Metromedia Inc., the owner of Washington's WTTG-TV, is climbing out of its staid but profitable niche in the backwaters of broadcasting and is preparing to become a leader of the revolution that is changing network television.
The seven-station TV chain is making the most ambitious plans ever undertaken by an independent broadcaster to challenge the historic dominance of the three major TV networks in television programming.
Last week Metromedia sent more shock waves through the National Broadcasting Co., CBS Inc. and American Broadcasting Cos. Inc. by signing a landmark deal with pay-television giant Home Box Office. Metromedia will acquire rights to eight HBO films and will produce or finance other films with HBO.
Beginning to build his own programming package, Metromedia Television President Robert Bennett has recently picked up two popular series, "Fame" and "Too Close for Comfort," that the networks had let go.
In addition, Metromedia is planning to challenge Johnny Carson's position this fall as the premiere late night entertainer by offering its own "Thicke of The Night," starring Canadian comic Alan Thicke. The late night comedy show will be co-produced with MGM TV and former network programmer Fred Silverman.
Assuming the company can sign a top anchor, Metromedia is planning a national late news show to further solidify its network-like package.
Behind all this is the blunt, dynamic Bennett, who seems on the verge of creating something as close to a fourth network as any independent broadcaster has ever envisioned.
Through deft television station deals, Metromedia has over the years acquired seven major market channels that reach 23 percent of the nation's households.
Metromedia's total market is at least one-third larger than any other over-the-air broadcaster, a valuable lure to television producers, film distributors and advertisers.
But Bennett and other Metromedia officials avoid characterizing their efforts as the foundation of a new network.
The company is cautious in trying to avoid the kinds of unmet overpromises that have given some cable television companies black eyes. Further, if Metromedia truly became a fourth network, it would have to face the federal regulatory restrictions that govern network broadcasters.
"I duck it because it isn't real," Bennett said recently during a visit to WTTG Channel 5 to celebrate the return to Washington of Panorama host and WTTG anchor Maury Povich.
"What's a network anyway? A network to you and to me and to most people is a seven-day service with 15, 16-hour days. We can't do that. It just isn't possible.
"It could happen down the line. Eight or 10 years from now all these things could happen. I would be more inclined to think of it in terms of opportunities for groups of stations on a periodic basis to group together to do an occasional movie; to do an occasional situation comedy; to do a late-night thing. Thicke comes as close to a network in concept as we can think of."
Bennett also has set about upgrading the largely moribund local news operations at Metromedia stations. "New York (WNEW TV) has been very strong for years," he said. "Washington used to be, but has faltered in the last few years and we're going out of our way to have it become as strong as it ever was."
WTTG will soon have 11 news crews--up from just three--and the station is building a new $400,000 set as part of a $3 million upgrade of its news department. In Los Angeles, Metromedia's KTTV recently added 44 people to its news staff.
On top of the bold moves in broadcasting, Metromedia is simultaneously emerging as a major player in the telecommunications business.
It is developing paging systems, moving into long-distance telephone service and seeking Federal Communications Commission approval to offer cellular mobile telephone service in several cities.
With seven TV stations, the limit permitted by federal regulations, "We were in a posture in broadcasting where we couldn't go any further," said Thomas J. Dougherty, vice president for regulatory affairs and general counsel. Earlier this year, after acquiring five radio-paging companies, the company formed the Metromedia TeleCommuncations Division.
The paging business is growing at a 25 percent to 30 percent annual rate, according to E. F. Hutton & Co. analyst Susan Watson. Metromedia is in the forefront of efforts to make the pagers a major consumer product. Marketing the small receiving devices as "The Little Bugger," it has about 200,000 pagers at $40 month in circulation, creating a high-cash-flow, high-margin business.
Things are less certain on the cellular phone front, a business that will require enormous capital investment and which Watson does not expect to be profitable for the company for five years. Metromedia has applied for cellular licenses in 44 markets and has won a preliminary franchise in Boston in partnership with Graphic Scanning Inc.
On the long-distance front, Metromedia acquired Long Distance Services Inc., a Texas reseller of cut-rate calling services, for $30 million plus contingent payments depending on the firm's profitability for the next five years. It is Metromedia's view that a major long-distance market of the coming years will be in intrastate communications.
According to Watson, Metromedia expects telecommunications revenues of $150 million in 1984, up from $20 million to $25 million this year. "It is reasonable to expect telecommunications earnings into the $75 million range within four or five years," she said.
Metromedia Chairman John W. Kluge, the driving force behind the company's broad strategy, did not return several calls requesting an interview, though he often chats with securities analysts.
It was Kluge who put together the family of seven sister stations and it is Kluge whom Wall Street largely credits with the remarkable performance of the company's stock, the highest-priced shares on the New York Stock Exchange.
The stock's rise is staggering. At one point nine years ago, Metromedia's shares were selling for $4.25 a share. Last week it closed at $554 a share after trading within the last year as low as $191.
The shares will split 10-for-one in mid August. Hutton analyst Watson, who has been recommending it since 1979 when it was selling for $59 a share, says, "Metromedia always seems to stay a step ahead." She notes the stock is now trading at 20 times next year's projected earnings.
Although it ranks as 98th on the recently published Fortune magazine list of the nation's 100 largest diversified service companies, Metromedia's 1982 profits of $309 million rank third on that list behind Halliburton's $496 million total and Phibro-Salomon's $337 million. But Halliburton's sales are almost 14 times those of Metromedia and its assets more than five times as big.
According to the Fortune tabulation, Metromedia's profits as a percentage of both sales and stockholders' equity rank it No. 1 among diversified service companies. Sales have more than doubled to 1982's $407 million in just five years.
A native of Germany, Kluge came to the United States in 1922 at the age of eight. He grew up in Detroit, but came to Washington in 1946 after military service and began WGAY Radio in Silver Spring.
After getting into the business of manufacturing and distributing Fritos and Cheetos in New England, he returned to Washington in 1951 to start a food brokerage firm, Kluge and Co., which later became Kluge, Finkelstein & Co. and still is one of the area's biggest food brokers.
But Kluge himself became more interested in television and in 1959 purchased control of Metropolitan Broadcasting Corp. He became chief executive because, as he put it 10 years ago, he believed the company "could be a vehicle for developing a new concept in the field of communications."
Started in 1955 with channels in Washington and New York, Metropolitan became Metromedia in 1961. Kluge continued to build the empire by purchasing television sales and billboard companies, publishing and production companies, and even the Ice Capades.
Though the company still includes entertainment ventures such as the ice show and the Harlem Globetrotters, it is broadcasting concerns that dominate Metromedia, with television and radio properties contributing 80 percent of revenues and virtually all its profits.
With stations in Washington, New York, Los Angeles, Chicago, Boston, Houston, and Dallas, Metromedia's TV programming reaches more viewers than the groups of local stations owned by ABC, CBS or NBC. In addition to the seven TV stations permitted by the FCC, Metromedia also has a "full deck"--seven each--of AM and FM radio stations.
Yet television remains Metromedia's bottom line business. And it is Bennett's aggressiveness in planning Metromedia Television's development as a major programming and advertising force that has caught the eye of both the broadcasting and film industries.
Metromedia never had much of a reputation in programming circles, although Bennett maintains that lack of visibility largely stemmed from inadequate public relations rather than weak efforts. "Westinghouse can spend $5,000 for a special and another $15,000 to tell people about it," he said.
Bennett came to Metromedia last year from WCVB TV when the company completed the acquisition of that Boston station for a record $220 million.
In Boston, Bennett had built a reputation based on his willingness to take risks on original program production as a way to avoid the costs of syndicated programming.
As Bennett explains it, that concern over program costs combined with industry and regulatory developments and the group's newly acquired circulation reach to produce Metromedia's new bravado.
Because the three networks are having trouble generating television series with long term staying power, independent stations are running short of reruns that can be acquired through syndication. Bennett says syndication, which has led Metromedia stations into the lucrative broadcasting of popular shows like "M*A*S*H," is getting rockier and rockier. Metromedia stations utilizing syndicated programming require at least 85 episodes to make a go of it and few shows make it that far these days.
"We're losing our ability to acquire programming," Bennett said. "We better be in a position to control our own destiny."
Metromedia's new strategy also reflects the controversial efforts of CBS, ABC and NBC to convince the FCC to let them syndicate their own programs. If the rules are lifted, Bennett said, the opportunities for syndicated shows "would get narrower and narrower.
"Then we'd have to deal with the three major networks and although they say it's not the case, we would have to deal with our three most important competitors in order to buy programming," Bennett said. "They're not about to let us get that product.
"I don't mean to sound like it's going to be a disaster, because we've got product that will supply us for years. I'm talking five years down the line. Our feeling is that we've got to try to find ways of developing programming for ourselves. We have the need and we have a major group of broadcasters who know a little about how you do a situation comedy or movies."
Starting with "Fame," "Too Close for Comfort," and a monthly Sunday night movie, Bennett hopes to put his programs not only on Metromedia television stations but other non-network channels that now reach 78 percent of the country's viewers.
Dissatisfied network affiliates are also likely part-time users of Metromedia programs, he noted.
"My guess is that there are going to be a hell of a lot of network affiliates out there who may be looking at weak time periods," he said.
"They might say 'NBC hasn't done anything for us. We've been sucking canal water. Maybe we'll just blow the networks off and put that Metromedia programming on."
TV producers worried about where the networks are headed "see us as a yellow brick road to go down as an alternative way of selling their programming," said Bennett. Metromedia has a major production facility at its Los Angeles station that producers such as Norman Lear have used for years.
TV series producers are no longer packing their bags when the networks call with a cancellation notice, Bennett said. "The cast and crew and everybody used to go off into the wild blue yonder. Now they'll say before we do that let's see if we can make a deal with Metromedia."
The television distribution pattern for feature films also is changing, largely thanks to HBO's willingness to outbid the networks for movies.
If advertisers are as eager as Bennett thinks to back the Metromedia effort, the monthly movie "could very easily go to one a week," he predicted.
The national 10 p.m. news, to be known as Metromedia Prime Time News, is meant to be combined with local news shows in both Metromedia and other markets.
Metromedia is trying to recruit a network anchor for that news show, which will largely revolve around Washington and the growing Metromedia Washington bureau. And Bennett is trying to work out a deal with Cable News Network to share overseas staff, thereby cutting costs.
But for all the activity, some analysts and competing television executives suggest that development of independent television stations has peaked and they, like network affiliates, will be among the losers when cable television moves into major cities.
"There is the risk of the tremendous gains by independents bottoming out," said Dennis Leibowitz, an analyst with Donaldson, Lufkin and Jenrette.
Bluge, Bennett and other Metromedia officials are skeptical about the potential of cable and new technologies for distributing pay television. "What's cable generated that's been so terrific?" Bennett asked.
Bennett, however, sees a niche for Metromedia no matter what befalls television and is eager to see the network's dominance of the television business continue to fade.
"I just know that the networks through the years have let the costs of production skyrocket to a point where they can't take the kinds of chances they used to be able to take," he said. "We're going to take the resources of our seven stations and do things we know we can do.
"Others in the broadcasting business feel much the same way we do," he said. "There are going to be some strange bedfellows developing in the next few years that will see television done differently than it's been done in the past."