It was FOX Family Channel's weak ratings and, less obviously, disagreements with kids boss Haim Saban that led to the ouster of network President Rich Cronin last week.
FOX Family Worldwide Chairman Saban and Cronin watched the network's 50-plus viewers leave in droves, when they refocused the network in 1998. But the kids and younger adults they were pitching to haven't come fast enough to show growth.
Behind the scenes were disagreements over programming strategy and marketing. Perhaps because of Saban's roots in syndication, where the deal is the thing, critics say programming strategy got short shrift.
"Rich is by no means a fall guy here," said an executive with one network familiar with FOX Family. "But Saban is very hands-on, so there's plenty of blame to go around."
While his entrance into FOX Family was full of fireworks, Cronin's exit was abrupt. Associates said he returned from the Michigan wedding of one of his brothers on Sunday, popped into the office at 8:30 a.m on Monday and was told he was out. They said Cronin didn't see it coming.
"He thought he had more time," said a friend who is an executive at another network. FOX Family would not comment on Cronin's departure. Cronin did not return calls.
Cronin was tapped in 1997 to run the network after Saban and News Corp. paid $1.9 billion for International Family Entertainment, best known as the cable home of televangelist Pat Robertson. Saban saw in Cronin 14 years of marketing experience at MTV Networks, first in affiliate sales, then as general manager of Nick at Nite and finally as president of TV Land.
But he was still under contract to MTVN, which went to court and successfully blocked Cronin from joining FOX Family until July 1998.
FOX Family relaunched three months later with the addition of kids programming during the daytime. A few shows were well regarded by critics-particularly a cut-out animation series, Angela Anaconda. But nothing hit big. After several months, the ratings stuck around 0.3. For the year to date, FOX Family is up just 6% in Nielsen's kids ratings 2-11, averaging a 0.33. The network is strongest with kids 9-11, up 42% to 0.44.
Adult 18-49 ratings are running about 0.6, down from earlier gains.
Industry executives said that Saban saw FOX Family as a platform for his production operations. After years as a successful syndicator of international kids programming, most notably Mighty Morphin Power Rangers, Saban was focused on programming that could be co-financed or readily syndicated worldwide.
Between the cable network and the children's syndication operation, network parent company FOX Family Worldwide is so far short of expectations, that it nearly fell into technical default on a $710 million bank-loan package. Another News Corp. unit lent Worldwide $125 million, but at a huge interest rate of 20% last summer. Part of that loan was extinguished with the initial public offering of FOX Kids Europe.
The network has decreased losses, but by reducing programming and production costs, not by increasing revenues. For the nine months ended March, FOX Family's revenues dipped a fraction of a percent to $488 million. Operating cash flow more than doubled from $118.7 million to $318.3 million. But that's counting proceeds from the IPO, hardly a recurring revenue source. It's also essentially ignoring most of the programming and production costs.
Adjust for those and the company lost $86.4 million.
Saban and News Corp.'s deal gives each the chance to buy the other out. Saban has denied earlier reports that he was looking to sell, and News Corp says it's not talking to any new buyers. But FOX Family is under a financial burden of $1.7 billion in debt used to finance the initial IFE takeover. Wall Street is skeptical. "I haven't seen any momentum in their story," said one analyst.