New Networks Hit the Air; More Changes on Horizon

TV broadcasters will be able to produce and own shows

MOVE over ABC, CBS, NBC, and Fox: Here come two new commercial television networks, United Paramount Network (UPN) and Warner Brothers Network (WB).

In the process, say hello to some new shows and potential stars, including another Star Trek spinoff on UPN and a singing frog who is the cartoon ``spokesperson'' for WB.

The introduction of the two new networks this month is giving broadcast television, including cable, ``a big boost,'' says media analyst Ed Atorino of Dillon Read & Co., an investment banking firm in New York. ``Television viewership is strong in general, and the new networks should attract some new audiences,'' Mr. Atorino says.

``The new networks also make the existing networks, as well as most commercial stations, more valuable as broadcast properties,'' given rising demand for TV outlets, he adds.

The UPN network, a joint venture between Chris Craft Industries Inc., a communication and entertainment company based in New York, and Viacom Inc., owner of Paramount Pictures, is scheduled to officially air Monday night, Jan. 16. The WB Network, owned by Time-Warner Inc., debuted last Wednesday night.

Analysts say each network will likely lose $50 million or more in its first year, and perhaps as much as $250 million over five years.

Yet, there are potential rewards, says Allan Gould, an entertainment expert with Oppenheimer & Co., an investment company in New York. Besides competing to nail down the dominant position as the fifth major broadcast network, the Paramount and Warner Brothers film studios will be able to use their networks to feature shows that they have produced.

That is important, Mr. Gould says, because of upcoming changes in United States communications laws. In November, the commercial networks will be able to own, produce, and syndicate their own shows. The Federal Communications Commission originally banned that practice to encourage the development of independent production companies. But with cable TV now doing so well, the FCC decided to shed its longtime prohibition on in-house network production.

Assuming the networks make more of their own programs, production companies such as Paramount and Warner Brothers will get less air time, Gould adds. Having their own networks allows them access to airwaves for their own projects.

Currently, both new networks have presold their ad space. ``We're completely sold out, right through the first quarter. There's just nothing available,'' says Kevin Brockman, a spokesman for UPN in Los Angeles. While ad rates can run about $11 to $12 per thousand viewers on the major networks, spots are much lower on the new networks, reportedly running between $7.50 per thousand viewers on WB Television and about $8.25 per thousand viewers on UPN.

WB reportedly has guaranteed its sponsors a ratings base of 3 percent, or 2.9 million homes. UPN, which has cleared more stations for its network, guarantees a higher ratings base. The new Star Trek spinoff, to be called ``Star Trek: Voyager,'' is rumored to have been presold with a guaranteed 7 rating. Both networks are targeting younger audiences, who are attracted to the Fox Network. Some top executives at the two new networks have come from Fox.

Analysts say ad sales will not pull money away from the established networks - at least for now. Advertising revenues for broadcast television should reach about $30 billion this year, up from $28.5 billion in 1994, says Arthur Gruen of Wilkofsky, Gruen Associates Inc., a New York consulting firm.

Still, if the new networks do well, there could be an adverse impact on the ``big three,'' says Chris Dixon, a media analyst with brokerage firm PaineWebber Inc. here. ``Advertisers like to go with the No. 1 network,'' he says.

Therefore, it is not inconceivable that if the new networks score hits, the beneficiary among the big three networks would be ABC, which has many of the ``top 10'' shows. ABC would be least likely to see its ad dollars shift elsewhere.

UPN starts out with programs on Monday and Tuesday nights, plus a film matinee on Saturday afternoons. WB, for now, will air a block of programs on Wednesday nights; the network says it expects to add a second night in August. UPN is considered to have the stronger lineup of affiliates.

Some analysts speculate that only one of the two new networks will survive. Still, both networks have rich corporate parents to draw on. They will each reach about 80 percent of all TV viewers in the US. Many of the affiliates, however, are UHF stations, which tend to attract smaller audiences than VHF channels. WB will broadcast its programs on WGN, a cable ``superstation'' in Chicago.

While the Fox Network, owned by Rupert Murdoch's News Corporation Ltd., is posting a profit now, it is said to have lost more than $200 million in its first years of operation.