Turner Nets Are OK, Despite an AOL Drain

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The AOL Time Warner Inc-owned cable networks are in good financial shape and won't cut back on original programming and acquisitions, despite the parent company's struggling stock, Turner Broadcasting System Inc. chairman and CEO Jamie Kellner said.

Kellner, who spoke at the recent Television Critics Association summer press tour, said AOL Time Warner's recent stock slide — due primarily to the financial problems at Internet-service provider America Online Inc. — has not compromised the budgets of any Turner cable networks.

"There's no question the ad-revenue shortfalls have driven the stock way, way down," Kellner said. "But we were able to weather the storm on the ad shortfalls and the upfront market has been substantially stronger this year."

That means business as usual for Turner Network Television, Cartoon Network, TBS Superstation and Cable News Network. But those pronouncements won't necessarily mean new original scripted series for TNT and TBS, according to Turner executives.

HIGH ON SERIES

Despite scheduling only one scripted series — TNT's Witchblade
— Turner executive vice president of programming Garth Ancier said the company is still bullish on the genre.

But given the high cost of such shows, Ancier said networks have to be very selective and look for programs that are uniquely different from what's offered by the broadcast networks.

He pointed to such sci-fi/fantasy series as Witchblade
and USA Network's The Dead Zone, as well as FX's cop show The Shield, as basic-cable programs that present content which can't be seen on over-the-air outlets.

"If you can present something different as an alternative, there is potentially an audience there," Ancier said.

With or without original series, Kellner predicted that cable will continue to make inroads against the broadcast networks in terms of audience share. But he believes the pace will eventually plateau "not too far down the road" and broadcast network TV will remain viable.

"There will continue to be a broadcast business if they can control their costs," he said.

One area in which cable will continue to gain on the broadcast networks is news. Broadcast networks that aren't aligned with a cable outlet will have problems maintaining a viable news presence in the future, he added.

"I think CBS and ABC have to plan for the future, because they're not going to be able to allocate their news-gathering costs over a 30-minute show and a couple of news pods in the morning," Kellner said.

Kellner also continued to sound warnings about the potentially deleterious effects of digital video recorders, with their ability to allow viewers to skip commercials.

While he said he's not against commercial-free television, he said the consumer would have to foot the bill — upwards of $250 a year — if the current ad-based infrastructure is compromised by DVRs.

Kellner made note of a recent study which found that 71 percent of TiVo Inc. and Replay TV users had skipped commercials. While such technology is in few homes today, it could pose a major problem for the industry if cable operators and direct-broadcast satellite services go ahead with plans to build such technology into set-top boxes.

"If programming is not paid for [through commercials], it either goes away or we find a new way to pay for it," Kellner said. "And the only way I know of is you write a check, based upon the business today."

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