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Such results have had an inevitable impact on the networks' bottom lines. Profits have plummeted at all but NBC. Each of the three networks has been taken over by a new corporate owner -- ABC by Capital Cities Communications, NBC by General Electric, and CBS by Loews chairman Laurence Tisch -- that has instituted severe cost-cutting measures. Some 3,500 people , from technicians to network censors, have been laid off at the Big Three in the past two years. Although some further postelection cuts are anticipated at CBS News and NBC News, the bulk of the reducing is probably over. "We need all the people we've got right now," says Capital Cities/ABC chairman Thomas Murphy. "I would think the other networks would be finished also."
Instead, the networks are looking for ways to expand their revenue base. In many cases, that means joining the competition. ABC owns 80% of ESPN, as well as smaller pieces of the Lifetime and Arts & Entertainment cable services. The network is also producing shows for cable, such as a documentary series on the Cold War, The Eagle and the Bear, done in collaboration with A&E. NBC is launching a 24-hour business-news channel for cable early next year, and has formed a home-video partnership with Columbia Pictures. Only Tisch at CBS has held back from such diversification. Since taking over the network in 1986, he has sold off CBS's record and publishing divisions, leaving the company with a hoard of cash and inviting rumors that he plans to sell the network. Tisch denies it; he has instead gone shopping for more local stations. (Despite the troubled times, the network-owned stations have continued to show healthy profits.)
The networks' financial woes are increasingly being reflected on the home screen, for good and ill. News programming is becoming more popular with network executives because it costs less to produce. CBS now has three hours of news in prime time; ABC has one and is planning a second for January. The networks are looking more kindly at other "reality" shows as well. ABC, for instance, has just set up a new subsidiary to produce nature shows and other nonfiction specials, both for the network and for other outlets.
Entertainment shows, meanwhile, are facing a cost squeeze. Hollywood producers, who must negotiate with the tight-fisted networks over fees to cover their production costs, are avoiding shows with elaborate action scenes and expensive locations (partly because such shows are doing poorly on the rerun market). "I sit in on development meetings," says Harris Katleman, president of 20th Century Fox Television Production. "I don't let someone develop a Star Wars. It would be crazy. We don't do westerns either, and we don't do big shows that require locations, car crashes and lots of stunts."
This penny-pinching approach could lead to what producer Aaron Spelling calls "bottled shows." "We always want to see someone come driving up to a house and going to the front door," says Spelling. "Now you will hear the car pulling up, the door slamming, and see someone coming into the house. I hate to see that happen." Some shows, like CBS's Wiseguy, are being shot in Canada to save money. Others are being jointly produced with foreign companies to spread the costs.