- The all-knowing sensors remind some their buttons on the meter's remote ning nationwide people -meter service- folks of Big Brother. "Some who might keypad. The sensor counts the number Nielsen, AGB and ScanAmerica (a co- accept a button will not accept a totally of vertical masses emitting body heat in venture of Arbitron and Time Inc.) are passive system," says Percy Tannen- front of the TV set. (Most of the bodies developing their own people detectors. baum, director of the University of Cali- belong to people, but analysts will look Nielsen plans field tests soon. fornia's Survey Research Center. "And closely at discrepancies in households Percy's heat -sensing meter isn't a the people you do get may not be repre- where there are large dogs.) If the num- truly "passive" people meter since it sentative of the general population."

CHANNELS / JUNE 1987 15

www.americanradiohistory.com Commitment to Quality Broadcasting Has its Rewards.

Out of 47 1986 Northern California Emmys, KRON-TV won 20. NewsCenter4 alone won 8 out of 12 News Emmys. For us, it all adds up to one thing: Proof that we're meeting our goal of providing quality newscasting and programming for the Bay Area.

KRÖN-TV4 San Francisco - San Jose - Oak/and

www.americanradiohistory.com IRIiETIN OMOTIO

The Copycat Factor by Rinker Buck The BPME judges found that repetition-not originality-is still the norm in promo spots.

mitation may be the sincerest form The first entry in the generic category of flattery, but it's also the most was a tired pastiche of images from relentlessly boring, and nowhere is Leave It To Beaver reruns from a Mid- this more evident today than in the field west station. (Ten seconds into the reel, of television promotion. That conclusion someone yelled "Cut!") An East coast was virtually inescapable during a station offered a football promo showing behind -the -scenes look at the 1987 players racing into the camera ("That's Broadcast Promotion and Marketing just a ripoff of what that Phoenix station Executives (BPME) gold medallion did last year") and a spot from Pennsyl- awards competition in San Diego in vania showed the security guard who April. Three days of sitting behind the raises the American flag in front of the judges as they reviewed 3,000 entries in station every morning. In other catego- the BPME's annual competition offered ries this year, there was a surplus of convincing proof that most local broad- nizers approached the tape decks with spots featuring weathermen who moon- casters-and a surprising number of four cardboard boxes overflowing with light as teachers; the generic category syndicators and cable services as well- video reels for the next category: in- was deluged with canned Christmas are still following the safest route to house generic television announce- spots, replete with plastic pine boughs promotion: piggybacking on someone ments from stations in major markets. and Santa's sleigh skidding to a halt on else's success. The experience also pro- There were 99 submissions in all, and the station roof. ("What happens if vided an opportunity to interview some the judges still had two additional cate- you're Jewish? Cut!") seasoned veterans-the 18 judges- gories to judge before they were done about the state of promotion today. for the day. By the end of the category, each Late in the afternoon on the second As it happened, they were able to race of the judges had set aside only day of the competition, for instance, I through all 99 entries in 80 minutes, and six or seven worthy entries-a joined one three -member panel inside a it was not difficult to see why. The bulk fairly typical win -loss ratio. Whittling darkened control room at San Diego of the spots were weak imitations of down the finalists took the judges only State University for the judging of a award -winning promos from earlier another five minutes. They picked an typical event. Over the past two days, years, and the judges had seen it all image spot from KNBC in Los Angeles they had plowed through more than 400 before. Many of the spots were rejected that made effective use of NBC's promotion campaigns and spots, and by the panel only seconds after they "C'mon Home" theme music; a promo now they groaned as the BPME orga- were cued onto the monitor screens. from WRTV in Indianapolis depicting a couple racing home to their condo to watch Divorce Court; and a spot launching Superior Court's debut on WCBS in New York that cleverly used a court- room artist's sketches. Most of the judges at San Diego agreed that the quality of the best spots have improved markedly in recent years, especially at large affiliates and stations owned by broadcast groups that have made promotion a top priority. Vince Manze, the director of broadcasting and promotion at KNBC who won six BPME gold medallions in 1986, made a hit this year with spots promoting KNBC sportscaster Fred Roggin. The spots showed a boxer being knocked out and a football team missing a goal, underneath the theme lines "If it sweats, Fred'll show it to you" and "If it chokes, Fred'll show it to you." MTV won raves for a spot featuring WCBS's Iry Gikofsky and his "kids": Weathermen moonlighting as teachers are a popular theme. an elderly couple in the year 2036 dis -

CHANNELS / JUNE 1987 17

www.americanradiohistory.com cussing their teenage memories of have been impossible in the early days. and now consults with stations on their music video and how it changed their By 1983 and 1984, the most original overall marketing operations. For lives. ("Madonna was the first president spots created by the new hardware had years he has been considered ahead of who really knew how to use video.") won several BPME and advertising - his time in advocating that stations Overall, however, the judges were industry awards. As the new look was alter their philosophies and give promo- disappointed with the quality of the sub- imitated nationwide, however, its tion a more important role. missions in many categories. The vast appeal began to wear thin, and many "For too many years, broadcasting majority of stations, they say, still lack stations were simply substituting high- was simply a license to steal, and gen- either consistency or sound creative tech razzle-dazzle for content. eral managers fell into the lazy habit of instincts in their approach to promotion "There's no question that the techni- hiring promotion people out of their pro- and-perhaps worse-few of them seem cal abilities of the industry have vastly duction departments," says Sjodahl. to realize it. improved in recent years," says Symon "They were regarded simply as techni- "It's amazing to sit here hour after B. Cowles of Cowles & Co. in New cians, people who were expected to hour and watch some of this awful stuff York, a former head of promotion for churn out a required number of promos go by," says John Wentworth, director ABC and a BPME judge this year. "But without in any way being included in the of advertising and promotion for Para- all this fascination with the new video major decisions the station made. The mount Network Television. "There are `toys' has crowded out the fundamental `marketing' side of their job was just all these stations out there who don't skills of promoting-fresh ideas, good tokenism. Most promotion directors have the first idea about promotion, yet writing, that single, memorable image don't even know how much their sta- they actually think they might win that carries a spot over the top." tions earn every year. Can you imagine something for this." any other industry-a computer com- The problem, most of the judges at Tis hard to argue that the excesses pany, a durable -goods manufacturer- San Diego agreed, is twofold, and is of high tech make for promotions operating that way? Of course not." symptomatic of larger forces at play in that are worse than, say, those of That, ultimately, is the dilemma fac- the industry today. It involves, on the ten years ago, but that brings us to the ing broadcasters. Even as they cele- one hand, a relatively simple question of second point. With all the competition brate the age of high tech with dense - technology and, on the other, a broader broadcasters now face in their markets, pack animation and computer graphics, issue of management philosophy and they can't afford to fall back on routine the philosophy behind their promotion recruitment policies. any longer. Only a small percentage of still dates back to the days when a good Beginning in the early 1980s, ad- the 900 broadcast outlets across the promotion was just another "happy vances in video technology that had country, however-perhaps 100 in all- talk" anchor or clever splices of the already revolutionized television news have brought their promotion depart- images sent down the network feed. To and entertainment programming began ments up to the same professional level meet the changing times in their indus- to trickle down to promotion staffs. as news and sales. try, stations will have to graduate from Sophisticated editing machines, com- Karl Sjodahl, president and creative the imitation era into a new phase of cre- puter animation and paint -boxes director of Sjocom Inc. of San Fran- ative innovation that makes them not allowed television to dazzle viewers cisco, is a former broadcaster who held only unique in their own markets, but with a variety of images that would programming and marketing positions distinct from the industry as a whole. Tue Do's and Don'ts of Promos BPME awards are usually given for exceptional creativity least for some promos. The big extravaganza spots aren't in a particular category, and every year the judges elimi- always effective, and they often tempt stations to reach nate hundreds of reasonably effective promos simply beyond their abilities. because they lack originality. Nevertheless, consistent Do it yourself-you're the one who knows your needs. placement as a finalist is usually a sign that a station is The ad agencies and national promotional firms are only developing a unique style and the ability to flexibly adapt to going to give you what they tried last year, in someone changing conditions in its market. If you're going to bother else's market. to send in your reels and pay the $50 entry fee, it's probably DON'TS best to master the following list of Do's and Don'ts in pro- No more anchors who really report, weathermen with motion, gleaned from three days of reviewing the BPME Ph.D.s or sportcasters who are jocks. competition this year. Hovering news helicopters and speeding SNG trucks DO 'S are passé-viewers have seen them all by now. Look for that single, identifiable image or theme unique Fright Week promos shouldn't look tackier than the to your station and market, and craft an uncomplicated flicks themselves. video and print campaign around it. You thought your station discovered look -alike Oprah Hire the best writers, ones who know your market and Winfreys and Phil Donahues? Forget it-there were station, and keep them on staff. dozens this year. Keep the animatics basic. Stentorian voiceovers that drown out the message, and Understatement is better than hype; straightforward, advertiser tie-ins are especially frowned upon by BPME simple imagery is better than glitz. judges. Whenever possible, contract your own theme music Bag the saccharin Christmas spots-we all know that and write your own tag lines. news anchors look great in red sweaters. Consider actually cutting your production budgets, at -RINKER BUCK

18 CHANNELS / JUNE 1987

www.americanradiohistory.com WATCH US GROW

Channel 9 has a new ownership. A new name. A new commitment. There's a whole world of opportunity before us.

We can't do all the things we hope to at once. We'll have to crawl before we can walk. But as we grow we'll be innovative. We'll be responsive. So watch us. Birthday after birthday.

WWORTV Secaucus,9 NJ.

An MCA Broadcasting Station

www.americanradiohistory.com 1_

THE PUBLIC EYE

superb fromf the very good, would surely agree that A QUANTITY American television is wronged by those who still dis- OF QUALITY miss it as the boob tube. So much quality television is produced in America- I find it curious that people who spend their lives by commercial broadcast stations as well as any striving to afford cars and clothing of the very best other-that if all of it were shown on a single channel quality, and who pride themselves on knowing the on successive evenings in prime time the shows would finest wines, are unable to say what constitutes qual- probably consume a full season. The pity is that so ity in their own field, TV programming. Quality of life many of the exceptional broadcasts are local and they understand; quality of television is a mystery. never seen outside their markets. When Fred Silverman became NBC president in Excellent programs, moreover, are often commer- 1978, he made a series of speeches pledging the net- cially successful, which at the back door supports the by Les Brown work to "quality television." Then he delivered otherwise outlandish view that popularity equals Supertrain and a rash of the most forgettable pro- quality. Take WCCO-TV, Minneapolis, for example, grams in the medium's history. whose investigative reporting consistently ranks The professionals who buy, sell and create TV pro- with the best in all journalism. The station's investiga- grams tend to be well -trav- tive team won Peabodys eled executives who know the past two years and only the best hotels, resorts and missed this year because restaurants, and can give the competition was sc you chapter and verse on great. WCCO's high stand- what makes them excep- ards, exemplified by the I - TV tional. But speak to them of Team, keeps it dominant in quality in television and its market. professionals they get perplexed and The National Geographic can give you defensive. specials (which won this At the last NATPE con- year against several excel- chapter and vention, where I was on a lent shows in their genre, panel with several captains are always brilliant works. verse on the of TV syndication and And when they air, best hotels, members of the trade whether on public televi- press, the moderator asked sion stations or on cable, resorts and what developments con- the best of them get excep- restaurants, cerned me most in the busi- tional ratings. ness today. I said it was the In the board's delibera- but speak bottom -line morality of the tions this spring there new owners, whose preoc- was momentary hesitation to them of cupation with serving about NBC's The Cosby Murder, She Wrote Good shows are often the most successful. quality in stockholders and servicing Show; we didn't want to be debt was not likely to advance the ideal of quality on rewarding its enormous popularity-until we agreed television and television or the related media. the series would deserve a Peabody even if it weren't they get To my astonishment, the statement agitated the TV's greatest hit. syndicators; it quickly became clear that the provoca- Quality is such an abstraction that one could serve perplexed tive word was quality. One panelist, feeling somehow on such a jury for a lifetime and still be unable to for- under attack, accused me of elitism and wanting com- mulate a working definition of exceptional television. and mercial television to be highbrow and culturally But anyone who has had the experience even once can defensive. uplifting. The most sensible comment came from the draw at least two conclusions: chairman of Columbia/Embassy Television, Gary Quality doesn't just happen by accident, and it Lieberthal: "I can't define quality television, but I doesn't have its roots in cynicism. Rather, it grows sure know it when I see it." out of a profound respect for the integrity of the work Of good television and mediocre television the dif- by those in charge, without an eye to the ratings. ference, most of the time, is in the spirit in which it's Quality's only special cost is a fierce, loving attention done. But many practitioners in the field equate qual- to detail. ity with popularity, something they wouldn't dream That's how we come to have the likes of Cagney & of doing with restaurants (Burger King over Lutèce?) Lacey; Hill Street Blues; Family Ties; Murder, She or clothing (Robert Hall over L.L. Bean?). Or worse, Wrote; Moonlighting; Pee-Wee's Playhouse; This they regard quality television as an oxymoron. They Week With David Brinkley; and even a quality syndi- do the industry an injustice. cated game show like Trivial Pursuits. If only from having served the last five years on the The Peabody entries have been diminishing in num- Peabody Awards board, I claim some knowledge of ber throughout this decade, although the old-line quality television, enough certainly to testify that it broadcasters continue to be well represented. This exists in remarkable abundance. The 14 other mem- suggests that the new breed of owner considers pro- bers who judged this year's entries at the University gramming excellence irrelevant. That could be his of Georgia, and struggled for days to separate the great mistake.

20 CHANNELS / JUNE 1987

www.americanradiohistory.com JAMES IRWIN Former Astronaut

I think we're basically interested in other pec : I Other numan beings. And othe- places.

And telev sion can take us there ra-her qu ckv

In fact i -can take us there instanianeous.l.. In a vicarious way we can share adventures tl-c t o -hers

are enicying. And so we're no longer lore y. We're more a part of life because of this television medium

`1i NBC.Tuned In To America'M

www.americanradiohistory.com 1

THE ßITSINESS SIDE trends that merit serious attention. NEW SEASON But, it seems, skepticism and hesitancy are proba- BLUES? bly appropriate, and anyone who's in the national advertising business ought to be somewhat worried. As the planning, Hacking and selling of the 1987-88 That's not to say the increasingly competitive efforts television season begins in earnest, there's reason of local television stations to garner larger shares of for concern about what's in store for media busi- their markets aren't likely to be successful, justifying nesses, and what the impact of an extraordinarily the massive bets by station buyers on the health of uncertain economic picture might be. local stations. National economic forecasters are at sea about the On the horizon is the imposing national introduction meaning of interest -rate upticks, the impact of dollar of people -meter technology, nearly certain over the fluctuations against foreign currencies and, most long run to make ad buying and media planning more importantly, whether or not this set of confusing fac- precise than ever, and just as certain to strengthen by Merrill tors could produce a recession. the competitive posture of strong independents and Brown But television experts say the tax cut is making con- growing cable networks. But for the national televi- sumers feel wealthier, a fact likely to be positive for sion picture, the people -meter muddle this fall, and mass advertising. The fac- such issues as which agen- tors that analysts are cies, networks and syndica- reviewing this spring bode tors are buying which Niel- well, particularly for net- - sen or AGB services should works. "All fingers are only yield short-term confu- pointing to a good up- sion and uncertainty. One analyst front market," says Gold- It's important to note man Sachs media analyst that the most outspoken speculates Barry Kaplan. Says Roger meter backers have been Rice, the president of the the ad agencies, who by and that NBC Television Bureau of large have been far ahead of might keep Advertising: "The net- programmers in signing up works sold more up-front for AGB's people meter and ad prices in than ever in history." who, in billions of dollars of check for Moreover, Kaplan points decisions, hold the cards in out, the nation's large pack- the national marketplace. major age -goods companies are What's more, there's no cash rich and eager to buy sign on the horizon that advertisers, large amounts of nation- metered measuring will do in exchange al television advertising. anything beyond cutting "There's a movement to- into audience calculations for a ward measured media and , ' for the most widely sought commitment away from couponing, a prime time programs. That realization that they're getting tired of making pro- too has to give pause to big spenders. for a big motional expenditures that hurt price integrity. Many "I'm an advertiser with a new product and I say I major advertisers are increasing ad budgets 16 to 18 want the best time a network can offer and I want to portion of percent," Kaplan says. pay up for it," says David Londoner, a Wertheim their future In addition, these same giant national advertisers- Schroder & Co. analyst. "If he finds out his demo- package-goods companies, for instance-are planning graphics are down 12 percent after the meters come ad spending. to use the savings that result from the corporate tax - in, the agency guy's ass is grass. I just don't think This could rate cut to develop new consumer products. If so, that these guys are going to be aggressive." trend is certain to produce increased national TV Londoner also raises another cautionary point. "I only hurt advertising as marketers rush to peddle new products want to know what NBC is going to do," he says. via national networks. "This is their first shot at showing a real strategy. We ABC and Not that Kaplan, or anybody else for that matter, is don't know what they're going to do." Londoner spec- CBS. predicting a return to the double-digit advertising ulates that a GE strategy for NBC might have the net- growth television people came to expect in previous work keeping ad prices in check for major adver- decades. He is, after all, talking only about ad -spend- tisers, in exchange for a commitment for something ing acceleration in the 5 percent range, roughly the like 65 percent of their incremental growth for the prediction of most industry forecasters. next three years. Aggressiveness like that on GE's Then, of course, there's the inevitable bullishness part will surely hurt others, notably ABC and CBS. generated by the fact that 1988 offers the combination "That says to me trouble," Londoner suggests. "Mar- of national elections and the summer and winter ket -share strength are the words the GE guys live by, Olympic games to stimulate advertising spending. and right now they've got the strongest hand ever." What emerges is a fairly enthusiastic consensus for Layer that uncertainty against a weak spring stock 1987-88. Granted some of that enthusiasm is based on market worried about interest rates and a possible how difficult the national advertising marketplace has recession, and the picture for the new fall season been since 1985. And part of it is based on historic grows cloudy.

22 CHANNELS / JUNE 1987

www.americanradiohistory.com CEA NOW PROVIDES NONSTOP SERVICE FROM NEW N AMP/1WHINGTON, C9 When you're CEA and And early this year, we COMMUNICATIONS you're the hardest working, opened an affiliated com- fastest growing, and largest pany, CEA, Inc., in midtown EQUITY independent brokerage and Manhattan, close to the nerve ASSOCIATES investment banking firm in center of the nation's bro- Investment banking, brokerage, financial, the cable tv, broadcast and kerage investment management, and regulatory affairs services and for the communications industry. entertainment fields, what do banking business. you do? If you'll be going to the Tampa: Keep growing, what else? table in 1987, call the com- 5401 W. Kennedy Blvd., Suite 851 That's why in addition to Tampa, FL 33609 (813) 877-8844 pany that exclusively serves Washington: our headquarters in Tampa, the media and entertainment 1133 20th Street, N.W., Suite260 we opened a Washington, industries. Call CEA. Washington, D.C. 20036 (2021 / f8-1400 D.C. office in 1985 with is New York: some The service nonstop. CEA, Inc., 375 Park Ave., Suite 3808 of the most savvy profes- And first class all the way. New York, NY 10152 (212) 319-1968 sionals in the industry

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www.americanradiohistory.com Benny took the salute,

Paradise stole the show...

611\_ and Chaplin walked off with the honours. On March 26th this year, the achievements of Britain's largest independent television company were celebrated in `A Salute to Thames: The International Council of the National Academy of Television Arts and Sciences presented a gala evening, with Benny Hill topping the bill in a sparkling stage show. A matter of weeks later, Thames Television was back in New York - this time to receive two of America's most prestigious broadcasting accolades. Kevin Brownlow and David Gill's unique Unknown Chaplin, seen on PBS in American Masters' and John Mortimer's sweeping Masterpiece Theatre/WGBH Boston series, Paradise Postponed were both honoured with Peabody Awards. A Salute, followed by handshakes all round - quite awelcome for the television company that needs no introduction the world over.

149 Tottenham Court Road, London W1P 9LL. Tel: 01-387 9494 INTERNATIONAL US Representative D L Taffner Ltd. the world is watching 31 West 56th Street, New York, NY 10019, USA. Tel: 212-245 4680

www.americanradiohistory.com CHANNELS

achieve \a - THE CHANNELS ACHT EV H JRS The second annual guide to the state of the top media companies unveils a restructured, risk -laden industry built on easy money, deregulation and a wide-open programming marketplace.

he results of the in last year's survey of Channels Achievers fi- the decade's fastest - nancial survey demon- growing companies, to strate the vast opportu- the acquisitive team nity and enormous risk of Ralph Baruch and in today's fast -paced Terrence Elkes, who media industry. While expanded and ulti- the opportunity for mately lost ninth -place financial achievement Viacom International has never been more while gaining huge for- enticing, the prospect tunes, the list is dotted for failure, for difficul- with visions of new ties stemming from in- directions in media. creased competition and Opportunities of that for financial and bal- magnitude were not pos- ance -sheet problems has sible until recently. As also never been as clear. business has changed The principal listing in across the board, the Channels' second annual financial accounting of the combination of easy financing, new outlets for pro- broadcasting and production industries, a survey of grammers such as barter and cable, deregulation the top 90 companies, sums up the state of the busi- that permits quick station transfers, and the boom in ness in 1986 and beyond. At the top, the fastest - the cable -system business allowed Channels to growing company in the field in 1986, Home Shop- assemble a growth chart of 90 companies. ping Network, moved into 1987 with a plunging But the "performance" charts that follow the top stock price and a concern on Wall Street that its bold 90 add warning signals, demonstrating that while expansion from cable into station ownership led the it's one thing to start something new, it's an entirely company too far too fast. But record revenues of separate challenge to operate a media enterprise. $160 million for a new company serve to remind the Some of the industry's fastest -growing companies industry of the entrepreneurial opportunity that are doing so at the expense of other measures of per- new ideas can create. formance, such as return on equity, and at the high Throughout the top ten of the Achievers' list of 90 price of creating highly leveraged balance sheets companies are firms dominated by individual talents that prevent management from fulfilling goals. For like those of HSN's Roy Speer and Lowell Paxson. the financial strategists, like the four chief financial From sixth -ranked Price Communications, headed officers profiled in this section, that balancing act is by financial entrepreneur Bob Price and the leader at the heart of the challenge for 1987 and beyond.

CHANNELS / JUNE 1987 25

www.americanradiohistory.com WHO'S IN, WHO'S OUT/THE CHANNELS ACHIEVERS ARRIVALS. PEPARTURES

The Channels Achievers, though expanded from 63 companies last year to 90 this year, is missing some old names. In THE NEWACHIEVERS 1986, RCA merged with General Electric, ABC with Capital Cities, Telepictures with BROADCASTING QVC Network Lorimar. like John Blair and Viacom, Others American Family Scott Cable will with next year's now private, disappear Clear Channel Comm. Tempo Enterprises Achievers. Emmis Broadcasting DIVERSIFIED What was difficult in assembling an Infinity Broadcasting McGraw-Hill expanded Achievers compilation this year Jacor Comm. Media General was assessing which companies to add. Liberty News Corp. There are dozens of recently launched firms Outlet Comm. PRODUCTION and track- in the media business and locating Selkirk Aaron Spelling Prods. ing them isn't always easy. While there are Westwood One DeLaurentiis Ent. always omissions in a limited compilation, CABLE Dick Clark Prods. this year's list includes virtually all the Adelphia Comm. Hal Roach Studios major players whose financial results, as Am. Cablesystems Heritage Ent. publicly traded or "semipublic" firms (com- ATC New World Pictures panies with bond offerings and limited finan- C.O.M.B. Peregrine Ent. cial disclosure), can be obtained and readily Centel Reeves Comm. assessed. All told, there are 32 new compa- Century Comm. Robert Halmi nies on the list, ten in the television produc- Home Shopping Net. Western World TV tion field, ten in cable, nine in broadcasting and three categorized as diversified.

THE ACHIEVERS GUIDE The 1987 Channels Achievers review of the media properties in several industry segments; production-com- industry's top companies has been expanded this year to panies in program production and distribution. include not only more companies but also a new set of data Two other new features are also worth noting. The sec- and feature packages. The basic 90 -company chart ranks tion highlights 25 large media companies with special industry players by revenue growth from 1985 to 1986, and emphasis on how they've performed in their fields and their features a ranking of the same firms by total profits. prospects. And the Achievers section closes with profiles of In addition, the section includes detailed charts of how four leading corporate chief financial officers with an eye to companies in four industry segments have performed. The the challenges they face this year. 90 companies break down into the following categories: The Channels Achievers section was produced by staff broadcasting-companies with primary media holdings in members Bronna Butler, Traci Churchill, Joseph Vitale radio and television; cable-firms in cable-system and and Carolyn Zjawin, with researchers Michael Burgi, Mat- cable -network ownership; diversified-companies with thew Murabito and Paul Noglows.

26 Listing of New Companies and Those GLOSSARY: To help define some of the Dropped financial terms and ratios used in the charts, refer to the following glossary: 26 Guide and Glossary Compound Annual Growth Rate (CAGR) 29 Report on Fastest -Growing Companies -Average annual growth. 30 The Channels Achievers Top 90 Debt/Equity Ratio (D/E)-Total liabilities, divided by total shareholder's equity. Stock Market Leaders 33 Net Income (NI)-Earnings after 36 Report on 25 Media Giants expenses, interest and taxes. Segment Performance Charts: Operating Income (01)-Earnings 39 Industry and taxes. Cable, Diversified, before interest Broadcasting, sales. Production Revenues-Total Return on Equity (ROE)-Net income 49 Media Industry Forecasts divided by total shareholders equity. 54 Chief Financial Officers to Watch

26 CHANNELS / JUNE 1987

www.americanradiohistory.com PLUMS. OUR PROPERTIES. OUR PROGRPiMMING. Directed by Starring Planned Produced Written Art Directed Announced Videotaped Edited Dubbed Recorded Engineered Researched Distributed Syndicated Marketed Promoted and everything else from Typing to Lighting by:

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www.americanradiohistory.com Bear Stearns Dedicated to serving the investment banking needs of the entertainment and communications industries.

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Barbara M. Ginader N Linsev lull\ Barry Porter BEAR STEARNS Bear, Stearns & Co Inc. 55 Water Street, New York, NY 10041 (212) 952-5000

www.americanradiohistory.com THE CHANNELS ACHIEVERS/WHO'S IN, WHO'S OUT

RFACIIING TFIF. TOP: RISK AND REWARI) HSN: The boomund-Mrst story of the eighties.

he list of the top ten fastest - growing media companies in 1986 underscores the fickleness of the media business and showcases the dramatic changes that have become a natural and expected part of the communications - industry landscape. This list of fastest - growers also points up a new development: a subtle shifting in power from the large companies that dominated the business as recently as three years ago to smaller firms started by individuals or groups of visionaries who saw opportunities that big firms, too slow off the mark or too interested in megaprofits, did not discern. No other company in this list better illustrates these points than last year's number -one grower, Home Shopping Network. Two -year-old HSN, started by entrepreneurs who believed the local success of an obscure shop -at-home service could translate nationally, set the programming world on fire in 1986. It was the hottest stock to hit Wall Street, initially offered at $18 a share last year and closing as high as $282 in January- adjusted for stock splits. Revenue growth from 1985 to 1986 was 988 percent. Ironically, HSN's success also led to its decline, sporing a host of competitors that duplicated its format and edged in on the cable systems and television stations HSN counted on. In May, its stock dropped to about $16. Other relatively new firms have had a less volatile climb. marily via aggressive acquisition programs. For some, revenue growth had been steady before catapult- Changes in the broadcasting and entertainment indus- ing in 1986 because of market changes. Third -ranked Barris tries and well calculated strategies to capitalize on them Industries, for example, founded in 1968 and headed until fueled growth for Hollywood production companies recently by one-time TV host Chuck Barris, caught the DeLaurentiis Entertainment, Robert Halmi and Hal Roach explosion in game shows. Growing 384 percent over 1985, Studios. Hal Roach, invigorated in 1985 after a group of Barris' jump came when the firm, noting a rise in ratings for entertainment executives acquired a third of it, set out to game-show reruns, introduced new syndicated shows mod- spruce up old films through colorization and to widely dis- eled on old ones. King World also grew on the popularity of tribute the goods from the Roach library-especially in game shows, although its recent boom has been fueled by home video. Revenues went up 120 percent. Halmi, for 30 the Oprah Winfrey phenomenon. The success of Wheel of years a producer of TV movies, last year increased output Fortune and Jeopardy account for 85 percent of the compa- and began selling heavily in ancillary markets. Revenues ny's 1986 revenues, up 81 percent last year. rose 122 percent. And second -fastest -growing company Others in the top ten have grown mainly through acquisi- DeLaurentiis, a 1985 start-up headed by producer Dino tion. Westwood One, a radio programmer and syndicator, DeLaurentiis, grew 683 percent last year with the success grew 210 percent in revenues, in large measure because of of motion pictures such as Crimes of the Heart and Blue its purchase of Mutual Radio. Capital Cities/ABC, Price Velvet. It announced recently it would build a studio in Aus- Communications and Viacom International also grew pri- tralia and begin producing for TV. CECILIA CAPUZZI

CHANNELS / JUNE 1987 29 www.americanradiohistory.com THE TOP 90 COMPANIES/THE CHANNELS ACHIEVERS THE CHANNELS ACHIEVERS

RANK COMPANY '85-86 REVENUE '86 REVENUE/RANK '86 NET INCOME/RANK HEADQUARTERS GROWTH (%) IN S THOUSANDS IN $ THOUSANDS 0 Home Shopping Net.1 988.2 160,159 51 17,049 37 Clearwater, FL © DeLaurentiis Ent.2 683.4 44,248 70 - 2,664 74 Beverly Hills, CA 0 Barris 384.6 31,024 73 7,555 47 Beverly Hills, CA O Cap Cities/ABC3 304.0 4,124,374 5 447,689 4 New York, NY O Westwood One 210.4 59,297 64 7,286 48 Culver City, CA O Price Comm. 131.3 96,675 60 - 24,594 86 New York, NY O Robert Halmi 121.7 17,254 82 2,830 59 New York, NY O Hal Roach Studios 120.2 8,470 86 -1,121 72 Hollywood, CA 0 Viacom Intl. 107.0 919,154 23 - 9,856 81 New York, NY O King World Prods. 80.7 145,718 54 19,846 33 New York, NY Q New World Pictures 77.3 188,923 49 10,709 42 Los Angeles, CA O Jacor Comm. 65.2 26,657 78 2 68 Cincinnati, OH O TVX 64.9 25,942 79 -6,111 78 Virginia Beach, VA Q Turner Broadcasting 58.3 556,917 28 187,314 90 Atlanta, GA O Scripps Howard Bcast. 56.5 210,548 42 5,477 50 Cincinnati, OH Q Fries Ent. 54.7 28,137 76 2,989 58 Los Angeles, CA Q American Family 46.8 1,401,463 20 100,697 20 Columbus, GA O Financial News Net. 45.8 15,408 83 1,284 64 Santa Monica, CA Q Jones Intercable 44.1 19,305 81 4,740 52 Englewood, CO Q Scott Cable 42.5 '15,364 84 2,028 62 Irving, TX ® News Corp.4 40.8 2,668,272 12 171,557 13 Sydney, Australia Q MGM/UA Comm. 39.1 355,355 36 17,861 35 Beverly Hills, CA Q LIN Broadcasting 37.8 195,340 46 66,240 23 New York, NY Q Emmis Broadcasting 35.5 24,386 80 -1,035 71 Indianapolis, IND Q Lorimar-Telepicturess 31.3 542,808 29 4,059 54 Culver City, CA Q C.O.M.B. 31.2 150,187 53 -5,175 77 Plymouth, MN Q Adelphia Comm. 29.3 30,431 74 -10,167 83 Couldersport, PA O Malrite Comm. 27.9 106,500 59 - 9,000 80 Cleveland, OH Q Warner Comm. 27.5 2,848,324 10 185,795 12 New York, NY Q Gannett 26.8 2,801,497 11 276,404 9 Arlington, VA Q Taft Broadcasting 26.0 472,770 32 19,418 34 Cincinnati, OH Q Reeves Comm. 25.7 92,010 61 4,960 51 New York, NY

Q General Electric6 25.5 36,725,000 1 2,492,000 1 Fairfield, CT Q Walt Disney 22.6 2,470,900 13 247,300 11 Burbank, CA Q Heritage Comm. 22.5 192,739 48 - 9,904 82 Des Moines, IA Q Heritage Ent. 21.9 10,626 85 2,388 60 Los Angeles, CA 0 Park Comm. 20.4 136,938 55 14,923 38 Ithaca, NY Q Coca -Colo 20.2 8,668,556 3 934,347 2 Atlanta, GA O Sun Group 19.8 6,577 88 - 1,605 73 Nashville, TN Q Gray Comm. 19.3 51,837 67 3,453 57 Albany, GA Q Maclean Hunter? 18.4 834,267 24 50,177 24 Toronto, Ontario Q Chris-Craft 17.7 223,992 39 14,747 39 New York, NY 0 Century Comm. 17.0 64,562 63 823 66 New Canaan, CT Rogers Comm.7 16.5 254,238 38 8,626 44 Toronto, Ontario Q MCA 16.3 2,441,374 14 155,204 14 Universal City, CA first 1985 hosed an rune mo. ended 11/30 3Merged 1986 ,Ausnoton company; converted to U.5. doll,,, ,Merged 1986; 1986 and 1985 results based on three quarters 1 Compares 11 mo. ended 8/31/86 ,h Channels' es see for 12 mo, ended 8/31/85 21986, results

30 CHANNELS / JUNE 1987

www.americanradiohistory.com THE CHANNELS ACHIEVERS/THE TOP 90 COMPANIES

The ninety companies that dominate the electronic media.

RANK COMPANY '85-86 REVENUE '86 REVENUE/RANK '86 NET INCOME/RANK HEADQUARTERS GROWTH ('Vo) IN S THOUSANDS IN S THOUSANDS United Cable 15.8 195,766 45 4,044 55 Denver, CO United Television 15.6 89,142 62 8,194 45 Beverly Hills, CA John Blair 15.4 208,499 43 - 79,760 89 New York, NY Peregrine Ent. 15.3 7,448 87 256 67 Los Angeles, CA Dick Clark Prods. 15.0 32,344 72 3,750 56 Burbank, CA Gulf+Western 13.9 3,781,100 6 267,400 10 New York, NY Infinity Broadcasting 13.4 51,895 66 -2,893 75 New York, NY Washington Post 12.7 1,215,064 22 100,173 21 Washington, DC Outlet Comm.8 12.6 56,540 65 -16,227 85 Providence, RI Meredith 12.3 533,376 31 47,218 25 Des Moines, IA New York Times 12.3 1,564,663 19 132,227 17 New York, NY United Artists Comm. 11.9 536,876 30 8,044 46 San Francisco, CA TCI 11.9 645,724 25 72,296 22 Denver, CO Comcast 11.5 130,854 56 1,004 65 Bala -Cynwyd, PA Cablevision Systems 11.2 152,303 52 -16,143 84 Woodbury, NY TCA Cable 10.7 48,269 68 5,547 49 Tyler, TX Multimedia 10.6 371,799 35 - 4,661 76 Greenville, SC Time 10.5 3,762,000 7 376,000 6 New York, NY Adams -Russell 10.5 43,425 71 4,642 53 Waltham, MA

Knight-Ridder 10.5 1,910,650 16 140,039 16 Miami, FL Media General 9.7 634,627 26 17,107 36 Richmond, VA ATC 9.2 568,653 27 32,518 28 Englewood, CO Liberty 7.4 380,625 34 34,730 26 Greenville, SC American Cablesystems 7.1 44,927 69 22,742 30 Beverly, MA Vestron 6.9 195,300 47 12,900 41 Stamford, CT Lee Enterprises 6.9 220,924 41 32,597 27 Davenport, IA CBS 6.7 4,753,700 4 375,100 7 New York, NY Cox Enterprises9 6.6 1,569,009 18 NA 69 Atlanta, GA McGraw-Hill 5.7 1,576,834 17 154,009 15 New York, NY Aaron Spelling Prods. 5.5 221,496 40 24,110 29 West Hollywood, CA Tribune 4.7 2,029,813 15 292,870 8 Chicago, IL Clear Channel Comm. 4.3 27,420 77 1,406 63 San Antonio, TX Stauffer Comm. 4.0 118,158 58 20,374 31 Topeka, KS A.H. Belo 3.1 397,233 33 20,268 32 Dallas, TX Centel 2.9 1,369,912 21 109,002 19 Chicago, IL GenCorp 2.E 3,099,000 8 130,000 18 Akron, OH Westinghouse 0.3 10,731,000 2 670,800 3 Pittsburgh, PA Times Mirror -1.0 2,948,136 9 408,085 5 Los Angeles, CA Tri-Star -1.7 254,377 37 13,760 40 New York, NY Playboy -4.3 181,639 50 -62,203 88 Chicago, IL Tempo Enterprises - 7.2 28,214 75 2,309 61 Tulsa, OK Orion Pictures -11.2 198,122 44 -31,862 87 New York, NY Selkirk Comm.' -17.1 124,519 57 8,996 43 Toronto, Ontario Western World TV - 77.1 2,745 89 -10 70 Los Angeles, CA QVC Network10 NA 1,593 90 -8,466 79 West Chester, PA

61986fi®ure includes seven mo. of RCA results 7Canadion company; converted o U.S. dollars 8lrªsults compote yeor ended 9130/86 ro year ended 12/31/85 9Now o private company 10Resues for quar.er ended 1/31/87

CHANNELS / JUNE 1987 31

www.americanradiohistory.com "First Bank System works for me.

I've been very impressed with First Banks' industry knowledge, customer interaction, innovativeness, and responsiveness. // Thomas B. McGrath Senior Vice President Acquisitions, Planning & Development Act III Communications, Inc.

Let us work for you. Our team of eight industry-knowledgeable corporate bankers have the professional background to understand the complexities of your business. We bring the latest in financing capabilities to bear in solving your financing needs. To find out how the Communications Industry Division of the 15th largest bank holding company can work for you, please call us in Minneapolis at 612-370-4844. (S) First Banksystem

www.americanradiohistory.com THE CHANNELS ACHIEVERS/THE BEST-PERFORMING STOCKS WHAT THE MARKET THINKS BROADCAST CABLE Company Stock Price Stock Price % Change Company Stock Price Stock Price % Change 4/1/87 4/1/86 4/1/87 4/1/86 Gray Comm. 223.000 138.000 61.59 Home Shopping Net. 20.000 6.2502 220.00 Westwood One 41.750 26.250 59.05 Scott Cable 22.750 12.250 85.71 GenCorp 117.250 75.000 56.33 United Artists Comm. 22.750 14.2501 59.65 LIN Bcast. 34.250 22.6251 51.38 ATC 22.625 14.5002 56.03 Infinity Broadcasting 16.250 10.7502 51.16 Amer. Cablesystems 19.500 12.5002 56.00 Cap. Cities/ABC 342.000 237.000 44.30 Century Comm. 20.750 13.750 50.91 Scripps Howard 75.000 52.000 44.23 Financial News Net. 11.875 8.250 43.94 Price Comm. 12.125 8.7501 38.57 Cablevision Systems 24.750 17.500 41.43 General Electric 105.000 77.125 36.14 Adelphia Comm. 19.500 14.0002 Outlet Comm. 15.500 11.5002 34.78 39.29 Stauffer Comm. 135.000 105.000 28.57 Joneslntercable 15.125 11.375 32.97 A.H. Belo 62.750 50.750 23.65 Comcast 21.500 17.125' 25.55 Chris-Craft 25.375 21.1251 20.12 ICI 29.625 24.625' 20.30 Park Comm. 32.500 27.500 18.18 Turner Broadcasting 20.250 17.125 18.25 United Television 31.125 28.250 10.18 Time 84.875 73.000 16.27 CBS 151.500 144.375 4.94 United Cable 31.875 27.875 14.35 TVX 10.750 10.500 2.38 C.O.M.B. 20.750 18.250 13.70 Liberty 40.750 42.250 3.55 - Maclean Hunter3 21.500 19.000 13.16 Jacor Comm. 7.000 7.500 - 6.67 Centel 58.875 53.750 9.53 American Family 13.125 14.375' - 8.70 QVC Network 12.000 11.2502 6.67 Selkirk Comm.3 22.125 25.250 -12.38 Malrite Comm. 12.000 15.000 - 20.00 Rogers Comm.3 21.875 20.750 5.42 Clear Channel Comm. 14.500 19.250 - 24.68 TCA Cable 21.750 21.0001 3.57 Sun Group 2.250 4.375 - 48.57 Tempo Enterprises 10.250 10.000 2.50 Emmis Broadcasting (Private) (Private) - Adams -Russell 22.500 33.250 - 32.33 Broadcast Average + 19.21 Cable Average +34.91 S&P 500 24.35 S&P 500 Index 24.35 DIVERSIFIED PRODUCTION Company Stock Price Stock Price % Change Company Stock Price Stock Price % Change 4/1/87 4/1/86 4/1/87 4/1/86 News Corp. 32.750 15.87514 106.30 Walt Disney 62.750 36.750 70.75 Viacom Intl. 52.000 27.6251 88.24 King World Prods. 20.750 12.875' 61.17 Playboy 12.875 8.375 53.73 Taft Broadcasting 158.250 96.000 64.84 MGM/UA Comm. 11.875 8.0002 48.44 Multimedia 55.125 35.375 55.83 Orion Pictures 16.500 11.375 45.05 John Blair 31.0005 21.000 47.62 Warner Comm. 29.875 20.750' 43.98 Caca -Cola 45.750 34.125' 34.07 New York Times 42.875 30.750' 39.43 Gulf+Western 75.375 57.500 31.09 Times Mirror 82.750 63.250 30.83 Aaron Spelling Prods. 10.125 8.2502 22.73 Media General 59.500 45.750' 30.05 Delaurentiis Ent. 10.375 9.6252 7.79 Dick Clark Prods. 6.375 6.0002 6.25 Gannett 46.500 36.000' 29.17 Peregrine Ent. 12.000 12.125' -1.03 Westinghouse 65.750 53.375 23.19 Heritage Ent. 9.000 9.500 - 5.26 Heritage Comm. 33.000 27.000 22.22 Robert Halmi 3.750 4.125 - 9.09 MCA 46.000 51.875 -11.33 Washington Post 184.000 153.500 19.87 Tri-Star 11.500 13.000 -11.54 Knight-Ridder 53.125 46.125 15.18 Reeves Comm. 11.625 14.500 -19.83 Tribune 77.625 68.500 13.32 New World Pictures 13.375 17.750 - 24.65 Lorimar-Telepictures 19.375 26.000 - 25.48 McGraw-Hill 63.875 58.625 8.96 Barris 15.625 22.000 - 28.98 Lee Enterprises 25.500 25.625 -0.49 Hal Roach Studios 9.250 13.625 -32.11 Meredith 36.000 38.1251 - 5.57 Western World TV 1.625 2.625 - 38.10 Fries Ent. 5.375 9.500 - 43.42 Cox Enterprises (Private) (Private) - Vestron 7.125 13.125 - 45.71 Diversified Average + 34.65 Production Average + 5.35 S&P 500 24.35 S&P 500 Index 24.35 11986 stock price adjusted for stock split. 21PO ence April 1, 1986. Price is 52 week low. 3Funds in Canadian dollars. 4lnitial U.S. offering May 20, 1986. SAcquisition price Aug. 18, 1986.

CHANNELS / JUNE 1987 33

www.americanradiohistory.com IN COMMUNICATIONS, No one knows that better than Drexel Burnham. Our communications financings have helped create jobs throughout the entire communications industry. These dollars have also financed employment among a spectrum of TO WORK PUTS suppliers-for everything from antennas to zirconium insulation. The 23 Drexel communications Cablevision Systems Ingersoll Newspapers, AMC Entertainment transactions you see here were all Corporation Inc. Inc. completed since January of 1986. $90,625,000 $65,000,000 $75,000,000 Together they total over $6.7 billion. This is both a record number of 6.250.000 Shares of Class A Common Stock 11%% Senior Subordinated Debentures 11%% Senior Subordinated Debentures issues and a record volume of January 17. 1986 September 3, 1986 July 2, 1986 financing for the communications industry. And it makes Drexel $50,000,000 once again the leader among all Rogers Cablesystems McCaw Cellular, Inc. communications underwriters. 12%% Subordinated Debentures of America, Inc. September 3, 1986 $125,000,000 What's responsible for Drexel's leadership in communications? $14,500,000 Senior Notes Innovation. Industry knowledge. July 3, 1986 1,000,000 Shares of Class A Common Stock Barris Industries, Inc. And our broad range of services. February 26, 19616 The results? Transactions designed $60,000,000 $150,000,000 to meet the specific financing needs of each client. Transactions which 83/4% Convertible Senior Debentures Senior Subordinated Notes are often the first of their kind. Fox Television February 24, 1987 July 3. 1986 Transactions that work. Stations, Inc. Examples? We pioneered fixed $1,148,000,000 rate, 20 -year subordinated debt; Western Publishing United public debt for private companies; 1,148,000 Shares of Increasing Rate Group, Inc. Cable Television Exchangeable Guaranteed Preferred Stock Corporation debt with warrants subject to February 27, 1986 $231,600,000 repurchase; and zero coupon debt US$50,000,000 deferring cash interest costs for 11,580,000 Shares of Common Stock several years. These financing Compact Video, Inc. April 22, 1906 5b% Convertible Subordinated Debentures techniques have enabled us to raise July 1986 the capital our clients need. At the $80,000,000 lowest possible cost. And for com- Lorimar-Telepictures munications companies of all sizes. 12N% Subordinated Debentures July 2. 1986 Corporation Cooke Media Group Drexel Burnham's strength is Incorporated financing America's growth indus- $150,000,000 tries. Like communications. 11% Senior Subordinated Debentures $430,000,000 Through the combined efforts of our February 19, 1987 Senior Subordinated Deferred 10,000 employees, this has had Interest Notes tangible results. In ideas, in jobs, in April 1987 progress. There's no better proof that putting capital to work puts $300,000,000 people to work. Subordinated Debentures April 1987

www.americanradiohistory.com , PUTTING CAPITAL PEOPLE TO WORK. Gulf + Western Inc. Warner Olympic Broadcasting Carolco Pictures Inc. Communications Inc. $175,000,000 Corporation $32,400,000 $500,000,000 $12,000,000 9%% Senior Debentures 3,600.000 Shares of Common Stock July 10. 1986 10,000,000 Shares of Series A Convertible Increasing Rate Senior Subordinated Notes November 28, 1966 Exchangeable Preferred Stock June 13, 1986 $100,000,000 August 22, 1986 $50,000,000

81% Senior Notes $30,000,000 13% Senior Subordinated Notes July 10, 1986 MGM/UA 13%% Senior Subordinated Debentures December 2, 1988 Communications Co. October 31, 1986 Aaron Spelling $150,000,000 $4,500,000 American Cablesystems Productions, Inc. 12%% Senior Subordinated Notes 750,000 Shares of Common Stock Corporation December 24, 1986 $77,000,000 October 31, 1986 $100,000,000

5.500,000 Shares of Class A Common Stock $250,000,000 111i% Senior Subordinated Notes 1, August 1986 May 7, 1986 13% Subordinated Debentures Turner Broadcasting December 24, 1988 System, Inc. $25,000,000 $54,375,000 $600,000,000 12%% Subordinated Notes 3.750.000 Shares of Class A August 1, 1986 New Line Cinema Extendable Senior Notes Common Stock Corporation March 18, 1986 May 7, 1986 Tele-Communications, $6,400,000 $440,000,000 Inc. 800.000 Shares MCI of Common Stock Zero Coupon Senior Notes Communications September 30. 1986 Corporation $230,000,000 March 18, 1986

654% Convertible $500,000,000 Subordinated Debentures $360,000,000 August 15, 1986 10% Subordinated Debentures 14% Senior Subordinated Debentures AprIl 7, 1986 March 18. 1988 Drexel Bumham Helping People Manage Change. Member SIPC. Copyright., 1987

www.americanradiohistory.com HOW THEY DO IT/THE CHANNELS ACHIEVERS 2 5 BIG CO1\WAN! h: Portraits of success and failure: Where they rise and fall.

COMPANY 1985-86 GROWTH 1986 5 -YEAR CAGR COMMENTS DIVISION PROFIT%' REV. PROFIT$' REV. PROFIT%' REV. CAPITAL CITIES/ABC INC.' 215.0 304.0 447.7 4,124.4 40.9 48.4 Tough cost reductions cushioned 1986 results. Revenues of BROADCASTING 4.0 - 2.2 519.7 3,153.6 4.4 6.3 $4.1 billion were buoyed by strong performance at sta - PUBLISHING - 4.4 1.0 177.2 970.8 18.6 8.9 tions, radio networks and ESPN. First-quarter results, down dramatically, were also helped by station operations.

CBS INC. 126.9 6.7 375.1 4,753.7 --1.8 5.2 Downsizing, sale of assets and paying off debt are credited CBS/BROADCAST GROL. P -30.6 1.1 250.0 2,817.2 - 4.6 8.0 with salvaging a year of declines in broadcast. Profits for CBS/RECORDS GROJP 85.9 21.6 162.1 1,489.4 22.4 4.1 stations and records were strong. CBS MAGAZINES 202.2 0 13.9 407.2 - 20.1 - 4.3

COCA-COLA COMPANY 29.4 20.2 934.3 8,668.6 14.2 8.1 The entertainment division went into its fifth year with 46 ENTERTAINMENT 46.3 28.1 235.4 1,373.8 NA NA percent growth in operating income over 1985. With the /íTc(ic4rrTnFrmpaY creation of Coca-Cola Television to oversee production and distribution, the company will expand its third operation, syndication.

GANNETT CO. INC. 9.1 26.8 276.4 2,801.5 9.9 15.4 New holdings contributed about 60 percent of last year's NEWSPAPERS 21.4 501.4 2,240.5 11.2 15.9 27 percent operating revenue gain, to $2.8 billion. It's the BROADCASTING 27.5 32.2 115.6 351.1 20.6 20.0 19th year of earnings gains, restrained by near -term costs ADVERTISING (- 8.9) 1.4 46.4 210.6 3.8 6.1 of the new acquisitions and the first year of a production GAR deal with Grant Tinker.

GENERAL ELECTRIC 5.9 25.5 4,310.0 36,725.0 140.1 35.6 The biggest non -oil merger ($6.4 billion) gave GE number - RCA BROADCASTING 22.1 15.2 406.8 3,048.7 53.3 13.5 one network NBC, with $3 billion in revenues. The challenge for GE is to keep NBC's profits climbing (up 22 percent in 1986).

GULF+WESTERN INC. 7.9 13.9 267.4 3,781.1 1.7 - 7.9 Downsized severely over the last four years as G+W sold ENTERTAINMENT 86.4 7.7 128.8 1,144.8 6.0 - 2.2 off subsidiaries; it's expanding in publishing. Despite Para - GuIF+WestemInc. PUBLISHING 35.5 18.9 140.5 944.0 43.1 mount's successes, TV, film and home video provide just 30 MOTION PICTURES NA 0.3 NA 340.2 - 6.8 percent of revenues and 26 percent of operating income. TELEVISION 8 HOME VIDEO NA 11.2 NA 598.6 27.5

HOME SHOPPING Sales were up nearly 10 -fold over '85, and the company NETWORK 108,492.4 988.2 17.0 160.2 has moved quickly to add over -the -air distribution. But growing competition hurt its prospects and its stock, which. between January and April, plunged from $47 to $14 a share.

KNIGHT-RIDDER INC. 5.6 10.5 140.1 1,910.7 6.9 9.1 What used to be Knight-Ridder Newspapers Inc. acknowl- BROADCASTING 27.5 57.2 22.2 102.6 NA 21.6 edged wider operations with a 1986 name change. Simul- NEWSPAPERS 14.9 8.6 300.8 1,688.1 NA 8.3 taneously, it sheared off videotex and a mobile phone corn - BUSINESS INFO. SERVICES - 20.7 11.0 2.2 88.9 NA 27.1 pony. Broadcasting added three stations to its eight. OTHER OPERATIONS 22.5 10.5 12.8 63.5 NA 11.2

LORIMAR-TELEPICTURES3 -76.1 31.3 4.1 542.8 - 13.4 30.5 Results reflect its merger, acquisition of the MGM/UA lot, ENTERTAINMENT - 244.0 10.2 18.0 356.5 NA NA Bozell & Jacobs and -very nearly-the Storer station L91tJM/Ut TV - 13.3 311.6 NA NA group. It took a charge against third quarter pre-tax FEATURE FILMS - 15.5 19.0 NA NA income to increase reserves against an expected slump in HOME VIDEO 74.3 25.8 NA NA syndication payments. ADVERTISING 8.9 - 6.9 66.0 MCA INC. 3.8 16.3 155.2 2,441.4 11.6 12.9 First studio to announce that syndication was so uncertain THEATRICAL FILM - 10.0 283.9 - 2.0 that it had dropped income forecasts and added to its bad MCA TELEVISION 25.6 663.6 12.5 debt reserve. A $50 million charge against TV operations HOME VIDEO & PAY TV 4.8 249.8 made Filmed Entertainment Group results disappointing in FILMED ENTERTAINMENT' - 38.3 12.1 89.0 1,311.2 4.3 10.7 an otherwise banner year.

McGRAW-HILL 4.5 5.7 154.0 1,576.8 9.4 7.3 McGraw-Hill's small station group increased sales 11.6 BOOKS 6.3 6.0 71.8 487.7 6.9 4.9 percent last year. It has grown faster than the company at INFORMATION SYSTEMS 5.4 3.8 94.2 366.1 10.1 6.1 large and shown higher profits, but remains a minor divi- PUBLICATIONS CO. 11.9 1.7 42.2 318.2 3.1 3.7 sion, contributing 6 percent of revenues and 10 percent of STANDARD & POORS CO. 17.2 10.6 74.7 311.9 28.6 19.0 operating profits in '86. BROADCASTING 16.3 11.6 32.0 92.9 6.5 9.7

'Company -wide total is Net Income. Segment totals are Operating Income 'Company totals before 1986 are Cap Cities only. Segment figures combined 21n 1985, HSN changed its fiscal year period from one ending in December to one ending in August. As o result, 1985 figures reflect only eight months

36 CHANNELS / JUNE 1987

www.americanradiohistory.com THE CHANNELS ACHIEVERS/ HOW THEY DO IT

COMPANY 1985-86 GROWTH 1986 5 -YEAR CAGR COMMENTS DIVISION PROFIT/u' REV. PROFITS' REV. PROFIT%' REV.

MEDIA GENERAL - 47.9 9.7 17.0 634.6 -11.5 11.6 Management expects a turnaround from its 48 percent mNEWSPAPERS - 45.7 4.3 22.3 264.1 -2.1 8.7 drop in profits by completing its cable-construction project 1 BROADCAST 87.6 29.8 - .3 167.1 48.2 in Fairfax, Va., breaking even at its troubled media -buying NEWSPRINT - 2.5 2.1 17.3 164.6 - 7.4 2.6 subsidiary and enhancing signal coverage at its trio of affiliates.

NEWS CORP. LTD.5 50.4 40.8 171.6 2,668.3 NA 20.2 Rupert Murdoch's empire hos doubled its sales and NEWSPAPERS 92.7 22.8 107.0 1,371.8 NA NA increased its profits more than five -fold in five years, . MAGAZINES 77.2 50.6 67.7 357.3 NA NA expanding into films, TV stations and the $50 million start- TELEVISION 507.8 81.5 37.8 245.2 NA NA up of the new Fox network. Its base remains newspapers FILMED ENT. 53.8 383.8 NA NA on three continents, which provide half of the company's revenues.

NEW YORK TIMES CO. 13.7 12.3 132.2 1,564.7 21.9 13.2 Four -fifths of revenues still come from newspapers, as well NI 7 BCAST/CABLE TV 30.5 35.6 14.3 93.1 32.4 20.4 as its highest operating profits, but its small broadcast/ NEWSPAPERS 24.6 13.0 245.4 1,252.4 35.3 15.6 cable group last year showed 35.6 percent growth in reve- MAGAZINES 44.6 1.3 25.5 219.2 14.2 7.6 nues and 30.5 percent in net income.

TAFT BROADCASTING CO. 61.0 26.0 19.4 472.8 - 4.3 14.5 In 1986, Taft expanded by acquiring five TV and four radio TAFT BROADCAST 13.7 49.5 72.0 283.4 11.2 20.4 stations. The deal upped revenues by 26 percent over '85, ENTERTAINMENT - 56.4 2.7 13.4 144.3 10.2 11.9 but sent net income down 61 percent. Recently, TVX bought LEISURE PROPERTIES DIV. 7.0 0 6.6 45.1 - 6.4 - 0.2 five TV stations from Taft for $240 million.

TELE -COMMUNICATIONS Positioned for growth in 1986, TCI increased net income morir INC. 614.5 11.9 72.3 645.7 49.1 28.9 837 percent, reflecting internal expansion and the acquisi- CABLE TV tion of CSI. Next year should be another whopper, with Group W, UACI and Heritage purchases factored into earnings.

TIME INC. 88.0 10.5 376.0 3,762.0 20.4 2.8 The company continued cost -containment efforts, showing MAGAZINES - 8.0 6.3 162.0 1,576.0 9.7 12.6 an 88 percent increase in net income and an 11 percent Time Inc. BOOKS & INFO SERVICES -14.1 20.1 73.0 663.0 28.3 5.0 jump in revenues in 1986. Last year's results reflect the sale PROGRAMMING - 8.3 11.5 111.0 952.0 NA NA of ATC common stock and the acquisition of Scott, Fares - CABLE TV 21.6 9.1 118.0 637.0 NA NA man and Co.

TIMES MIRROR 72.1 - 0.4 408.1 2,948.1 22.1 6.5 Times Mirror completed a plan to focus on publishing and NEWSPAPERS 18.5 6.6 330.9 1,726.7 14.3 10.1 TV by selling off unrelated holdings and acquiring Broad- Times Mirror BOOKS, MAGAZINES, ETC. 14.4 14.1 98.3 586.8 17.1 15.1 casting magazine. Earnings seta record for the fourth year BROADCAST TV 10.2 -1.2 70.8 127.3 in a row, but revenues remained flot because of operations CABLE TV -22.5 -12.8 36.6 242.9 sold.

TRIBUNE CO. 136.5 4.7 292.9 2,029.8 26.9 7.6 The 137 percent growth in net income last year was fueled TRIBUNE NEWSPAPERS 14.5 0.5 200.3 1,363.7 24.6 5.9 through improved margins at newspaper and newsprint COMPANY BROADC. & ENTERT. 9.3 40.6 65.5 466.2 17.3 26.7 operations and the sale of unprofitable cable systems. NEWSPRINT OPERATIONS 35.8 2.6 54.6 378.2 0.4 1.0

TURNER BROADCASTING Turner's two fast-growing Cable News Network channels SYSTEM (less) 58.3 - 187.3 556.9 42.4 and WTBS provide two-thirds of revenues and profits as BROADCASTING 79.2 9.5 12.5 207.6 6.9 28.4 well, but all that was swamped by debts related to pur- 4;;) CABLE PRODUCTIONS 208.9 35.7 38.6 171.8 42.8 chase of the MGM film library, resulting in a $187 million PROG. SYND. & LIC. (less) 1,213.9 - 6.7 135.1 loss last year. PRO SPORTS - 50.6 9.2 -13.8 25.5 23.6

VIACOM (less) 107.0 - 9.9 919.2 34.3 Viacom is about to enter a new phase under the ownership NETWORKS 82.0 490.4 37.0 510.4 - of Sumner Redstone. Through the '80s, Viacom reported ENTERTAINMENT -14.8 16.3 21.7 77.3 stunning 34 -percent revenue growth. Acquisition -related CABLE TV 40.3 13.0 46.4 232.8 24.1 22.3 debt made it unprofitable in '86. BROADCASTING 47.8 33.0 37.1 111.3 38.6 5.9

WALT DISNEY CO. 38.4 22.6 247.3 2,470.9 15.3 19.7 Disney has enjoyed record revenues and net income, with a FILMED ENTERT. 53.1 59.9 51.6 511.7 11.0 24.0 big assist from theme parks and a smaller one from Bette .. THEME PARKS & RESORTS 57.9 21.2 403.7 1,523.0 25.5 17.1 Midler. Revenues from movies and TV are the company's n Ww.xcmmrs°y. COMMUNITY DEV. - 36.4 - 3.2 41.8 305.1 NA NA fastest growing, but still make up only a fifth of the total.

WARNER Two years after reporting disastrous losses from its former COMMUNICATIONS - 5.0 27.5 185.8 2,848.3 - 3.9 - 2.5 Atari unit, Warner is in the midst of a turnaround. Help has FILMED ENTERT. 7.5 4.2 172.2 1,251.3 47.4 10.6 come from record profits in the filmed -entertainment and RECORDED MUSIC & record divisions, and improved results in broadcasting and MUSIC PUBLISHING 33.6 25 150.6 1,138.7 12.1 7.0 cable. Income from publishing continues to decline. PUBLISHING & RELATED DISTRIBUTION - 18.0 4.8 11.3 132.6 - 5.4 9.5 CABLE & BROADC. 282.0 16.2 325.7 NA NA

WASHINGTON POST CO. -12.3 12.7 100.2 1,215.1 25.1 10.0 With a decline in operating income of 12 percent in 1986, NEWSPAPERS 13.7 6.0 130.1 589.3 33.4 9.8 the company could find solace in TV and cable divisions. Its Sl1r 1Ueehin4ton post MAGAZINES -38.3 -1.6 17.9 320.9 5.3 1 .7 TV stations enjoyed operating -income growth of nearly 21 BROADCASTING 20.8 8.2 70.0 167.1 27.2 13.0 percent, and cable contributed income of some $12 million CABLE TV 11.8 84.9 - on revenues of almost $85 million.

WESTINGHOUSE 10.8 0.3 670.8 10,731.0 8.9 2.76 Broadcasting and cable operations enjoyed a five-year GROUP ENERGY & ADVANCED growth in operating income of almost 14 percent and a TECHNOLOGY 4.1 9.1 434.8 4,807.7 11.2 8.4 revenue increase to match. That helped to offset declines in INDUSTRIAL 101.0 -3.5 123.2 3,602.4 - 11.7 7.0 the industrial and commercial divisions. The sale of Group w in $651 mil- COMMERCIAL a2.3 -2.9 178.2 1,699.7 - 0.3 - 7.6 W Cable last June resulted a pre-tax gain of BROADCASTING & CABLE 8.1 -21.5 149.9 838.8 13.9 14.2 lion.

3Totals represent nine -month periods ending Dec. 30, 1985 and Dec. 31, 1986. Companies merged February 1986. Division results cover 1985 fiscal year, eight months ended March 31, 1986 'Composed of film, TV, home video, pay TV and studio tour. 5ln American dollars. Using formula of Australian dollar value multiplied by .698, the rate of exchange used by News Corp. in their 1986 annual report

CHANNELS / JUNE 1987 37

www.americanradiohistory.com Financial Achievers In Media

First Boston and its London -based affiliate Credit Suisse First Boston provide the full range of investment banking services to companies in all segments of the media industry. Ask your peers for whom we've recently worked:

N W Ayer Incorporated Katz Communications, Inc. Affiliated Publications, Inc. King Broadcasting Company American City Business Journals, Inc. King Videocable Company American Television and King World Productions, Inc. Communications Corporation KSCI-TV Capital Cities/ABC, Inc. New England Television Corporation Cellular Communications The News Corporation Limited Centel Corporation Pearson PLC The Chronicle Publishing Company Gerry M. Ritterman Communications Satellite Corporation E. W. Scripps Company Cox Enterprises, Inc. Scripps Howard Broadcasting Company Devon Group, Inc. John P. Scripps Newspapers Esquire Magazine Group, Inc. Sorg Incorporated Gaylord Broadcasting Company Taft Broadcasting Company General Cinema Corporation Tele -Communications, Inc. Mark Goodson Tri-Star Pictures, Inc. Goodson Newspaper Group, Inc. Turner Broadcasting System, Inc. Gulf + Western Inc. Viacom International Inc. Harcourt Brace Jovanovich, Inc. Westinghouse Electric Corporation Heritage Communications, Inc. World Book Finance, Inc.

For large transactions, such as the $370 million initial public offering of common stock for American Television and Communications Corporation, or smaller transactions, such as raising $11 million of debt privately for King Broadcasting Company, First Boston's Media Group can help you achieve your financial objectives. If you are considering acquisitions, divestitures, corporate restructuring or if you need to raise capital, call the Financial Achievers in Media at First Boston, Fred Smith or Chuck Ward at (212) 909-2000.

q=First Boston Investment Bunkers

www.americanradiohistory.com THE CHANNELS ACHIEVERS/ PERFORMANCE BliOU)C:\STI\(:

RANK COMPANY ROE 1986 ROE 1985 DIE 1986 RANK DIE 1985

AVERAGE 0 07' 0.06 2.39 2.21 o CBS 0.47 0.06 3.18 13 6.29 o Stauffer Comm. 0.33 0.15 0.74 3 0.85 O Chris-Craft 0.23 0.37 12.11 22 15.42 O Cap Cities/ABC 0.23 0.16 1.64 9 1.12 O American Family 0.23 0.16 6.40 20 5.69 O LIN Broadcasting 0.17 0.11 0.40 2 0.21 O United Television 0.17 0.31 2.68 11 3.04 O General Electric 0.16 0.17 1.29 7 0.00

O Gray Comm. 0.13 0.11 0.35 1 0.27 m Clear Channel Comm. 0.13 0.23 3.84 16 2.45 ED GenCorp 0.12 0.08 1.02 6 0.00 ® Liberty 0.12 0.10 3.63 15 2.58 C) Park Comm. 0.11 0.13 0.77 5 0.48 C) Selkirk Comm. 0.11 0.09 0.77 4 0.83 ® Westwood One 0.10 0.10 1.60 8 0.23 m A.H. Belo 0.08 0.08 1.85 10 1.40 m Scripps Howard Bcast. 0.04 0.23 3.36 14 0.89 O Jacor Comm. 0.00 0.06 2.96 12 6.75 m Emmis Broadcasting - 0.053 -0.983 - 3.36 24 -11.12 m Infinity Broadcasting -0.13 0.862 5.19 19 - 34.70 ® Mairite Comm. - 0.20 0.20 5.18 18 2.84 ® Sun Group - 0.42 0.08 4.41 17 4.72 ® Outlet Comm. - 0.62 -0.13 6.92 21 0.25 m TVX -1.57 0.18 26.14 23 2.82 ® Price Comm. -1.763 -1.55 - 33.39 25 42.05 Exdudes TVX and Price Comm. 2Prdtable won negative equiy. 3unprofitable with negative equìy. a Excludes Turner. >Exdud.. Cablevisian. The Lowest Return Although radio and television broadcasting is widely The average itself is somewhat high in light of the fact that recognized as one of the nation's most profitable businesses, CBS, the industry leader in this compilation, reports a high the field last year showed the lowest return of the four ROE, in part because the company has bought back large media sectors reviewed in the Achievers section. amounts of its stock and because its profits more than quad- In 1986, the field's average return on equity (ROE)-a sig- rupled last year, reflecting austerity measures and an eas- nificant measure of profitability -was 0.07, below cable's ing of its corporate -debt burden. Ten other companies, how- 0.12, the diversified company average of 0.17 and the pro- ever, did show improvements in return on equity from 1985 duction segment average of 0.16. to 1986. Stauffer Communications, American Family and It is probably not just a statistical quirk. The TV station Cap Cities/ABC were the biggest gainers. business, while essentially healthy, had problems last year. In the overall figures, debt/equity (D/E) levels rose very Total TV ad revenues rose by 8 percent to about $22 billion slightly, although 17 of the 25 broadcast companies showed last year, well below the double-digit growth figures that higher figures by that measure, revealing that continued had been the norm. National spot advertising is soft and, in low interest rates last year encouraged broadcasting firms an increasingly competitive environment, not likely to to borrow more money. Gray Communications and LIN resume earlier rates of rapid growth. In the meantime, sta- Broadcasting reported the least leveraged balance sheets, tions are aggressively trying to gain more local advertising, while TVX Broadcast Group, Emmis Broadcasting and a marketing problem they've not solved. Price Communications the most highly leveraged.

CHANNELS / JUNE 1987 39

www.americanradiohistory.com Barney

Great

www.americanradiohistory.com r Miller

. legs. COLUMBIA/EMBASSY TELEVISION A unit of C QoYvis,

www.americanradiohistory.com PERFORMANCE/THE CHANNELS ACHIEVERS CABLE

RANK COMPANY ROE 1986 ROE 1985 DIE 1986 RANK DIE 1985 AVERAGE 0.12° 0.06' 2.335 2.90 O American Cablesystems 0.92 0.143 5.71 15 5.60 O Tempo Enterprises 0.61 0.37 8.73 19 4.89 O Home Shopping Net. 0.36 0.04 0.98 4 11.76 O Time 0.29 0.17 2.25 7 1.54 O Adams -Russell 0.282 0.15 -4.56 21 1.11 O Financial News Net. 0.23 - 0.43 0.58 3 2.14 O ATC 0.22 0.06 5.97 16 0.56 O TCA Cable 0.21 0.29 2.44 8 2.79 O Maclean Hunter 0.18 0.20 1.02 5 1.27 O Scott Cable 0.12 0.43 2.94 10 3.81 O Centel 0.11 0.15 1.92 6 1.85 O TCI 0.10 0.03 5.48 14 3.68 O United Cable 0.08 0.30 8.24 18 9.13 O Jones Intercable 0.08 0.11 3.04 11 2.02 United Artists Comm. 0.07 0.14 6.46 17 5.79 O Rogers Comm. 0.04 - 0.26 2.89 9 9.95 O Century Comm. 0.02 0.08 3.84 12 7.93 O Comcast 0.01 -0.13 4.31 13 2.15 m C.O.M.B. - 0.04 0.23 0.55 2 1.82 Adelphia Comm. - 0.303 - 0.823 3.46 20 - 7.26 ® QVC Network - 0.41 NA 0.24 1 NA Cablevision Systems - 0.433 -1.293 -16.59 23 - 8.46 O Turner Broadcasting - 0.903 0.04 - 8.21 22 11.01 tzcuees UvA ana ence Lamm. £rromona wen negarne eque. unpronmow wen negarne equity. oaaudes Burner. 5Ecdudes Cao o. VISO Success Story It shouldn't be surprising that 1986 was a strong year for tions Inc. (TCI), the largest MSO, is typical of large opera- the cable industry and that the industry's average return on tors with enormous cash flow and considerable interest pay- equity grew dramatically. Industrywide statistics help to ments that lower net income totals sharply. Those high tell the story. Total industry revenues rose by close to $1 bil- interest payments reflect the enormous debt large cable lion, total subscribers grew by 2.5 million and cable ad reve- companies have taken on in order to fund system construc- nues grew by $181 million, a healthy 24 percent rise. tion and acquisition. TCI, for instance, reported operating The firms in the accompanying chart were the clear benefi- income of $154.3 million last year on revenues of $645.7 mil- ciaries. From a small -but -growing, highly successful Massa- lion, but net income of just $72.3 million, a figure seven times chusetts -based multiple -system operator, American Cable - greater than TCI's 1985 net income. systems -the industry return -on -equity (ROE) leader -to At the same time, the cable industry also took advantage highly ranked programmers Home Shopping Network, of surging cash flows to lower its average debt/equity level, Time Inc. and Financial News Network, 1986 was a very easing balance -sheet pressures. But only one of the top strong year for cable. seven companies in the debt/equity ranking is a "pure" But return on equity isn't necessarily a telling measure of cable operator, reflecting the fact that the more dependent the health of the cable industry, since it is a business widely firms are on cable operations, the more likely they are to be measured not by profitability but by cash flow. For example, highly leveraged. Virtually all those MSOs report debt/ industry giant and Wall Street darling Tele-Communica- equity ratios well above those in broadcasting.

42 CHANNELS / JUNE 1987

www.americanradiohistory.com Tak Communications, Inc.

has acquired

KIT V-T V (Honolulu, HI)

a.7ul

WUSL -FM (Philadelphia, PA)

The undersigned acted as financial advisor to Ihk Communications, Inc. in these transactions.

MORGAN STANLEY & CO. Incorporated

April 1987

www.americanradiohistory.com PERFORMANCE /THE CHANNELS ACHIEVERS VEIISIF I El)

RANK COMPANY ROE 1986 ROE 1985 DIE 1986 RANK DIE 1985 AVERAGE 0.17° 0.15 2.58 1.58 O News Corp. 0.44 0.40 11.96 16 6.40

O Times Mirror 0.31 0.24 1.25 5 1.77

O Tribune 0.27 0.14 1.35 7 1.69

O Lee Enterprises 0.25 0.24 0.59 1 0.60

Washington Post 0.23 0.33 1.62 10 1.53 O Westinghouse 0.22 0.19 1.81 11 1.99 O Gannett 0.19 0.20 1.35 6 0.81 New York Times 0.19 0.20 0.99 4 1.20 O McGraw-Hill 0.18 0.19 0.70 2 0.64 Knight-Ridder 0.17 0.19 1.39 9 1.00 m Meredith 0.16 0.16 0.94 3 0.84 ® Taft Broadcasting 0.06 0.15 3.57 13 1.33 ® Media General 0.05 0.11 1.35 8 1.25 ® Multimedia -0.013 0.042 -1.70 17 -1.69 ® Viacom Intl. -0.02 0.06 3.85 14 1.65 O Heritage Comm. - 0.04 0.07 3.10 12 2.09 m John Blair -1.32 - 0.30 9.77 15 4.63 O Cox Enterprises NA 0.05 NA 18 0.77

2Profltable with negative equity. 3Unprofrtable with negative equity. 4 Exdudes Turner. SExdudes Coblevision. &Exdudes John Blair. 7Exdudes Playboy. BExdudes Western World TV. Old and in the Money

Rupert Murdoch's News Corp. is the Achievers top - largely because this group of 18 firms includes the indus- ranked diversified media company, an ironic statistical con- try's old-line media firms. The top -ranked diversified firms clusion in light of the fact that two of Murdoch's most visible measured by debt/equity ratios -Lee, McGraw-Hill and U.S. media properties -the Fox Network and The New Meredith -enjoy steady profits and little debt. York Post -lose large amounts of money. The companies on the list such as Times Mirror, Washing- Otherwise, News Corp., whose shares are traded on the ton Post and Gannett, though included in this survey of the New York Stock Exchange as depository receipts, is vastly electronic media, show far more stability in both return and successful, spreading across the country and around the in balance -sheet measures because of the relative stability world. About 60 percent of its revenues are produced by of publishing, their dominant business. The nation's large U.S. properties and about 80 percent of the company's publishers are generally not subject to the fickleness of the break-up value would also come from U.S. holdings. television marketplace and haven't had to face the huge What's notable about this listing of media giants -just investment costs that accompany the development of a ahead of the production industry with the highest return of cable -system company. the four segments studied -is the obvious health and stabil- For all the health of this group, several of the companies ity of the companies. Other than News Corp., with its huge have disappeared, or will soon, from the nation's log of pub- debt, most of the diversified companies have cleaner balance lic firms. John Blair, Cox, Heritage, Viacom and Taft al- sheets than their counterparts in other segments. That's ready are or will be part of larger companies, or will go private.

44 CHANNELS / JUNE 1987

www.americanradiohistory.com $110, 000, 000 Tak Communications, Inc.

$80,000,000 Senior Secured Financing

$10,000,000 Senior Subordinated Notes due 1997 and related common stock purchase warrants

$10,000,000 Junior Subordinated Notes due 1997 and related common stock purchase warrants

$10,000,000 Common Equity

The undersigned structured the financing and acted as agent in the private placement of these securities.

MORGAN STANLEY & CO. Incorporated

April 1987

www.americanradiohistory.com PERFORMANCE /THE CHANNELS ACHIEVERS

Pnoi n c 'TION

RANK COMPANY ROE 1986 ROE 1985 DIE 1986 RANK DIE 1985 AVERAGE 0.16' 0.09' 2.61 0.91 O Aaron Spelling Prods. 1.23 0.40 4.76 22 1.01 O King World Prods. 0.45 0.42 0.96 4 1.96 © Dick Clark Prods. 0.43 0.49 1.08 6 1.15 O Coca-Cola 0.27 0.24 1.38 10 1.27 O Heritage Ent. 0.24 0.30 0.87 3 1.28 O New World Pictures 0.20 0.34 7.88 23 7.17 Barris 0.20 0.11 0.21 1 0.16 O Walt Disney 0.17 0.15 1.20 7 1.45 O Robert Halmi 0.17 0.08 1.05 5 1.36 O Warner Comm. 0.16 0.37 1.75 14 3.35 m Vestron 0.15 0.48 2.14 15 0.73 O Gulf +Western 0.14 0.14 1.23 8 1.34 C) Fries Ent. 0.13 0.09 2.71 17 0.94 m Reeves Comm. 0.11 -1.76 1.59 12 2.12 ® MCA 0.10 0.11 0.68 2 0.61 O Tri-Star 0.06 0.02 2.36 16 2.06 m MGM/UA Comm. 0.05 -0.18 1.32 9 1.32 O Peregrine Ent. 0.04 -0.34 3.04 19 2.89 m Lorimar-Telepictures 0.01 0.09 1.53 11 1.08 m Western World TV -0.02 - 5.973 13.10 24 -17.03 ® DeLaurentiis Ent. - 0.06 NA 2.88 18 NA ® Hal Roach Studios -0.18 0.35 1.59 13 1.01 O Orion Pictures - 0.28 0.04 3.41 20 1.83 m Playboy - 3.07 0.08 3.83 21 0.98 7Profitoble with negative equity. ,Unprofitable with negative equity. 4 Exdudes Tumor. SExdudes Cablevision. 6Exdudes John Blair. 7Exdudes Playboy. BExdudes Wesem World TV. Seizing on Opportunity Last year's first-half boom in the television the list is dotted with the successes of Spelling -type programming market helped propel the production and companies, producers and entrepreneurs such as Dick Clark syndication business to dramatic growth, fueled by and the King brothers of King World, a duo who built an successes at both the large Hollywood studios and the enormous distribution empire around hot game and talk smaller new breed of entrepreneurial production houses. shows. Also settling into the top 10 are giants Coca-Cola, Only the average return on equity (ROE) of the large, whose profitability is, of course, largely fueled by soda pop, diversified media giants exceeded that of the production and Walt Disney, a company whose success is driven in firms, testimony to Hollywood's 1986 health. But the boom significant measure by real estate and theme -park holdings. in new production companies and the successes of such Also notable in the production-company figures is the fact giants as MCA and Lorimar-Telepictures was also marred that 13 of the 24 companies in the category showed higher by substantial program write -downs later in the year, after debt/equity ratios than in 1985. In addition, the jump in the the crash in the independent -TV station world began industry's debt/equity ratio compared with 1985 was the lowering the value of syndicated program libraries. sharpest of the four segments in this survey. That reflects a Although the company's profits fell slightly in 1986, a year of low interest rates and an industry aggressively restructuring of the balance sheet of Aaron Spelling endeavoring to meet the needs of the growing first-run Productions pushed that company into the top spot, syndication and cable -programming markets. It is unclear measured by return on equity. That statistical oddity aside, in 1987 whether those bets will pay off.

46 CHANNELS / JUNE 1987

www.americanradiohistory.com This announcement appears as a matter of record only.

$100,000,000

Pulitzer Publishing Company

8.80% Senior Notes due 1997

The undersigned acted as agents in the private placement of the notes.

MORGAN STANLEY & CO. A. G. EDWARDS & SONS. INC. I,u orporaled

April 23, 198

www.americanradiohistory.com HowAmericans feel about the press. Read all about it.

Yours for the asking: Call (Allentown, PA);The Advocate, 0 Reports of three Times Mirror/ GreenwichTime (Connecticut); Los Angeles Gallup investigations into Americans' atti- Times Syndicate. tudes toward the news media. Times Mirror Magazines: (D Transcripts of three Times Mirror Popular Science; Outdoor Life; Golf panel discussions that featured journalists, Magazine; Ski Magazine; The Sporting News; members of Congress and presidential National Journal; Broadcasting; Sports inc. aides exchanging views about the press - you think; and to publish your answers... Times MirrorTVStations: often with considerable passion. so you and we can continue to stay in touch. KDFW-TV, Dallas; ETBC-'IV, Austin; KM, 0 A summary of the 8,000 letters, How to order: St Louis; WVTM-TV, Birmingham (AL). cards, poems and drawings we received in Just call our public affairs people at Times Mirror Cable: response to our invitation in ads and public (213) 237-3946, and we'll send your book- More than 40 cableTVsystems serve 300 forums to"tell us what you think" about lets by mail. communities in 14 states across the nation. press issues. Or, if you'd also like to tell us what you Times Mirror Publishing: What's behind this offer: think about press performance, write our Matthew Bender & Company, law books; These booklets are part of a compre- chairman, Robert Erburu,Times Mirror, The C.V. Mosby Company, medical and hensive program -"The People &The Times Mirror Square, Suite 102, Los college publishers; Year Book Medical Press" - that aims to help the public and Angeles, CA 90053. Publishers, medical publications; Harry N. the news media understand each other Who we are: Abrams, art books; Mirror Systems, com- better. We own the properties listed below. puter software; Learning International, We undertook it because we felt we In terms of sales, we rank 133rd among training programs; Jeppesen Sanderson, could serve you better if we both knew Fortune's "500:' In terms of net income, flight information and training;Times more about what you thought and felt. we're 43rd. Mirror Press, directories and manuals. And nowwe're committed to it, thanks Times Mirror Newspapers: OtherTimes Mirror Operations: to the feedback we've gotten from our Los Angeles Times; Newsday; the Million Market Newspapers/Times colleagues and from you. Baltimore Sun newspapers;The Hartford Mirror National Marketing; Times Mirror We'll continue to ask you to "tell us what Courant; The Denver Post; The Morning Land andTimber Company. if71 Times Mirror 64 We're interested in what you think.

www.americanradiohistory.com THE CHANNELS ACHIEVERS/ INDUSTRY FORECASTS WHAT'S AHEAIJ In a difficult economic environment, the Olympics and the 1988 elections could heat up a lukewarm advertising market.

ECONOMY take steps to steady interest -rate lev- Cable's established revenue streams els. Sharper jumps in interest rates and are well protected-with even a slow economy, could prompt a reces- beleaguered pay TV nets staging a Clouds On sion, the year's most treacherous sce- fourth-quarter recovery. Only an uptick nario for the economy and for advertis- in interest rates could alter the bullish The Horizon ing spending. MERRILL BROWN picture, a particular problem for highly leveraged MSOs. But the slight rise in The recent rise in interest rates and some key borrowing rates this spring CABLE OPERATORS the nation's muddled trade-policy pos- and a minor drop in MSO stocks only ture combined with a drop in the value created a new buying opportunity, said of the dollar is raising doubts about the 1987: A Scorcher some analysts. They think Tele -Com- economy's capacity to grow in the sec- munications Inc. and Comcast are ond half of 1987. If those fears are real- likely growth leaders over the next six ized, media -industry hopes for a strong in the Making to 12 months. JERI BAKER second half of 1987 and early '88 are of Cable operators are awash in liquid- threatened. There are few signs CABLE PROGRAMMING strength in the ad climate in 1987, with ity. Deregulation has enhanced MSO first-quarter national advertising cash flows, filling corporate coffers to trends showing the same weaknesses as the point that they are sufficient to virtu- System Owners a slow late 1986. ally any business plan, including costly Analysts say that the broadcasting pay -per -view installations. The boom industry can no longer count on double- has made cable increasingly attractive Are Buying In digit annual ad growth, in part because to both the debt and equity markets: of a slower national economy, but also Over $7 billion in transactions were Pogramming is the name of the because advertisers are merging, cut- agreed to last year, says analyst Paul game for driving cable -subscriber ting budgets and targeting ad spending. Kagan. And the record pace of mergers growth in the coming years, and Wall Although network ad spending has reg- and acquisitions in late 1986, aimed to Street likes that, says Drexel Burnham ularly topped the inflation rate by as beat the new tax law (and thus expected Lambert analyst Jeff Russell. But as for much as 6 percent, that won't continue to end January 1) has continued, sug- investment opportunities, the rule of if inflation moderates. "We're return- gesting that 1987 will be another thumb is to put stock elsewhere in ing to orderly ad growth that more scorcher. Industry forecasts include, as cable-namely into system operating directly correlates to the economy," they must, obligatory lists of risks cable companies. Few cable networks are says McCann Erickson's Robert Coen, may face, but analysts admit they are pure plays-that is, cable programming who predicts that network advertising, farfetched. services that are not part of larger cor- a proxy for ad health, will rise by 5.5 One clear sign of the industry's self- porate conglomerates. And after the percent this year, two to three points confidence is the cable money going into legendary cable network shakeout of better than expected rates of inflation cable: MSOs are putting together new the early '80s, there are only a handful and economic growth. Also suggesting a collections of systems, buying other of programming services to invest in: slim gap between economic and ad MSOs and making investments that will Turner Broadcasting System for years growth, PaineWebber's Andrew Wal- launch or salvage program networks. seemed to be the likeliest, even as Ted lach says ad spending should grow by The signature, in fact, of the indus- Turner held 80 percent of the stock. But 7.7 percent this year (up from 6.6 per- try's economic activity is plain audacity. as TBS puts the final touches on a deal cent in 1986), while the nominal GNP In 1987, this is a business financially that lets 17 MSOs including Time Inc. in grows at 5.8. That prediction suggests well insulated and entirely in control of on 35 percent of the company, even that the economic and ad pickup usually itself. Case in point: The FCC's sympa- CNN, Headline News and WTBS are accompanying Olympic/election years thy for reimposing syndicated exclusiv- going the way of other pure -play cable - will match earlier expectations. ity, a regulatory heirloom from cable's network dinosaurs. Financial News Goldman Sachs economists say that less successful lobbying days, caused Network and the three home shopping economic growth will weaken markedly barely a flinch among MSOs and services (HSN, C.O.M.B. and QVC) are in the second half. But such a slowdown prompted a vast yawn among Wall also relatively pure plays. As operators is likely to encourage policymakers to Street analysts. Nobody's scared. up their stakes in cable nets, investing

CHANNELS / JUNE 1987 49

www.americanradiohistory.com INDUSTRY FORECASTS/THE CHANNELS ACHIEVERS

in programming is a question of deter- other low-cost promotions "because another shakeout. Both Vogel and mining the MSOs most active in it. network is still the most effective way Logsdon are betting on the big studios "What's good for the operators is to get a consumer product to market." this go-round-Paramount, MGM/UA good for programmers," says Tony Hoff- CBS and ABC will improve, he says, and MCA for Logsdon, and Lorimar- man, an investment banker with Union because they lowered their break-even Telepictures and MCA for Vogel- Bank of L.A. But rarely, says Eber- by slashing overhead. because they will have the resources to stadt analyst Mark Riely, will a net- PaineWebber's Ken Noble antici- weather the storm. PATRICIA E. BAUER work's performance greatly influence pates a boost in network stocks this fall, the decision to invest in the corporate largely from expectations of a classic parent, unless it's a Viacom (which election/Olympics-year ad boom in 1988. STATIONS owns MTV Networks and number -two But Noble doubts that next year will be pay service, Showtime) or Time Inc. as strong as convention would have it. Clear Sailing (HBO's parent). With the VCR threat He observes: "It's the economy that waning, the price of pay declining as the determines advertising." LES BROWN cost of basic goes up and pay networks For Local TV offering pricing incentives to operators, the pays seem to be emerging from last PRODUCTION Despite a disappointing first half, ad year's slump. On the surface, it bodes revenues for the nation's 900 TV sta- well, but a Donaldson Lufkin Jenrette The Gloom and tions are expected to recover strongly report warns that reduced profit mar- during the remainder of 1987, though gins and marketing costs indicate hur- gains will not match those of last year. dles down the road. CECILIA CAPUZZI Doom Abates Revenue from local TV buys swelled to $6.5 billion last year, a 14 percent NETWORKS Frst, the good news: the outlook is increase over '85, according to the Tele- brighter for the production and syndica- vision Bureau of Advertising. National tion business. Now the bad: the best is spot sales also rose to $6.5 billion, a 9 Red Ink for over. Program suppliers won't be percent gain. returning to those halcyon days of esca- Analysts offer two reasons for the rel- lating prices and revenues. In fact, atively strong performance of local sta- Two of Three? some will be lucky to be profitable. tions. Most of the economy's growth is Program suppliers have suffered from in the booming service sector, domi- For as long as there has been three - Grant Broadcasting's bankruptcy, the nated by smaller, regional companies network competition, there has never resulting drop in prices and a soft ad that do not need the national saturation been a year in which two lost money. market. Anticipating a strong ad mar- of network buys. Optical services were This could be the first, if business should ket in 1988, courtesy of the Olympics up 64 percent over 1985; medical and fail to pick up in the second half of the and national elections, much of the dental services, up 31 percent; and law year. But even if CBS and ABC were to gloom is abating. "By and large, things firms, up 23 percent. Second, traditional post losses, their parent corporations are looking up," says Hal Vogel of Mer- network mainstays such as auto manu- will do quite well in 1987, thanks to their rill Lynch. facturers, household -goods producers owned stations and other divisions. That's not to say everything is rosy. and retail chains are giving their The networks are feeling the brunt of Despite the growth of new program out- regional managers more authority over radical change in the TV business, coin- lets, it's hard to get a new show on the marketing decisions, which often trans- cident with a general softening of the ad air. The number of programming hours lates into local buys tailored to their market. And now, the switch to people - has declined sharply over the past year, individual needs. meter ratings promises to complicate nudged downward by independent-sta- Investors hoping to ride surging sta- the selling process. "It's a tough year to tion bankruptcies, the growth of home tion revenues to quick profits may have call," says William Suter, who follows shopping shows and the waning of a hard time, however. "Leveraged buy- the networks for Merrill Lynch. checkerboarding. Meanwhile, adver- outs have removed a lot of strong sta- Most key Wall Street analysts antici- tisers say they'd rather concentrate tions from the public markets, and pate a lift in fall network sales and esti- spending on proven winners like Cosby, many of the rest are owned by the net- mate overall 1987 gains of up to 7 per- or The Oprah Winfrey Show, whose works or diversified media companies, cent on the optimistic side, and 2 or 3 hour format squeezes out many half- where local station earnings get buried percent on the cautious side. hour shows. "Other than the top tier of in the mix," says Richard MacDonald,

One of the cautious, John Reidy of programming, it's still tough," says First Boston media analyst. MacDonald >F! Drexel Burnham, notes that NBC will Crowell, Weedon & Co.'s Jeffrey and Wertheim and Co.'s David Lon- be chief beneficiary of any fall revenue Logsdon. doner are recommending Cap Cities/ gains, with the other networks marking Simultaneously, networks continue ABC, for instance, on the theory that slight improvement. He tentatively pressuring producers to hold down it's station group will remain strong forecasts profits of $15 to $25 million for costs. But for the first time, big studios while its network operation can't get CBS and losses of $55 million for ABC, are hinting they might agree to a finan- any worse. LIN Broadcasting, Multi- both on some $2 billion in revenues. cial-interest/syndication compromise media, United Television and Scripps More bullish is Ernest Levenstein of granting networks partial ownership of Howard Broadcasting should also con- Tucker, Anthony, who sees advertising programs. If that happens, small inde- tinue to benefit from local and national switching back from direct mail and pendent producers may face yet spot gains. RINKER BUCK

50 CHANNELS / JUNE 1987

www.americanradiohistory.com First Quarter

Acquisitions. May 1987 NARRAGANSETTCapital

has formed

CABLE TELEVISION: NARRAGANSETT CAPITAL PARTNERS L. P. Serving 60,000 subscribers in Fulton, Missouri $216,000,000 Jacksonville, Florida equity investment fund Kauai, Hawaii Ruidoso, New Mexico specializing in media Vincennes, Indiana acquisitions and dedicated

RADIO: to leveraged buyouts Tulsa, Oklahoma organized by Narragansett KAMI -FM & Narragansett Capital, Inc. Baton Rouge, Louisiana Providence, Rhode Island Capital, Inc. WYNK AM + FM

Narragansett Capital controls investments in businesses with aggregate sales of approximately one billion dollars. These include cable television systems serving 300,000 subscribers as well as numerous radio and television properties.

For more information on Narragansett Capital Partners, contact Gregory P. Barber or Jonathan M. Nelson, NARRAGANSETTCapitGlZ Managing Directors, Narragansett Capital, Inc., 401.751.1000

40 Westminster Street Providence, Rhode Island 02903

www.americanradiohistory.com CFOs TO WATCH /THE CHANNELS ACHIEVERS MEDIA'S HOT Four pillars of the purse who are building

WILLIAM C. BEVINS JR At Ted's Right Hand Pluto's Paymaster Though he works in one of the media's most talked It's easy to tell that Gary Wilson, the Walt Disney IIIIIIIabout companies, Turner Broadcasting System vice Company's chief financial officer, is a key player on the president of finance and chief financial officer William Bevins team led by chairman Michael Eisner and president Frank Jr. shuns publicity at every opportunity. TBS executive Wells: Wilson's phone keeps ringing with calls from the two. vice president Robert Wussler says, "He doesn't even like And Wilson talks in terms of the big picture, the search for to go to sporting events where he can be seen in public." deals and the far-sighted strategic moves that will help Dis- Bevins has been Ted Turner's right-hand man for eight ney flourish into the next century. years-the one, say analysts, with the responsibility for exe- It was Wilson's talent for long-term thinking that cuting Ted's impossible -sounding financial schemes. "He's prompted Disney to recruit him from Marriott Corp. two been a key ingredient in the company's growth," says years ago. Though he hadn't worked in Hollywood, Wilson's Wussler. Adds Lee Wilder, media analyst with the Atlanta - vision as Marriott's CFO and executive v.p. had helped turn based financial house Robinson Humphrey Co., "He's had a graying family run hotel business into a powerhouse. Ear- plenty of experience in creative financing in the last few lier, he had guided a Philippine company out of the flagging years. It takes a special combination of personality traits to sugar business and onto the crest of Southeast Asia's con- work in a company dominated by one person who's usually struction wave. Now at 47, the tall, boyish Wilson is one of a willing to bet the ranch." handful of people who have helped steer Disney in its phe- With 17 cable operating companies including Time Inc. nomenal turnaround. Since he arrived in the fall of 1985, Dis- about to invest $550 million in TBS-while Ted reduces his ney's stock price has more than tripled while profits and rev- holdings from 81 to 51 percent-the 41 -year -old Bevins has a enues have surged as well. full plate before him this year. But it won't be the first time A native of Alliance, Ohio-a town with fewer inhabitants he's ushered TBS into a new phase-or bailed it out of tough than Disney has employees-Wilson parlayed football skills financial times. (Many analysts blame Turner's current fis- into an athletic scholarship to Duke University. That was cal problems on the MGM purchase last year, saying he followed by an MBA from Wharton. He still cherishes team- overpaid by as much as $600 million.) work, not claiming credit for Disney's winning game plans Despite Wall Street's raised eyebrows over some of Turn- but admitting to a role in key plays. The Silver Screen II and er's ventures (the Goodwill Games lost $26 million), Bevins III partnerships, for instance, brought Disney $500 million is highly regarded in the financial community-described as in film production money-far more than any single studio brilliant, straight-shooting and hardworking. Though the had raised in public markets. Disney's Arvida real-estate company's finances are vast and intricate, Bevins has a division was sold for $400 million, double what the company small staff and few meetings. Says Wussler: "In eight years, paid two years ago. I've never gotten a memo from Bill." Wilson has also been overhauling the company's finance Before joining TBS, Bevins worked for 11 years at Price department and possibly even creating a group of indepen- Waterhouse Co. Bevins suffered a heart attack five years ago dent television stations around recently acquired KHJ in while at work, and some who know him say TBS dominates his Los Angeles. "When the right strategic decisions are made life. But with his aversion to the limelight, one can only guess and a lot of value is created-that's what I pride myself on," what Bevins would say about himself. CECILIA CAPUZZI he says. PATRICIA E. BAUER

54 CHANNELS / JUNE 1987

www.americanradiohistory.com THE CHANNELS ACHIEVERS/ CFOs TO WATCH MONEYMEN the media industry of the '90s.

ROBERT E. HAMBY RONALD J. DOERFLER Multimedia's Maverick Cap Cities' Quiet Man

Wall Street's vocabulary expanded considerably in IIINAIn January 1986, when Capital Cities swallowed 11111111985 when Multimedia Inc. coined "recapitalization mer- BC, the responsibility for shepherding the two compa- ger" for its defense strategy against a takeover bidder. Oth- nies through the difficult merger of their financial struc- ers preferred "public -leveraged cashout"; still others tures fell to Ronald J. Doerfler, Capital Cities' chief financial "public -leveraged buyout." Whatever the new jargon, Mul- officer. Since then, Doerfler has spent many long nights at timedia deftly hired away Robert Hamby, its Peat Marwick Cap Cities offices in midtown Manhattan securing the $1.6 Mitchell accountant for more than a decade, to help assure billion in financing that holds the deal together, divesting that this first -ever maneuver was done right. another $1 billion in cable and station assets and overseeing Hamby, now finance v.p., had done everything as head of a series of traumatic budget cuts at the network. The dives- Peat's tax department, from considering the tax implica- titure program alone involved the sale of more than ten sep- tions of Multimedia's acquisitions (it has five TV and eight arate operations over two and a half months. Yet, in the tra- radio stations, 47 newspapers and 100 cable franchises) to ditional Cap Cities mold, Doerfler, 45, worked quietly and doing taxes for the founding Peace and Jolley families. confidently behind the scenes, asking for no particular Hamby was raised near Multimedia's Greenville, S.C., credit when all the pieces finally fell together. headquarters and worked in textile mills during college. "I "The only question I've asked myself all these months is: don't come from money," he says. "Sometimes I still can't `It's 7 p.m. Why am I still at my desk after a 12 -hour day?' " grasp that I'm an officer of a major firm addressing Wall says Doerfler. "It's been a lot of work." Street analysts." Doerfler joined Cap Cities as an assistant controller in Multimedia, of which family members and management 1969 and rose steadily through the ranks before being still own almost 40 percent, intended the recap merger as a named CFO in 1980. It was during this period that he earned shield against charges that management's proposed LBO a loyal following on Wall Street for his dry, understated discriminated against minority shareholders. Multimedia style and attention to detail, especially the tax and account- "found a way to treat all shareholders like family," Hamby ing implications of corporate mergers. His only departure recalls. "No one had ever done it before. We used the LBO from the tone set by Cap Cities chairman Thomas Murphy is maneuver of providing shareholders with stocks and bonds, his thick brown goatee, now flecked with gray. but instead of thereby buying them out, we let them con- Lately, Doerfler has devoted more time to the long-range tinue as owners." It was a highly leveraged company then implications of the Cap Cities/ABC merger. He was forced but the stock has since gained well over 100 percent. to write down $290 million worth of entertainment and Hamby's first priority is to reduce debt. Multimedia sports programming costs that were "overvalued" by ABC. added standard poison pills to its recap papers, so it feels The disclosure of such figures in recent months amounted to safe from takeover. Bank loans for the deal neared $625 mil- a tacit admission that key liabilities were overlooked in the lion; the company was $65 million ahead in paybacks by acquisition. Typically, Doerfler doesn't dodge the issue. 1986. Multimedia also issued $480 million in high-interest "It's safe to say that the business we contemplated buying in subordinated debentures. Hamby's next priority is to 1985 was better than the one we ended up owning in 1986," he choose the right moment to refinance. "And to act as the says. "The marketplace has deteriorated more than we president's right arm," he adds. JERI BAKER thought, and now we're facing up to that." RINKER BUCK

CHANNELS / JUNE 1987 55

www.americanradiohistory.com Wometco WLOS, Inc.

owner of television station

WLOS-TV (Greenville - Spartanburg, SC - Asheville, NC)

has been acquired by

AMC of Delaware, Inc. an affiliate of Anchor Media, Ltd.

The undersigned acted as financial advisor to Wometco WLOS, Inc. in this transaction.

MORGAN STANLEY & CO. Incorporated

May 1, 1987

www.americanradiohistory.com What's Hot in Marketing Back To asks There may be many new players, but in promotion there's really nothing new under the sun. Is a return to fundamentals the answer?

Anew revisionism is sweeping mar - simple messages, solid writing and production values. keting and promotion. After a dec- Second, because advertisers are as concerned about ade of looking upon the challenges demographics as ratings, promotion departments are facing television-the rise of cable, becoming more skilled in their use of audience the VCR and independent sta- research, whether devising an entire campaign or a tions-as an all-out war to attract single spot. viewers, promotion executives Our In Focus section examines this trend from now realize that the toughest competitors in their three directions. Jean Bergantini Grillo shows how markets are the same ones as before: entities that are some affiliates are using a new twist on localism to most like themselves. To attract the ratings and make inroads in competitive news markets. Patricia demographics they want, network affiliates must first Bauer describes how Geraldo Rivera's irrepressible battle other affiliates; independents have to nibble self -promotion has been put to work for Tribune away at other indies; and cable programmers have to Entertainment and Cecilia Capuzzi analyses Nickel- distance themselves from the host of competing ser- odeon's new strategy in childrens' programming. vices on the selector box. Each, of course, is a unique tale of promotion, but The renewed emphasis on competing directly they all share a common theme. While the funda- within one's own domain has brought about two mentals of promotion-creativity, the willingness important changes. First, an increasing number of to take risks, strong execution-may not have broadcasters and syndicators are advocating a return changed, the hardest part is bringing them all to the fundamentals of promotion: fresh approaches, together in a single campaign.

For Gannett's KARE -7, localism means sponsoring an elaborate fireworks display during the annual St Paul (Minn.) Winter Carnival.

CHANNELS / JUNE 1987 57

www.americanradiohistory.com What's Hot in Marketing/IN FOCUS

Making Localism Count

It's no longer enough simply to talk about community service. Stations have to get involved. BY JEAN BERGANTINI GRILLO

Four years ago, when the Gan- nett Company paid $75 million for WTCN in Minneapolis -St. Paul, the station was arguably one of the weakest major -market affiliates in the country. Under its previous owner, John Kluge's old Metromedia Television Inc., WTCN had been converted in 1979 from an independent to an NBC affiliate, but it remained a per- ennial ratings loser to the two power- houses of the Twin Cities market, WCCO-TV (CBS) and KSTP-TV (ABC). WTCN had further damaged its reputation by running a desperate series of promotional spots that humorously attacked the competition, outraging viewers who felt this local "Edsel of news" had no right to compare itself to the Cadillacs of the market. These image problems were compounded by a succession of call -letter changes that began in 1985, when Gan- nett renamed the station WUSA. One year later the company bought WDVM in Washington, D.C. and abruptly decided to make it WUSA instead. The Minneapolis outlet was redubbed KARE, following the logic that if market leader WCCO enjoyed a reputation as the thinking person's station, KARE would become the station for feeling people. KARE -TV's John Bachman and Kirsten Lindquist at the "ice desk" during St. Paul's Winter Carnival. Corny as it sounds, the gambit actually appears to be working. Over the ized, community involvement is a way news departments with established past two years KARE has climbed out for a station to differentiate itself from reputations for breaking news and iden- of the cellar and become a genuine con- being just another local vendor," says tifying community problems. The mar- tender in Minneapolis. Its 10 P.M. news- consultant Jerry Wishnow, president of ket obviously didn't need a third strong cast-once almost 20 points behind in the Wishnow Group in Boston, a long- news outlet, but KARE could position the ratings-is now tied for number time advocate of localism. itself against the others by becoming two, and KARE claims to have the best "It's no longer enough for stations to known as the station that helped solve adult demographics in the market. say that things are bad," says Willis community problems. Second, the sta- The key ingredient in KARE's Duff, a senior partner in Audience tion's ratings were so weak that its own revival has been to position itself as the Research & Development in Dallas. airtime was virtually worthless as a pro- station that not only talks about commu- "They must be involved in real -life motional tool. Says Steve Thaxton, nity service, but backs up its commit- problem solving, in offering solutions. KARE's vice president for advertising ment by becoming an active participant They have to show ways that involved and promotion, "We needed community in solving specific local problems. This citizens can right a wrong." events because, in many cases, attend- twist on localism is quickly gaining The original inspiration for KARE's ance at them was greater than our own ground at many other affiliates across community -service emphasis grew out on-air audience." the country as a means of standing of two fundamental traits of the Minne- Thaxton and KARE general manager apart in competitive markets. apolis market. First, the competition at Joe Franzgrote also learned from com- "As television becomes fractional - WCCO and KSTP had outstanding munity leaders that many worthy pro -

58 CHANNELS / JUNE 1987

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TV Goes Postal Derect -mail promotions-long a mainstay in the KWWL continued to broadcast from a temporary print field-are gaining acceptance among the tower, and mailed a newsletter to advertisers to keep nation's broadcasters. Through limited mail- them informed of developments until a new tower was ings to advertisers and bulk mailings to viewers, sta- built. Other advertisers asked to be included on the tions are using the local mail drop to reinforce the mailing list and now KWWL's Signal, an attractive, messages in their promo spots. Interest in direct mail eight -page quarterly with articles about the Waterloo has become so widespread that a workshop on market, is sent to 1,500 customers. desktop publishing was part of the BPME convention Perhaps the most ambitious direct -mail campaign in Atlanta this year. was that undertaken by Chronicle's flagship station in The station move to direct mail is not without irony. San Francisco, KRON-TV. In 1984, the station sent a The booming direct -mail business-between 1976 and mailing to 337,000 Bay Area TV Guide subscribers, 1986 it grew from a $4 billion to a $17 billion indus- inviting them to join a new "KRON-TV Viewer Advi- try-has relied on heavy TV buys to break through sory Council." More than 18,000 recipients-about 5 the clutter of junk mail sent into American homes. percent-responded. Advisory Council members Now broadcasters are simply borrowing a marketing receive quarterly newsletters and questionnaires and tactic of one of their major advertisers. are invited to weekly luncheons at the station, where Chronicle Broadcasting's KAKE-TV in Wichita, they comment on programming and preview promo- Kansas, which reaches the entire state through satel- tional spots. The station's cost: $130,000 annually. lite arrangements with two other stations, broadcasts Favorable reaction among advisory council mem- in the heart of the Midwest's "tornado alley," and its bers was an important factor in the station's decision detailed weather reports are a news staple. To pro- earlier this year to begin airing condom ads. mote that image to viewers, KAKE distributes a "It's like a permanent focus group," says Bruce weather brochure through Welcome Wagon pro- Lindgren, promotion director. "This industry is in grams. Nashville's WSMV mails four-color brochures love with the 30 -second spot, but people are too over- to 2,500 "new movers" every month, using a list pre- whelmed today by the clutter on TV, and we have to pared by a local market -research firm. think of more intimate ways of reaching them. By Weather also played a critical role in the direct -mail pulling off the TV Guide list, we're reaching a sub- efforts of KWWL in Waterloo, Iowa. In 1983, the sta- scriber who's already highly involved. I'm amazed tion's broadcast tower was felled by a freak ice storm. that more stations don't do this." RINKER BUCK

jects were not meeting their potential iting local communities and soliciting if it means lifting up all the other guys in due to a lack of resources and publicity. viewer reaction. These efforts were the market as well," says Los Angeles KARE decided to become the station pulled together by a general theme spot television consultant Stefan Gerber, that always showed up to pitch in and which featured a chorus singing, "The who created the spot for WNEV. "It's help out. big stories are for anyone to break, but the affiliates that have this unique abil- In 1984 KARE initiated an annual the difference is the time we take. ity to do good and connect with their Health Fair in Minneapolis that pro- ... You're the one who really matters." audiences in other ways than simply vides elaborate disease screenings for selling advertising." 50,000 citizens at booths around the Gannett's experience in Minne- Enthusiasm for a more active commu- city. In cooperation with the Minnesota apolis was similar to the chal- nity-service role is not restricted to Vikings, KARE sponsors a geography lenge faced by Boston's CBS Minneapolis or Boston, of course. Sta- education program for local school stu- affiliate, WNEV-TV. The stations contemplating this approach have dents. During St. Paul's annual Winter tion, owned by New England TV Corp., to make certain that they touch all the Carnival, KARE pays for an elaborate faced strong competition from Hearst's right bases first. "To make it work, you fireworks display that is televised on WCVB and Group W's WBZ, must first isolate a genuine the station and even creates a special both of which have long problem," says Boston con- "ice desk' set so that its news anchors records of community service. sultant Jerry Wishnow. "Then can cover the event from the carnival. Instead of taking the competi- find a way to intervene in a Lengthy public-service campaigns pro- tion head on, WNEV broad- measurable way. Last, you moting child safety, aid for teenage run- cast a spot crediting all three need to form an alliance with aways and food banks are also aired. affiliates for their good works. nonprofit groups in the com- KARE-Channel 11-solidified its The tag line for the promo munity. No station is equipped image by broadcasting a live special in boasts: "We're all on the same to do it alone, and the key is prime time honoring 11 outstanding team." making viewers feel that their local citizens (11 Who Care) and a news "Affiliates have to search for voice is going directly to the series featuring station executives vis- ways to be the good guys, even KARE's loe F ranzgrote station's ear."

CHANNELS / JUNE 1987 59 www.americanradiohistory.com IN FOCUS/ What hot in 'Marketing

Selling the Children

How does Nickelodeon keep kids happy and still appeal to sponsors and parents? It launched Kids' Day and Green Slime. BY C EC I L I A CAPUZZI

Four years ago, when the chil- and nobody watched. We're trying to forces Nick's claim of being the kids dren's cable network Nickel- give kids an entertainment network channel (75 percent nationwide are fa- odeon announced it would be- where they can be kids-where we're miliar with it; 92 percent of Nick sub- gin accepting advertising, not pressuring them with adult prob- scribers agree with the statement few-save advertisers and some Nick lems. We may not be teaching them "Nick understands kids"). Now with 19 officials-were happy about it. Critics math or history, but that's not our con- of television's top 20 advertisers as claimed the channel would resort to cern. Our con- sponsors, the network is in a position to more typical Saturday morning kidvid cern is letting drive its image home. Like the rest of fare, the kind served up by the broad- them feel fine cabledom, it is concentrating on market- cast networks. That didn't happen. ing and promo- Even Peggy Charren, head of Action tional schemes it for Children's Television who opposed hopes will indeli- Nick's move into commercial sponsor- bly etch it into ship, has amended her stance: "A little capitalism where children are concerned is not the end of the world. I thought commercials would affect their programming, but they didn't." What's going on here? For years, critics have watched Nick closely, ready to pounce at any sign that its programs, or its program sponsors, ex- ploit kids. Not only is the Viacom Inter- national -owned channel aggressively capitalistic, it's also become a A Nickelodeon logo: 'We're trying to give kids an entertainment network where they can be kids.' product -development and marketing test for cable as about being kids. Kids come to Nick be- kids' hearts, on operators' channel Nick marketeers busily concoct sham- cause it's their home." lineups and in advertisers' budgets. poos and soaps and launch giveaways, They also come to Nickelodeon be- Though the network has been in- drawings and game shows. Says Robert cause it looks like fun-and Nick officials volved almost from the start in contests Roganti, MTV Networks president of are betting their marketing dollars that and gimmicks as a way to generate operations: "Nothing is not being that tone will carry them, both on and viewing from its primarily 2- to 15 -year - looked at." off the air. With Nick in 30 million old audience, most were self-contained At the same time, the network seems homes (up from 1.5 million in 1980 just efforts. Now the service ties in with ad- to have comfortably gained the accept- after its start-up) and with the success- vertisers and merchants frequently, go- ance of kids, parents, cable operators ful launch in 1985 of adjunct service ing for high-profile events that generate and advertisers who recognize the vast Nick at Nite under its belt (making publicity and hoist the Nick logo in potential in the children's audience. Nickelodeon a 24 -hour service in 80 per- stores, fast food joints and on the local "We're not out to educate kids," says cent of its subscribing homes), the net- news. Perhaps the most successful ex- executive vice president and general work is starting to have real clout. A ample was last year's "Kids' Day" held manager Geraldine Laybourne. "We fancy marketing study done recently by in Salt Lake City. Hoping to turn the had a lot of that programming on at first Yankelovich Clancy Shulman rein - event into a national holiday eventu-

60 CHANNELS / JUNE 1987

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ally-along the lines of Mother's Day place with shows like Double Dare and and Secretaries' Day-Nick started in a You Can't," says Allen, "merchandis- single market and managed to get ten ing became a natural companion." local kids appointed to public office But Roganti is sensitive about criti- (there was a kid mayor) and other key cisms that Nickelodeon may be too com- community positions including a televi- mercial. Charren, with her toned -down e 1 t sion newscaster, police chief and views on the appropriateness of adver- zookeeper. Then the city was turned ' ? 3 tising to kids, has warned that problems over to kids while Hardees fast-food 41.10.>hr will start if programs are developed outlet and local stores tied in by offering R4, around products. "Are we going to discounts and free gifts. Local TV news make money on this?" says Roganti. shows ate it up, as did the all-important Some 15 percent of American kids know Nick. "Yes. We are a business after all." (to the cable operator) city officials. This Indeed. And Nickelodeon has gone year, Kids' Day will happen in five mar- captured the attention of hospital gift through great pains and expense to kets: Minneapolis, Pittsburgh, Salt shops and schools, which are consider- know its business-and its audience. Lake City and two others not yet con- ing having students sell it door to door The recent Yankelovich Clancy Shul- firmed. Nancy Allen, Nickelodeon vice as a way to raise money. In April, Toys man study, commissioned with USA To- president of marketing, says a major `R' Us began carrying the line. Green day and titled "Youth Monitor" part of Kids' Day's success is that it slime is set for a massive retail launch in ($15,500 for those who are not Yanke- teaches kids to take charge, but to the time for Christmas and Nick officials are lovich clients), points up the extraordi- network, the effect of the publicity- convinced that they can spin off other nary influence kids have in buying deci- and the enthusiasm advertisers have products successfully. sions concerning everything from food shown for the event (this year Mc - to the family car. Roganti says Nickel- Donald's will tie in also)-can't be un- Two years ago, Nancy Allen odeon has led the pack in defining "the derstated. joined Nick to head up market- new child" and is now even teaching the Nick is also going for the off-beat in its ing and product licensing. A broadcast networks the ropes. "A lot of programming, looking increasingly like former vice president from advertising clients out there assume a prepubescent counterculture that ex- Marvel Comics, she is developing prod- that what worked ten years ago, espe- cludes the nerd adult. Laybourne ad- ucts under four Nickelodeon "umbrella cially in programming, works today," mits that the crazy fast -paced You lines:" toys, clothing, home video and he says. And advertisers, anxious to Can't Do That On Television is misun- publishing. So far, only two products reach kids who, research says, know derstood by mainstream adults. And other than green slime are in the works. what brand of clothing they want to buy Rated K, a new Nick program modeled One, a game board modeled on Nick's from ages 11 through 14, are all ears: on Siskel & Ebert's At The Movies, is game show Double Dare, is still in the "Advertising to kids is a way of doing hosted entirely by kids who review the talking stages; and the other, a comic business now," says Jack Irving, senior movies they're interested in. `Built into strip based on You Can't is published in vice president at DFS Dorland. "The it," says Laybourne, "is an us versus TVSM's Cable Guide. "Once we made more visibility Nickelodeon gets, the them feeling." On Academy Awards the decision to go into the kids market- better it is for advertisers." evening, for example, Rated K held its own version of the awards. None of its nominees, Nick officials point out, coin- cided with those in the adult show. Its newest marketing foray, however, holds the most possibilities for crystaliz- ing the Nick image-adding not only additional viewers, but ancillary revenue to the operation. Taking a page from the books of other successful children's programmers such as Disney, Children's Television Workshop and even sister- service MTV, Nick introduced green slime shampoo and soap last Septem- ber. Inspiration for the product came from the Nick show You Can't Do That On Television, where every time a kid says "I don't know," a slimy green sub- stance is dumped on him. Some kids, says Laybourne, have been known to deliberately mess up just so they can get slimed. Sure enough, slime sales were three times what Nick executives expected and after limited availability initially, the bubble -gum smelling ooze Salt Lake City Kids' Day: 'A little capitalism where kids are concerned isn't the end of the world.'

CHANNELS / JUNE 1987 61 www.americanradiohistory.com IN FOCUS/ What's Hot in Marketing

What Makes Geraldo Run?

Say what you want about Rivera's journalism. When teamed with Tribune's marketing savvy, it sells. BY PATRICIA E. B A U E R

During the filming of Tribune Entertainment's Innocence Lost Geraldo Rivera posed with a newborn at a home for unwed mothers in Fort Worth.

When Geraldo Rivera came with local TV critics and did an inter- for Tribune Broadcasting Co. "It's just to the Dallas -Fort Worth view for KTVT's news broadcast. He like breathing for him." area this spring, the even spent hours posing cheerfully for Working together, Tribune and ostensible reason was to grip -and -grin shots with KTVT's big- Rivera have elevated hard sell to high gather news, not to make it. He was gest advertisers at a hotel reception. art, even adding a one -minute "win- planning to film teenage girls and their It was all part of a sophisticated, dow" for stations during the show along babies for the special he was coproduc- highly orchestrated plan to sell the with the standard press releases and ing with Tribune Entertainment, Inno- show and the man himself. Though 8x10 glossies. It's worked. Tribune has cence Lost. But over the two-day visit, Rivera has frequently come under fire assembled some of the largest audi- Rivera didn't get to spend much time at by critics for his mawkish brand of jour- ences for one-time specials in the his- the local home for unwed mothers. nalism, his showmanship and notoriety tory of syndication. Instead, he made two dozen commer- have been a marketer's dream for Trib- Many syndicators are devoting more cials for the special, with local plugs for une. "Geraldo is one of the best natural attention to marketing these days, Fort Worth independent KTVT and its promoters in the business," says Jim mindful of the broadening of the TV sister Gaylord stations. He sparred Ellis, vice president of creative services marketplace and the increased competi -

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tion for viewers among independent window. Most stations jumped at it, stations, cable, home video and the net- GERALDO'S HARD happy for an easy way to portray them- works. But Tribune has hustled harder AND SOFT SELL selves as concerned local broadcasters. than most with the Rivera specials, The On Chicago's WGN, Cubs pitcher Rick Mystery of Al Capone's Vaults, Ameri- TITLE: "Search for Solutions" Sutcliffe urged kids "not to strike out in can Vice and Innocence Lost-in part TARGET AUDIENCE: life." Anchors and newscasters across Women/adults. because the high-risk economics of interviewed local experts the LENGTH: One minute. the country shows have demanded it. MUSIC: Gentle orchestral. and urged runaways to contact authori- SCENE: Somber and ties, and many stations reported receiv- flach of the specials, and two business -suited, Rivera sits in front ing hundreds of calls in response. more that will follow, has of a softì brown studio backdrop. "The local community doesn't under- Jbeen distributed on a full AUDIO: "I'm a parent of a stand it's something they provided for 7 -year -old son, and, like your barter basis, with Trib- children, he's growing up in this us," says Lisa Wilson, promotion man- une's only source of revenue coming confusing, sometimes dangerous ager of WXMI in Grand Rapids, Michi- from the commercial minutes it sells. world. I'm concerned because more gan. "They think we thought of it our- The ad rates are keyed to audience rat- than ever kids are running away, selves, so it's great for us. It not only getting high, hurting others and ings figures, so Tribune's profit margins even killing themselves. Together, lends credibility, but it increases our are determined by the number of view- we'll search for solutions. I hope community involvement." ers it can deliver. And because the you'll watch this live special, with Tribune also advised stations on hand- much -vaunted "live" segments make your children." ling press and coordinating their own the specials one-time events, the com- TITLE: "Two Million Runaways" promotion. The syndicator paid for ads pany has only one chance to get its TARGET AUDIENCE: in local editions of TV Guide and pro- money out. "The key," says Jack Teens/young adults. vided radio promos and video news Devlin, Tribune Entertainment's crea- LENGTH: Ten seconds. releases for use in local newscasts. tive services director, "is to be willing MUSIC: Ominous, haunting. Many stations backed up their promos SCENE: Rivera strides down a to go to all extremes-to tap everything neon -lighted city street in jeans and with video news releases, which fea- you've got to make this turkey fly." a leather jacket. tured Rivera excerpting teen runaway What that means for Tribune is a full- AUDIO: "Tonight, there are statistics from the special-though few fledged promotional campaign for each between one and two million news directors saw that as part of the of the specials, at no extra charge to the runaways out on the streets. Is one promotional effort. "I felt there would of them your kid?" more than 180 stations that have car- be a great deal of interest in our commu- ried them. Each campaign cost Tribune nity," says Jerry Fedeli, news director about $200,000. That's roughly what a tions, many of which don't have sizable for WKBW in Buffalo. "So it was a legit- network would spend promoting a spe- promotion budgets, to devote airtime to imate story for our newscasts." cial, though Tribune was able to get advancing the show by giving them more for its money by doing most of the something they could slap on the screen is difficult to tell where Rivera's post -production on its TV commercials the moment it arrived. "Just about any- persona leaves off and the in right-to-work Georgia. thing they send us, we use," says Bar- power of promotion begins, but In the Innocence Lost campaign, sta- bara Deaton, promotion manager for there's no doubt the combina- tions got a package of 14 network-qual- KPTV in Portland. "With just three tion has been formidable. The Capone ity promotional spots and a promise of employees in the promotion depart- show, in which the mobster's vault help for the stations that wanted to pro- ment, we're all working full force every yielded up nothing more than a couple of duce more on their own. "Fourteen? minute of the day. We wouldn't have old beer bottles, got a 34.2 rating-mak- Half that number is high," says Lance the budget to create something our- ing it the top -rated syndicated one-time Webster, member -services director of selves." Bigger stations got Rivera to special ever telecast. Broadcast Promotion and Marketing cut special promos in their studios. American Vice, remembered chiefly Executives. "There are some syndica- Among the most innovative tools in for its three live drug busts, was num- tors who send only one or two promos, Tribune's collection was the one -minute ber five on the syndication hit parade and some who send none." with a rating of 17.2. And Innocence Tribune's promo package ran the Lost, a show with less of Rivera's usual gamut from hard sell to soft. There grandstanding, did a 10.8-disappoint- were promos to be run in news shows, ing, but still much higher than the sta- with footage of teen prostitutes and tions had been pulling in on their own. runaways borrowed from the special. After that kind of success, it seems Or, for time slots with appeal to young likely that Tribune's example could adults, there were lush, fast -paced pro- encourage other syndicators to offer mos with a rock beat. And for women more marketing help to stations-who viewers, some promos featured a soft - are, after all, their partners in the rat- talking Geraldo expressing his concerns ings war. "I think Tribune is better at it about American youth. All played heav- than everyone else," says Dale Palecek, ily on the show's dominant themes: fear, acting promotion manager of Fort curiosity and the wish to help. Worth's KTVT. "But everyone else is The idea was to encourage local sta- Rivera is made up before a promo shoot. trying to catch up."

CHANNELS / JUNE 1987 63 www.americanradiohistory.com ADVERTISEMENT danger of damaging television, of cheapening it. Please understand. I'm not offering up a sermon on lofty ideals and the dangers of grubby materialism. The real conflict is not between business and chari- ty, but rather between two kinds of business enterprise: smart and dumb. By aiming at today's maximum bottom -line, we risk diluting television's potential as the greatest advertising medium the world has ever known. No One Wins Clutter is like inflation. In the short run, inflation benefits a lot of people. In the short run, commercial clutter benefits many in our industry. But in the long run, clutter -- like inflation -- is bad for everyone: our audiences, those who of control? create our programming, the Clutter: Out artists who design and execute the commercials, those who pur- "We'll return to our important has stimulated freedom of chase advertising time, and commercial messages in just speech by requiring those grant- eventually the very medium one moment... right after this ed a broadcast license to pro- itself. brief pause for programming." vide their communities with a The facts of clutter are beyond broad range of viewpoints on dispute. Since 1965, the number Things haven't really gotten controversial issues. of network commercials in the that bad yet in television. Still...I Similarly, by requiring average week has almost tripled am concerned. licensees to own and operate a from around 1800 to nearly Last month, as you may know, station for at least three years, 5400. In the last two years I retired from the world of the Anti-trafficking Rule encour- alone, local station commercials broadcasting. It's an industry I aged the idea of broadcasting as have increased by 20 percent. love and which has been good a public trust and long-term to me. Filled with bright and investment, rather than Enter The 15 -Second dedicated people, it plays a overnight speculation. Commercial uniquely important role in our Some of the recent surge has country. A Threat To been caused by an introduction, Yet for some time now, I've The Public Interest in 1984, of the 15 -second ad. been troubled by certain trends. After the FCC abolished this Last year, network 15 -second In an age of Federal deregula- Rule in 1982, some stations have commercials represented about tion, no industry code, and been owned by as many as 20 percent of the total inventory. unprecedented financial pres- three different licensees within a This year, they will likely sures, I fear that broadcast tele- year. And our entire industry account for about 30 percent. vision has begun to lose its iden- has been swept by multibillion - And by 1990, according to J. tity and mission. dollar mergers, acquisitions and Walter Thompson, fully half of takeover attempts, with con- network ads will be 15 seconds. The Benefit of comitant levels of debt that These trends will be made even worse by two other forces. Traditional Regulations threaten news and other public - The networks, We in Group W have long interest programming. under severe will almost argued that American broadcast- But no less important is the financial pressure, ing would be best served by immediately visible problem of certainly continue to increase the number of commercial min- retaining certain traditional regu- commercial clutter. I believe that lations. We believe, for exam- by permitting ever-increasing utes per week, as they have with ple, that the Fairness Doctrine amounts of clutter, we're in real regularity in the past.

www.americanradiohistory.com ADVERTISEMENT The Proliferation Of PCAs that kind of clutter would have would soon intrude into ques- In the meantime, syndicators on broadcasting? tions of program content. will continue to expand the What broadcasting does not commercialization of PCAs (pro- Viewers Become need is regulations based on motional consideration More Antagonistic vague, idiosyncratic opinions, on announcements.) Not long ago, Audiences are very conscious personal evaluations and judge- of clutter. PCAs appeared only at the end Indeed, they tend to ment -calls -- just the kind of reg- of game shows -- brief flat cam- overestimate it. On our logs, ulations that would threaten our era -card pictures with voice- four 15 -second spots look the genuine First Amendment free- over: "Transportation for contes- same as one 60 -second commer- doms. tants was provided by X --- cial. But most people don't Airways." Today, they frequent- view television with a stop- Clutter Can Be Controlled ly are full-fledged 10 -second watch. They believe a cluttered In contrast, the problem of moving commercials, scattered minute has stolen additional clutter is particularly suitable for through the program, and often time from the program they're regulation. Clutter is a fact -- not even directly tied to the con- watching. They're not only specific, discernible and quantifi- tent of the show. aware of clutter, they hate it. able: so many messages, so Six such announcements add This is particularly true of cer- many seconds. Yes. No. another minute of commercial tain viewers, including adults This distinction is clear to lead- clutter per half-hour, with no between 18 and 34, cable sub- ers within our government and financial benefit to the station. scribers, VCR owners, and view- within our industry. If these Add that to the prevailing 6.5 ers with remote -control devices. leaders choose to work together, minutes of commercials, all of In other words, television is I believe the threat of commer- which could now be devoted turning off those viewers who cial clutter can be defeated. entirely to the new 15 -second represent a growing percentage If it isn't, I'm afraid the day will ads, and we have a theoretical of our total audience, those who come when people say of televi- potential of 32 commercial mes- are above the median in afflu- sion, what Yogi Berra said of his sages in a 30 -minute program. ence, and those who represent once -favorite restaurant: our future, rather than our past. And today's potential is likely "Nobody goes there anymore. to become tomorrow's reality. Advertiser Recognition It's too crowded." One can predict, as a kind of Is Plummeting Gresham's law, that those sta- But not only do our audiences Daniel L. Ritchie tions and networks that clutter hate clutter, they're also con- will Retiring Chairman and CEO gain a short-term economic fused by it. Network commer- Westinghouse Broadcasting Co. advantage, thereby forcing cials increased from 1965 to everyone else to do the same. 1981 by 150 percent. During Can anyone doubt the impact that same period, viewer recall declined dramatically. Self Regulation Preferred I'm certain that most broadcasters would agree with me in pre- ferring self-regulation to any new regulations by Big Brother. A tough NAB Code on clutter would be more efficient and productive (and considerably more pleasant to work under) than any likely FCC regulation. But any NAB Code will require a Congressional act, exempting the industry from the kind of antitrust judgement by which the Courts eliminated our old Code in September 1982. This makes many broadcasters nervous -- and with reason. There is a real danger that Congress, in considering a new Code for Television, Daniel L. Ritchie

www.americanradiohistory.com PRODUCTION The Man They Love Nothing personal, but agent Marty Hurwitz is a television to Hate packager, and if there's by James Traub one thing MGM/UA, may generally be defined as whether actors and directors (in the case Hollywood can't "Let's screw the studios and make them of movies) or writer/producers (in the say, `Thank you.' " And he didn't say case of television), have long occupied stand, "screw," either. Hollywood's catbird seat. But two things it's a packager. Hurwitz would rather talk about the have happened in recent years to vastly way he shapes his clients' careers and the increase the stature of packaging agents E specially deals he swings for them than about pack- in television and to mobilize resentment aging. It's not hard to see why. Thirty against them. First, the potential value of when he's years ago, agencies received a percent- any given program, and thus of the age of a show's license fee in exchange for profits in which both client and agency as good as putting together virtually the entire pro- share, rose to heights of giddy fantasy gram-the package. Now, they demand a when stations began bidding up the price Marty. fixed percentage of a show's license fee of syndication rights. William Morris, for and a share of the profits in exchange for example, is expected to earn as much as delivering, in most cases, only one key $50 million simply for representing Bill If Marty Hurwitz weren't such element of the show. Hurwitz concedes Cosby, whose show has already earned a nice guy he might really be hated in that packaging has an image problem, tens of millions in the syndication market. Hollywood. As it turns out, only one stu- especially with the increasingly hard- Yet as the prospect of financial success dio's executives barred the doors to him, pressed studios that pay the freight. has become intoxicating, the risk to stu- and even they eventually relented. Sitting in the hushed, thick -carpeted dios of making shows has become almost Hurwitz's problem is not his personality; living room of his "townhome" at the lethal. As programming costs have shot it's his job. He's the cocky young ace of edge of Century City, Hurwitz gropes for skyward, studios have begun hunting the packaging department-known a genteel definition of an activity that almost desperately for fat in the budget. a euphemistically as "the programming tends to be described as the financial "We can't produce for less than 3 department"-at ICM, one of the big equivalent of rape. "It's a very special $100,000 to $125,000 deficit anymore," three West Coast talent agencies, which art," he says softly. "Being a packaging says a former high-ranking studio execu- include William Morris and CAA. agent is in certain ways very much like tive. "Why do we want to add $18,000 Now more than ever, Hollywood is being a producer-putting people to $40,000 in package fees? It's really very, very unhappy about packaging. together, generating ideas, controlling grating." The practice, says Peter Greenberg, properties. It's a matter of generating Did someone say "grating"? Even one former head of comedy and drama at some combination of those elements, or of Hurwitz's star clients, director representing someone who someone else Thomas Carter, complains-with Hur- Contributing editor James Traub's last very much wants to do business with." witz sitting right next to him at lunch- article for Channels was a look at ad - The key words here are "very much." that the practice harms productions by agency program analysts. Agents who represent the stars, taking money off the screen.

66 CHANNELS / JUNE 1987

www.americanradiohistory.com GENT PROVOCATEUR: HURWITZ'S WEAPONS INCLUDE HIS TOUCH-TONE, ROLODEX AND GIFT FOR GAB. OF HIS WORK HE SAYS: 'I DO IT FOR LOVE.'

"A package," Carter says bluntly, "is feel for story, and at least a rudimentary elite taking over Hollywood. He talks basically a rip-off." acquaintanceship with literature. "In numbers; he talks well -polished euphe- "I told you you'd enjoy his candor," today's Hollywood," says Pat Faulstitch, misms. He can be as aggressive as need says Hurwitz with a grimace. But Carter a former ICM agent now at CBS, "Max be. Bobby Goldman, a Hurwitz client and loves his agent anyway; he wants to be an Perkins would never get out of the executive producer of such miniseries as owner, too. And Hurwitz is marching him agency mailroom." The latter-day agent Jackie Collins' Chances and Lucky, calls smartly, swiftly up that ladder. Agents is more likely to have the soul of a sales- him "my trained cobra." But on the tele- such as Hurwitz take two separate bites man and the advanced electronic cir- phone to his often high-strung, over- at the golden apple of ownership. The eco- cuitry of a calculator. In an age when the wrought clients, Hurwitz is a careful lis- nomic function of packaging agents, one average Hollywood deal has become diz- tener and a delicate balance wheel, might say, is to redistribute the owner- zyingly complex, the agent is the deal - clucking sympathetically or applying the ship of programs from studios and syndi- maker par excellence. He "structures" needle as required. Often he'll call up just cators to clients and agencies. deals, in Hollywood parlance, and he to say, "You sounded down yesterday. The great talent agents of yore, men keeps a low profile. You okay?" like the legendary Leonard Hanzer, were With his gray suits and MBA from the Hurwitz comes from a well-educa- notorious little Caesars, hanging up on University of Michigan, Marty Hurwitz, ted, upper -middle-class background-his network presidents and sliouting down 33, is an advanced evolutionary species of father is senior vice president of General adversaries. Yet they also had an editor's agent. He is a member of the business Cinema Corp., the country's largest

CHANNELS / JUNE 1987 67

www.americanradiohistory.com WITH ASSISTANT STEVEN SARDELLI DURING A WORKING SNACK. 'I'VE retaInson MADE MORE DEALS THAN F MOST LAWYERS HAVE,' HURWITZ SAYS.

movie -theater chain-and it's clear he's they like him because he gets them good money and the prospect of control, but he read a book or two. "Marty reads books deals. He makes them ready to be own- saw his film career, and with it his sense by people he doesn't even represent," ers, then fights for the biggest possible of aesthetic self-esteem, slipping away. says an amazed Wendy Kout, a writer share of ownership. Already, on Hurwitz's instructions, he currently at Twentieth Century Fox. had turned down the chance to direct the Hurwitz has been an agent his entire One afternoon earlier this second unit of Steven Spielberg's The professional life, starting in 1978 as year, Hurwitz sat down to Color Purple. Now it seemed he was assistant to William Morris agent Stan lunch with Thomas Carter binding himself to television for a year. Kamen. After three years at ICM, in an L.A. restaurant with Hurwitz patiently explained that the deal Hurwitz has begun to handle the TV open rafters, pouty wait- could only advance Carter's career. careers of some of the agency's weighti- ers, a Mexican name and "Thomas," he said, picking over a duck est clients, though television's super- New American cuisine. Carter, who salad, "Disney is calling every other day novas, such as Cosby and Aaron Spelling, directed the pilots of St. Elsewhere and practically since they heard about the tend to be represented elsewhere. In Miami Vice and gained reknown for his CBS deal." point of prestige, ICM trails the other keen visual sense, was at a crucial rung on Carter, a young man with an eager, two big agencies, and in part for this rea- the ladder from salaried laborer to owner ingenuous air, was impressed. "What son Hurwitz remains more or less at the and needed some guidance. Hurwitz had does that mean Disney will offer?" he BMW level of TV agents. He represents approached CBS to work out a pilot for asked. some of the best of the young generation him, an arrangement that would vault "You'll probably get a stronger back of writers and producers, including Carter from hired hand to producer. end for the deal" -a larger slice of the Michael Mann, creator of Miami Vice and Hurwitz, in fact, was drawing up the profits of any series Carter developed Crime Story; Jay Presson Allen, who cre- paperwork that would turn Carter into a with Disney for CBS. It was classic ated the series Family as well as The one-man production company. Hurwitz logic: Don't go to the studio until Clinic (scheduled to debut this fall on The idea had been Hurwitz's; Carter you've concluded a development deal ABC); and many of the writers on Hill conceded that he would never have with the network. With a network com- Street Blues and Miami Vice. known "how to leverage my position as mitment, the studio will consider you a Hurwitz's clients like him, they say, director to expedite another position." player. Now Carter was listening because he knows when to be sensitive Carter was trying to sound like an old intently. and when to be aggressive. But mostly, pro, but he was anxious. He liked the "Maybe," Hurwitz continued, "we can

68 CHANNELS / JUNE 1987

www.americanradiohistory.com AT THE HEART OF THE DEAL

When Marty Hurwitz wants some- hundred. And 110-twelve five." thing he doesn't shout; he wheedles. Marty says he won on all counts. The He'll wheedle, in fact, until his oppo- writer accepted the studio's offer of nent drops from exhaustion. Hurwitz, $12,500 per episode for any half-hour like all talented salesmen, has turned series he developed, but balked at dogged persistence into an art. He let receiving only $17,500 for an hour-long me overhear several dozen phone calls series. This, as Hurwitz pointed out, he made to a studio executive to con- was less than he would be getting next summate a one-year pilot -develop- year as a writer on his current show. ment deal for one of his hot young The studio came up. The credit line, writers. A tiny snatch of hours of dick- which mattered every bit as much as ering sounded like this: the money, was mutually acceptable. "On the series episodic fee, twelve And the author's share of the net five is fine. But it's got to be 20 on 'This is the bottom line.' profits of any show he created, it was ... He's getting 20 on [the show he's agreed, were to be paid out on a sliding now doing] ... Fine. Fine. Pass on it. He's worth 20 on [the scale starting with $3,500 per episode after 66 episodes, and show], but he's not worth 20,000 on the show he creates him- rising after 88 episodes and again after 110. self, right? I don't understand the logic of that ... Fine. Pass It would not, however, be "a truer sharing," since the on it ... You wanna hear the rest, or you wanna not go fur- writer was in the Thomas Carter, rather than the Jay Pres- ther? ... For a royalty, thirty-five hundred for an hour show. son Allen, league. And ICM would get a package only on a Bob, can I tell you something? This is it. This is the bottom show developed in conjunction with the writer's pilot -devel- line. It has to be 'in association with' if he creates it. Profits- opment deal at a network. But the writer was on his way. twelve and half is okay. The advance against syndication-I'll This year he would earn about $500,000 from TV and movies. take the thirty-five hundred. Eighty-eight-seventy-five Next year, who can guess? J.T.

turn it into a feature deal, or a feature - $45,000 per episode but will collect no "entirely untrustworthy." Hurwitz development deal, which maybe would be advances against profits from the sale of grows uncharacteristically testy when he the best." The hidden message: Climb foreign rights for the first three years of hears the charge. the ladder. Once you're a director/pro- production. After three years, she will "I made a deal with them that they ducer in TV, you can be a director in the begin receiving advances, which will ulti- didn't like" is his version of events. "It movies. Hollywood respects status. mately amount to one-third of profits was too strong a deal. Anyway, they'll Carter was still nervous; he was mov- after the studio deducts expenses. With a always deal with me." ing into foreign terrain. Wouldn't he need less prominent figure, Lorimar might When Hurwitz went to Lorimar to cut a a lawyer now? he asked. That was a mis- have insisted on deducting from profits production deal for comedian Dave take. Hurwitz's sense of professional such huge nonproduction expenses as dis- Thomas, who already had a pilot -develop- competence was wounded. tribution fees (paid to itself); but not with ment deal with CBS, he presented "I've made more deals than most law- Allen. Should The Clinic make it past its Thomas as a "package client." On any yers have," he said. third year and the syndication market pilot that turned into a series, he said, Carter, who considers Hurwitz his Hol- hold up, Allen would probably be assured ICM would get a package fee. No dice, lywood wilderness guide, left reassured. of at least $10 million. said Lorimar's senior vice president, A few days later, a CBS executive tried Jerry Gottlieb. Any project that came to persuade Hurwitz that any pilot urwitz is a mild -look- from the CBS commitment and thus had Carter developed should be produced ing man with sleepy strong network support would be pack- only with a studio the executive had in eyes and a sheaf of ageable; otherwise no. Gottlieb would mind. It was a power play, based on Cart- light brown hair that rather not have agreed to any package er's novice status as producer. "We don't falls aslant his fore- fee at all. But, he says, "If I didn't go want to limit him to one place," Hurwitz head. On the phone, along with that, I wouldn't be in a posi- shot back. "Disney's called and other peo- where he's happiest, he maintains a light, tion to even have the series." Gottlieb ple have called." The network backed off. bantering style, even with a studio execu- says he found Hurwitz "bright and (The deal is still under consideration.) tive who's holding out on him. The studio aggressive" and that negotiations were Hurwitz says he guides clients to "a and network people he deals with on a amicable. But at such moments, he says, truer sharing of risk and reward"-a daily basis generally like him. Stuart "the role of the agent and the business - Hurwitz euphemism for becoming an Bloomberg, ABC's vice president of com- affairs department gets a little sticky." equal partner with the studios. Truer edy and variety series development, calls "Sticky," perhaps, is how you feel sharing is reserved for key figures in tele- him "a gentleman," and those who call when submitting to what former ICM vision, the same people for whom him "aggressive" usually mean it as agent Faulstitch calls "low-grade extor- Hurwitz can demand a package fee for praise. But Hurwitz may occasionally tion." (Not all packages, Faulstitch adds, ICM. Last winter, Hurwitz struck a deal carry his trained cobra act too far. MGM/ are objectionable.) But studios submit with Lorimar-Telepictures for Jay Pres- UA Television officials refused to deal because they have no choice, and because son Allen that illustrates perfectly the with him after he allegedly misrepre- the presence of a proven star or producer tremendous bargaining power of success- sented what one of his clients was getting calms fears of failure. With profit margins ful writer/ producers. in order to increase the fee for another cli- squeezed tight, neither the networks nor For her one -hour dramatic series, The ent, among other things. A source close to the studios can afford failure as easily as Clinic, Allen will receive more than the dispute accuses Hurwitz of being they once did. Thus, the demand for bank -

CHANNELS / JUNE 1987 69

www.americanradiohistory.com able talent. And bankable talent is pack- in the U.S., New World breaks even. story rights. Peter Greenberg remem- ageable talent. "The studios," says one ICM will make about $500,000 a year. bers optioning a magazine article for a official,"can't afford to draw that line, and ICM earned its package fee keeping series, developing a story in-house and they can't afford not to." Crime Story on life support. Hurwitz contracting a producer and writer. On the rare show that is not packaged, insists that package fees, in general, are "Then before we went to the network the agency's fees come out of the hides of payment for services rendered rather we brought the script to one particular the star, director and writers. For a pack- than submission before a higher power. actress," Greenberg says. "Her agent age, however, the studio pays 3 percent Agencies, he points out, offer to supply said, `It's got to be a package.' So we to 5 percent of the license fee every week, the studios with writers, guest stars and went to the network and sold it without another 3 to 5 percent once the show so on. Unfortunately, as Hurwitz admits, the actress." In many cases, Greenberg begins to make a profit and 10 percent of the days when studios, or sometimes says, packaging agents "should be the net profits themselves. Thus, a highly sponsor -producers, needed agencies to arrested for even asking." popular sitcom such as Webster, whose put shows together for them are long That, of course, was an aggressive 100 episodes gross about $1 million each gone. There's not much that agencies can agent. Hurwitz, too, has been accused of in the syndication market, could earn $4.5 do anymore to really earn their package trying to extract a package fee from a million to $5 million in net profits for the fees. Sometimes, in fact, they do almost project with which he was only margin- agency, as well as another $2.5 million to nothing. ICM currently receives a pack- ally connected. But that's salesmanship $4 million from the $400,000 license fee. age fee for Fox's Down and Out in for you. The studios hate it, but they feel When a show such as Cosby or Webster Beverly Hills simply for representing powerless to defend their own interest. hits the syndication jackpot, the studio director Paul Mazursky, who owned the "We're desperate to roll it back," says need not begrudge the agency its effort- the head of business affairs at a major stu- less millions. "But one of the real prob- dio. "Everyone's desperate." Develop- lems of the packaging situation," says ment deals, he says, have been rejected Paramount Television president John because of an attached package fee. Pike, "is that the agency is rewarded in PACKAGING Series, however, have not, owing to the failure and rewarded in success." PEERS fear of giving a valuable property to the Another studio executive gives the exam- competition. Paramount TV's Pike says ple of the ill-fated Call to Glory, a show Bill Haber, cofounder of CAA he refuses to pay package fees when only for which Paramount paid William Morris is "far above everyone else," ac- a single element is involved, as is gener- $35,000 a week for the services of pro- cording to one independent pro- ally the case today. The potential loss of ducers Steve Tisch and John Avnet. (Wil- ducer. Haber represents Aaron market share, says Pike, is less important liam Morris refuses to comment on its Spelling and Witt/Thomas Pro- than holding the line against agencies' package fees.) ductions, and many of the same strong-arm tactics. Pike may feel that he clients are han- can do without Hurwitz and his ilk, but The problem is not nearly so dled by fellow scarcely anyone else does. Hurwitz has grave for sitcoms, which CAA agent Lee what the studios need-and they know it. cost only about 40 percent Gabler. as much as action -adven- Jerry Katz- Blackmail" may not be the ture shows, run up much man, head of right word, but Hurwitz lower deficits and, at least William Morris's concedes that packaging, at the moment, have far better prospects Television De- in the end, is a power play. in the back end. With packaged sitcoms, partment, han- HABER The hungrier you are, the the studios do not normally feel the agen- dles Viacom and more willing you'll be to cies are eating their lunch. "The one -hour New World Pictures. Insiders submit. That's why Hurwitz specializes packages," says Peter Greenberg, for- also give much credit for the in studios like Lorimar and New World, merly of MGM/UA, "are killers." agency's TV success to cochair- both of which are willing to take risks to The biggest one -hour package that man of the board Lou Weiss. get big in a hurry. But it's not only them. Hurwitz has negotiated so far was Robert Broder is cofounder of Everyone is mesmerized by the pot of Michael Mann's Crime Story, a show minipowerhouse agency Broder, gold at the end of the rainbow, a pot that whose efforts to find a home have become Kurland, Webb. truly materializes after a show lasts three legendary. After Universal refused to Broder repre- or four years. Everyone wants to dip a produce it because the studio feared the sents Glen and finger in the pot-agencies, artists, stu- deficit would be too large, Hurwitz, along Les Charles, cre- dios, distributors. Hurwitz comes up with with ICM chairman Jeffrey Berg, swung ators of Cheers two big fingerfuls, one for his agency and into action. They tried to raise NBC's and Taxi, and one for his stars. license fee from $875,000. They tried to Glenn Caron, It's a wonderful life-the six -figure lower the studio's projected cost. Both the force behind income, the lovely wife, the half share in a network and studio were adamant-in WESTON Moonlighting. 54 -foot sailboat, the irreproachable, if the new budget -conscious era, they had a Richard Wes- strangely hushed, townhome. No wonder point to make. And so, it turned out, did ton is one of packaging's rising Hurwitz says he has no ambition to leave virtually every other studio in Holly- stars. He took over Leonard Han- agenting for a network or studio job. He's wood. ICM, and above all Hurwitz, zer's agency after Hanzer's death in that catbird seat; he's got the world on shopped the project all over town without in 1985. With partner Jeffrey the phone. "I don't do it for the money," success. But did the agency ever consider Benson, he handles, among oth- he says. "I do it for love." foregoing the roughly $25,000 -a -week ers, Henry Winkler and John package payment? Of course not. Rich, executive producers of As this article was going to press, In the end, Mann and New World Pic- MacGyver, and Bill Blinn and Marty Hurwitz announced he was for- tures structured an ingenious deal that Jerry Thorpe, executive pro- saking his catbird seat for a perch in the allowed the studio to make back virtually ducers of Our House. executive suite of television and movie the entire $300,000-$400,000 deficit on producer Zanuck/Brown. Obviously, advance foreign sales. If the show bombs love isn't always enough.

70 CHANNELS / JUNE 1987

www.americanradiohistory.com iimmini- MARKETEYE

When Bossy Was Boss by Jean Bergantini Grillo

Indiana farmers love Daylight time but for TV stations, it's another `Hoosier confuser.'

Who put the milk cows in September, seven weeks before Day- charge of television schedul- light Savings ended, he proposed to ing in Indiana? That's what NBC that WTHR be permitted to pig- Mike Corken, newly arrived general gyback on the network's Rocky Moun- manager of NBC affiliateWTHR-TV in tain feed, a 7-10 P.M. prime time sched- Indianapolis, asked himself in 1985 as he ule that translated to 8-11 P.M. in prepared to take on the pandemonium Corken's market. NBC is the only net- caused by central Indiana's long-stand- work that still offers a Rocky Mountain ing decision to ignore daylight savings feed, so the shift was literally a matter time. When the rest of America springs of "pushing a button at NBC satellite forward in April, Indiana stands still, headquarters in New Jersey," said Cor - remaining on Eastern Standard Time ken. In addition, NBC uses a Ku -Band all year long. The dairy -rich state has rather than C -Band satellite. By agree- long withstood the "daylight lobby," its based on the clock. But he'd never ment, affiliates split evenly with the net- legislators doing their best to keep life assessed their impact on his station. work all interconnection costs. NBC, tranquil for the cows. For if the farmers To accommodate the network pro- facing scant expense or inconvenience, were to stay indoors an extra hour to gram feeds, which, of course, do change and confident in the power of its access catch the morning news, the cows' to Daylight Savings, affiliate program- programming, agreed to experiment. digestion would be upset, milk produc- ming is satellite -delivered one hour While the ABC and CBS affiliates tion would plummet and state revenues earlier-transforming Indianapolis, began their prime time shows at 7 P.M., would follow. between April and October, from an WTHR now countered with its access It was station revenues, however, in Eastern time zone market with, for double whammy, Jeopardy and Wheel highly competitive Indianapolis that instance, an 8-11 P.M. prime time, to a of Fortune. And while the competition concerned Corken. Formerly a general Central time zone market with a 7-10 aired network late -night programming manager at a New Orleans station and, P.M. prime time. Spot buyers, ad sales at 11 P.M., WTHR ran news-just like at 52, eager for a "bigger market and people and mom, dad and the kids never always. "We are introducing year- challenges", Corken had been dimly could settle into a consistent 12 -month round consistency," Corken announced. aware of what Indiana calls its "Hoosier schedule. "We were a Midwestern state "People's schedules and personal rou- confusers"-a variety of upheavals in the summer and an Eastern state in tines don't change. Now we're saying the winter," explained a local media 'Your television viewing habits don't Jean Bergantini Grillo, a free-lance buyer. "National buyers either stayed have to change either.' " journalist specializing in television, away or put us on the bottom of the list, here begins a monthly column focusing rather than deal with time shifting." ival stations were pleased to on local stations. Then Corken changed all that. Last regard Corken's experiment as something just short of lunacy. "We stand to gain tremendously," said a competing sales manager. "We Indianapolis Market Analysis believe viewers are now much more likely to sample new programming on our network." Net Broadcast Ad Revenue 1985 $87M Indeed, Corken's decision could have Net Broadcast Ad Revenue 1986 $93M been disastrous. WTHR's access and prime time programs were number one Projected Net Broadcast Ad Revenue 1987 $100M in the market. Could Pat and Vanna Cable Penetration 50% really take on Dallas and Moonlighting and win? Cable Subscribers 440,660 The kicker in Corken's plan was that VCR Penetration... 46% because only NBC has a Rocky Moun- tain feed, if NBC's affiliate succeeded Market Rank 23 with its piggybacking, there was no TV Households 813,230 cheap and simple way for the competition to copy the strategy. And succeed it did. WTHR not only won again in access and prime time, but

CHANNELS / JUNE 1987 71

www.americanradiohistory.com the October Arbitron results showed tends, noting that a petroleum and a among the affiliates. The local news race the station gaining commanding leads shoe company, each national spot buy- is a dogfight. WRTV, last year voted elsewhere. Golden Girls went up 61 per- ers, were once slated to pass on Indian- UPI's best newscast in Indiana and in cent over its 1985 results. Hill Street apolis and "are now coming back on." the Midwest, is in a dead heat with Blues, though 6 percent down in rat- "You have to understand it used to WISH at 6 P.M., and nearly as close at 11 ings, was 56 percent up in household take agencies hours to get a fix on Indi- P.M. Sign -on to sign -off, the three sta- share. Alf beat the NFL Game of the anapolis, just to retrieve shares and tions are kissing close, with WISH Week between 8 P.M. and 8:40. HUTS (homes using television)," adds slightly ahead of WTHR. Competing stations stopped caviling Karen Goldstein, media buyer for Perhaps that's why WISH president and started copying. This March, both Ogilvy and Mather. Goldstein, who rep- and general manager Peter Orne, in his WRTV, the ABC affiliate and WISH, resents Hardee's in Indianapolis, job for a year and now heading into a the CBS affiliate, announced plans to described the weekends she spent get- "stabilized"-or perhaps more aptly keep their prime time programming on ting a fix on the market as "a challenge I "homogenized" market-remains curi- Eastern Standard Time all year. On like. But others dreaded it; most do try ously undisturbed by time -zone ques- April 5, when the rest of the country to put it at the bottom." tions. "Spot money is determined by went on Daylight Savings, WRTV and market size and share. Clients deter- WISH began time -shifting their net- Up until now, a lot of national mine the market and buyers determine work prime time programming by tape - buyers literally didn't know the station share," he says. "They're delaying their New York feeds. Both what time it was in Indianapo- the ones who have the problem." While stations will spend at least $175,000 lis," says Jerry Chapman, vice presi- WISH will join the other affiliates in each for new taping equipment. dent and general manager, at ABC's shifting its weekday prime time to East- But those who operate in the market WRTV. Chapman is so intent on ern Standard Time, Orne sees only think that's a pittance compared to the change, he's outdoing WTHR. While "marginal benefits". revenue loss repeatedly suffered as a NBC provides a Rocky Mountain feed The sociological questions all this pro- result of its eccentricity. "It's stagger- only in prime time and affiliate WTHR vokes about Indianapolis' culture are ing," says Bill Perkins, president of the has chosen not to tape delay from New less than marginal. "With this move, we Perkins Group, an Indianapolis -based York other dayparts, Chapman has have cast our lot with the Eastern part advertising agency. So he considers, decided to shift WRTV's entire sched- of the country on a permanent basis," forgivably, Indianapolis' new aim at ule. CBS affiliate WISH is planning a notes Bill Perkins, local ad agency presi- time-zone consistency to be "the big- mix of tape -delayed and Daylight Sav- dent. "We are no longer a border state. gest story of the year." It has already ings -scheduled programming both in Does this mean we still eat supper at had an impact on the advertising com- prime time and in early dayparts. 5:30, or do we have to learn to dine at munity locally and nationally, he con- There has always been fierce jousting 8:00?" Indianapolis Indies

While Indianapolis affiliates struggled to get their time Multimedia over the deal to show the Reds games. He was zones straight, a quieter but no less dramatic battle asked if he wanted to throw in a young talk -show host from played itself out among the market's two independents. Dayton. "I wanted the Reds," Snow says, "and got Phil In January, WTTV-TV, once among the country's top Donahue in the deal." WTTV has had him ever since.) five independents, rocked the city with the news that it was WTTV's combined advantages give it, says Snow, "the filing for bankruptcy. As is true for a growing number of highest weekly circulation in the market." His is the only stations, neither poor programming nor bad management local indie with wide cable carriage both inside and outside derailed WTTV. Debt did. the metro ADI. But all those plusses only enhanced the sta- "It is simply a case of having a small amount of cash and a tion's desirability as a takeover target. Two quick buyouts lot of borrowed money," says Elmer Snow, WTTV presi- occurred between 1978 and 1984 and another seems immi- dent. As Snow described the situation in a letter to pro- nent. (The third could come from Emmis Broadcasting, a gram distributors: "WTTV went through a buyout two and local group now involved only in radio, with whom Snow a half years ago that was highly leveraged. At the time, the says active discussions are underway. But there are, he industry in general was coming off several years of double- says, "others" as well.) digit growth ... That growth has not continued." During the changes, WTTV's debt service distracted it He emphasizes that the move to Chapter XI was "pre- from its public service and WXIN-TV, a feisty new inde- cautionary," that "business goes on as usual," that the sta- pendent, quickly capitalized on its weakness. "WTTV tion is "very healthy" and that not one program distributor didn't take us for real," says Joe Young, WXIN general has abandoned him. manager. "Why did we get Cheers? And Night Court? And There is no dispute that WTTV is a study in crafty station Family Ties?" management based on three elements: 1) a VHF signal Operating only since April 1985, WXIN runs just three that's been part of the state's viewing pattern for over 30 share points behind WTTV, sign -on to sign -off. Says years; 2) an early decision to persuade cable systems to Young, "While WTTV is very viable and mature, they're carry WTTV, an effort that began in 1978 when Snow hired never going to get the same numbers they had in the past." a full-time cable -only staffer, and 3) the negotiating skill to Young even beat WTHR, the NBC affiliate, on its own lock up local sports contracts. WTTV has exclusive rights turf: scheduling consistency. By June 1985, he had his to the Cincinnati Reds, the Indiana Pacers, both Purdue Prime Movie and The Late Show Starring Joan Rivers air- and Indiana basketball and Big 10 football and baseball. ing at 8 and 11 P.M. all year round. "We're an indie. We (Snow likes to tell of his negotiations with rights owner don't have to answer to anyone." J.B.G.

72 CHANNELS / JUNE 1987

www.americanradiohistory.com MEDIADEALS

Banding Together by Ellen Berland Gibbs

Malrite and Hutton offer a limited partnership aimed at broadcast acquisitions.

To take advantage of the general be reasonably attractive as well. The public's perception that invest- brochure speaks of guaranteed 100 per- ments in broadcast properties cent return of capital, subject to avail- can be lucrative, Malrite Communica- ability of funds (hence the name, Malrite tions Group has adopted a new financing Guaranteed Broadcast Partners Lim- strategy. ited Partnership), quarterly cash distri- Borrowing a leaf from the book of butions, capital appreciation potential, such cable operators as Heritage Com- preferred 7 percent return, liquidity of munications, Comcast and Jones Inter - transferable securities (once the units cable, Malrite, in conjunction with E.F. are publicly traded) and optional war- Hutton & Company, has formed Malrite rants for Malrite Class A stock. Guaranteed Broadcast Partners, a lim- In addition to all of the above, inves- ited partnership put together to acquire tors receive all cash distributions and manage radio and television sta- In addition, until the investors have directly, thereby eliminating double tions. The partnership hopes to raise been repaid their net investment in the taxation at the corporate level, and $100 million through the sale of $1,000 partnership, Malrite receives 1 percent retain a 70 percent interest in the part- units (required minimum purchase of of all cash distributions. Once the inves- nership, after satisfying various pay- $5,000) to individual investors. tors have recouped and Hutton has ment obligations to Malrite and Hutton. For Malrite, the deal is an attractive received its allocations (totaling Over time, were the value of the proper- one. After paying Hutton an 8 percent roughly 15 percent of what Malrite ties bought by Malrite in the partner- sales commission and various other fees receives), Malrite is entitled to 27 per- ship to increase three- or fourfold or and expenses, Malrite nets approxi- cent of the net income of the partner- more, this residual interest held by the mately $88 million, assuming the maxi- ship, Hutton to 3 percent and the inves- investors in the partnership could prove mum $100 million is raised. On an ongo- tors to 70 percent. quite valuable. ing basis, Malrite receives an annual In other words, while the up -front management fee equal to 8 percent of charges on this partnership may at first To date, the partnership has pur- broadcast cash flow (i.e., net revenues reading seem a bit high for Malrite, chased one property, WTRK-FM minus direct operating costs) plus an there are ample compensations thereaf- in Philadelphia for $13.8 million. acquisition fee amounting to 1.8 percent ter. Most importantly, once the offering The station is currently not profitable, of the gross equity investment in each is completed, Malrite actually receives but Philadelphia is the fourth -largest station purchased. substantial payments from the partner- market in the U.S., with radio revenues ship, instead of making payments to of over $100 million. If Malrite is able to Ellen Berland Gibbs Is president of lenders, as they would in the case of a improve the station's market share Communications Resources, Inc., and bank loan or a debt offering. from its current 2 percent level to 4 or 5 principal of CRI Media Partners, L.P. For investors, the returns appear to percent, and bring it to profitability, the upside leverage would be considerable. For individuals not otherwise able to Malrite Acquisition History own a broadcast property, the Malrite MARKET AND PROPERTY YEAR OF ACQUISITION Communications offering could be of ACQUISITION CONII interest, given the rapid rise in station KSAN-FM Oakland/San Francisco, CA. 1982 $6,500,000 values in recent years and Malrite's suc- WFLX-TV, West Palm Beach, FL. 1982 5,100,0002 cess in reviving underperforming prop- KMVP-AM/KRXY-FM, Denver, CO 1983 5,900,000 erties. For Malrite, the size of the offer- WHTZ-FM, New York City/Newark, N.J. 1983 7,300,000 ing and its unusual cash flow WXIX-TV, Cincinnati, Ohio/Newport, KY. 1983 45,000,000 characteristics also make it attractive. WDGY-AM, Minneapolis, MI 1984 3,250,000 In sum, there seems to be something for WAWS-TV, Jacksonville, FL 1984 1,175,0003 everyone in Malrite Guaranteed Broad- KZLA-FM/KLAC-AM, Los Angeles, CA 1986 42,800,000 cast Partners Limited Partnership, KSRR-FM (now KKHT-FM), Houston, TX 1986 32,500,000 with the major beneficiaries being WSTE-TV, Ponce/San Juan, P.R. 1986 6,100,000' Malrite shareholders. Their holdings, WOIO-TV, Cleveland, OH 1986 1,500,0005 over time, should increase substantially WZGO, Inc, Philadelphia, PA 1986 13,800,000 in worth once the company's asset val- 1U drpsYoeM.M^6 mn

CHANNELS / JUNE 1987 73

www.americanradiohistory.com Excellence.

In any business, it's the hardest thing to achieve- and it's even more difficult to win recognition for it. Television is no exception. Every October CHANNELS honors outstanding individuals and companies who have become not simply the best, but truly excellent by meeting a unique business challenge in their field. We tell you how they did it and show you why we believe that excellence always produces commercial success. Every fall professionals from local stations, cable and programming eagerly await the announcement of our awards. Place yourself in the midst of this excellence with a position in the October CHANNELS. Space closing e is September 15, 1987 Call Joel A. Berger, Associate Publisher, for more information (212) 302-2680. CI-IANNELS THE BUSINESS OF COMMUNICATIONS

www.americanradiohistory.com EYE WIMBLEDON: HOLD although its Wimbledon coverage occasionally PRIVATE develops a case of the cites. CBS may be marginally THE BERRIES better than NBC, but it drives me crazy that on a 15 - minute nightly highlight show of early rounds from Oh, what is so rare as a day in June, or early July, the U.S. Open, typically less than half is devoted to when the lark is on the wing, the rose is on the actual play. Much of the rest is squandered on inter- bloom, the strawberries are ripening and Wimble- views with the best-known contenders saying either don's on the telly? To say I am a tennis fan is some- that they are glad they won that day or that they hope thing of an understatement: Last year I took a week of to win the next. vacation just so I could sit home and watch the early It's understandable that networks seek to maximize round highlights on Home Box Office. Actually, I am ratings; that is, after ail, the main point. But they not so much a tennis fan as a TV tennis fan. I don't should make their pease with the fact that even play (trick shoulder), and although I have had the among sports fans, not everybody will like every pleasure of attending Wimbledon, the the sport, sometimes for purely personal reasons of taste, by William A. U.S. Open, Masters and other mega -events in person, I find it sometimes as a reflectiomof social class. Tennis is most Henry III much easier to screen out the crowd, follow the action popular among college graduates; they are 63 percent and get a good clear view more likely than the aver- (plus helpful instant re- age American to watch ten- plays) when watching a nis on television, according match on the box. to a study reported in the Except for one thing. TV February edition of Ameri- sports departments, espe- can Demographics maga- Why do cially NBC's, persist in tak- zine. Tennis is only the ing time away from the ninth -most -popular sport TV sports action to put on inane fea- with television audiences, tures meant as audience ranking just behind bowl- departments, builders. Tradition -bound ing and ahead of automobile especially as Wimbledon is, nothing racing (pro football is at the about the tournament is top of the heep, of course, NBC's, quite so predictable as with baseball a whisker persist in these purported bright behind). But tennis's 26.3 spots: the bits about the million viewers have a taking time Queen and other royalty; median household income the gee -whiz walk through above $50,000, which ought away from the locker room while the to make them pretty sal- the action to Kipling quote inscribed able to advertisers. It's above the door gets ana- hard to envision the slap- put on inane lyzed as though it were the happy features doing any- The berries at Wimbledon: But dc they detract from the tennis? features Rosetta stone; the shot of thing but driving down the the intrepid correspondent spooning his way through audience demographics_ which just might prove meant as strawberries and cream; above all the inevitable man - counterproductive. on -the -street interviews with British types (redoubt- Soccer, it turns out in this study by Jeremy Schlos- audience able old lady, uniformed bobby, rainbow -haired berg, based on statistics collected by the research builders? punker) saying they neither know nor care that firms of Paul Kagan Associates and Simmons Market Wimbledon is on, let alone who wins. What is stupid Research Bureau, is the number one sport among the about this kind of coverage, apart from the fact that it young, who are the only generation to grow up play- says nothing badly, is that it annoys committed viewing it in school in any large numbers. People in the ers like me without demonstrably bringing anyone Northeast are the strongest ice hockey fans, while the else in under the tent. If people tune in to Wimbledon, West, where the running craze was spawned, is dis- they want to watch tennis. I refuse to believe that proportionately fond of watching track and field. anyone sits through hours of ball -thwacking, which to Roller derby, by contrast, attracts Southerners with a nonfans must be akin to watching paint dry, just in $15,000 income and no high school diploma. College anticipation of these fluffy fillers, the times of which football is, unastonishingl}, most popular with college don't appear in any listings log anyway. graduates and in the Midwest, where the big state Some sports departments seem to understand this. universities play so major a role in civic life. Golf is the Whether through enlightenment or simply as a result most popular sport to watch among those aged 55 to of a constrained budget, ESPN routinely delivers ten- 64. Boxing, I was interested to note, draws a bigger nis, basketball if you're watching basketball, even crowd than either college r pro basketball. Not much yachting if you're watching yachting. Its staff holds to of this comes as a surprise, to be sure. But a careful a minimum the happy horsefeathers of interviews examination of the entire study might be a useful with the inarticulate, the mock chronicles pretending exercise for executives w -io tend to forget that the that a game is the equivalent of an Arthurian legend television audience is rea]y made up of many sub - or a war, and the electronic wallpaper of nubile specta- audiences, only partially stsceptible to being made to tors displaying bare skin. HBO does almost as well, overlap-Kipling quotes or no.

'7HANNELS / JUNE 1987 75

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www.americanradiohistory.com Planting for Coke's Harvest Frank Biondi, chief of Coca-Cola TV, sows tomorrow's crops in the company's new fields and surveys the media horizon.

Frank Biondi's meteoric rise to the top of COKE'S FUTURE GROWTH We think the station business is, in the Coca-Cola's television empire was as long run, a much better than average abrupt as his 1984 departure from his job Acquisitions remain a very, very integral business. You have to assume that adver- as chairman and CEO of Home Box part of our growth strategy. There just tising will continue to grow at a slight Office. As the golden boy of HBO, Biondi are fundamental limits to how much you premium to the GNP, and if it does, the had helped nurture the pay service from can grow in a production -based business station business will perform very similar its meager beginnings to king of the pay in terms of compounded earnings growth. to that. You'll have well -run stations and universe. When Biondi joined the Enter- I think Columbia has always been very poorly run stations in the market, but tainment Business Sector of the Coca- adept at risk management. But that is not that is presumably a controllable varia- Cola COmpany as executive vice presi- quite the same as being able to grow. ble. You can't control a macro factor like dent a few months later, he was charged We've been very successful at growing advertising. Either it's going to be there with enlarging Coke's entertainment through acquisition. What we're tending or not, and if it's not, it's going to be hard interests via acquisitions. He has, help- to do is focus our efforts now, in a sense by to make it a great business. But for better ing the company acquire Embassy Tele- default, on new ventures, or smaller ven- or for worse, we haven't seen the price - vision and Mery Griffin Enterprises. Now tures like barter or colorization, which I value in broadcasting come into a range chairman and CEO of Coca-Cola Televi- would view very much as planting a crop, that we feel comfortable with. sion, the 42-year -old Biondi sat down and not according to whether it will be with Channels editors Merrill Brown and harvested in five or six years. IS PAY TV PASSÉ? Cecilia Capuzzi to discuss his company Passé is a strong word. But I would say it and the television business. OWNING DISTRIBUTION OUTLETS has just simply changed. I think the We like the cable business, particularly in emergence of video has forever changed the short run. I, along with 283 analysts the consumer's perspective on pay. I on Wall Street, think that in the short would argue that over the next three to term the cable business is probably the five years, you will see video vending most interesting financial vehicle in our machines everywhere. They'll make it industry, with the possible exception of even more convenient. In the lobby of cellular outlets. Our problem, quite hon- this building you'll be able to drop your estly, is that to be a player in today's mar- MasterCard in, hit a button, get Top ketplace you'd have to spend $3 or $4 bil- Gun-and it won't be out of stock, there'll lion. The ability of cable to generate be 100 copies of Top Gun in the machine- earnings really takes an investment of and you can return it at New Canaan or that magnitude simply to make it possible Sayville or you name where. I think it's for us to work on an earnings basis. Aside true that the value of pay has diminished from the fact that it doesn't work finan- on a relative basis to a cable operator. But cially, we haven't been able to figure out for whatever its problems and opportuni- what it does for us strategically. The ties, the cable industry simply cannot problem I have always had with vertical afford to let either Showtime or HBO sur- integration is that it's basically a double vive by itself. It still is the single highest - whammy-in the sense that, if you've got rated programming vehicle that a cable good product, you typically don't need operator has, and it simply has the most locked -in distribution. On the other hand, attractive product. if you've got bad product, do you want to force it down your own distribution PAY PER VIEW stream? Fox will be a very interesting Request TV [for which Coke subsidiary experiment from that end. Columbia Pictures supplies films] has

78 CHANNELS / JUNE 1987

www.americanradiohistory.com e like the cable business...but we haven't seen the price -value relationship in broadcasting come into a comfortable range. r

succeeded, I would argue, on a strategic pinch. When you're leveraged, the lever- I know that in our case, we've level taken a very nicely. As a business it's still age works both ways. You're talking pretty hard look at our reserves and we'll got a lot of kinks to be worked out. But about 250-270 independents; probably take a pretty hard look at our actual expe- the good news is that there are answers ten or fifteen are in serious financial trou- riences or expected experiences on the to almost every problem. What we had ble. But if you go back to 1973 in the cable bad -debt side. We're not happy hoped about it, would happen with Request is that business, TCI was trading at $1. That's but we feel that we've adequately pro- we would get a lot of people's attention how many splits ago? They overextended vided for it. We do not have a and major stimulate an acceleration of both themselves in a different way-construc- inventory of one -hours that we feel needs hardware and software and marketing tion and what have you. All I'm saying is adjusting at this time. and entrance. I think on each of those lev- that it's a cycle that we'll wear our way els there's been enormous progress. It's through. There will be some pain on the MSO PROGRAMMING INITIATIVES literally been only a year and a quarter. suppliers' side and on the stations' side. It's a terrific idea conceptually but the Having said all that, it's still a business. mechanics of pulling it together Just the sheer logistics SYNDICATOR are of launching it in WRITE -DOWNS scary. Programming is hard to do when 40 million cable homes will take a decade. When you bookkeep for a TV show or you are capitalized and are in total control I think the best pay -TV year I can movie, you put what's called an "ulti- of your destiny as a producer. remember was about It is three or four million mate" on it that you feel is the absolute extremely hard to do when you're pro- subs being hooked up. Our problem was, outside revenue stream you can achieve gramming by committee, whether it's in 1985 no one was doing anything about in all markets. And you basically amor- coproductions or a cable consortium. this. So we basically If lit a match in a dark tize your cost structure against that. You they're willing to put together a blind room and said, `Is anybody coming to this assume you can get $100 million for a TV pool and hire somebody who knows how party?' Sure enough, a few people did. I show and your physical costs fall in the to do it-whether it's Michael think Fuchs or the critical mass is getting bigger $60 million range. Then you have a 40 per- Peter Chernin-then they have a chance and bigger and finally, the last piece of cent margin on every dollar of revenue. of making it work. But if that's not the the industry that responded was the Now what happens is, if in fact the mar- case, you might equipment as well go and buy USA side. Because their basic ket causes you to readjust that $100 mil- Network or Lifetime and put some real premise is 'Why should I invest a lot of lion down to $60 million, well, then you're money into it and go. money in R&D if there's so little market saying implicitly, `I'm going to break here?' They have to see a critical mass, even on this show.' That's what's called THE GOING -PUBLIC TREND and now they see it. But you're still not `changing the ultimates.' You are, in fact, If you're interested in being a public vehi- talking about a business of any real size adjusting the margins that you are recog- cle in the entertainment business, until just be the 1990s. And it's questionable nizing on programming. Because that's a sure you're comfortable. There are a lot whether it can catch video, in terms of one-time event, you literally don't go of pressures in the marketplace. dollars. 'Fri -Star It's possible, but video has a big back and restate, but you recognize it in [Coke is an owner], a company that's lead and a more established infrastruc- the form of a write-off. MCA has a big done a sensational job, has been ture of able to distribution and marketing. one -hour inventory and obviously made show earnings that are a terrific testi- some adjustments in what INDIE INSOLVENCY they think the mony to the job it's done, but they're not ultimate values of the one -hour shows $50 or $100 million earnings streams. I don't think the Milt Grant case is are. I would say that if they had been car- They're $10-, $12-, $15 -million after-tax unique. On the other hand, it's probably rying big numbers-and I don't know numbers. All that goes to tell you is that the largest one sitting out there. That what their ultimates are-it probably is some of the best people doesn't in the business mean there aren't people of size conservative and proper to make some are on the motion picture side, and who would they prefer to have the terms of adjustments on that. But unfortunately, are some of the most astute financial their program acquisitions changed. that has to be run through the income minds on the case. It's Everybody hard to make mon- is feeling somewhat of a statement. ey in the picture business these days.

CHANNELS / JUNE 1987 79

www.americanradiohistory.com RUN THE Soft Spots iii the NUMBERS Networks' Schedules

SUN MON TUE WED THU FRI SAT.._ 2 AM Q Q Q 3 AM

4AM

ost of the time, the three net- 5AM works are solid as rocks: The majority 1 1 of prime time programs, soap operas, 6AM early morning shows (even CBS' Morn- 7AM ing Program) achieve 99 percent (or sometimes 98 percent) clearance. That $ AM is, they're aired by the network's outlets in markets with 98 or 99 percent of 9AM American TV households. If the station 10AM in a market the size of Baltimore or Indi- anapolis preempted, clearance would 11AM O 1 O fall by a full point. But there are a num- D D D D D ber of soft spots in network clearance, 12PM especially in fringe times. This was the 1PM Q O scene in February. All hours given are T17. < for the Eastern time zone. 2PM a

O Sunday morning's best -cleared shows 3PM 0 0 O are CBS' Sunday Morning (with 96 percent clearance) and ABC's This Week with David 4PM Brinkley (97), which put to shame CBS' Face the Nation (81), NBC's Meet the Press (90) SPM and ABC's new Business World (70). O Coverage for sporting events on the net- ÓPM works often reaches 99 some 4:* percent, but 7PM u NFL games are as low as 78. O NBC's Sale of the Century (85) and 8PM Blockbusters (76) suffer because many affiliates insert the Donahue or Winfrey talk 9PM u show. CBS is none too strong with New Card Sharks (84). 10PM O Even though ABC stays dark between 9 and 11, its clearances after 11 have been tum- 11PM i bling since 1983. In February, Fame, For- 1P D D tune and Romance had 76 percent clearance 12 AM Q and Webster 74 percent. After noon, Ryan's Hope gets 84 and Loving 92. 1AM V V © Local noon newscasts cut into NBC's Super Password (77) and Wordplay (78). 0 CBS' Guiding Light, 50 years old this year, is showing its age. Last year, the soap been moved to Thursdays. O CBS Late Night (91), the action -adven- got 99 percent clearance and was getting rat- 0 CBS' The New Mike Hammer (98) runs tures and movies anthology that follows local ings above 7; now with clearance of just 93 third in the time period and has been bumped late newscasts, is a disappointment for the percent, its ratings have dropped to 5. occasionally for shows as weak as Foley network, which unsuccessfully proposed O CBS' Galaxy High School, which previ- Square (94). added incentives for clearance. ABC's ously cleared in the high 90s, gets an 85. The O Up against NBC's Cosby Show and Nightline holds on to 97 percent clearance, 11:30 slot, with CBS Storybreak, is likewise Family Ties, with 50 -plus shares, ABC's but the network has little luck after mid- down to 83. NBC and ABC are getting 93 to Our World gets 97 and CBS' Wizard 98. night. Its Cavett and Breslin talk shows, now 99 percent clearance. I;J ABC's clearance is the slightest bit soft defunct, got 72 percent or less, post -mid- © Most Saturday afternoon sports get 97 (97 or 98) for four series between 8:30 and 11 night. Starting in June, ABC tries again with to 99 clearance. When CBS stays with its ani- Friday opposite CBS' Dallas and Falcon the weekly Monday SportsNite. mated Hulk Hogan's Rock 'n Wrestling at Crest, and three opposite NBC comedies O ABC's Weekend Report with Brit Hume noon, however, clearance plummets to 69. between 8 and 10 Saturday nights. ABC has (79) doesn't quite keep the clearance attained O All three nets get weak clearance for since temporarily plugged Friday's 8 P.M. by Sunday's edition with Tom Jarriel (85). their Sunday evening early newscasts: ABC, slot with The Charmings. O CBS News Nightwatch takes the air at 2 84; CBS, 88; NBC, 92. 0 Coverage falls off for ail three nets: CBS A.M. with only 48 percent clearance, but O Swamped by ABC's Who's the Boss?, Sunday News (66) at 11, ABC Weekend builds to about 80 percent between 3 and 4 in CBS' Wizard has slipped to 95 percent clear- Report at 11:30 (85) and NBC's George the morning, when many affiliates finish their ance since its debut last fall and has since Michael's Sports Machine (54), also at 11:30. late movies and join the newscast.

80 CHANNELS / JUNE 1987

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