Embarrassment runs deep at CBS Inc. this week after the announcement that the communications power is junking CBS Cable, the most ambitious foray into cable programming ever undertaken by one of the commercial television networks.
How the proud media giant got into a position to take a loss of $30 million and admit to the biggest programming failure in cable's muddled development period raises interesting questions about the future of CBS and of television in general.
CBS spared no expense in producing and promoting CBS Cable, although most television watchers missed it in the Washington area, where cable is catching on slowly. Original dramatic series starred such heavyweights as Liv Ullman and Peter O'Toole, while dance programs included the work of Rudolf Nureyev.
Critics swooned over much of the cultural fare just as they admired the system's "Signature" program, a unique, five-night-a-week interview show that displayed only the faces of the interviewees, who were prominent figures in the arts, literature and public affairs.
CBS lived up to its reputation of doing everything it touches in a big way, publicizing its cable service with lavish parties. One West Coast cable show featured a CBS Cable gala on the dockside Queen Mary, while just this spring at another trade convention, CBS Cable threw an ornate, sumptuous party for hundreds of guests on a suburban Las Vegas lot made to resemble a Middle Eastern bazaar.
"They spent a lot of money and were unrealistic about it being profitable in its first year," said W.S. James, vice president video technology/programming for the advertising agency Doyle Dane Berhbach Inc. "But the primary problem was that there was ambivalence on the part of CBS Inc. about the thing. CBS' primary revenue is from broadcasting, and cable is, in a sense, a threat to CBS."
As good as the programming might have been, CBS misread badly its ability to use the network's reputation and its high-brow programming to sell the service to the advertising community, at least in the one year that CBS cable was telecast. The CBS name apparently means far less than it once did to advertisers.
The CBS management may have further underestimated the level of hostility it was to encounter from the cable industry, which largely resents the networks' efforts over the past decade to stymie cable development. "It was another case of broadcasters getting into cable and not knowing what they're doing," said the chief executive of a major communications company.
But CBS officials say the cable programming venture fulfilled all of its goals, except for advertising revenues. Few in television, however, thought CBS was realistic about the service from the beginning, and many media watchers say that part of the CBS Cable disaster can be blamed on eagerness of the CBS management team to please its top culture buff, retiring CBS Chairman William S. Paley.
"It's very hard to generate the revenues for first-class video programming at this point," said Paul Bortz, a consultant with Denver's Browne, Bortz and Coddington, who has worked with American Broadcasting Companies Inc. on developing ARTS, ABC's more modest, three-hour-a-day cable cultural service.
"You can't proliferate program services like you can magazines and radio," Bortz said, noting that for television, production expenses represent about 90 percent of total costs. "You can't have something for everybody because of the cost structure." About half the CBS Cable productions were original works.
But the service was not without an audience, with distribution on 12-hour-a-day cycles to 5 million homes over about 430 cable systems, although regulatory restraints barred CBS from syndicating the programming to independent networks and other outlets, limiting potential downstream revenues.
Though the service had the ability to reach a potentially attractive audience, one of the advertising community's problems with cable is the difficulty measuring the size of that audience. The major rating services have yet to evaluate cable's pull in an adequate and regular way.
Furthermore, CBS Cable was requiring fairly significant commitments from advertisers. CBS was seeking package ad purchases, while ARTS, for example, will sell its advertising spots in chunks as small as 30 seconds.
CBS officials also argue that they were, in part, victims of the bad economy. "There was not a lot of discretionary funds for upscale consumers," said Thomas F. Leahy, executive vice president of the CBS/Broadcast Group and the official who had authority for CBS Cable. "The theory was that it was an audience that would be hard to reach and that the message would be different."
But it also is difficult to imagine high-priced culture making it on television. Perhaps the limited audience would have been willing to pay enough for CBS Cable to make it work as a pay television venture, but the service was marketed free to cable subscribers.
Although many television executives praise the production quality of CBS Cable, it is clear that the performing arts across the country are suffering from rising costs and a relatively small audience. And CBS Cable was making an effort to attract the light to medium television viewer, a particularly difficult proposition for a service with an audience limited by cable's reach.
Experts, however, say the heralded promise of cable, which now reaches about a quarter of the television audience, will come only when the market widens. "There is a market for culture on cable," James said.
The experts agree that the market isn't there yet. For all the grandeur of CBS Cable, it would be a tragedy if naive decision-making was instead read as a reason to push cable even closer to the mix of sports, sex, religion and repeats it could well become.