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The Humbled Peacock NBC : Network Struggles for Hits : Media: President Robert Wright has steamrolled change but often gets blamed for a ratings debacle.


Earlier this year, 90 of NBC's top executives met at General Electric's spartan Crotonville, N.Y., conference center for three days of corporate brainstorming.

Such retreats tend to be routine. But on this occasion, NBC President Robert C. Wright called the group together for what one participant described as "shock therapy."

One cold slap was an NBC-produced video called "The Comet." Interviews with such heavyweights as John Malone of Tele-Communications Inc., Michael D. Eisner of Walt Disney Co. and former Hollywood studio chief Barry Diller laid out an alarmist message:

Technology is moving forward so rapidly, they said, that the wrenching changes that have scorched the networks in recent years will look mild compared to what is just around the corner. By the turn of the century, Wright told the executives, the three networks will see their share of the viewing audience plummet to 42%.

For seven years, Wright, a Jesuit-educated former prosecutor, had been working to craft an NBC that could compete in this new environment. Believing that traditional over-the-air broadcasting had a limited future, Wright plunged the company into cable programming, overseas partnerships and high-tech ventures.

But clarity of long-term vision is not how TV networks are judged--not by the critics, not by advertisers, not by producers, and not even by so notoriously brutal a competitor as GE Chairman John F. Welch Jr., who bought the company from RCA in 1986.

Then, NBC was at the crest of a six-year prime-time winning streak that generated billions of dollars in profits.

Now, as the chastened executives gathered outside New York City, NBC was mired in third place in the ratings. It had only one show in the top 10. The daytime schedule had shrunk to four hours. Important affiliates such as KRON-TV in San Francisco no longer carried the network's Saturday morning schedule. David Letterman had humiliated the network by defecting to CBS. A scandal was about to break out at NBC News.

So when Welch rose at the retreat to deliver what was supposed to be a pep talk, he could barely conceal his displeasure.

One of the managers indiscretely suggested that the network could be "a lot more successful" if GE gave a "little more support." Welch's face reddened.

"Well, let's see," Welch shot back. "Seven years and $500 million in development money, and you guys haven't produced one hit yet." He paused. "Where are the hits?"

Judged by that standard, these indeed are troublesome times for NBC--worse than the dark days of the early 1980s, when the network had been in third place for so long that it was dismissed as "brain dead."

That world was much simpler. A typical TV viewer had only a dozen channels to choose from. The networks collectively pulled in 80% of prime-time viewers. Advertisers stampeded to pay ever-increasing ad rates to hawk soap and cars. There were no VCRs.

It was an old-fashioned cure--hits--that revived NBC from its '80s malaise. The unprecedented success of such shows as "Cheers," "Family Ties" and "The Cosby Show" powered the network into first place.

And as Welch observed, no such rating successes have arisen on Wright's watch.

Yet despite Welch's bluster--no real surprise to NBC executives who have endured two years of rumors that Welch and GE want to dump the network--GE may be ready to embrace the structure Wright has created, hits or no hits, as it leaps into the video unknown.

In a rare appearance last week, Welch told NBC employees that he had no plans to sell the network. Instead, say knowledgeable industry executives, Welch will probably "rebirth" NBC within General Electric.

Aware of the rapid changes taking place in the TV industry because of fiber optics, satellites, digital storage and video compression--the electronic architecture behind the 500-channel cable TV systems of the near future--Welch wants to find ways that NBC can take advantage of GE's high-technology base in the "post-channel" world that TV is entering.

It is unclear if Wright, 49, will be present for the rebirthing. A cerebral manager with a lawyer's penchant for argument, Wright frequently is blamed for NBC's problems.

A few weeks ago, Welch--unhappy with NBC's blizzard of bad press--sounded out ABC News President Roone Arledge about the possibility of running the company. Arledge, who created ABC's "Monday Night Football" and built ABC News into an industry leader, declined.

No wonder. NBC's core business--its broadcast network and the seven TV stations it owns--is rapidly shrinking. The company's revenue has slid since 1988; operating profit is at a third of its 1989 peak. NBC's prime-time ratings this season are down 10% from a year ago and more than a third below their peak.

And within the network itself, which accounts for about 65% of NBC's annual revenue, there are major programming problems.

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