Net chiefs: TV faces 'digital crossroads'

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"Sometimes challenges give you the most clarity," NBC Entertainment president Kevin Reilly told a packed ballroom at the Regent Beverly Wilshire on Thursday as TV industry insiders gathered for the annual Hollywood Radio & Television Society luncheon with the broadcast network programming chiefs.

The news of NBC Universal's plans for about 700 layoffs across its TV units and significant strategy shifts in its programming and production operations was the talk of the room as industry-ites convened for the panel session with the entertainment chiefs of ABC, CBS, NBC, Fox, the CW and MyNetworkTV. Reilly noted that NBC Universal, like other major media concerns, is facing significant challenges ahead at a time when the television business finds itself at a "digital crossroads."

Reilly's colleagues on the panel concurred with his assessment that the industry, and television in particular, is facing a transformative moment wrought by new technologies and platforms that are putting significant pressure on the traditional broadcast network business model. The programming chiefs agreed that finding ways to utilize digital media and keeping production costs in check are the most vexing issues facing the television business. That's one reason why NBC is focusing on reality and other lower-cost programming in the 8 p.m. leadoff hour in primetime, where the network has had little luck launching new scripted programming in recent seasons.

Reilly added that the restructuring and cuts "may be perceived as fairly drastic right now" but in time might be viewed as "forward thinking" and that people may at some point say, "Oh, I understand that's what they meant."

Asked by moderator Andrew Wallenstein, digital media and TV features editor of The Hollywood Reporter, what the changes will mean for the network, Reilly said "not much to the naked eye" as NBC already had been working to implement cost-cutting measures over the past couple of years. But he added that "we're playing with the programming mix and being more interactive."

ABC Entertainment president Stephen McPherson agreed that spiraling production costs are a major concern.

"There's no question production costs are getting out of control," he said. "We pour amazing amounts of money into these quality shows. We've got to figure out how to do them at a lower cost."

CBS Entertainment president Nina Tassler agreed that vigilance is necessary to ensure cost containment, but she sounded an upbeat note about the state of broadcast network TV in general.

"Broadcast TV is in very good shape," she said. "Our revenues are up."

Fox Broadcasting Co. president of entertainment Peter Liguori said his network has spent less on off-air marketing this year and instead has been putting that money back into programming. He also noted that there is room for two or more strong shows to air in the same time period — a la this year's "Grey's Anatomy"/ "CSI: Crime Scene Investigation" showdown at 9 p.m. Thursdays — citing the performance of last season's "American Idol" and "Lost" finales, which aired opposite each other in May.

"Good shows will not wind up killing other good shows," he said.

Tassler added that "audiences seem to be taking their time" in finding new shows this season, but she pointed out that the number of people watching television is up this year and that they are spending more time watching TV.

During the discussion, the network chiefs said they are still figuring out how to best utilize digital media, adding that their new-media initiatives at this point are purely for promotional purposes and that the on-air content remains the primary focus, with Tassler calling CBS "the epicenter of content" for all of the network's initiatives.

The network programming chiefs also noted that the concerns of the guilds in relation to digital content are at the forefront of their minds as they experiment in the new-media landscape.

As for the two new networks, CW president of entertainment Dawn Ostroff said she's seeing good results in terms of ratings, especially considering how many viewers across the country had to switch stations to find their favorite former WB Network and UPN series.

"If we end the season with growth in the 18-34 demo (over WB Network and UPN ratings last season), then I'll be happy," she said, adding that the network already is seeing positive results.

Fox Television Stations CEO Jack Abernethy, who was representing the new MyNetworkTV, emphasized that his network is still standing behind its decision to air only drama strips but admitted that "the ratings are not what we want them to be."

"This is the best thing for us," he said. "If something better comes along, we'll consider it, but right now this is the best model for us."
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