Report: USA, NBC In Talks Again
USA Networks Chairman Barry Diller met with General Electric's NBC Television Stations President Scott Sassa last week, according to a report in Monday's Hollywood Reporter trade daily. Shares of USA (USAI) jumped 1 1/4, or 5.5 percent to 24 1/16, while GE (GE) added 1 7/16 to 84 1/2.
This isn't the first time there's been speculation about some kind of arrangement between the two networks.
In July, talks of a planned merger were reportedly scuttled by Seagram (VO) CEO Edgar Bronfman, whose company owns 45 percent of USA. Under the terms of the proposed deal, Seagram's stake in USA would've been cut, reports said.
Soon after that, NBC Entertainment President Warren Littlefield told a gathering of television critics in Pasadena that an alignment with a cable network or studio is "inevitable" for NBC. Earlier this month, NBC said it would lay off 250-300 employees in a move related to soaring programming costs and declining viewership - a scenario familiar to each of the broadcast networks.
Unlike its broadcast rivals, NBC isn't directly connected to a movie studio that can serve as a programming pipeline, so despite its status as the top-rated network, it's in a difficult bargaining position. Earlier this year, NBC agreed to a three-year deal to pay Time Warner's Warner Bros. unit $13 million an episode to retain the top-rated hospital drama E.R.
ABC, by contrast, is owned by entertainment giant Disney, which owns Buena Vista and other TV production companies, and Fox is owned by News Corp., which also owns 20th Century Fox Television. Even the lowly WB and UPN can receive programming from the various studios of Time Warner and Viacom, respectively.
Why would USA want a relationship with a broadcast network? The answer is reach. CBS, for example, has "five times the audience" of its nearest cable network competitor, according to CBS President Mel Karmazin.
"What's happening is that even as cable gains market share, cable networks are fragmenting each other," Karmazin said. There's a big difference between th cost per thousand viewers that an advertiser will pay to a broadcast network and the rate that same advertiser will pay to a cable entity, for precisely this reason.
While cable networks like USA, TNT, TBS and ESPN have been very successful in drawing broad-based groups of viewers, there are still many people in the U.S. who simply don't have cable, and that will probably be true even as we enter the digital cable world.
Written By David B. Wilkerson