entering the age of indecency the ftc opens its eyes to tv

Entering the Age of IndecencyThe FTC Opens Its Eyes to TV

NOVEMBER S, 19911 THE BUSINESS OF CONIMUNI- vriONS

Why do some bigcompanies seem togel better thanothers? Viacom's

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Henry Schleiff, Viacom senior vicepresident/chairman and CEO,Broadcast and Entertainment groups.

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IVES

CHANNELSTHE BUSINESS OF COMMUNICATIONS

VOLUME 10, NUMBER 16

FEATURES

PROGRAMMING

THE CENSOR WITHIN

NOVEMBER 5, 1990

16Events like the 2 Live Crew pay -per -view concert force TV executives to balance

decency and diversity. Has fear of censorship brought on a big chill?BY BILL LICHTENSTEIN

COVERSTORY

IN FOCUS: ON SYNDICATION'S HORIZON

UTILITY PLAYERViacom's Henry Schleiff has used humor and intensity to meld a

band of specialists into a cohesive conglomerate.BY CHERYL HEUTON

THE Two WORLDS OF CABLE SALESThe majors may still look at cable as a secondary market, butsmaller syndicators have had to embrace it out of necessity.

BY LYNN BRAZ

THE HAVES AND THE HAVE-NOTSListening to large and small syndicators talk about barter, you

begin to wonder if they're even in the same business.BY DAVID KALISH

20

24

26

I II

OPERATIONS

NEWS CHANNELS 10More Justice for AllBroadcast coverage of the courtroom won't be the sameafter the advent of In Court and American Courtroom Net-work, two new legal channels BY JANET STILSON

MARKETING & PROMOTION 12Tools of CapitalismWhen democracy came to the East, Soviet journalists cameto the West as guests of American TV stations. They weregreeted warmly-with hype BY LYNN BRAZ

DEPARTMENTS

LETTERS 4REPORTS 6Access hero makes good . .. Channel 9 goes Universal . . .

Cable -cutters in California .. . A man and his soapbox.

WHAT'S ON 8A monthly calendar.

WASHINGTON 14Another Set of Eyes on TVThe FTC comes back to life BY PENNY PAGANO

MEDIA DEALS 29The Magic FadesKing World's Merlin couldn't make Iraq and a shaky mar-ket disappear BY CHERYL HEUTON

SOUND BITES 30From an interview with Ann Harris, managing director ofthe U.K.'s Telso Communications.

RUNNING THE NUMBERSWhen Miami Freezes OverIs the Sunbelt hot enough for ice hockey?

32

COVER PHOTOGRAPH BY MICHAEL WEINSTE I

CHANNELS / NOVEMBER 5, 1990 1

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Senior EditorsCHERYL HEUTON

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PENNY PAGANOContributing Editors

JOHN F. BERRY, STEVEN BESCHLOSSALEX BEN BLOCK, DAVID BOLLIER

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CHANNELS The Business of Communications (ISSN0895-693X) is published twice monthly except monthly in July andAugust by C.C. Publishing L.P, an affiliate of Act III Publishing, 401Park Avenue South, New York, NY 10016. Second class postage paidNew York, NY and additional mailing offices. Volume 10, Number 16,November 5, 1990. Copyright C 1990 by C.C. Publishing Inc. Allrights reserved. Subscriptions: $65 per year; all foreign countries add$18. Please address all subscription mail to CHANNELSThe Business of Communications, Subscription ServiceDept., P.O. Box 6438, Duluth, MN 55806, or call 218-723-9202. Postmaster: Send address changes to CHANNELS, TheBusiness of Communications, Subscription Services Dept., P.O. Box6438, Duluth, MN 55806. Editorial and business offices: 401Park Avenue South, New York, NY 10016; 212-545-5100.Unsolicited manuscripts cannot be considered or returnedunless accompanied by a stamped, self-addressed enve-lope. No part of this magazine may be repro-duced in any form without written consent.

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ofyour time.Just :60 of prime time to get our recruiting message out.

Because more than ever before, it's a message thatdeserves to be heard.

The National Guard makes up about one-half of ournation's combat forces. And we need men and womento help keep us strong-ready to protect your communityand defend your country.

It's a commitment that takes dedication. Guardsmengive at least two weeks a year and two days every monthto the Guard-and to you. Is a minute of your time reallytoo much to ask?

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CHANNELSTHE BUSINESS OF COMMUNICATIONS

The Business Magazine forTelevision Professionals

A Public Disagreement

am writing in response to David Bol-lier's article, "Community Affairs'New Lustre" in the August 13, 1990issue of Channels.

First, the deserved praise. David tooka complicated, multi -layered topic andmade it clear, understandable andhighly informative. Further, he gaveseveral of my company's projects muchappreciated positive comment. If he leftanything out it was the distinctionbetween public -affairs projects whichare designed to actually measurablyimprove the community and those thatare merely related to improving the sta-tion's image and, at best, provide aware-ness to a social issue. These distinctionsare important. When the first categoryof projects are completed, the stationand the community are improved. Withthe second, it's usually just the stationgoals which are enhanced.

Now the criticism. In the story'saccompanying box, entitled "Save TheBaby Rivalry," David makes threepoints which are inaccurate:

1. That my company's "BeautifulBabies Right From The Start" projectis paid for by the station and, indeed,"costs in the high six figures." Despite adetailed conversation with David, hestill got it wrong. Our projects are freeto television stations. They receive afully formed, tested campaign inexchange for enough airtime to pro-mote the project and themselves. Wework with the government, not -for-profit and business community to raisethe dollars necessary to carry out thecampaign. As David points out, unlikeimitators of "Beautiful Babies RightFrom The Start," our campaigns aredesigned to be more than promotions:They have become medical interven-tions that actually save infant lives. Theprojects require the materials, supervi-sion, staffing and infrastructure thatare highly professional and as a resultexpensive. He did report correctly thatmy company's return is a fraction of thedollars that we help to raise, generallycomparable to what a federal contractorreceives.

2. David then quoted me out of con-text as saying that I was in a "tricky sit-uation" regarding a lawsuit with KUTV

The situation was that I have beenattempting to settle this matter ratherthan drag a sensitive public-service proj-ect through court and media battles, andfor those reasons I felt it inappropriateto go into detail about the situation. Outof context his quote leaves the reader toconjure up his own meaning.

3. Probably the most regrettable errorwas a quote that I made that somehowemerged from the mouth of a KUTV rep-resentative: "It's unseemly that peoplewould sue over how to prevent infantmortality." I agree it is unseemly andsince KUTV sued us in an attempt togain clear title to their version of theproject, that quote coming from themmakes no sense at all.Your magazine is about the only place

one can read about the burgeoning fieldof public affairs/promotion. My hope isthat you and David continue to explorethe issue, being sensitive to the nuancewhich defines it.

Jerry WishnowPresident

Wishnow GroupMarblehead, Mass.

David Bollier replies: Mr. Wishnow'scampaigns are not free," as stations areproviding airtime, in-house resourcesand a percentage of sponsorship rev-enues in exchange-issues explicitlyraised with Wishnow in reporting thearticle. Channels did not claim that the"Beautiful Babies" campaign sells for"high six figures" generally-just atWBBM-TV in Chicago. A sum of thismagnitude was mentioned by knowledge-able sources, and is consistent with thefee formula that Wishnow himselfaffirms as accurate.

As for the tastefulness of a "Save -the -Babies" rivalry, a KUTV representative,not Wishnow, was the source of thatremark. Readers can judge for them-selves which is unseemly: litigation topermit a proliferation of other infanthealth campaigns (KUTV) or anattempt to retain exclusive control overthe idea (Wishnow).

Channels welcomes readers' comments.Address letters to the editor to Channels,401 Park Avenue South, New York, N.Y.10016. Letters may be edited for pur-poses of clarity or space.

4 CHANNELS / NOVEMBER 5, 1990

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IIIIREPORTSIIIIIIThe NextLetterman?

A local -access hero tests the syndication market.

Monday, Tuesday andWednesday nights hecan be found waiting

tables at L.A.'s trendy Authen-tic Cafe, but Mr. Pete (a.k.a.Peter Chaconas) would quit ina second if his local -accesscable show becomes the firstever launched into broadcastsyndication.

The jury is still out. After afour -week September test runon L.A.'s Tribune -owned indieKTLA, the producers are dis-cussing whether or not theycan take The Late Mr. PeteShow to NATPE in January."The goal is a first -run syndi-cation five -night strip," saysKevin Bright, executive pro-ducer for the project and theEmmy-winning supervisingproducer of Fox's In LivingColor. Mr. Pete is a Grant/Tri-bune Production in associationwith KTLA, Kevin Bright Pro-ductions and Moress, Nanas &Golden.

In his four -week trial onKTLA, the mustachioed Mr.Pete averaged an Arbitron 2.8rating/10 share, usually beatingthe other indies in the 11:30 P.M.to midnight Sunday slot.

"That was a test to see whatkind of show we could produceand whether or not therewould be any broader appealfor this guy than just cableaccess," says David Goldsmith,senior v.p., creative affairs forGrant/Tribune. "We're cau-tiously optimistic and reason-ably encouraged by the initialreturns."

Mr. Pete has done 55 showson Century Cable's publicaccess channel and become acult figure in Hollywood for hiscampy comedy. His characteris a combination of SoupySales, Pee -Wee Herman andBill Murray in a plaid smokingjacket. Steve Allen, RoseanneBarr and George Carlin areamong the stars who've ap-

peared on the show for free.Chaconas and Bright agree

that KTLA was lax in promot-ing the show. "[KTLA] did agood job in the first week ofgetting the word out," saysBright, "but when the ratingsweren't equal to what they hadin that slot prior to our pre-miere, I think a very prema-ture panic set in and the pro-motion was pulled way back."

Mr. Pete was able to take fivedays off from the restaurantwith the pay from the four testshows. For the time being, he'swaiting tables and waiting to

Mr. Pete would be the first accessshow to make it to syndication

hear what Grant/Tribunedecides to do with his show. Helikes working at the AuthenticCafe-fans come in regularlyto chat-but he'd much ratherearn a paycheck for The LateMr. Pete Show than workfor tips. RICHARD KATZ

The Quest ForUniversal AcceptanceWWOR tries on a more national image.

As Fox affiliates haveshifted their images fromhometown independents

to satellites of the Fox Broad-casting Company, non -Foxindies have been lacking inways to compete. NowWWOR-TV, a New York indiecarried by many cable sys-tems as a superstation, has fol-lowed Fox's lead by trumpet-ing ties with its parentcompany, entertainment con-glomerate MCA, which ownsUniversal Pictures.

"The premise is to create inthe mind of the viewer that thisin not just another New Yorkindependent station," saysAlex Dusek, WWOR's directorof creative services.

When the station was boughtby MCA in 1987, it began toshed its former "Million DollarMovie" image by investing intop -dollar off -net and first -runshows (Cosby, Arsenio), whileexpanding its news division.

With the debut of three first -run shows from MCA this fall,She -Wolf of London, TheyCame from Outer Space andShades of L.A., the stationthought it was time to push itslink to MCA/Universal.WWOR, Channel 9, is now"Universal Nine."

"To use Procter & Gamble

terms," says Dusek, "we'removing toward one of thefamily of accepted brands."Says Donna Zapata, vice presi-dent of sales and advertising,"People will look to the stationand expect more becausewe're part of an entertainmentconglomerate."The station began teaser

spots in June, building the Uni-versal tie-in with slogans suchas "An explosion of Universalproportions is coming to Chan-nel 9." Labor Day spotsannounced the new prime -timeshows and introduced the"Universal Nine" ID. All on -airspots were produced in con-junction with Boston's Spot -wise Agency.

Zapata says WWOR will waitto see how the new program-ming and image fared in theNovember books to decidewhat the next promotional tac-tic will be, but emphasizes that"Universal Nine" is a perma-nent change.

The potential sale of MCAto Japan's Matsushita ElectricIndustrial Co., however, couldthrow a wrench into themultimillion -dollar Universalcampaign. No foreign com-pany can own more than 20percent of a U.S. station, soconceivably WWOR could endup not at all affiliated withMCA and Universal.

"There's no sense worryingabout that now," shrugs Zap-ata. "Every year there arefresh rumors about buying andselling and takeovers. We'regoing to keep going with this[image] until there is a goodsolid reason not to." R.K.

Shooting a new look for New York independent Channel 9.


In Los Angeles,The Unkindest CutTwo operators, two responses to vandalism.

Aseries of unrelated inci-dents of vandalism haveleft executives of two

L.A.-area cable systems devoidof suspects. And though theyresponded in radically differ-ent ways to the incidents, nei-ther really knows how to keepit from happening again.

Century Cable suffered thefirst pair of incidents. On July30 at 11 P.M., vandals cut a keyfiber-optic line in West LosAngeles and interrupted ser-vice to 120,000 of Century's160,000 subs. In Beverly Hillsand West Hollywood, cus-tomers lost their cable for anhour. Elsewhere, downtimewas only 30 seconds.

Century's back-up cablekicked in a feed throughoutmost of its coverage area, pre-venting a lengthy outagedespite the severity of the cut.Century had been down that

road before.In 1987, during heated con-

tract negotiations with theCommunications Workers ofAmerica, Century sufferedcuts all along its 1,700 -mileplant. At the time, Bill Rosen-dahl, Century's v.p. of opera-tions for L.A., offered a rewardfor info leading to an arrest.The July incident also cameduring contract negotiations."Was it coincidental? I thinknot," says Rosendahl.

As in '87, Rosendahl swunginto action. He phoned re-porters and went before theL.A. City Council to offera $25,000 reward. When asecond, minor cut occurredAugust 2, he upped the rewardto $50,000 and went on cameraon ten Century channels with a'We've had enough!" message.

When Continental's 14 -sys-tem, 325,000 -sub complex was

Continental's Gibbs says cable is vulnerable to anyone with hedge shears.

sabotaged August 11 and 14,John Gibbs, v.p. of corporateand legal affairs, took a morelaid-back approach.

The first cut left 75,000 in theWilshire and Hollywood areascable -less for from two to 17hours starting at 9 P.M., theheart of prime time. The sec-ond episode was in roughly thesame area and affected morehomes, but happened in themiddle of the night.

Gibbs didn't tell subs that theline had been cut, offered noreward money and didn't con-

tact reporters. He thinks thecuts were the isolated acts ofpranksters. And though Gibbshas beefed up security, headmits cable is vulnerable to"anyone with a good pair ofhedge shears."

Rosendahl's answer seems tobe taking "an active, aggres-sive public posture againstthese things. [If you don't], theterrorists feel they've got youwere they want you. I don'tever intend to give those bas-tards the upper hand again."

RAY RICHMOND

An UnlikelyCable -basherBob Gessner knows what good service is.

Bob Gessner isn't shy aboutclimbing up on a soapboxto decry the poor service

offered by some cable opera-tors. But what sets Gessnerapart from others who criticizecable is that he's an insider:His family owns two cable sys-tems with 34,000 subscribersin Massillon and Wooster,Ohio.

What gives Gessner the rightto talk is the apparent satisfac-tion of his own customers.Gessner enclosed an open-ended survey with the Julycable bill, simply telling sub-scribers, "Please jot downyour comments and sugges-tions regarding our service."

Six hundred sixty-six people,or 2 percent of the combinedsub base at Massillon CableTV and Clear Picture Inc. inWooster, responded. By Gess-ner's reckoning, only 42 hadanything negative to say.Thirty of those were reportingtechnical problems, and tenobjected to the price. Two subscomplained about customerservice; 256 lauded it.

Price may actually be one ofthe reasons for the positiveglow, Gessner admits. Massil-lon's basic subs pay $15monthly. In neighboring Can-ton, Warner subs pay $18.50,and in nearby Green Town-ship, Post -Newsweek subs pay

CLEAR PICTURE.,

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I '9;?Few of the 666 subs who responded to Massillon's survey had complaints.

more than $24.The biggest factor, says

Gessner, is that Massillon sim-ply provides good service. Infact, he thinks most systemsdo so-it's the minority, hesays, that give legislators theanecdotal grist they need to

advance reregulation. So Gess-ner, an inveterate letter -writer,sent copies of his surveyresults to 70 congressmen,hoping to convince them that a"silent majority" of thenational public is happy withcable. MARK SCHONE

CHANNELS/NOVEMBER5,1990 7

WHAT'S ON

Low -PowerStruggle

BY RICHARD KATZ

NOVEMBER 1-30: ESPN veers into Discov-ery Channel territory with its new series,Expedition Earth, an environmental andadventure show featuring human and naturestories from all over the planet. The 16 -partseries, shown over three years, is scheduled tokick off sometime in November-dependingon weather and wind conditions-with"Earthwinds: First -Ever Around -the -WorldManned Balloon Flight." "It's very difficultto be involved from a television standpointbecause there are so many variables," saysESPN spokesman Chris LaPlaca about theunknown takeoff time. The network will airtwo one -hour shows on the attempt to breakthe nonstop balloon distance record. In addi-tion, ESPN will attempt nightly updates onthe flight's progress on its SportsCenter."We think we have a way to get live video offthe gondola," says LaPlaca, "but since wenever know where the balloon is going to beat any given time, [it's difficult] to book satel-lite time." As for the environmental side ofthe show, NASA and Glavkosmos, the Sovietspace agency, will provide science instrumentsto test the Earth's atmosphere and collectdata about the ozone layer. LaPlaca says theseries, which will feature a show attemptingto get the first -ever footage of a giant squid,hasn't attracted any new advertisers to thenetwork, but he remains hopeful it will once itgets rolling.

NOVEMBER 1 7-1 9: The small but rapidlyexpanding low -power television industrymeets in Las Vegas at the third annual LPTVConference & Exposition, sponsored by theCommunity Broadcasters Association.CBA president John Kompas says thisyear's buzz will be about the favorableimpression the LPTV industry made onWashington in the past year. Getting on thelocal cable system is crucial for the financialviability of most LPTV stations, so the indus-try was banking on being covered by mustcarry. "In the Senate, if the [cable] bill wouldhave gotten to the floor, it would have

included local LPTV in the must carry," saysKompas, despite (he maintains) the NationalAssociation of Broadcasters sending eachmember of the Commerce Committee "a four -page assassination document" recommendingagainst low -power being included in mustcarry. Kompas speculates that the NationalCable Television Association traded thechannel realignment the Association ofIndependent Television Stations wanted forthe NAB coming out against low -power car-riage. "There are a lot of LPTV stations com-peting with cable systems for local advertis-ing," explains Kompas. "It would be hard forthe NCTA to come out against us, but if theNAB [did], it would be a lot more palatable toCongress."

NAB spokesperson Susan Kraus says theNAB did recommend against low -power, butthat Kompas' reasoning bears "no resem-blance to reality." Says Kraus, "Low -powerstations are awarded by lottery with no pub-lic -interest obligations. They don't have thesame obligations as a full -power station, sothey don't deserve the same protection."

NOVEMBER 20: Paul Tagliabue, commis-sioner of the National Football League,speaks at a Federal Communications BarAssociation luncheon in Washington. One issuehe might address is the fear that many pro foot-ball fans have that their beloved Sunday after-noon and Monday night games may end up onpay -per -view. At a recent National Academyof Cable Programming luncheon, Bob Wus-sler, president and CEO of ComSat VideoEnterprises, noted that there is actually lan-guage in the current NFL TV contracts thatwould permit games to be offered via PPV. ButPaul Bortz, president of analysts Bartz & Co.,says fans could benefit if the NFL went PPV."[What's being talked about] is offering gamesthat aren't coming into a particular market forthe guy who moved from Chicago to Philadel-phia and wants to get the Bears games," saysBortz. "It wouldn't be a substitute for whatthey now do, but a supplement."

NOVEMBER

November 10: NationalAcademy of TelevisionArts and SciencesNashville chapter EmmyAwards. Opryland Hotel,Nashville, Tenn. Contact:Monty Nugent, (615) 373-8295.

November 12-14: "Regu-lating the Cable Indus-try," a course from theCable Management Pro-gram, sponsored byWomen in Cable and theUniversity of Denver.Delivered via satellite tosites including Atlanta,San Francisco, Denverand Washington. Contact:Valerie Gross, (312) 661-1700.

November 14-16: Televi-sion Bureau of Advertis-ing 36th Annual Meeting.Loews Anatole, Dallas,Texas. Contact: RonniFaust, (212) 486-1111.

November 14-16: PrivateCable Show. Caesar'sTahoe, Lake Tahoe, Nev.Contact: Barbara Polka,(713) 342-9826.

November 16-18: ThirdAnnual Conference ofCollege Broadcasters,sponsored by CBS.Keynote speaker: QuincyJones. Brown University,Providence, R.I. Contact:Glenn Gutmacher, (401)863-2225.

November 26-30: VideoExpo Orlando, sponsoredby Knowledge IndustryPublications. OrangeCounty Convention Cen-ter, Orlando, Fla. Con-tact: Debbie Rotolo, (914)328-9157 or (800) 248-KIPI.

November 28-30: WesternCable Show, sponsored bythe California Cable Tele-vision Association. Ana-heim Convention Center,Anaheim, Calif. Contact:C.J. Hirschfield, (415)428-2225.

8 CHANNELS / NOVEMBER 5,1990

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1989

NEWS CHANNELS

More JusticeFor All

Two new cable channels could change theface of courtroom coverage on television.

BY JANET STILSON

He tried to tell the attendant, 'Iwant to live,' but he couldn'tbecause he had no mouth, nochin, no nose.' "

That bloody story isn't from a horrormovie or pulp novel, but an attorney'srecounting of a shotgun suicide attemptdelivered during the recent Reno, Nev.,trial of heavy-metal group Judas Priest.It's the kind of sensational moment thattwo new cable channels are counting onto draw viewers. While mayhem andcelebrities may draw viewers to the net-works, the duo's very existence is likelyto improve the quality of courtroomreporting by TV stations.

Imagine a cable network programmedwith gavel -to -gavel coverage of courtrages across the country, and you've gotthe concept of In Court, a network fromCablevision Systems launching thismonth in several major markets. It'salso the blueprint for American Court-room Network, a joint venture of TimeWarner and American Lawyer maga-zine expected in the first quarter ofnext year.

The pair could be more than just twomore cable competitors nibbling away atbroadcast television's audience share.Brad Carr, a spokesman for the NewYork State Bar Association, sees thepotential impact on stations from an his-torical perspective. Just as some major -market newspapers added legal re-porters after the emergence of severallaw publications in the late '70s (includ-ing American Lawyer), Carr expectstop -market TV stations to hire legal cor-respondents after the channels debut.

The cable services' exhaustive cover-age will hold broadcast newsroomsmore accountable for their court report-

ing, according to Steven Brill, whoheads American Courtroom as presi-dent and chief executive of AmericanLawyer Media. He thinks stations willmove away from quick soundbites thatmisrepresent complex cases and mis-lead the public.

The cable channels could also assumeresponsibility for the soundbites. Amer-ican Courtroom will request full -daycoverage from judges, and will utilizetwo cameras, compared to stations'

Judas Priest's trial is the type of event two legal nets pray for.

usual one. With those advantages, thenetwork hopes to take over pool cover-age duties.

It's a win -win proposition. AmericanCourtroom can defray some of itsexpenses and is likely to derive somepromotional benefit. Station newsroomswill cut costs and still have more mate-rial from which to choose.

NBC affiliates could find similar syn-ergies with In Court, according to TomRogers, president of NBC Cable and

business development. NBC is invest-ing in the channel.

But Paul Beavers, news director atCleveland's NBC O&O WKYC, doesn'texpect his court coverage to be affectedby In Court, tentatively set to launch inthat city. He does believe, however, thatthe legal channels will expand con-sumer perspectives on legal proceed-ings well beyond Judge Wapner andL.A. Law. Dennis Patton, In Court'svice president and general manager,concurs wholeheartedly: "In Court willdemystify the public's perception of thejudicial process."

Are consumers that interested inbeing enlightened? Cablevision's Rain-bow Program Enterprises unit, whichcreated In Court, rests its case on onepiece of evidence in particular.

Last February, the company's News12/Long Island regional news channelconducted an hour-long phone coinci-dental survey midway through its livecoverage of the Golub murder trial,which had received heavy media cover-age. In the homes News 12 serves, ittied WABC with a 3.0 rating, and sur-passed every other TV channel.

Both networks can exploit such re-gional interest in specific trials-they'reowned by companies that control someof the largest multiple system operationsin the country, and they plan to make useof their geographic strengths. Nowherewill their presence be felt more than inmetropolitan New York, where both

Time Warner and Cable -vision have system clusters.

Time Warner could launchits network in central Flo-rida, San Diego, Houston,Columbus and Rochester, allareas where it has pocketsof strength. And In Court,to be launched in all Cable -vision's operations, couldaffect stations in Bostonand Chicago, as well asCleveland.

Even with the top -marketcoverage, "the biggest chal-lenge for these channels isgoing to be whether theycan make trials interest-ing," says Paul Sagan,

WCBS-TV New York's news director.Despite some sensational high points,"most are bloody boring."

Both channels plan on covering aboutthree trials per day and switchingbetween them to keep things lively,adding lots of analysis from experts.There was actually one week this year,points out Brill, when the John Gotti,Eddie Murphy/Art Buchwald and PeteRose cases were all in court. It's thestuff of cable -channel dreams.

10 CHANNELS/NOVEMBER50.990

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MARKETING & PROMOTION

Tools OfCapitalism

Soviet journalists at U.S. television stationsfind themselves surrounded by hype.

BY LYNN BRAZ

en Vincent Barresi, vice presi-dent and general manager ofWTSP-TV Tampa, decided tosend a news crew to the Soviet

Union and, in return, host two Sovietjournalists at his station, he knew hehad something highly promotable. Theonly problem was finding an umbrellatheme, something that would tie all thevarious activities the station hadundertaken into one short and sweetconcept. After translating every newsyword the WTSP staff could suggestinto Russian, promotion manager Bar-bara Sobocinski finally decided ondruzhba, which means friendship.

"It was the only word we could comeup with that was short enough to pro-nounce in a 30 -second spot," she says.Druzhba, Sobocinski believes, has nowreplaced glasnost as the Russian wordmost readily recognized by residentsof the Tampa Bay area.When democracy began running

rampant in Eastern Europe last year,stations immediately recognized thepossibilities. Across the country, sta-tions have exchanged journalists withthe Soviet Union. While Americansmay learn more about the SovietUnion in the process, the Soviet jour-nalists are likely to learn how impor-tant marketing is to American localnews. Many fmd themselves doing soft,human interest stories and makingpromotional appearances.

WXIA-TV, the NBC affiliate inAtlanta, was the first to capitalize onthe programming opportunities ofglasnost. Hosting a reporter from theSoviet republic of Georgia namedNugzar Ruhadze, who became a localcelebrity fondly referred to as "Nug-

Wherever he went, whatever he did, acamera followed. Billboards featuredhis unglamorous visage. Print ads sup-plemented the marketing push andwhile Peavy won't say how much shespent on promoting Ruhadze, she willsay this: "It really doesn't matter howmuch it cost because we got a million -dollars worth of free press."

Letting viewers hear the perspec-tives of a Russian journalist has itsaltrusitic overtones. But Ruhadzenever actually covered hard news; hedelved into the human -interest side oflife. And the marketing of "Nuggie" isreminiscent of the methods radio sta-tions use to hype their drive -time discjockeys. How many news reporters arepositioned as Batman fans? Still Peavystresses the first goal of the stationwas to "bring two countries together."Ratings were secondary. "We don'tknow if this project did anything to theratings," Peavy says. "But we wererated higher then [during Ruhadze's

guest appearance]than we are now."

In Tampa, WTSPcould use a littlehelp with thenumbers. Ratedthird in its mar-ket, the ABC affil-iate's newscastsconsistently lagbehind those ofthe other affili-ates. And thoughgeneral managerBarresi stressesthat the Druzhbacampaign is firstand foremost aprogrammingdecision, he ac-knowledges he

hopes the promotional efforts willspawn a ratings increase that won'tabate after the Russians return home.

"Druzhba: A Channel 10 Citizens'Summit" was one year in the works.Making arrangements with the Soviettelevision and radio ministry was "anincredible nightmare," according toBarresi. For two weeks, WTSP hostedSoviet journalists, who reported theirviews of Tampa Bay back to theU.S.S.R. as well as to WTSP viewers.Simultaneously, a WTSP news crewdispatched to the Soviet Union deliv-ered live satellite feeds and taped seg-ments for broadcast during the 5, 6and 11 P.M. newscasts. The project cul-minated with a two-hour prime -timespecial that aired on October 25th. Askybridge between Tampa Bay andMoscow linked studio audiences ineach country and gave them the

,T1PY)KBACITIZENS' SUMMIT

Advertisers were offered a package deal during WTSP's Druzhba campaign.

gie," the station attracted nationalpress coverage in April 1989. Responsewas so positive, says promotion man-ager Lanna Peavy, that Nuggie cameback this spring for an encore.

A series of on -air spots featuring theflags of the U.S. and the U.S.S.R.touted Ruhadze's arrival in '89. Thespots, which told viewers that WXIAwas "making history," were rolled outtwo months ahead of time. "Once Nug-gie got here and we saw how funny andunusual a character he was," saysPeavy, "we decided he was very mar-ketable." The promotional emphasisthen switched to spots showing thereporter discovering things American.When the movie Batman gaveRuhadze a case of hysterical laughter,it gave viewers one too. When Ruhadzebegan weeping during Memorial Dayservices, viewers wept along with him.


chance to ask each other questions in aDonahue -like forum.

After Barresi announced the projectat the end of the summer, he wasbesieged with requests for the Sovietreporters to make public and privateappearances. Community interest wasoverwhelming. The Soviets were wel-comed to Tampa Bay with a receptionparty attended by the station's adver-tisers, city officials, university Russianstudies majors and civic leaders. Localbusiness people begged to meet thejournalists, says Barresi, because theywere eager to make contacts in theU.S.S.R. and learn about opportunitiesfor selling their products in that mar-ketplace. The reporters, who were flu-ent in English, made speaking engage-ments at elementary schools, seniorcitizens' centers, women's groups, evenmalls. "Druzhba was most certainlyevent marketing," says Barresi. "In away, this campaign was like a value-added marketing program."

Although Druzhba's hype level wasextraordinarily high, Barresi says hewas careful not to go too far in takingadvantage of the marketing opportuni-ties. Approached by advertisers as wellas radio stations for requests to tie-into the special programming, Barresiand his staff decided against it. "Thenews department wanted to keep itclean. We wanted to make it clear weweren't doing this just to get advertis-ers," says Sobocinski. One segmentreported from Moscow, however,focused on such fast-food outlets asMcDonald's and Pizza Hut, which arebeginning to pop up in the SovietUnion. And since McDonald's was fea-tured as part of the editorial, the com-pany signed on as an advertiser for theprime -time special, according to FrankSeymour, general sales manager. "Thegreat thing about Druzhba is that itwas a local story with international fla-vor," he says. "That was very appeal-ing to advertisers."

While the station discouraged co-sponsorship, advertisers wereapproached with a package deal thatincluded buying into the regular news-casts during Druzhba, the prime -timespecial and Moscow Minutes, briefupdates featuring the American crewreporting from the U.S.S.R. Ads werealso sold individually during the sched-ule of newscasts and updates. Andwhile Seymour shopped aroundDruzhba the way he would any otherprogramming, he focused on compa-nies that might have an interest in dis-tributing their products in the SovietUnion-soft-drink distributors andmanufacturers in particular. Once theSoviets arrived, they were the guests

USA*USSR

JOURNALISTEXCHANGE

of honor at luncheons featuring thestation's major advertisers.

As for consumer marketing, the firstphase of the campaign rolled out onOctober 1st. Viewers were introducedto the word druzhba through four printads and ten -second on -air spots featur-ing a logo with druzhba in Cyrillic let-tering. Ads were tagged with the sta-tion identification followed by"Citizens' Summit." Both the print andon -air spots gave out little informationto pique viewers' curiosity slowly, saysSobocinski. During the second week ofthe campaign, 30 -second spotsexplained that Druzhba was anexchange of journalists and ended with,"Druzhba, a word we hope you'll all beusing." Radio and print ads supple-mented the on -air spots. Once theactual exchange took place, episodicspots telling viewers what the Ameri-can crew would be reporting on duringthe week were taped. The total amount

Soviet reporter Nugzar Ruhadze(I., with WXIA's reporter SimeonSmith) became a star in Atlanta.

spent on all outside mediafor promotion came toabout $45,000, saysSobocinski.What effect, if any,

Druzhba will have onviewer friendliness towardsWTSP in the long runremains to be seen. Sincethe station had no controlover the timing of the jour-nalistic exchange-the Rus-sians called all the

shots-Druzhba couldn't be strategi-cally placed in a sweeps month. ButBarresi maintains ratings are sec-ondary in any case. "We consider thissomething we did for the good of com-munity," he says.

While both Druzhba and Nuggie wereconceived in the stations' programmingdepartments, the actual news reportedby the Soviet journalists was much lesshard-hitting than the marketing cam-paigns. And could it be hindsight to saythat neither project was done for rat-ings, since extensive promotion didn'ttranslate into significant viewershipgains? "I've seen a lot of stations dosome great things that don't necessarilytranslate into ratings," acknowledgesWayne Freedman, v.p. of marketing atWXIA. "But that doesn't mean youshouldn't try to do them."

Lynn Braz is a freelance writer basedin New York.


WASHINGTON

Another Set OfEyes on TV

After a dormant decade, the Federal TradeCommission is again watching television.

BY PENNY PAGANO

It was about a year ago whennews broke that Tele-Communica-tions Inc. was planning to addanother investment to the growing

list of cable networks in which it ownsa stake: a 50 percent interest inShowtime. As part of the deal, Show -time's owner, Viacom, would collect$225 million.

Weeks passed, then months, and nowa year, yet the purchase has yet to befinalized. And it won't be until officialsat one federal agency in Washingtoncomplete a review of the transactionand give their approval.

But if you're thinking that this isanother matter before the FederalCommunications Commission, you'rewrong. True, when it comes to thenation's capital, the FCC is the firstagency that comes to the minds of sta-tion owners and cable operators. But inthe past year or so, a few more headshave been turned to a stately federalbuilding across town and just a fewblocks from Capitol Hill, the offices ofthe Federal Trade Commission. There anew Bush -appointed chairman, JanetD. Steiger-the first woman ever tohead the 75 -year -old agency-is raisingsome questions about what course theagency will follow and what areas, suchas cable television, it will focus on withits limited staff and budget.

The TCl/Showtime deal is not theonly broadcast/cable matter that hasattracted the agency's attention:

In September, the FTC charged theCollege Football Association and Capi-tal Cities/ABC Inc. with illegallyrestraining competition in the market-ing of college football games. In anadministrative complaint, the FTC

charged that the CFA illegally gaveABC exclusive rights to certain collegefootball games. A conference betweenthe parties and an administrative lawjudge is expected this month. Also in September, the staff of

the FTC's Bureau of Economics filedcomments with the FCC as part of theFCC's proceeding to evaluate the finan-cial interest and syndication rules.The FTC's comments,similar to those filed inan earlier FCC pro-ceeding in 1983, con-cluded that the justifi-cation for continuingthe rules "seems to usquestionable."

While the FTC doesnot make its investiga-tions public, there havebeen reports of severalprobes into the cableindustry. According tothe trade publicationFTC:WATCH, the FTChas looked at a number Janet Steiger: personal ties to Bushof cable deals, includingan acquisition by ATC of a 15,000 -sub-scriber system in the Orlando, Fla.,area from Sanlando Cablevision, a sub-sidiary of SCI Holdings; Benchmark'sacquisition of a Ridgecrest, Calif., cablesystem from Boulder Ridge Cable TV;and the acquisition of certain assets ofTelesat Cablevision Inc. by StorerCable TV of Florida and by TCI.

In a related area, FTC:WATCH alsoreported that the FTC is investigatingwhether some motion -picture studioshave attempted to fix the price of video-cassettes of their movies by refusing toprovide co-op ad money to retailers who

discount the videos.What all this means for broadcasters

and the cable industry is that in addi-tion to the Al Sikes -revitalized FCC,there is another federal regulatoryagency now taking a more serious lookat television. And groups that watchover TV issues will have to pay moreattention to the FTC, which had virtu-ally disappeared from the news.

The investigations of the past year allfall within the purview of the FTC,which was created in 1915 with a broadmandate to promote fair competitionand protect the public from unfair ordeceptive business practices. Over theyears the FTC has delved into contro-versial areas ranging from cigaretteadvertising to used cars to funeralhomes, and in the process developed itsshare of supporters and foes.

If a federal agency could be said tosuffer an identity crisis, the FTC is acandidate. The agency has been taggedwith a number of nicknames, from the"national nanny" to the "old gray ladyof Pennsylvania Avenue." Its fortuneshave waxed and waned with those of itsfive commissioners and its chairmen.Relations with Congress have beenrocky, at times even stormy. Its politicalconstituency for strong enforcement isa fragile one.As an independent agency, the FTC

was perhaps most active under chair-man Michael Pertschuk,appointed by PresidentJimmy Carter. Pert-schuk's activist, pro -consumer stance led thecommission to tackleissues far more aggres-sively and to hurl con-troversial challenges atsome of the nation'slargest corporations.

The agency's activi-ties angered businessand riled Congress,which reduced theFTC's powers, budgetand staff. One of themost celebrated epi-

sodes occurred in the late '70s, whenthe FTC decided to look at televisionprograms and advertising aimed at chil-dren. The FTC's famed "kidvid" inves-tigation, with a goal of regulatingadvertising aimed at kids, essentiallycame to a halt after Congress passed abill in 1980 setting restrictions on chil-dren's advertising.

That issue and others precipitateduncomfortable times for the FTC.Fights over its funding and congres-sional authority to veto its actions ledthe FTC to actually shut down for a dayin May 1980-the first federal agency


to have to do so.Once Ronald Reagan was elected

president, and Pertschuk was replacedby James Miller III, the FTC's activistdays were numbered. Miller, like MarkFowler at the FCC, adhered to the Rea-gan administration's philosophy ofderegulation and the free marketplace.While Miller ran the FTC as a tightship, the agency made few headlines.Miller left in 1985 to head the Office ofManagement and Budget, but his suc-cessor, Daniel Oliver, held firm to thecourse already set.

Enter Bush's appointment as chair-man, Janet Steiger, the 51 -year -oldwidow of Rep. William A. Steiger (R-Wis.). Steiger, a Phi Beta Kappa gradu-ate of Lawrence College in Wisconsinand a Fulbright and Woodrow Wilson

Attracting FTC interest: football, inthe form of ABC's deal with the Col-

lege Football Association, and movies(inset: Woody Allen's Crimes andMisdemeanors) via Mrs proposedinvestment in Showtime.

scholar, is the former chairman of thePostal Rate Commission and has herown personal links to the White House:George Bush is her son's godfather.

So far the regulatory agencies in theBush administration are not blindlycontinuing the Reagan administration'sfree-market ideology, but are taking amore pragmatic approach to competi-tion with less aversion to regulation.Steiger's recently expressed interest intelevision is precedent -setting, in someways, because the FTC's previous boutof activism came before cable was muchof a factor in TV

What clout Steiger and her four fellowcommissioners will really be able toexercise remains to be seen. The FTCbudget and its staff are about half thesize they were ten years ago. Oneantitrust attorney, a former FTC

staffer, says Steiger's highest priorityis to create no waves and avoid fightswith commission staff. "All Steigerwants to do is present a public -relationsmessage. Popularity and go -along arebig in the Bush administration," theattorney says.

Others, however, say Steiger hasmade strides to truly reinvigorate theFTC, to improve relations outside theagency-including on Capitol Hill-andto underscore its interest in upgradingantitrust enforcement in a number ofareas, including cable television.

"There really has been a sea -changeat the FTC, there's no question aboutit," says Pertschuk, now co -director ofthe Advocacy Institute, a public -inter-est lobbying group. "The FTC is backwhere it was under the Nixon adminis-

tration with about half the resources.The Nixon administration had areformist, activist FTC that recognizedit had a responsibility in these areas.The best mark of this FTC is that JimMiller has been quoted as saying thatthe FTC is out of control."

But Pertschuk adds a caveat about thecurrent FTC: "They aren't going to doanything wild and crazy like we did toban advertising to kids, but they arequite serious."

Even Peggy Charren, president ofAction for Children's Television in Cam-bridge, Mass., seems pleasantly sur-prised. When Charren was unable toattend a session with Steiger and otherpublic -interest groups, Steiger sched-uled a separate hour-long meeting withCharren. "She listened and asked all ofthe right questions," says Charren.

Attorney Lewis Engman, who wasFTC chairman from 1973 until 1975,and is now representing the CollegeFootball Association in the FTC's com-plaint, says, "Steiger has given everyindication that she will have an aggres-sive enforcement policy, and I thinkthat's good. Our system depends on thefree-market economy and the good flowof information to consumers."

But not surprisingly, Engman doesn'tthink the FTC's complaint about tele-vising college football games meetsthose criteria. "I haven't heard anyonecomplaining that there isn't enough col-lege football being televised," he says.

"I don't think this is a very good casefor the commission to bring," Engmancontinues, arguing that the FTC'saction could result in less choice andfewer quality games being shown. "Ihope [the CFA action] is not an exampleof the type of enforcement policy thatSteiger hopes to have. There are a lot ofproblems out there that deserve atten-tion. But whether there are 12 or 13 col-lege football games isn't one of them."

Some FTC watchers also say theTCl/Showtime investigation may haverevealed a permanent deviation fromthe FTC's earlier course. Under theHart-Scott-Rodino law, companiesinvolved in a merger exceeding $15 mil-lion must routinely file their plans withthe federal government. The JusticeDepartment and the FTC share thisreview authority, and usually decideinformally which agency will screen theproposed merger.

Art Amolsch, editor and publisher ofFTC:WATCH, says that the FTCmoved into the cable -merger area dur-ing the twilight of the Reagan adminis-tration, when the Justice Department'santitrust division was concentrating itsresources on criminal antitrust enforce-ment, leaving most merger work to theFTC. And now that the FTC staff hasits hooks into mergers, Amolsch thinksthe agency may be less inclined to defermerger reviews to the Justice Depart-ment's antitrust division.

"The bottom line," says Amolsch, "isthat future cable TV mergers and othercompetitive problems are as likely tobe examined by the FTC as they areby the Justice antitrust division. Andthat's new."

With all of the changes in the tele-vision arena, the broadcast and cableindustries will have to pay more atten-tion to the FTC and its decisions.And as companies such as TCI havefound out, the wait can be a long one.When asked about the status of theFTC review, TCI executives say onlythat "Nothing's changed. We're justwaiting."

CHANNELS/NOVEMBER50990 15

PROGRAMMING

Will fear of

offending the

community defeat

diversity in

television?

f censorship is the controversy of the day, TomColeman, chairman of the Los Angeles -basedIndependent Entertainment Group, is the man of thehour, having agreed to produce a pay -per -viewconcert featuring trouble -ridden rap group 2 LiveCrew. But the difficulty he's had getting clearances is

making him half -wish he hadn't gotten involved."My first reaction when the people from 2 Live Crew brought

us the program was, 'Why do we need this stuff on the air?' "says Coleman, whose Choice Entertainment is distributing theevent. "The more I thought about it, I realized I was engaging inself -censorship. If I said no, I'd be part of the problem."

Coleman did not foresee that getting clearances for the two-hour program, scheduled for November 8, would be such anightmare. PPV networks Viewer's Choice and Request havedecided not to carry it, and Choice Entertainment hasencountered strong resistance from local operators because ofthe bawdy lyrics and performances of the Crew. At press time,Choice had 2 million clearances out of a hoped -for 10 million,according to company president Lisa Phillips, but poor turnoutBy Bill Lichtenstein at the Crew's live shows and tepid response to the PPV offer

16 CHANNELS/NOVEMBER5,1990

Within

were making the November 8 event look like an iffy proposition.It's hard to say what role censorship-a decision to avoid

controversy by keeping the event away from localsubscribers-has played in the process, but most of Choice'srefusals ultimately came down to community standards.

"I think it's an indulgent sort of adolescent programming,"says Ellen Notbohm of KBLCOM in Houston, which refused tocarry the concert. "For a number of reasons, including a risk tothe community, we made the editorial decision not to run it."

The flap surrounding 2 Live Crew stems from the group'sarrest on obscenity charges in Broward County, Fla., followingan over -21 -only show that featured songs from their latestalbum, As Nasty as They Wanna Be. The arrests followed aruling by Federal District Court Judge Jose A. Gonzalez Jr. inFt. Lauderdale that the Crew's music appealed to prurientinterests, was patently offensive to the community and lackedany serious artistic merit: the three tests for obscenityestablished in the Supreme Court's 1973 Miller vs. Californiaruling. ("It's an appeal to dirty thoughts and loins," wroteJudge Gonzalez.) After the arrests, group spokesman DavidChackler commented, "This country is going berserk. I don't

see what the problem is. They're Eddie Murphy and ReddFoxx gone 1990. They're using authentic street lingo andthey're poking fun and having a good time."

According to Chackler, the Crew's record sales skyrocketedfollowing the bust-As Nasty As They Wanna Be has sold 1.9million copies, up 600,000 since the June 10 arrest. In Florida,at the Video Juke Box Network, all the Crew's old video's wentinto the Top 20, and 74 percent of viewers responding to a pollthought the record shouldn't have been banned.

A wide variety of supporters have joined the Crew in theirfight against rap censorship. Bruce Springsteen lent them themusic from "Born in the USA" for their latest single, "Bannedin the USA," and Duke University professor Henry LouisGates Jr., author of The Signifying Monkey, wrote in The NewYork Times that "2 Live Crew, like many 'hip -hop' groups, isengaged in sexual carnivalesque. Parody reigns supreme, froma takeoff of standard blues to a spoof of the black powermovement; their off-color nursery rhymes are part of avenerable Western tradition."

According to Lisa Phillips, however, "most cableoperators"-many of whom have never seen the band-are"reluctant to say yes, reluctant to say no, [because of a] fear ofbeing live [with the PPV show] and a fear of the unknown."

In fact, operators choosing to carry the concert will probablyhave few problems with it. The Crew cleaned up its lyrics for arecent appearance on the MTV Music Awards, and when PhilDonahue rushed them onto his program for a live broadcast, itwas the pro -censorship Bob DeMoss of Focus on the Family,not the rap group, who broke the indecency barrier by readingthe Crew's lyrics, leaving Donahue visibly flustered.

"The whole thing was appalling," says Donahue producerDebby Harwick. "The irony is that this is what this guy istrying to stop. If he wants the freedom for him to say it, it'samazing that he's trying to rein in freedoms for other people."

In all, Choice's problems in getting clearances for the 2 LiveCrew event raise questions about the future of adult -orientedprogramming, and whether television-and PPV inparticular-can support diverse products of interest to olderviewers in the current climate of censorship.

Just examine some of the events of recent days:

CHANNELS/NOVEMBER5,19N 17

In the wake of the bust of Cincinnati's Contemporary ArtsCenter for displaying photographs by Robert Mapplethorpe,complaints against WGBH, the Boston public -televisionstation, are being reviewed by the FCC after the stationshowed more than 30 of the controversial photos on its eveningnewscast. "We felt we were acting appropriately in that theexhibition was controversial and was news in Boston, and wewere giving the viewers the ability to decide for themselves,"says WGBH's Julie Eggleston. "We felt with regard to FCCrules we were acting appropriately." In October, New York City's Manhattan and Paragon Cablesystems reformatted the notorious Channel J-a hybrid ofpublic access and commercial leased access. On J, the publicwas free to rent a half-hour-reaching up to 400,000households for as little as $35-produce programming and sellad time (often to escort and Dial -a -Porn services) with virtuallyno restrictions. Displaced are such programs as Al Goldstein'sInterludes After Midnight, which bills itself as the world's firstall -nude talk show. Also gone will be Goldstein's provocative

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Choice Entertainment's problems getting clearancesfor 2 Live Crew spell trouble for adult fare on TV.

and often on -target editorials, as well as programs for the gaycommunity and more innocuous talk and service shows. The Helms Amendment, an effort to increase the current 6A.M. to 8 P.M. FCC ban on indecency on television to 24 hours, ispending before Congress. The R-rated Tuxxedo and X-rated American Exxxtasynetworks, brainchildren of former NBC executive v.p. ofprogramming Paul Klein, folded earlier this year after anAlabama district attorney indicted GTE Spacenet for carryingExxxtasy on its satellite and threatened additional legal action,and General Motors, owner of Hughes Satellite, pulledTuxxedo's transponder. The FCC is reviewing a complaint against San Francisco'sKQED for airing the BBC series The Singing Detective, whichfeatured nudity and several scenes that depicted a tryst.

Looking at these and other similar events, a mosaic begins totake shape that explains, in part, why the 2 Live Crew event ishaving such trouble with clearances. Yet cable is supposed tobe about choice. It has a long history with what hastraditionally been referred to as "adult" TV-watered down Rversions of skin movies, or what programmers call"provocative programming." And while there are no national

figures available, the two leaders-Playboy and Graff Pay-Per-View-say business is doing quite well.

At Playboy's video division, a few lean years have turnedaround-the company is now offering two services: the pay -per -view Playboy at Night (in 3 million homes) and thepremium Playboy Channel. After losing $926,000 on $21.9million in revenues in 1988, Playboy reported $3 millionoperating income on $28.1 million in revenues for theirinternational video Entertainment Division last year.

Graff's Spice network (formally called Rendezvous) currentlyhas 2.6 million addressable households-double the subs of ayear ago-but programs R-rated fare within what Tina Clarkecalls "voluntary and discretionary censorship. We are verycognizant of the climate. Obviously you have to take intoaccount what has already happened."

Surprisingly, even with PPV's ability to keep adult programsout of the hands of children or those who may beoffended-viewers must actively seek out and order it-fewsystems will risk airing anything more provocative than TheBikini Open or Playmates in Paradise. Some systems won'tgo even that far. Witness Atlanta's Cox Cable, with its 24systems and 1.6 million subs: "We have no adult pro-gramming," says Dave Andersen, Cox's v.p. of public affairs."It's our operating philosophy. The product on our channels issufficient for the wants and needs of the community. It hasnothing to do with economics. We just don't see any merit."

Many operators, such as United Artists Entertainment,employ exhaustive surveys in the community before adding R-rated channels. At United Artists' Southwest division, whichreaches 520,000 subs in Texas through California, senior v.p.Bill Cullen says, "We are very careful about how we introducethis type of service. Generally we will survey elected leaders,opinion makers, clergy-notable people in a community-andwill make a decision on whether to introduce this service."

The limitations on adult TV are surprising if only because thesecurity and viewer discretion offered by pay -per -view wereonce thought to be the key to more diverse programming. "Ialways recall the words of Supreme Court Justice Sutherland,"says Andrew Schwartzman, executive director of the MediaAccess Project. "He wrote, 'Nuisance may be merely a rightthing in the wrong place . . . like a pig in the parlor instead ofthe barnyard.' The difference between pay -per -view andbroadcasting is like the pig in the parlor: it's not broadcasted.Broadcasting is there . .. and broadcasters are responsible fortailoring programming to community needs. However, PPV is anarrowcast medium, targeted to specific segments of theaudience who choose to view it. And the Supreme Court hasupheld that the private actions of adults in their own homeshave much less justification for governmental intrusion."

Alan Gottesman, a media analyst with PaineWebber, thinksit's a matter of climate rather than security. "I don't thinksecurity is an issue," says Gottesman. "The people who worryabout this sort of thing see its existence as a problem-not itsaccessibility."

But not everyone views the issue in terms of salaciousness.Dan O'Brien, v.p. of new product development for WarnerCable Communications in Dublin, Ohio, says that though only afew of the MSO's systems have picked up the Crewconcert-such as BQ Cable in New York City-it's less amatter of censorship and more one of program quality. "I thinkthere's a personal concern over censorship," says O'Brien, "butthere's a greater concern among operators committed to PPVthat we don't want to put on something that is consideredtrash. We hurt ourselves with Thunder and Mud [a heavymetal and mud wresting special] and there's a concern that weneed to put on quality events. Then there's also a concern thatwe not fail to put on events because we're being a censor. Thequestion is are we saying no because it's controversial and maymake waves-and therefore no because it's self -censorship?"

Bill Lichtenstein is a New York -based writer and TV producer.


STATEMENT OF OWNERSHIP, MANAGEMENT AND CIRCULATION (Required by 39 U.S.C.3685) 1A.Title of Publication: Channels, the Business of Communications. 1B. Publication number: 0001-896. 2. Dateof Filing: October 1, 1990. 3. Frequency of issue: Twice monthly except monthly in July and August. 3A. No.of issues published annually: Twenty two (22). 3B. Annual Subscription price: $65.00. 4. Complete MailingAddress of known office of publication (not printers): 401 Park Avenue South, New York, NY 10016. 5. Com-plete Mailing Address of general business offices of the publisher (not printer): 401 Park Ave. South, NewYork, NY 10016. 6. Full names and complete mailing address of Publisher, Editor, and Managing Editor:Publisher: Joel Berger, Channels, 401 Park Ave. South, NY, NY 10016; Editor: John A. Flinn, Channels, 401Park Ave. South, NY, NY 10016; Managing Editor: Mark Schone, Channels, 401 Park Ave. South, NY, NY10016. 7. Owner: C.C. Publishing, Inc., Norman Lear, Mediafin, USA, Inc.; 401 Park Ave. South, NY, NY10016. 8. Known Bondholders, Mortgages, and Other Security Holders Owning or Holding 1 Percent of TotalAmount of Binds, Mortgages or Other Securities: none. 9. For completion by nonprofit organization to mailat special rates: none. 10. Extent and Nature of circulation/Avg. # of copies each issue during preceding 12months: A: Total # of copies (net press run): 30,723. Bl. Paid and/or requested Circulation sales through deal-ers, carriers, street vendors & counter sales: -0- B2.Mail subscription (paid and/or requested): 27,046. C.Total paid and/or requested circulation: 27,046. D. Free distribution by mail, carrier, or other means: 2,883.E. Total distribution: 29,929. Fl. Copies not distributed: 794; F2. Returns from news agents: -0-. G. TOTAL:30,723. Extent and nature of circulation Actual # of copies of single issue published nearest to filing date: A.Total # of copies: 29,491. Bl. Paid and/or requested circulation/sales through dealers, carriers, street vendors& counter sales: -0-/ B2. Mail subscription (paid and/or requested): 27,926. C. Total paid and/or requestedcirculation: 27,926. D. Free distribution by mail, carrier, or other means: 900. E. Total distribution: 28,826.Fl. Copies not distributed: 665/return from news agents: -0-. G. TOTAL: 29,491

I certify that the statements made by me above are correct and complete.Joel A.Berger

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IN FOCUSON SYNDICATION'S HORIZON

InsideIN FOCUS

The syndicationbusiness is changing.How and to whomdistributors sellproduct is no longeras clear as it wasjust two years ago.Large and smallcompanies often

seem to bein differentbusinesses.Our firststory, a

PAGE 20 profile ofViacom's

Henry Schleiff byCheryl Heuton,shows that thediversified busi-nesses of a majordistributor callfor a uniquetype of man-ager. Next,Lynn Brazdescribes thewhimper, nota bang, withwhich cable isstorming thesyndication scene.And finally, DavidKalish examines theshifting role ofbarter in programsales.

UTILITYPLAYER

Everything is barely enough for Henry Schleiff.By Cheryl Heuton

"If Henry Schleiffs job title were to describe what heactually does, it would have to be something like Guy inCharge of Making Sure That We Don't Miss BusinessOpportunities Right Under Our Noses, While at theSame Time Running Syndication, Production and

Broadcasting. Shorter, if less descriptive, is the true label:senior vice president/chairman and CEO of Viacom's Broad-cast and Entertainment groups.

Examining Schleiffs duties is like taking a snapshot of thesyndication business itself. The market is increasingly splitinto two camps: the conglomerates, who produce for the net-works as well as syndication, who own stations and perhaps acable network or a movie studio, and who have varyingdegrees of success tying their diverse operations together; andthe specialists, or niche players, who pick one area of the busi-ness-owning broadcast stations, or syndicating movie pack-ages or first -run shows to focus on.

Viacom used to be a conglomerate that acted like a band ofspecialists, each division out on its own. But three years ago,Viacom president Frank Biondi lured Schleiff away from HBO,where he was senior vice president of business administration,to oversee broadcasting and entertainment.

Since then, revenues in Schleiffs divisions have risen fromapproximately $290 million in '87 to $467 million in '90. Viacomcontinues to pursue the business for which it first becameknown: off -net syndication. Under Schleiff, the hit sitcomRoseanne has been added to a roster that features The CosbyShow, A Different World and Matlock. And, at Schleiffs insis-tence, Viacom is pushing to expand its product line for first -run syndication and has pursued what it considers a desirableniche: the half-hour action -adventure. This fall Super Forcejoined The Adventures of Superboy, creating a Saturday -after-noon package that hit the air in September and beat out keygames in the National League pennant race. Viacom is devel-oping Lightning Force and a project with the working titleNight Master to fill out a two-hour block. Viacom was already

Schleiff likes to keep a light-hearted touch in a heavy business.

z

20 CHANNELS / NOVEMBER 5,1990


producing Perry Mason made -for -television movies whenSchleiff came on board, but under his leadership the projectgrew from three or four to more than 20 so far, with no endin sight.

Under Schleiff, the radio division has grown to 14 stationsand embarked on its own innovations. Bill Figenshu, presi-dent for radio, says Viacom bought two stations in the SanFrancisco area, adjacent on the dial, and combined them into"one huge mama radio station" covering 250 miles and threeArbitron markets. The television division, with its five net-work affiliates, wants to make acquisitions that will move itinto larger markets. And in January, Schleiff put his touch onViacom's internal organization, dividing his sales force intotwo parts-one assigned to first -run and international, theother to off -net and feature films. "Companies struggle withthe idea of separate sales staffs, but it has worked out for us,"says Michael Gerber, president for first -run sales.

Schleiff is known for ignoring the usual divisions between

Viacom's found a niche for action half-hours like Super Force.

business operations. Viacom syndicated Nickelodeon's DoubleDare and Finders Keepers, despite resistance to selling basic-

cable programming to broadcast. And last month Schleiff"brokered" a deal between MTV Networks andCapCities/ABC, which will see MTV producing prime -timeprogramming for ABC's fall or mid -season '91 schedule.

In addition to all that, Schleiffs most important role may bemaking sure the company's diverse operations mesh: Viacomis often its own best customer, producer and co -venture part-ner. Schleiffs role is a bewildering combination of developer,broker, matchmaker, ringmaster. To do it he relies not only onhis educational training (undergrad and law degrees from theUniversity of Pennsylvania) and background in businessaffairs, but on an ability to work long hours and a talent fortracking details on a dozen projects. To these he adds a per-sonable wit that, on a practical level, works as a shortcut todevelop relationships and cooperation that might otherwiserequire years to evolve.

Many people find Schleiffs combination of personal clever-ness and professional intensity arresting. John Mason,Schleiffs roommate in law school, recalls that "Henry was anextraordinarily hard worker. Everybody works hard in law

school, but Henry quite literally worked around the clock. Ihad never seen anyone work as hard. I had never heard of it.It was a matter of getting two hours of sleep a night." Masonhad been an indifferent student before rooming with Schleiff,but "because of Henry's example, I started working harderthan I'd ever worked in my life. As a result of that-quite lit-erally as a result of Henry's influence-I was named editor [inchief] of law review." Mason is now a partner in the Bostonfirm of Ropes and Gray. "Just about everything that's hap-pened to me from law school on is due to Henry. I have neverforgotten that energy, what it meant to me. I'd give every-thing to be able to repeat that feeling, to find that energy, tohave something else in my life that affects me like that."

The ability to win loyalty has remained key to Schleiffsstyle. To cover the ground his job involves, he must rely on astaff of executives in whom he places great confidence. "I haveincredible people working for me," he says. It is his trust intheir judgment, combined with his capacity for work, that liesbehind what many mistakenly perceive as a willingness tomake snap decisions. Schleiff spends his off time studying,reading trades, talking on the phone, jotting down ideas."There isn't a time you can't fmd Henry on the case," saysDennis Gillespie, Viacom's president of cash sales. Schleiffenjoys weekend trips to his house in Watermill, Long Island,because his wife drives and he gets two hours to read. Theresult is that he's ready to decide issues at a rate unusual inan industry characterized by hesitation and delay. "Henry isthe personification of decisiveness," Gillespie says. Lou Weiss,chairman of the board of the William Morris Agency, says,"Many people in this industry have to take time to sleep onsomething before they decide. With Henry, he's already slepton it by the time you meet with him, so you get answers."

If patience is a virtue, it isn't one of Schleiffs. "If we'regoing to do something, then I say, 'Let's do it,' " he says.Those who work for him are accustomed to phone calls late atnight and on weekends. "Henry is someone who needs instantgratification. No grass grows under his feet," says Pat Fili,senior v.p. for programming and production at Lifetime."When you work for him you have to be fairly responsive tothat type of management. It's good training." In 1986, Fili wasworking for Schleiff at HBO, when a broken pelvis put her in ahospital for two weeks. She continued work from bed, doingdeals on the hospital room's two phone lines. "I was in themiddle of a deal with a well-known female vocalist, and thephones in the hospital closed down at 9 P.M.," she recalls. At 10BM., a nurse raced into her room, saying that Fili's doctor wason the phone, warning that he had mistakenly prescribed thewrong dose of a medication and needed to talk to his patient."My doctor?" asked Fili. "Yes," the nurse replied, "Dr.Schleiff." The restless executive, finding the phones closed forthe night, had found a way to get through anyway.

Schleiff might have trouble getting away with such stunts ifit weren't for his humor, which he uses to great effect. "It's sodisarming," says Fili. Explains Weiss, "He never permitsthings to get too uptight. In dealing with Henry, irreconcilabledifferences become reconciled. The impossible things aren'timpossible." Viacom president Biondi says that "Henry hastaken a natural sense of fun and humor and turned into aresource for our company." Actor Raymond Burr explainsthat Schleiffs humor does more than keep things amiable:"His humor allows him to live in a corporate world that is animpossible place. It's a killer world, and Henry's humor notonly allows him to stay in that world, but he makes it easierfor other people who also find the television business animpossible, difficult place."

22 CHANNELS/NOVEMBER5,1990

IN FOCUS011 SYNDICATION'S HORIZON

Schleiff upped Viacom's commitment to Perry Mason made -for -TV movies.

Unlike most executives who memorizea few jokes to deliver awkwardly,Schleiffs witticisms pop up in thecourse of everyday discussion to illus-trate points or lighten the mood. Hisquips reveal an observant, irreverent,bemused view of the world and itsabsurdities. Tom Freston, chairman ofViacom's MTV Networks, says thatwhen he first met Schleiff he seemed "across between a nightclub act and astrong executive." Says Sumner Red-stone, Viacom's venerable chairman,"I've often told him, 'If you strike out atwhat you're doing, you can get a job as astand-up comedian on Showtime.' Now Itell him he might even get on HA!"Schleiff seems to be well into rehearsals.About his marriage six years ago,Schleiff says, "Like everything else, Iwas quite decisive about this. If you doenough preparation, then you're readywhen the right person is there-andshe's had a lot of Scotch." On his son,Harry: "World's greatest. He's two, andhe has a job at William Mon -is. Nobodyknows he's two. We took him in, taughthim to smoke. He works with LouWeiss."

Schleiff offers insight on the role ofhumor in business. "What really worksis to see the essence of a situation, toreact to it accordingly. A good business-man sees the essence of a deal, and cutsto the chase. A sense of humor is theother side of that coin, it's the ability tosee what people really mean.... I thinkhumor is an important part of business,and of life, because it sets the parameters of what we're doing.Two dogs on the street recognize each other, and they set theparameters. If one barks at the get -go, that's not a good sign."

Schleiffs style was clearly on display for an observer dur-ing one of his regular Monday -morning staff meetings lastmonth. Surrounded by a dozen executives, each poised with aweekly update, Schleiff asked sternly: 'Well, do we know whokilled Laura Palmer?" The joke wasn't lost on the group; nei-ther was the point. "Nobody knows, because nobody stayedtuned to find out," answered Gillespie. The overnights hadrevealed Perry Mason the winner over David Lynch's oddballTwin Peaks.

Schleiff kept things moving quickly, though never permit-ting a subject to drop before a judgment or decision hadmoved it ahead. There was no backgrounding or wordy intro-ductions. There was no hesitation: Assignments were issuedon the spot, executives dispatched to meetings on the WestCoast, promotion ideas pitched, key sales announced, hiringsand castings critiqued. Schleiff tracked dates and numbers ona desktop calendar-the kind with two small pages for eachday. 'When I'm in meetings, I have the ability to focus notonly on the needs at hand, but on the next issue," saysSchleiff. "Always in the back of my mind is something else thatwill be coming up. Like a tennis or pool player, I'm lining upfor the next shot."

Gillespie says that Schleiff reminds him of "one of thoseguys you see in the park playing chess on 15 boards. Though

he runs all operations, he can retainwhat's going on." Gillespie says he hasnever written his manager a memo, andhas never received one. Instead theyrely on "scribbled notes on clippings, oron notes we've made about other things.There's a real shorthand to this."

The word shorthand comes up fre-quently when Viacom executives talkabout Schleiff. "We almost speak inshorthand," says Figenshu. "You keep itshort," says Gerber. Gillespie tells ofsharing a ride to the airport with hisboss, with whom he needed to discuss atopic. Schleiff was on the car phone forcall after call. Then they hit the LincolnTunnel. "During the phone black out, inthose two and a half minutes, we did ourbusiness," Gillespie says. Once out ofthe tunnel, Schleiff was back on thephone.

Despite his schedule and his intensity,it's the affability people mention mostwhen talking about Henry Schleiff. Andit isn't something he saves for businesscontacts. "He's so busy, but he makestime to stay in touch," says John Siffert,who worked with Schleiff as a law clerkfor a federal judge in 1973. "We talkonce or twice a week," says his formerroommate Mason, "and that's Henry'sdoing. He is extraordinarily loyal. He'snever forgotten me. I can't do anythingfor him, but he calls. He'd walk througha wall for a friend."

Raymond Burr, who has worked onnumerous projects with Viacom, fromthe Perry Mason movies to the first -run

syndicated show Trial By Jury, expresses his one regretabout his dealings with Schleiff: "I wish that both he and Iwere not so busy. I wish we had more time for friendship."

Henry Schleiff:A Brief Resume

Born April 17, 1948, Lawrence, L. I., N.Y.

B.A. Cum Laude, Political Science,University of Pennsylvania, 1970J.D., Law Review,University of Pennsylvania, 1973

1973-74

1974-79

1979-81

Law Clerk, Federal Judge in SouthernDistrict Court of New York.

Associate, Davis Polk Wardell,New York.

Associate General Counsel andAssistant Secretary of ViacomInternational Inc.

1981 Director, Business Affairs, Home BoxOffice Inc.

1982 Director, Business Affairs, HBO Inc.,New York

1983 Vice President, Business Affairs andAdministration, HBO Inc.

1984 Senior Vice President, BusinessAffairs and Administration,HBO Inc.

1984-87 Senior Vice President, BusinessAdministration, Enterprises, HBO Inc.

1987 Senior Vice President/Chairman andCEO, Broadcast and EntertainmentGroups, Viacom International Inc.

CHANNELS / NOVEMBER 5,1990 23


THE Two WORLDSOF CABLE SALES

For some cable is no great shakes, but for others it's a lifeline.By Lynn Braz

sk syndicators if cable repre-sents an important market forthem, and the answer you getwill depend very much on the

company you ask. Call it syndicationbifurcation: Forming one branch arethe companies peddling their librariesof one -hour off -network shows-and, inthose rare instances when it behoovesthem financially, off -pay movies-tocable. For them, cable networks are anadjunct, one more potential buyer, justanother card on the Rolodex.Joel Berman, Paramount's vice presi-

dent of off -network, feature planningand basic cable, doesn't see the cablemarket changing his business-justadding to it a little. "I know every-one is looking for the next wave incable," Berman says, "but at least forright now, I see nothing new on thehorizon."

But there's another world out there,coexisting with the first like an alter-nate universe in an old Star Trek rerun.For smaller companies, cable is farmore significant. "More than 50 per-cent of our domestic sales are cable,"says Chuck Larsen, president ofRepublic Domestic Television. "Andthat number continues to grow."While the major-league syndicators

largely stick to unbundling movie pack-ages and pitching product with cablenetworks' niches in mind, smaller syn-dicators are doing more. Granted, whenyour product is Get Smart, one ofRepublic's offerings, some hustling is inorder. The innovative approaches ofsmall syndicators, however, indicatedirections the entire market may follow

as cable networks grow in ratings, cashand clout.While the majors have plenty to keep

them busy in traditional broadcast mar-kets, for some syndicators cable salesare a desperately needed source of newrevenue. A soft market created byoverabundance of product and exacer-bated by difficulties in peddling hour-long series makes broadcast opportuni-ties rare. And when Fox Broadcastingswipes five nights of prime time fromleading indies in the top 50 markets andbarter deals lose their luster-cablesuddenly starts looking pretty good. Itoffers one -stop shopping, cold hardcash. "The advent of cable is very goodfor our business," affirms Bob King,president of Orion EntertainmentGroup's domestic television distribu-tion. "Cable has become our domesticbusiness," says Rob Miller, vice presi-dent of domestic syndication forFox/Lorber Associates Inc.

As enticing as the additional revenue isthe nature of cable, says Larsen. "Cableis fun. The programming is fun. Thebuying and selling is fun. Even market-ing to cable has to be innovative." Lack-ing the rigidity of a station negotiationprocess, cable nets are flexible. Larsensold three series titles, each of whichhad only thirty or forty episodes, underthe title Theater of the Stars, to the Nos-talgia Channel. He sold Beauty and theBeast to the Family Channel for a lim-ited pre -syndication run. "Every cabledeal is unique," he says.

The smaller syndicators are settingmore of the cable sales trends. Still con-sidered a long way down the road for

companies such as Paramount andWarner Bros., cable first -run is anexpanding business for the little guys.Drew Levin, president and chief execu-tive officer of DSL Entertainment, sawwhat he perceived as a great opportu-nity in cable. So great, in fact, that hecreated what he calls a "media fund," a$15 million dollar cache bankrolled byEuropean investors who are well-acquainted with DSEs work in interna-tional syndication. Levin's partnershipwith Kagan Capital Management-aptly named Sentinel-controls thefunds used to cover the deficit costs ofproducing new products for licensing tocable networks. Done deals includeHollywood Fall Guys to Discovery,Shadow Theater to USA and This isHorror to VH-1. Simultaneous with theshows' cable releases will be interna-tional releases. Thereafter, when theseries go into U.S. syndication, they willalready have a ratings history that,according to Levin, will increase theirchances for success.

For Republic Pictures Domestic Tele-vision, savvy use of library led to acable first -run sale. With AmericanMovie Classics, it's coproducing a two-hour special that both entities maintainwill have a strong appeal in ancillarysales. It features clips culled fromRepublic's own library of 1,200 titles.

Another angle Republic used to sellexisting product was a swift response tosyndicated exclusivity. "When I startedhearing about syndex, like everyoneelse, I panicked," Larsen says. "Then Ithought, 'There's gotta be a way tomake some money off this.' " Republic



now supplies Chicago superstationWGN with movies for blackout substi-tution. "If superstations have a lot ofblack holes, that's a very good deal forus," Larsen says.

Another change in the industry, her-alded by shifts at a few companies, maybe the reorganizations and staffingchanges made to meet cable's specialdemands. "We're setting up a cabledivision that will go much deeper intounderstanding the cable business," saysJohn D. Ryan, president and chief exec-utive officer of Worldvision EnterprisesInc. 'We want to explore the opportuni-ties in cable first -run."

"We've amplified our operations tomeet the needs of cable," says EdBleier, president of Warner Bros. pay -

Republic licensed Beauty and the Beast to the Family Channel for alimited number of airings over one year prior to its syndication run.

TV, animation and network featuresdivision. "While we haven't had toexpand our sales staff, cable is necessi-tating a lot more operations work in theback room. We've added more people toour promotions department." ForFox/Lorber, cable means a streamliningof business. "Four years ago, we had afour -person sales staff. Now we operatewith three," says Miller. The company'srevenues have remained virtually thesame. Republic's Larsen hasn'tchanged his staff numbers. "Whenyou're already covering eleven hundredmarkets, 12 more calls to cable net-works don't require beefing up staff,"he says. However, Larsen has pulledpeople out of syndication to go aftercable sales.

Though the small guys may be show-ing the way on some fronts, the big syn-dicators continue to be responsible forthe vast majority of non -original cableprogamming. That is not likely tochange soon. What will change is theratio of library to off -network salesmade to cable. "One of these days,cable will outbid broadcast for top sit-coms," notes Bleier. And, say cable pro-grammers, major studios take cablevery seriously. According to Neil Hoff-man, vice president of programming forUSA Network, it's not unusual for syn-dicators to "feel cable out" beforedeciding to take product into syndica-tion. "I get a courtesy call on most, ifnot all, product," agrees Arts & Enter-tainment Network's v.p. of program-

ming Brooke Bai-ley Johnson.

According toPeter Newman,Viacom's seniorvice president ofancillary rights andspecial projects,cable offers funda-mental advantagesover domestic syn-dication. "One,residual paymentsare lower. Two,marketing costs aremuch lower. Three,there is much lesswear and tear onthe product," hesays. A fourthadvantage: Cablesales are exceed-ingly less compli-cated than syndica-tion. Cable is basicmath; broadcast iscalculus.

"In many instances cable is muchmore cost effective than dealing withstations," says Fox/Lorber's Miller."Stations involve clearances, market-ing, ads, travel, distribution of shows,barter measurement costs, promotionalmaterials. To have any success in syndi-cation, you have to reach at least 100stations. And that usually means travel-ing to 200 markets. Sometimes a cablesale can be done right over the phone.If we can get $100,000 in gross revenuefrom a syndication deal and $50,000from cable, we'll take cable."

While cable deals are now far moreswift than broadcast, that will likelychange. Republic's Larsen points outthat the days of sitting down with onlyone programming executive at a cable

network are almost over. As cable buildsmomentum in its fight for popular pro-grams, the next wave of the future, saysViacom's Newman, could be barter. "Ithink we could strike a barter deal rightnow if we wanted to," agrees USA'sHoffman. "Up until now we've pre-ferred not to. But one doesn't rule any-thing out." Here, again, is an area smallsyndicators are likely to develop first.'We've never given any consideration todoing a barter deal [with cable]," saysParamount's Berman.

When told that cable inspires consid-erably more excitement from smallcompanies than large ones, WarnerBros.' Ed Bleier laughs. "If my com-petitors don't know how exciting cableis, please don't tell them." Bleier notessome of the ratings achieved by showshe has sold to cable: Life On Earthgets the highest rating on Arts &Entertainment for an 8 P.M. show;Scarecrow and Mrs. King is the sec-ond -highest rated weekday show onFamily. On Saturday nights, Lifetime'sHotel drew 50 percent more audienceshare than its lead-in.

Despite the carefully qualified data,ratings numbers aren't even discussed,presumably because the decimal pointsstill line up on the left side. No mat-ter, Bleier's pride is indicative thatmajor syndicators are watching cableclosely.

But Paramount's Berman does notsee the day when he will consider cablea competitor of syndication for first -run. "The big projects like ArsenioHall and Donahue could never gener-ate near the money selling to cablethey can selling in syndication. I can'tforesee that changing. The dollardifferential is too great. The numbersjust don't work. For our first -run,stations will be primary," he says.Bleier notes that although cable net-works have been investing increasingamounts of money in new program-ming, it's still the off -network rerunsthat are the strongest performers forcable.

It wasn't too long ago, though, that noone thought independents-buyers thatcould be counted on to pick up libraryproduct and off -net shows-wouldbecome aggressive purchasers of suchfirst -run hits as The Arsenio HallShow. Thus, points out Bleier, signifi-cant cable first -run deals could be onthe horizon. Berman's response: "Callme in four years."

Lynn Braz is a New York -based free-lance writer.



111-IE HAVES ANDTHE HAVE-NOTS

In a mature barter market, not everyone prospers.By David Kalish

The $1.2 billion barter syndica-tion market is in turmoil.Amid a dramatic glut ofbarter shows, syndicators try-

ing to launch programs are failing towin over television stations, failing toget ratings they need to impressnational advertisers and getting thebrush off from skeptical ad agencies.

But that doesn't seem to bother thelikes of the Walt Disney Co. This pastsummer the entertainment companyformed a 22 -person in-house unit to sellad time on its television programming,removing the estimated $100 -millionaccount, starting with the '91 season,from barter giant Camelot Entertain-ment Sales, Disney's sales rep for threeyears. Anticipating double-digit growthin barter sales, Disney became thelargest studio to date to vie with out-side syndicators for the lucrative rightto retain and sell national ad time onshows distributed to stations. "Whenyou're representing your own product,you hope to be doing somewhat better[than non -Disney syndicators],"explains Mark Zoradi, vice presidentand sales manager at Buena Vista Tele-vision, Disney's syndication arm.

Disney's move could signal a trend ofconsolidation. In late September, Tri-bune Entertainment Co. announcedplans to take over distribution of Ger-aldo and The Joan Rivers Show, both ofwhich had been handled by ParamountDomestic Television (Tribune alreadyhandled barter ad sales). Tribune execssay the company is eager to increase itsparticipation in the success of its ownproduct, and will be expanding its sales

staff accordingly in offices in New York,L.A., Chicago and Nashville. Othermajor companies, including ViacomEnterprises, have stated that they arestudying the possibility of taking theirown barter sales operations in-house.

That such optimism about the bartermarket can coexist with tales of bartergloom and doom points to the recentgrowth in the barter world of a two -class society: the haves and the have-nots. After five years of rocketinggrowth-sales of barter advertisingdoubled from $500 million in 1985 to$1.2 billion this year, according to PaulKagan Associates-the market is show-ing signs of maturing. As with mostbusinesses that reach a plateau, someearly participants who got a free rideduring the period of explosive growthare finding it difficult to keep going on

Established syn-dication hits likeParamount'sStar Trek: The

Next Generationdon't feel thepinch of a troub-led marketplace.

their own steam. Big players, includingCamelot and Disney's Buena Vista, talkabout barter's rich opportunitiesbecause they have lots of popular showsto sell. The syndicators without hot pro-grams, on the other hand, face trouble.

'We reject ten shows for every one weclear," compared to a much lower rejec-tion rate just three years ago, says DanSullivan, president of Clear ChannelTelevision, a Houston -based owner offive television stations.

Though these changes take some dis-tributors by surprise, they reallyshouldn't. The market's maturation hasbeen under way for several years. Tenyears ago, for -cash programming wasking, and syndicators were able tocharge through the roof for theirshows, thanks to a proliferation of inde-pendent stations hungry for fare. But in



the mid -'80s, amid a slowing indiegrowth rate, stations began resistingprice hikes. Under pressure to continueto increase revenues, syndicators beganoffering more shows through barterarrangements-where stations couldget shows at little or no cash costin exchange for ceding a portion ofeach program's ad avails to nationaladvertisers that syndicators had signedon. Starting two years ago, however,many stations made a conscientiouseffort to accept less barter inventory.They wanted to retain control of theirown revenue sources, and many feltthey could accomplish more throughlocal ad sales or by hawking the timeon the national spot market. FoxBroadcasting exacerbated the situa-tion: As the fourth network programsmore time at former indies, traditionalbarter slots are disappearing.

yen newly launched showscleared in the major marketsaren't attracting the sort ofratings that please national

advertisers, because an embarrassinglylarge number of stations-their handsalready full with established, high-per-formance barter fare-are relegatingnew barter shows to low viewershipslots.

Many syndicators are so desperate toclear shows that they are formalizing"tiered" payment deals in contractsthat allow stations to "pay 'x' price for7:30 RM., 'y' price for daytime and 'z'price for early morning," notes SteveBell, vice president and general man-ager of Los Angeles independentKTLA. The result has not gone unno-ticed at ad agencies. In the past, newlylaunched syndicated programs thatcleared 80 to 90 percent of the coun-try's markets typically aired duringprime access and other coveted day -parts. Now, virtually all the new pro-grams, including Tic Tac Dough, Pre-view and Trump Card, are also endingup in such less -than -desirable slots as 2A.M., according to Dick Hobbs, seniorvice president and media director atadvertising agency Leo Burnett, thenation's largest purchaser of syndi-cated ad time.Annoyed agencies are cracking down

on syndicators' inflated claims by run-ning a fine-toothed comb through syn-dicators' clearance lists to ensurethey're getting the daypart deliverythat's required by clients' plans.

"In the past, advertisers would bewilling to cut even a pre-NATPE dealwith the syndicators," says Donna Sal-

vatore, senior vice president and groupdirector of national broadcast at adagency DMB&B, the number two syn-dication ad purchaser. Those days areover. Says Joel M. Segal, executive vicepresident of national broadcasting atMcCann-Erickson, "Barter is as popu-lar as it was. But its limitations aremore generally known."

Seeking new sources of barter rev-enue, more syndicators are offeringoff -network shows on a cash -barterbasis-particularly the hour-long dra-mas that were previously sold on acash -only basis. In these deals, sta-tions pay a discounted price for a pro-gram that has fewer -than -usual slotstaken by built-in commercials. Thisfall, Viacom started distribution of

mercial time that failed to clear mar-kets or achieve promised ratings at theend of 52 weeks. The risk is somewhatless for multiple -show syndicators, whooften offer "make goods" or free ads inother programs for advertisers whopaid for time in failed shows. A smalleroutfit gets stuck with cash losses.

Looking ahead to an uncertain mar-ket, syndicators are considering thesale of barter fare directly to cableoperators, and are even thinking of sell-ing barter advertising to home -videomovie distributors. In addition,"Barterers are trying to hedge them-selves with international barter," think-ing ahead to selling ads in globallydistributed programs, says David But-terfield, who owns an eponymous Cam-

bridge, Mass. -basedbroadcast managementconsultancy.

Despite all the prob-lems, barter is still con-sidered a powerfulgrowth category. It justdepends how big youare. In addition to Dis-ney's new venture, MCAand Paramount one yearago jointly formed Pre-mier Advertiser Sales tohandle barter ad sales;its powerhouse showsinclude Star Trek: TheNext Generation, Arse-

nio Hall and Charles in Charge. Anddespite the loss of the Disney account,Camelot, with hot shows likeJeopardy!, Wheel of Fortune andOprah Winfrey, insists it will be in themoney for years to come. Says presi-dent Steven Hirsch, "We are in a veryenviable position."

If anything, analysts say the entranceof studios into the barter game is evi-dence that they are trying to diver-sify-just like syndicators. "Disneypulling out of Camelot is a recognitionthat programmers and distributors inthe future are going to have to look at amixture of revenue streams to supportbusiness," observes Butterfield. Butwith TV stations now in the driver'sseat when it comes to barter syndica-tion, it also marks a dangerous time forsmaller distributors. They'll have fewerresources to fall back on if theirbartered product grows less desirableto a picky market, one that is now facedwith a much wider selection from whichto choose.

(h:

1 2 3 4 5

6 7 8 9 10

11 12 13 14 15

16 17 18 19 20

1 22 23 24 548 21 28 29 30

31 32 33 3435

36 37 38 39 40

gek.

48.

New shows like Trump Card are ending up in undesirable time slots.

Matlock on a cash -barter basis, thefirst time it had done so with an hour-long show.

The pressures that have mountedagainst bartered shows are forcing syn-dicators to adopt increasingly riskystrategies-even promoting programlaunches that have failed to achievenationwide clearance. The idea is to usesuccess stories in already cleared mar-kets to convince prospective buyer sta-tions to take on the programming. Forexample, Byrne Enterprises, with only63 -percent clearance at press time forits Neon Rider, which launched in July,says it has hired an outside firm to mailpromotional kits to schools around thecountry in hopes teachers will encour-age their students to watch the show. Ifthe effort doesn't succeed, it will bemuch costlier than if the show had beencanceled after failure to clear throughtraditional efforts.

The risk is considerable not only forsyndicators who fail to clear programs,but especially for those barterers whocan't deliver ratings. Advertiser con-tracts usually call for syndicators topay back advertisers for bartered corn -

David Kalish is a New York -based free-lance writer specializing in advertising.

CHANNELS / NOVEMBER 5,1990 27

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The Magic Fades by Cheryl Heuton

Blame Iraq or the market, but raising cash for first -run production isn't easy.

What do Saddam Hussein andthe high cost of first -run pro-duction have in common? No,

Hussein's TVQ rating hasn't landed hima talk -show contract. The correctanswer is that both Hussein and highcosts played a part in aborting KingWorld's plans for a unique public offer-ing called Merlin Program Capital. Thesyndicator's decision to back off, how-ever, may say more about the risks thatbedevil first -run production than it doesabout the struggle for petroleumresources.

Merlin was announced by King WorldProductions Inc. in July. Handled byPaineWebber, it was planned as a publicoffering to raise a minimum of $36lion by selling 2.25 million units pricedat $16 apiece. Each unit would haveconsisted of one share of Merlin com-mon stock and one warrant to purchaseKing World common stock at a price tobe set in the future.

King World's chief financial officer,Jeff Epstein, says Merlin was to be a"unique pure -play investment in pro-gramming because it has no buildings,no employees, no equipment-justdirect ownership of programs." Whilethere are other public companies thatsyndicate, it's hard to find such a focusedinvestment opportunity. Merlin wouldhave split with King World the produc-tion costs of specified shows, with Mer-lin investors getting half the producerprofits, but no share in distribution.

But while King World was waiting forits registration statement to clear theSecurities and Exchange Commission,Hussein invaded Kuwait. The stockmarket responded with a precipitousdrop. With prices depressed across theboard, offerings such as King World'sMerlin-introduced when the marketwas at a high-became great deals forinvestors. Too great. King World can-celed the offering in September.

It's true that with prices down, theMerlin warrants would have diluted theshare prices, as the company claimed.Many analysts, however, question

whether Merlin would have attractedinvestors had it gone on the marketeven under more usual conditions. Itwas, after all, a good deal for King

bag for investors."If you believe King World is going to

do well, then you should just buy KingWorld," says one Wall Street profes-sional. "Why buy just a high -risk cornerof the company?" Says another, "Merlinwas made to seem as though it pluggedinvestors into the success and excite-ment of the next Wheel of Fortune, thenit turned out to be a chance to back arehash of Candid Camera."

Most analysts agree that King Worldwas probably counting on its reputa-

King World's Epstein: no change in strategy.

tion, and the lure of entertainment, toentice investors who wouldn't have beeninterested if the deal involved moremundane product. Indeed, the Merlinstructure, while new to media financing,is old hat for technology and research.Such investments in high tech, whilerisky, offer the chance for tremendousgain, and thus attract the high-flyerswho can afford to gamble. Merlin, how-ever, had a decidedly limited upside. Itwas an odd mix: not safe enough for aconservative buyer, nor potentiallylucrative enough for a big risk -taker.

Whatever it says about media invest-ment and the dampening effect of inter-national conflict, the clearest lessonMerlin offers is that the growing costsof first -run production are steepenough to prompt even the most suc-cessful companies to try to reduce therisk. King World's bench, whichincludes Jeopardy!, Wheel of Fortune,The Oprah Winfrey Show and InsideEdition, may be the deepest in theindustry. It does not lack forcash-King World is sitting on a $150million kitty, reports Epstein, and thecompany's consolidated long-term debtis a modest $90 million. "We'll go onwithout changing our strategy," saysEpstein. The two shows that wouldhave been the first Merlin projects,Instant Recall and Candid Camera,continue on schedule. Epstein saysKing World might consider an invest-ment offering similar to Merlin, but"not right away."

Other investment analysts doubtthat the offering or equivalentswill surface. "I don't think it's

something we'll ever see again," saysone. Adds another, "If a powerhouselike King World couldn't make this anattractive package it could live with,there isn't much chance that smallerproducers can." The need for cash, how-ever, will prompt other attempts,though most will probably amount tovariations on two old themes: coproduc-tion deals and equity partnerships.

CHANNELS / NOVEMBER 5, 1990 29

ince she joined Telso Commu-nications in 1987, Ann Harris has seenthe British production and distribu-tion company's client list expand, asAmerican cable networks and othertelevision outlets around the worldbecome more receptive to such copro-ductions as Murderers Among Us; TheSimon Wiesenthal Story. This year'sprojects include participants from theU.K., New Zealand, Canada, theNetherlands, Japan and the U.S.,among others. In 1989, Harris becamemanaging director of Telso, a sub-sidiary of U.K-based TVS Entertain-ment, which also owns TVS Television(the ITV franchise serving SouthernEngland) and MTM. Members of theChannels editorial staff spoke withHarris recently.

Changes in the U.K.I am having to be in a somewhat reac-tive phase. That is, reactive to whathappens to our principal client, the tele-vision company, our sister company[TVS Television]. They are going to gothrough this process of having to bid toretain their [TV station] franchise.

I think the channels now beaming intothe U.K. on DBS, and indeed the cablefranchises which are being applied foras well, will [create more windows].That plus the fact that we have some-how or another to generate quite a sig-nificant amount of finance for our tele-vision business in the U.K. in thefuture, because we need, if nothing else,to bid for our own franchises. Our TVfranchises will be awarded not just onmerit, on quality, but also on the finan-cial bid.

Franchises are bid for by March of

Telso'sChannel

CrossingsAnn Harris of the U.K.'s Telso,

a leader in international coproductions, bracesfor change at home and abroad.

next year, and the decisions will beknown by the end of '91. We then have'92 as a notice period, a 12 -month periodduring which either the newlyappointed franchisee will take over, orthe incumbent just carries on, depend-ing on what the decision is.

I think you could seriously speculatethat decision -makers, creative decision -makers, directors of programs at thetelevision stations, would have more ofa reason to be cautious about majorinternational projects for the short-term than they might given more secu-rity of tenure.

We don't have enough time now to doa 24- or 26 -hour series and broadcast it,if we were to lose our franchise. Wehave enough time to produce it. But ifthat is done in the last year of a com-pany's franchise, then why make a com-mitment to do 26 new hours?

So I think those large projects aregoing to have a really rough time in theU.K. for a while. They always have had.Seven hours is a long -running series inthe U.K. But there was a start tochanging that.

One way or another, we have to createmore cash in that U.K. market, and Ithink the use of programs at an ancil-lary level will be the way that we willdo it.

Independents DayThere is support for independent pro-ducers from the powers that be. Legis-lation is going through Parliamentwhich will affect the future of U.K.broadcasting. That will support a quotafor independent production, both interms of finance and in terms of hours,of 25 percent. The broadcasters in the

U.K. will have to take 25 percent oftheir programming from the U.K. inde-pendent producers.

So you can see that they're not havingto work in the more competitive envi-ronment that you have in the U.S.They've found a niche by intercuttinglegislative support for their cause. Andthey may take issue with that kind ofstatement, because it was a hard-fought -for position that they have. Butat least it gives them a much moresecure base, I think, from which totrade with the broadcasters.

Changes in the U.S.I've referred to the way our market ischanging. Yours changes very rapidly.It's noticeable that the cable stationshave really put their identity in theirprogramming. I think they have a veryclear view of what they want.

And often, the executives I meet arecombining both creative skills andbusiness affairs skills, which isunusual-usually those disciplinesare separate. Certainly in Europeantelevision you find those are separatedisciplines.

The other thing is that [in the U.S.the] decision process seems to beoffered fairly quick. I mean, they seemto be able to take a project, assess it,and you've got a decision. Remember,my background is in dealing with PBS,largely-they were the principal opera-tion through which you could getBritish programming to move into theU.S., both through acquisition andcoproduction.

It feels a little bit more rapid. I mean,that's not to criticize PBS. Withoutthem, British programming would

zce


never have been able to find a homeover here, and a lot of the executives,particularly flagship stations likeWNET and KCET and WGBH inBoston, have been very loyal to Britishprogramming.

But there's been a marked change inthe U.S., and I think it's to do with theemergence of cable stations. I'm notsaying in terms of ease of access forBritish programming to come in here;it's never easy. There are more opportu-nities and more of a readiness to con-sider programming that used to be dis-missed because it was British, becauseits source was British, because itswriter was British. Much more open-mindedness. That consideration processmay still result in it being dismissed.But at least now I know that at certainlevels it's getting a chance.

It also speaks to the fact that what-ever we may do internationally, peoplehave a great interest in domestic pro-gramming, and I think we must neverforget that. There's an attractivenessabout the international marketplace. Itapparently reduces financial risk andcreates more opportunities for pro-grams to emerge. But ultimately, peopleseem very interested in domestic.

Making It WorkMy experience of people like A&E andDiscovery and [TBS] is that they orga-nized themselves very quickly. And Ithink those three stations also recog-nized the value of the internationalmarket very quickly. So they had pro-fessionals who were aware of the mar-ket and able to deal in it, and they putthem into calm environments.

Changes in DevelopmentThere used to be a tendency just todevelop a two -to -four-hour treatmenton ten pages. Possibly sometimes toeven take it to script form, and sort ofthrow it out onto the international mar-ketplace and see what might happen toit. Increasingly, people are taking astrategic view of that.

Coproductions have to be project -driven. You can't contrive them. Youseriously have to find a good script thatyou and I like before people gettogether and want to do it.

Now, if it's a project that is essentiallyEuropean in its nature, [for example,] adocumentary series about the Mediter-ranean, then we wouldn't even launch it[in the U.S.]. Indeed, I think it would bevirtually impossible to introduce anAmerican partner into that kind ofproperty.

Producing for the Big ThreeIt's always quoted, as it were, as thegold ring. Because there's apparently

'One way or an-other, we have to cre-ate more cash in thatU.K market, and Ithink the use of pro-

grams at an ancillarylevel will be the waythat we will do it.'

so much more money attached tothe potential of doing a coproductionwith the U.S.-one of the three orfour, depending on how you view it-networks. It's always seen as thepot of gold at the end of the rainbow.I hear less people in the U.K. talk aboutthat now. The one example that we'vehad in recent times was Jack the Rip-per, with Thames [Television]. I think,in terms of audience, it worked well inboth countries.

There are certain creative interfaceproblems. I don't just mean minuteapproval of the scripts that oneassumes the networks would want, butthe need to lead up to and fall backfrom an act break, just in the way youbuild the story-which we don't do somuch in the U.K. around our airtime.So creatively, it's a very difficult juxta-position.

The Meaning of RecessionYou get some people who say, "Okaythis means we now generally have tocoproduce, co -finance." That you gen-uinely have to work television at itsinternational level. And there are otherpeople who just would avoid the risks ofinternational coproduction and wouldsay, "No, let's play it safe; let's just gofor the domestic market for the timebeing." And you'll always get a mixtureof those two kinds of people. I don'tthink you'll see any single reaction tothat situation as uniform. You have areaction to it, and so do I. The questionhas more to do with whether or notbroadcasters in either of our countriesdecide to say, 'Well, the hell with it."

Down Down UnderThere are national characteristics ineach country's reaction to a coproduc-tion situation.

[For example,] until recently, obvi-ously, the Australians were extremelyentrepreneurial. Their projects, theirtype of production, the dramatic pro-cess seems to appeal to the audiencethat we certainly have in the U.K. Andwe had a number of projects which hadbeen pre -sold to the Australian marketappearing on U.K. television, andlargely liked by the audience. But at acertain level, there was a way to say,"Perhaps there's too much of this goingon." But anyway, I think the problemsthey have at their networks downthere.. . . Projects haven't been killed,but certainly some have been put onthe back burner. There were indica-tions of it for quite some period. Ithasn't just blown suddenly.

Now, because of the problems in Aus-tralia, the debt problems . . . That's anexample to be avoided, certainly, withnew stations in Europe.


When Miami Freezes Overn January, in San Jose, Calif., the average temperature is 50 degreeThere are only two ice skating rinks. Nevertheless, the San JoseSharks will begin life as the NHEs newest franchise in fall '91. Hockey

needs exposure to grow, thinks the NHL brain trust, and the San FranciscDMA is top -ten, even if kids there associate skating with roller derby.1992, the league will add two more teams, and the leading candidamong the eight applicant cities below are thought to be SanTampa/St. Petersburg, despite the palm trees. Potential TV revreportedly the top criterion for franchise location-the NHDs contraSportsChannel America runs out after this season. Can a be awskating rinks and hockey fans, but Ottawa and Ham' givechance to land a team because of their relatively low p s.

Average Number o Number oftemperature ice skating/ televisionin January: hockey rinks: households:

CableDMA rank: penetration:

Potential cablesports outlets:

MIAMI 69° 4 1,313,540 16 62.5%

SportsChannel

Florida, Sunshine

Network

TAMPA/ST. PETERSBURG 60° 4 1,349,730 13 61.8%

SportsChannel

Florida, Sunshine

Network

SAN DIEGO 55° 3 908,610 24 77% Prime Ticket

Network

HOUSTON 48° 2 1,471,840 10 51% Home Sports

Entertainment

SEATTLE 41° 8 1,321,920 14 63.6% Prime Sports

Northwest

HAMILTON 21° 14

Hamilton CMA,

210,000; part of

Toronto DMA,

1,768,400

Hamilton is

the equivalent

of US DMA

110

83%The Sports

Network

OTTAWA 19° 173 427,000Equivalent of

US DMA 60

76% The Sports

Network

MILWAUKEE 19° 6 772,710 28 52.3%Sports Channel

Chicago

Source: Nielsen Media Research, Chonnels Research.


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January, 1990

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September 17, 1990

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4-7

entering the age of indecency the ftc opens its eyes to tv

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