How Network TV Will Reinvent Itself

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"This is not going to get the same ratings as the scripted dramas at 10 o'clock," NBC Universal CEO Jeff Zucker acknowledged at a recent BusinessWeek media conference. "We can put our heads down and we can cross our fingers and wish this was 1987. But it is not."

Although other network executives say Zucker is motivated mostly by NBC's dismal ratings, the fact remains that programming costs are skyrocketing at a time when the audience is shrinking. The answer, say experts, is that TV networks will be increasingly forced to share the costs of making new shows to keep the costs of failure down. That's why CBS is making two of its new cop shows, Flash Point and The Bridge, with Canada's CTV network and why NBC picked up the 13-episode series Merlin to run after its airing on BBC. Those deals not only reduce the $3 million it often costs to produce an hour of TV but also slash the millions more networks usually pay to film pilots for shows that never air.

Radical Overhaul?

Of course, that will stem only the financial bleeding for networks. A more radical overhaul could take shape down the road. Networks eventually will give back to their affiliates the 8 p.m. to 9 p.m. time slot, legendary network executive Fred Silverman recently told a Syracuse University TV symposium. Local affiliates could fill that time with even more reruns or, Silverman believes, reality, news, and other TV shows more closely tailored to the needs of the communities they serve. Daytime soap operas will disappear from the schedule as well, Silverman predicts.

In time, TV networks likely will start to look more like cable channels that have built audiences based on shows that cater to specific groups, such as Bravo's women-centric offerings and the testosterone-laced Spike TV programming, says a former network executive. In its heyday, NBC provided shows that lured yuppies. At least one network—the CW—is already focused heavily on shows like Gossip Girl aimed largely at younger women. "CBS is the cop channel," says the BBC's Ancier. Indeed, CBS continues to lure heftier audiences than its three larger rivals, mostly with its highly rated CSI police-forensics series and other "procedural dramas" such as The Mentalist, Numb3rs, and Without a Trace.

As more and more viewers move online to watch their favorite TV shows, the networks are scrambling to follow them. NBC and Fox have Hulu.com, an increasingly popular site with TV shows and movies, old and new. CBS and ABC both have their own sites. In the coming years, the networks will go mobile, too. David Poltrack, chief research officer, CBS Corp, and president, CBS VISION, expects networks to tailor their offerings for smartphones and other devices—everything from clips to entire shows. "We could offer our prime-time shows at 3 p.m., or at any other time when [viewers] are out of their homes," he says.

As audiences continue to fragment, the sell to advertisers gets harder and harder. That's why viewer engagement—how involved audiences are with a given show—is becoming increasingly important. As such, expect the networks to embrace new ways to reach and retain their audience. That in itself will change the whole TV-watching experience and make it more Web-like. One product now being tested, called MediaFriends TV Chat, will allow viewers to send text messages—"OMG, can you believe what Miley is wearing?"—that will show up on friends' TV screens if they are watching the same show. The goal is clear: keeping viewers glued to the program instead of channel-surfing or heading to the Web.

Grover is Los Angeles bureau chief for BusinessWeek. Lowry is a senior writer for BusinessWeek in New York.

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