Seven years after General Electric Co. bought NBC Inc. and its parent company, RCA Corp., the network's top executives still don't seem to understand the odd dynamics of broadcasting: Shrewd business and successful television are often mutually exclusive. Never has this been more striking than in Michael Gartner's bitter departure Mar. 2 as president of NBC News.
Gartner resigned three weeks after NBC issued an abject public apology to General Motors Corp. for rigging a demonstration crash of its pickup trucks on the Dateline NBC program. He acknowledges that his five-year stewardship of NBC News has come under withering criticism. Yet Gartner claims that he took the news division from $126 million in losses in 1988 to a projected profit of $20 million in 1993. "You can't be journalistically strong unless you are financially strong," he insists.
SPLASHY EVENTS. NBC President Robert C. Wright has run the rest of the network by the same playbook. But while analysts predict NBC will make money in 1993, the peacock network is on its back by many other conventional yardsticks of success in television: Its prime-time ratings have tumbled behind CBS and ABC (chart), its daytime schedule is eroding, and David Letterman has jumped ship for CBS. "If we are not doing well in the public eye, that creates a great number of problems for us," admits Wright.
Now, as Wright tries to rebuild the network, NBC affiliates and former staffers are wondering whether this former GE manager can set aside his bottom-line instincts and penchant for ventures such as cable TV in favor of getting NBC back in the race. Some are doubtful: "There's a sense of drift," says Jim Waterbury, president of NBC's affiliate board. "We need someone whose full attention is focused on the network."
Wright admits he has devoted lots of attention to NBC's diversification. These days, though, he says he's spending 100% of his time on the core network. Last month, for example, he hired Don Ohlmeyer to revamp NBC's beleaguered entertainment schedule. Ohlmeyer, a prominent sports producer, hopes to hike ratings with splashy special events.
On May 20, NBC will turn the final episode of Cheers into an all-night celebration. In addition to a one-hour farewell episode, Ohlmeyer plans an hour-long retrospective. He also wants to gather the cast for a live interview with Tonight show host Jay Leno at Boston's Bull & Finch tavern, which inspired the fictional bar. "The events strategy is a good one because it has elements of showmanship," says Howard Stringer, president of CBS Broadcast Group.
Trouble is, big events eat up lots of money. Just ask Stringer: CBS used marquee sports and other specials to vault from third place to first place. But in doing so, it vastly overpaid for rights to baseball and football. CBS took heavy losses before it became profitable again last year. That's something GE probably won't stand for. Wright says NBC may stretch to acquire some entertainment shows. But he cautions: "We have no desire to lose millions of dollars just to make a splash." Improved ad revenue could give NBC operating earnings of about $275 million in 1993, a 12% increase over last year, according to Nicholas Heymann, an analyst who follows GE at Natwest Securities Corp.
NO RETREAT. One change costs nothing: Ohlmeyer has abandoned NBC's strategy of focusing on younger viewers in its programming--which some observers blame for much of the 10% decline in the network's prime-time ratings this season. Now, the network has reverted to going after a broad audience.
As for replacing Gartner, Wright is leaning toward candidates with a strong pedigree in broadcast news. Tom Brokaw, anchor of NBC Nightly News, says the news division can rebound from the Dateline fiasco by "doing uniformly excellent work."
One thing GE is not likely to do is beat a hasty retreat: The litany of bad news has dampened perennial rumors that the parent will soon sell the network. GE steadfastly declines comment on a possible sale. Even if it wanted to, say analysts and investment bankers, the company has very little chance of getting anything close to the $3.9 billion in value it placed on NBC and its cable properties in 1991. One oft-rumored suitor for NBC, Paramount Communications Inc. Chairman Martin S. Davis, joked in a recent interview that he might find the network "interesting" for around $2 billion.
Some industry executives suggest that NBC can't be turned around unless Wright himself is replaced. At the moment, though, his job seems secure. So for the forseeable future, NBC's fortunes hinge on his ability to pull off a CBS-style recovery. That has some NBC affiliates sweating. But Stringer points out: "It's easier to write off a network in theory than in practice." Then again, he's the guy who dropped $42 million to lure Letterman away from NBC.