The Math Behind The CW

[SOURCE: Broadcasting&Cable, AUTHOR: John M. Higgins]
Time Warner is the largest media company, not just in the country but in the entire world. Its Warner Brothers Television dominates the TV-production industry, supplying more shows to broadcast networks than anyone. Yet, for all that clout, Time Warner executives couldn't manage to successfully program The WB for two prime time hours, six nights a week. Viacom and its new spawn, CBS, are smaller but did no better with UPN. After a decade on the air, the networks are folding, with the pieces combined into a new channel, The CW network. The inability of such powerful companies to make even modest channels work on the air speaks volumes about the state of TV networks. Consolidation is a classic response of companies stuck in a mature business, and every network is stuck. The broadcast networks' revenue growth averaged an unimpressive 4% over the past five years, and the next five look no better. If the ad market is slow and programmers can't chisel audience from rivals, combining operations is often the only way to squeeze some earnings growth. The deal may initially look like a merger of The WB and UPN, but it's carefully crafted in a different way. The two networks are being shut down and some of their assets drawn upon to create what CBS and Time Warner tout as “the new fifth network.” That's more than mere hype. Executives believe that closing the old networks frees them of obligations to angry former WB and UPN affiliates not chosen for The CW. That's a contentious issue roiling station groups, even big ones like Fox TV Stations.
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