Can ABC Come Back?

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ABC's problems can fill a book—and will one day. The network can't find a breakout hit. Ratings are at all-time lows. Of its target 18-49-year-old audience, 17% has gone elsewhere.

What's at the heart of ABC's tumble? One industry complaint is that the network simply has too many chiefs.

Producers and agents bring projects to the network, get excited responses from top lieutenants, only to get the rejection call the next day.

Even when they meet with the top brass—Entertainment President Susan Lyne, Entertainment Television Group Chairman Lloyd Braun, and Television Network President Alex Wallau—decisions don't come easy. Though those three ostensibly run the network, Disney CEO Michael Eisner and President and Chief Operating Officer Bob Iger have veto power.—and they use it.

The upshot? No one person is empowered to lead. "They have some good, talented people there. I don't know that Eisner and Iger are letting them do what they are paid to do," says one studio executive.

One producer tells how he walked away from a project with ABC because he realized it was going to be too hard to get through the process with his sanity intact. Meetings are filled with bickering and infighting, says the producer, and no key decisions get made.

Lyne knows how her shop is perceived in certain quarters, but says any big entertainment entity is a collaborative effort. "There are plenty of divisions at Disney doing brilliantly with the same management structure," she says. "I won't tell you it's the simplest process, but I'm not convinced it's that different from other companies."

Tell it to shareholders.

Last year, the network lost $515 million and stands to lose as much as $340 million in 2004, estimates Merrill Lynch analyst Jessica Reif-Cohen. But Lyne is optimistic. She predicts ABC will return to profitability next year.

ABC's spinmeisters say that what is really standing between the network and being in the black is finding a breakout series.

"You can't really be a player without having an uber-hit," admits Lyne. "We're first or second in 64% of the comedy half-hours on our schedule and that's great. But the problem is, we don't have the one top-rated show that can lift all ships."

Finding that elusive star turn is ABC's mission. With all the broadcast nets declining in an era of 500 cable channels it only takes one big show to close a narrow ratings gap.

ABC is searching for a miracle, like American Idol, Survivor, or Sex and the City—preferably all rolled into one. Lyne is betting on Stephen King's Kingdom Hospital, debuting March 3, to be that white knight. "This is a big piece of event TV," she says. "It's 13 weeks, it's got a big narrative arc to it, a big explosive ending, and a lot of surprises along the way."

The network won't tolerate flatlines forever. "I suspect that, unless something significant happens over the course of the next three or four months," says one insider, "ABC is going to be hard-pressed not to take a close look at its situation and make some major changes."

Most industry chatter is about whether Eisner can survive the heat from some of Disney's biggest investors, as well as Comcast's hostile takeover bid. The merger drama has drowned out talk of how long it might take Lyne and Braun to turn things around.

And Lyne knows the clock is ticking. "At the end of the day, Lloyd and I have to take responsibility for the network's performance," she says.

During sweeps, ABC pulled in decent numbers with Super Millionaire, a souped-up version of Who Wants to Be A Millionaire. ABC found huge success with the game show in 1999 but destroyed that momentum in 2001 by playing the show to death. ABC is still recovering.

Last season, the network scored with The Bachelor
and The Bachelorette, but this season audiences aren't as interested. The Bachelor
was down 19% in adults 18-49 and 18% in viewers. Worse, a Trista-free Bachelorette
is down 33% in adults 18-49 and 30% in viewers, not including last week's finale. The show lost 28% of its women 18-49 and 39% of women 18-34.

Dramas are down, too. For now, ABC has three reliables, and all are tanking year-to-year: NYPD Blue
has dropped 15% in adults 18-49, Alias
is down 17%, and a remade The Practice, despite critical praise, sank 8%.

ABC is getting some traction with comedy, but its most promising sitcom from last season, 8 Simple Rules, lost star John Ritter right before the season. That's bad mojo, which lately has outweighed the Happy Days
at ABC.

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