ABC on Thursday became the second major broadcaster to combine its television network and production studio into a single unit, an acknowledgment of troubled economic times and changing viewer preferences.
Walt Disney Co.'s ABC, like all television companies, is scaling back amid a deepening recession. Networks are particularly vulnerable now because their audiences are shrinking and their advertising revenues are falling but production costs for dramas and comedies are continuing to climb.
"The broadcast television model is not working the way it used to, and it needs to be fixed," said Jason Maltby, a top buyer with the influential ad agency Mindshare. The current economic climate is simply putting more pressure on networks to produce shows more efficiently, he said.
Last month, NBC Universal merged its NBC network with its production studio and laid off dozens of executives who shepherded shows onto the air.
ABC said its reorganization would not immediately result in job cuts among the people who develop shows, but Disney is expected to begin layoffs at ABC as soon as next week. ABC executives declined to discuss the potential reductions.
The big winner in ABC's makeover is Stephen McPherson. He will now be president of the newly formed ABC Entertainment Group, responsible for both the network's programming and production.
ABC's prime-time ratings are down this season. It is currently tied with NBC for third place among the big four networks in the 18- to 49-year-old demographic that advertisers pay a premium to reach.
As part of the reorganization, Mark Pedowitz, the head of soon-to-be-gone ABC Studios, has been assigned a new role as senior advisor to Anne Sweeney, head of Disney-ABC Television Group. Sweeney, McPherson and Pedowitz declined interview requests.
"By operating these units in a coordinated fashion we'll be able to present the industry with a unified, cohesive vision for ABC programming," Sweeney said in a statement.
McPherson and Pedowitz frequently clashed. McPherson's focus has been to build ABC's prime-time schedule while Pedowitz aggressively shopped the studio's shows to the network as well as rival broadcasters and cable channels. The TV studio produces two hits for CBS: "Criminal Minds" and "Ghost Whisperer."
Thursday's move was an admission that Disney's TV studio will have a more limited mission -- producing programs for ABC. "The new division's primary mandate will be to develop and produce compelling programming for broadcast on ABC," a company statement said, adding "when appropriate the studio will look for outside opportunities."
ABC's decision means that the era of a network developing original dramas and comedies for its competitors "is over," said Michael B. Nathanson, a media analyst with Sanford C. Bernstein.
For Hollywood producers and writers, opportunities to land a show in a lucrative prime-time network slot are decreasing. Already those spots were being crowded out by cheaper game shows and reality fare.
NBC essentially erased five hours of prime-time real estate off the map by moving comedian Jay Leno to the 10 p.m. slot, Monday through Friday, as part of its retrenchment.
With NBC cutting back on comedies and dramas, "it means less demand," said Larry Gerbrandt, principal of consulting firm Media Valuation Partners.
The move was a homecoming for McPherson, who ran the TV studio for four years before joining the network. He nurtured several of ABC's signature shows, including "Desperate Housewives," "Lost" and "Grey's Anatomy."
He also developed "CSI: Crime Scene Investigation," but that show found its way to CBS, where it became a monster hit.