Turner Broadcasting System, Inc.

One CNN Center
100 International Boulevard
Atlanta, Georgia 30303
U.S.A.
(404) 827-1500
Fax: (404) 827-1593

Public Company
Incorporated: 1965
Employees: 5,000
Sales: $1.48 billion
Stock Exchanges: American

The history of Turner Broadcasting System, Inc. (TBS), is closely tied to the personal history of its flamboyant founder, chairman, and president, Robert Edward “Ted” Turner III. Alternately seeking and shunning media attention, Ted Turner has accumulated colorful nicknames, including “Captain Outrageous,” “the Mouth of the South,” and “Terrible Ted,” and has earned a reputation for daredevil tactics. Turner’s freewheeling entrepreneurial style is reflected in the strategic and financial risks the company has taken under his leadership.

Turner became president and chief operating officer of a $1 million billboard enterprise, Turner Advertising Company, upon his father’s suicide in 1961, which occurred shortly after the elder Turner concluded an agreement to sell the firm’s recently acquired Atlanta, Georgia, division. Turner offered the buyers $200,000 to rescind the deal and persuaded them to accept his offer by shifting employees and contracts to another division, threatening to destroy financial records.

In 1970 Turner’s firm merged with Rice Broadcasting Company, Inc., a small Atlanta UHF television station. The transaction took the resulting company public, with Turner as majority stockholder, under the new name Turner Communications Corporation.

Turner Communications bought the right to broadcast the Atlanta Braves major league baseball games, then bought the team in 1976. The Braves were said to be losing money at the time and were on the verge of being transferred to another city; Turner’s acquisition kept popular broadcasts on the air and provided diversification for his growing company. Turner increased his sports presence in 1977 by acquiring the National Basketball Association’s Atlanta Hawks.

After reading that the cable television network Home Box Office (HBO) was transmitting programs nationwide via satellite, Turner saw an opportunity to expand his station’s audience enormously and to make it more attractive to advertisers by beaming its signal to cable TV systems throughout the country. The resulting SuperStation WTBS, begun in December of 1976, became, in effect, another TV network. But start-up costs were substantial, cable operators who signed up tended to have questionable credit records, and advertisers were skeptical and reluctant to invest. In the course of a few years, however, the concept proved viable as WTBS-TV gradually became profitable.

Meanwhile, Robert J. Wussler, a 21-year veteran of CBS, joined TBS in April of 1980 as executive vice-president, an office he would held for several years. At CBS, Wussler had been instrumental in the expansion of satellite usage in news coverage—which began as early as 1962—and in the development of the minicam for on-the-spot news coverage. His career included positions as president of the CBS television network and of the CBS sports division.

In its early years, Turner’s SuperStation aired primarily reruns and sports. But in June of 1980, Turner created the Cable News Network (CNN) subsidiary to broadcast live news on a 24-hour basis. News bureaus were established in major cities throughout the United States and the world. The live, 24-hour format encouraged a more direct and unedited presentation of the news than the networks provided, as well as instant availability at viewers’ convenience. The minimal editing and absence of star anchors sparked both positive and negative reactions: some felt the approach lacked polish and professionalism, but others felt it brought viewers closer to the news items at hand. In January of 1981, shortly after CNN began operation, another subsidiary, Turner Program Services, was created to serve as the syndication arm of TBS.

In January of the following year, Turner formed a second all-news television network. Officially named Headline News, the network aired a sequence of half-hour segments edited from the live material shown on CNN. If CNN was conceived as “a newspaper you can watch,” in Turner’s words, then Headline News permitted a quick scan of the top stories at any time. Just months later, in April of 1982, CNN Radio commenced operations, offering a 24-hour, all-news format on a network basis in the radio market.

By this time the broadcast market was becoming increasingly competitive. TBS benefitted as cable became available to an increasing portion of U.S. households. CNN’s success pressured the three established networks to acknowledge the audience CNN had tapped and to provide late-night and early-morning news broadcasts for this group. In addition, Satellite News Channels (SNC)—a second 24-hour cable news headline service—opened direct competition, promising financial incentives to combat the loyalty of CNN’s cable operators and viewers.

In January of 1985 TBS purchased for $60 million a 75 percent interest in an Atlanta real estate complex that contained approximately 470 hotel rooms and 775,000 square feet of office and retail space. By 1987 the company had acquired the remaining 25 percent of the facility, which was renamed CNN Center and housed the corporate offices as well as the Atlanta headquarters for CNN, Headline News, and CNN Radio.

In 1982 CBS had declined to comment on industry rumors that it wished to buy CNN but wasn’t as quiet in April of 1985, when TBC filed a preliminary exchange offer with the Securities and Exchange Commission (SEC) for CBS. CBS immediately bought back nearly six million shares of its common stock— amounting to almost $1 billion—forcing Turner to withdraw his offer in August. The aborted bid cost TBS approximately $20 million in underwriting, legal, and accounting fees, but Turner argued that the action, which forced CBS into significant borrowing to finance its repurchase and absorbed management time and attention, at least hindered CBS as a competitor.

In later years Turner defended his bid for CBS as an attempt to protect his own company’s vulnerability. In addition to the three major networks, there were by this time more than 25 independent ones, including Fox, Tribune, HBO, USA, Viacom, Time, and Showtime. Turner worried that networks, as the distributors of television programming, could be held at the mercy of program producers, and he described his bid to gain control of CBS as an attempt to strengthen his bargaining position with them.

Turner also took a small step into the production business in the 1980s. He helped found the Better World Society in 1985, a nonprofit organization that produced documentaries on ecological and environmental issues. Turner’s global consciousness was also behind his company’s contribution to the Goodwill Games with the former Soviet Union. These games, patterned after the Olympics, were held in order to bring U.S. and Soviet athletes away from recent political boycotts of the Olympics and back into sporting competition. Conceived and organized in 1985, they were first held in Moscow in July of 1986. TBS’s production costs associated with the Goodwill Games amounted to more than $25 million, a sum not completely recovered through the increased revenues that resulted from the broadcast syndication of the Games.

TBS’s ventures into original programming were dwarfed, however, by its acquisition of the film company MGM/UA Entertainment in 1986. Turner contended with Kirk Ker-korian, the 50.1 percent owner of MGM/UA, which was losing money and valued on Wall Street at about $825 million in August of 1985. Kerkorian was represented by Drexel Burnham Lambert, an investment-banking firm famed for dealing in high-risk junk bonds. In an unusual move and with the consent of all parties, the bankers switched sides and represented Turner when it became apparent that he needed their expertise to finance the deal that was being discussed.

In the end, TBS bought MGM/UA Entertainment for $1.4 billion in March of 1986, immediately sold the United Artists portion back to Kerkorian for $480 million, and assumed $700 million of MGM debt, for a net purchase price of more than $1.6 billion. Because the purchase price was almost twice the street price, Drexel Burnham Lambert was at first unable to create securities acceptable to Turner and to potential investors. After Kerkorian was persuaded to accept approximately $475 million less in cash in return for a new issue of TBS preferred stock, financing for the remainder could be secured. When critics questioned the purchase price, Turner cited the enduring merit of the classic films in MGM’s library, the programming security he sought from this entertainment base, his fear of being outbid by another buyer, and, characteristically, his disinclination to haggle.

The new issue of preferred stock carried two provisions. The first was a necessary payment of $600 million of notes in September of 1986. To meet this requirement, Turner was forced to sell all MGM assets except the film library; many were bought by Kerkorian himself just before the September deadline. The second provision involved dividend requirements that threatened corporate control, depending on market performance.

The entire MGM deal also weighed heavily on the TBS’s financial statements. As Turner conceded in his 1986 report to shareholders, “The financial representation of 1986 is what it is—a net loss of approximately $187 million on revenue of more than $556 million.” (In 1985, TBS had earned a net income of $1 million on $352 million in revenues.) Interest payments, together with amortization of the MGM purchase price, would lead to what Turner described as “substantial accounting losses in the foreseeable future.”

In 1987 Turner called on the support of the cable industry to deal with the preferred stock problem created as a result of the MGM deal. A group of 31 cable operators—the companies that provide local cable service and choose what cable networks subscribers can get—headed by Telecommunications Inc. (TCI), paid nearly $565 million for 37 percent of TBS. This capital secured Turner’s control of voting stock and introduced new directors to Turner operations, including John Malone, president of TCI; Michael Fuchs, chairman of HBO; and Jim Gray, chairman of Warner Cable. While the backing of the cable industry virtually guaranteed the success of the Turner networks, the presence of major cable operators on Turner’s board also posed certain problems. Since cable operators such as TCI purchase programming from TBS, Turner commented in the New York Times, the operators “don’t have much incentive to see us make healthy profits.” But the rescue deal succeeded in keeping Turner afloat.

Although Turner’s MGM purchase was criticized for putting TBS in nearly unmanageable debt, within two years the company’s prospects were looking up. TBS’s new Turner Network Television (TNT) channel, which is based on the MGM film library but also offers original programming, has done exceptionally well. With eight of fifteen places on Turner’s board in the hands of the cable consortium, TBS is moving more slowly and deliberately than in the past. Turner himself points to the completion of cable wiring in metropolitan areas as critical to his industry’s growth, noting that major events would not receive adequate coverage while cable remained unavailable to large blocks of viewers.

In 1989 Turner Broadcasting made several important moves, including a $1.6 billion refinancing of its debt. The company also launched Turner Pictures, a filmmaking division, and Turner Publishing, a subsidiary that develops TBS properties for book publication.

With the onset of 1990s, Turner brought the Goodwill Games to Seattle, Washington. The Games, intended to take place every four years, generated about $60 million in subscription and advertising revenues and created production costs of nearly $95 million. Naturally these figures skewed the company’s overall performance statistics for the year: profit fell by about $65 million from 1989, and revenue increased significantly, reaching $1.39 billion. TBS instituted a one-dollar-per-viewer surcharge to cable operators for carrying the Games, resulting in a blackout of TBS for nearly 17 percent of the 54 million households receiving the network. Ratings for the Goodwill Games were not as high as expected, and Turner felt obligated to compensate advertisers with costly “make good” time.

CNN’s coverage of early 1990s events in the Persian Gulf resulted in spectacular ratings for the Turner networks, which beat out all other broadcast networks for the ten-week period from January 14 to March 24, 1991. CNN set new industry standards for war coverage during Operation Desert Storm, committing nearly 2,000 staff members, more than 4,000 hours of airtime, and $17.1 million to war-related telecasts. On the night of the invasion, 11 percent of U.S. households were tuned to CNN, compared with less than one percent on an ordinary day. The network’s reputation soared when, at a press conference following the initial bombing runs, General Colin Powell and Defense Secretary Richard Cheney revealed that some of their information was coming from CNN.

Turner continued to create specialized networks for particular markets in 1991, launching the Airport Channel and the Checkout Channel. The Airport Channel is broadcast in strategic places in airports, including gates and baggage claim areas. Its programming consists of a 30-minute loop of live news and features lifted from CNN as well as several advertising spots. Revenues for the Airport Channel approached $10 million for its first year, with broadcasts in Dallas-Fort Worth, Miami, Cincinnati, Denver, Minneapolis, and Washington, D.C.

Late in 1991 TBS purchased Hanna-Barbera Productions for $320 million. Turner and its joint-venture partner, Apollo Investment Fund, thus gained access to more than 3,000 half-hours of animated programming, including such classics as Yogi Bear, The Flint stones, Scooby Doo, and The Jetsons, as well as a total of 350 series and films. Prior to the purchase, TBS already owned approximately 800 animated half-hours, primarily from the MGM library. These included Popeye, Tom and Jerry, and a collection of Warner Bros, cartoons from before 1948. With this impressive animation array in hand, Turner announced in early 1992 the creation of the Cartoon Network, a 24-hour animation channel for basic cable systems that was scheduled to begin broadcasting in October of 1992.

TBS has been remarkably aggressive in programming all of its cable channels, which are the heart of the company’s business. As the cable television industry grows, these stations will likely improve their ability to compete with the major networks. TBS appears to be committed to expanding into more telecommunications and entertainment areas, even creating sectors that previously did not exist. Regardless of whether or not the company succeeds in all of these areas, TBS—thanks to its determined founder—seems certain to remain a major force in the communications industry.

Principal Subsidiaries

Turner Entertainment Co.; Turner Network Television (TNT); Turner Program Services, Inc.; SuperStation WTBS; Turner Publishing; Turner Home Entertainment; Turner Private Networks, Inc.; Cable News Network (CNN) Atlanta; CNN International; Turner Sports; Headline News; CNN Radio; Atlanta Hawks; Atlanta Braves; Hanna-Barbera Productions.

Further Reading

Williams, Christian, Lead, Follow, or Get out of the Way: The Story of Ted Turner, Times Books, 1981; TBS annual reports, 1986 and 1991; “A Contest Without a Cause,” Newsweek, August 6, 1990; Konrad, Walecia, “The Scoop on CNN’s Bottom Line,” Business Week, February 4, 1991; “Crowd-Calmer,” Forbes, February 17, 1992; Brown, Rich, “Turner Animated Over New Channel,” Broadcasting, February 24, 1992.

—updated by Robert R. Jacobson

Turner Broadcasting System, Inc.

One CNN Center
100 International Boulevard
Atlanta, Georgia 30318
U.S.A.
(404) 827-1500

Public Company
incorporated: 1965
Employees: 3,187
Sales: $806.6 million
Stock Index: American

The history of Turner Broadcasting System is closely tied to the personal history of its flamboyant founder, chairman, and president, Robert Edward “Ted” Turner III. Alternately seeking and shunning media attention, Turner has accumulated colorful nicknames (“Captain Outrageous,” “the Mouth of the South,” “Terrible Ted”) and a reputation for daredevil tactics. Turner’s freewheeling entrepreneurial style is reflected in the strategic and financial risks that the company has taken under his direction and control.

Turner became president and chief operating officer of a $1 million billboard company, Turner Advertising Company, upon his father’s suicide in 1963, shortly after concluding an agreement to sell the firm’s recently acquired Atlanta division. Turner offered the buyers $200,000 to rescind the deal, and persuaded them to accept his offer by shifting employees and contracts to another division, threatening to destroy financial records, and similar tactics.

In 1970, Turner’s company merged with Rice Broadcasting Company, Inc., a small Atlanta UHF TV station. The transaction took the resulting company public, with Turner as majority stockholder, under the new name Turner Communications Corporation.

Turner Communications bought the right to broadcast the Atlanta Braves major league baseball games, then bought the team itself in 1976. The team was said to be losing money at the time and about to leave town; Turner’s acquisition kept popular broadcasts on the air and provided diversification for his growing company.

After reading that Home Box Office was transmitting programs nationwide via satellite, Turner saw an opportunity to expand his station’s audience enormously and to make it more attractive to advertisers by beaming its signal via satellite to cable TV systems around the country. The resulting “superstation,” begun in December, 1976, became, in effect, another TV network. But start-up costs were substantial, cable operators who signed up tended to have questionable credit records, and advertisers were skeptical and reluctant to invest. In the course of a few years, however, the concept proved viable as WTBS-TV became fractionally and then tremendously profitable.

Meanwhile, in January 1977, Turner increased his sports presence by acquiring the National Basketball Association’s Atlanta Hawks.

After 21 years at CBS, Robert J. Wussler joined Turner Broadcasting System in April, 1980 as executive vice president, an office he held for several years. At CBS, Wussler had been instrumental in the expansion of satellite usage in news coverage as early as 1962, and in the development of the minicam for on-the-spot news coverage. His career included positions as president of the CBS Television Network and of the CBS sports division.

In its early years, Turner’s “superstation” aired primarily reruns and sports. But, in June 1980, Turner created the Cable News Network (CNN) subsidiary to broadcast live news on a 24-hour basis. News bureaus were established in major cities across the United States and around the world. The live, 24-hour format encouraged a more direct and unedited presentation of the news than the networks provided, as well as instant availability at viewers’ convenience. The minimal editing and absence of star anchors sparked both positive and negative reactions: some felt the approach lacked polish and professionalism, but others felt it brought viewers closer to the news items at hand. In January, 1981, shortly after CNN began operation, another subsidiary, Turner Program Services, was created to serve as the syndication arm of Turner Broadcasting System.

In January 1982, Turner formed a second all-news television network. Officially named Headline News, the network aired a sequence of half-hour segments edited from the live material shown on CNN. If CNN was conceived as “a newspaper you can watch,” in Turner’s words then, Headline News permitted a quick scan of the top stories at any time. Just months later, in April, 1982, CNN Radio began operations, offering a 24-hour all-news format on a network basis in the radio market.

By this time the overall broadcast market was becoming increasingly competitive. Turner Broadcasting System benefited as cable became available to an increasing portion of U.S. households. CNN’s success pressured the three established networks to acknowledge the audience CNN had uncovered and to provide late-night and early-morning news broadcasts for this group. In addition, Satellite News Channels (SNC) opened direct competition in 1982, as a second 24-hour cable news headline service, promising financial incentives to combat the loyalty of CNN’s cable operators and viewers.

In January 1985, Turner Broadcasting System purchased a 75% interest in an Atlanta real estate complex which contained approximately 470 hotel rooms and 775,000 square feet of office and retail space for $60 million. By 1987, Turner Broadcasting had acquired the remaining 25% of the facility, which was renamed CNN Center and housed the corporate offices as well as the Atlanta headquarters for CNN, Headline News, and CNN Radio.

In 1982, CBS had declined to comment on industry rumors that it wished to buy CNN. It wasn’t as quiet in April, 1985 when the Turner Broadcasting Company filed a preliminary exchange offer with the Securities and Exchange Commission for CBS. CBS immediately bought back about six million shares of its common stock (amounting to almost $1 billion), forcing Turner to withdraw his offer in August. The aborted bid cost Turner Broadcasting about $20 million in underwriting, legal, and accounting fees, but Turner argued that the action, by forcing CBS into significant borrowing to finance its buyback and absorbing CBS management time and attention, at least hindered CBS as a competitor.

In later years, Turner defended his bid for CBS as an attempt to protect his own company’s vulnerability. In addition to the three major networks there were, by this time, more than 25 independent ones, including Fox, Tribune, HBO, USA, Viacom, Time, and Showtime. Turner worried that networks, as the distributors of TV programming, could be held at the mercy of program producers and described his attempt to gain control of CBS as an attempt to strengthen his bargaining position with them.

In a smaller way, Turner also ventured into the production business himself. He helped found the Better World Society in 1985, a nonprofit organization that produced documentaries on ecological and environmental issues. Turner’s global consciousness was also behind his company’s contribution to the Goodwill Games with the U.S.S.R. These games, patterned after the Olympic Games, were staged as a way to bring U.S. and Soviet athletes away from recent political boycotts of the Olympics and back into sporting competition. Conceived and organized in 1985, they were first held in Moscow in July, 1986. Turner Broadcasting’s production costs associated with the Goodwill Games amounted to more than $25 million, a sum not completely recovered through increased revenues as a result of the broadcast syndication of the games.

These ventures into original programming were dwarfed, however, by Turner’s acquisition of the film company MGM/UA in 1986. Turner dealt with Kirk Kerkorian, the 50.1% owner of MGM/UA, which was losing money and valued by Wall Street at about $825 million in August, 1985. Kerkorian was represented by Drexel Burnham Lambert, an investment-banking firm famed for dealing in high-risk “junk bonds.” In an unusual move, and with the consent of all parties, the bankers switched sides and represented Turner when it became apparent that he needed their expertise to finance the deal that was being discussed.

In the deal’s final structure, Turner Broadcasting bought MGM/UA Entertainment for $1.4 billion in March, 1986, immediately sold the United Artists portion back to Kerkorian for $480 million, and assumed $700 million of MGM debt, for a net purchase price of more than $1.6 billion. At almost twice the street price, Drexel Burnham Lambert was at first unable to create securities acceptable to Turner and to potential investors. After Kerkorian was persuaded to accept about $475 million less in cash in return for a new issue of Turner Broadcasting preferred stock, financing for the remainder could be secured. When critics questioned the purchase price, Turner cited the enduring merit of the classic films in MGM’s library, the programming security he sought from this entertainment base, his fear of being outbid by another buyer, and, characteristically, his disinclination to haggle.

The new issue of preferred stock carried two provisions. The first was a required payment of $600 million of notes in September, 1986. To meet this requirement, Turner was forced to sell all MGM assets but the film library, many back to Kerkorian himself, just before the September deadline. The second provision involved dividend requirements that threatened corporate control, depending upon market performance.

The entire MGM deal also weighed heavily on the company’s financial statements. As Turner conceded in his 1986 report to shareholders, “The financial representation of 1986 is what it is—a net loss of approximately $187 million on revenue of more than $556 million” (in 1985, Turner Broadcasting earned a net income of $1 million on $352 million in revenues). Interest payments, together with amortization of the MGM purchase price, would lead to what Turner described as “substantial accounting losses in the foreseeable future”

In 1987, Turner called on the support of the cable industry to deal with the preferred stock problem created in the MGM deal. A group of 31 cable operators (the companies that provide local cable service—and choose what cable networks subscribers can get) headed by Tele-Communications Inc. (TCI), paid some $565 million for 37% of Turner Broadcasting System. This capital secured Turner’s control of voting stock (just), and introduced new directors to Turner operations, including John Malone, president of TCI; Michael Fuchs, chairman of HBO; and Jim Gray, chairman of Warner Cable. While the backing of the cable industry virtually guarantees the success of the Turner networks, the presence of major cable operators on Turner’s board also poses certain problems. Since cable operators like TCI purchase programming from Turner, Ted Turner told the New York Times, the operators “don’t have much incentive to see us make healthy profits/’ But the rescue deal kept Turner afloat.

Although Turner’s MGM purchase was roundly criticized for putting TBS in nearly unmanageable debt, within two years the company’s prospects were looking up. TBS’s new TNT channel, which is based on the MGM film library but also offers original programming, has done exceptionally well. With eight of 15 places on Turner’s board in the hands of the cable consortium, Turner Broadcasting is moving more slowly and deliberately than in the past. Turner himself points to the completion of cable wiring for metropolitan areas as critical to his industry’s growth, noting that major events can’t very well be covered by cable while cable remains unavailable to large blocks of viewers.

In 1989 Turner Broadcasting made several important moves, including a $1.6 billion refinancing of its debt. The company also launced Turner Pictures, a film-making division, and Turner Publishing, a subsidiary that develops TBS properties for book publication. Meanwhile, Cable News Network is a steady profit maker, and TNT has made a promising start. As the company rebounded, speculation about a takeover—or Turner selling out—surfaced again. Turner’s own stake in TBS was reduced from 80% to 43% after the cable-industry bail-out, and Time Inc. already owns 13% of the company. The Time-Warner merger, of course, may well distract Time from buying any more of Turner, but it has said it would like to. Ted Turner’s unpredictability makes speculation on the future ownership of TBS futile, but whatever the future holds, Turner Broadcasting seems certain to remain a major force in the communications industry.

Principal Subsidiaries

Atlanta Hawks, Inc.; Atlanta National League Baseball Club, Inc.; Cable News Network, Inc.; Turner Broadcasting Sales, Inc.; Superstation, Inc.; Cable News International, Inc.; Stadium Club, Inc.; TBS Productions, Inc.; Turner Reciprocal Advertising Corp.; Turner Teleport, Inc.; Turner Entertainment, Co.; Omni Ventures; Turner Network Television; Turner Program Services, Inc.; TBS Superstation; Turner Pictures; Turner Publishing; World Championship Wrestling, Inc.; Turner Home Entertainment.

Further Reading

Williams, Christian. Lead, Follow, or Get Out of the Way: The Story of Ted Turner, New York, Times Books, 1981.

Turner Broadcasting System, Inc.

One CNN Center
100 International Boulevard
Atlanta, Georgia 30303
USA
Telephone: (404) 827-1700
Fax: (404) 827-2437
Web site: www.turner.com

31 DAYS OF OSCAR CAMPAIGN

OVERVIEW

In 1994 Turner Classic Movies (TCM) was a small startup cable network with a collection of 4,000 movies, 21 employees, an operating budget of between $13 and $15 million, and 1 million subscribers. TCM also had the backing of television giant Turner Broadcasting System (TBS). Within a year of its launch TCM had increased its subscriptions to include 4.3 million homes, and its classic movie library had grown to 5,600 films. But the new network had a goal of being the leading classic movie brand. To help achieve this goal, the network in 1995 introduced its "31 Days of Oscar" marketing campaign, which every year ran during March, the month of the Academy Awards.

By 2002, "31 Days of Oscar" had become a staple of advertising for the commercial-free, all-movies network, but to broaden its appeal to a younger audience while not alienating its core viewers—middle-aged Americans—the network reevaluated the campaign. For the updated version of "31 Days of Oscar," TCM partnered with the New York-based agency nicebigbrain and creative Jim Jenkins to produce a series of three ads that spoofed classic movies. The ads were shown as trailers in theaters and also as television spots. The first ad was a takeoff on the film Rocky that featured senior citizens in the starring roles. This was followed by a rendition of Ben-Hur performed by second and third graders, and the third was a remake of The Dirty Dozen that was set in an ice rink, with skaters taking the roles. While the company did not release budget figures for the campaign, previous budgets reportedly had ranged from $1 to several millions.

TCM's decision to shift its marketing strategy was a success. The "Rocky" ad earned a Bronze Lion at Cannes, and the overall campaign as well as the individual ads earned gold awards in several categories from Promax. In addition, the campaign appeared to achieve the goal of attracting younger viewers to the network.

HISTORICAL CONTEXT

In 1994 Turner Network Television (TNT) launched the commercial-free, all-movies cable channel TCM. The new channel went head-to-head with the long-running cable network American Movie Classics (AMC). TCM's enticement to persuade cable providers to include the new network in its channel listings was its library of 4,000 movies, which dated from the 1930s to modern classics such as Chinatown and Ordinary People. The network's broader movie offerings were also expected to draw younger viewers than those who typically tuned in to AMC.

Within a year the TCM library had grown to 5,600 movies, which included 2,300 films obtained in licensing deals with Paramount and Columbia Pictures, Warner Bros., and MGM/UA. Its subscriptions had increased from 1 million to 4.3 million homes. Fueling the new channel's growth was its ability to advertise on other Turner-owned networks, including TNT, Cable News Network (CNN), and TBS Superstation.

In 1995, to promote its commercial-free programming, TCM launched the marketing campaign "31 Days of Oscar." As part of the campaign TNT ran a special program titled Inside the Academy Awards. The TNT promotion kicked off the campaign, which included showing only films that had won or been nominated for Academy Awards during the month of March. TCM's "31 Days of Oscar" campaign became an annual marketing event for the network, with a budget by 1999 that was reported to be "several million dollars," according to Multichannel News. As well as print ads and cross-channel television spots, the campaign included movie trivia contests. In 2000 TCM's director of marketing, Katherine Evans, told Multichannel News that the annual "31 Days of Oscar" campaign was the network's highest profile event, with a budget of about $1 million. According to Evans, the company devoted about six months annually to planning for the campaign. "31 Days of Oscar is something we never stop thinking about. As soon as this [year] is over, we'll do a postmortem and start working on the next year," she said.

TARGET MARKET

From its inception TCM had aimed the "31 Days of Oscar" campaign at serious film buffs of all ages. In 2002, in an effort to attract younger viewers, TCM shifted its marketing focus by sending the message that classic films had an impact on current culture. TCM hoped to show younger audiences that the events from the past portrayed in classic movies had relevance to contemporary life. In an discussion in Broadcasting & Cable, a quote attributed to actress Elizabeth Taylor—"The only difference from movies and real life is better lighting and music"—was used to explain the inspiration for reaching out to young viewers: The network was careful, however, not to abandon traditional viewers, those in the 55-and-older demographic. Many of TCM's core viewers had seen the movies in the network's line-up as original releases in theaters, and they tuned in to watch once again those movies they had enjoyed when they first appeared on the big screen.

COMPETITION

In 1984, when AMC joined the list of cable television networks, it was the premier choice for viewers in search of commercial-free, all-movies programming. AMC held that position for 10 years, until in 1994 TNT launched TCM. The race for viewers was then on. At the time industry experts questioned whether there were enough viewers to support two all-movie channels and whether cable operators were interested in offering subscribers both networks. But when TCM was launched, AMC executives commented that they expected their new competitor to be a great channel.

By 1995 AMC counted 54 million subscribers, compared to 4.3 million for TCM, but the new network was positioning itself to take over the classic movie brand. Hurting AMC was the fact that it did not own the movies it showed. Rather, the network depended on licensing agreements with studios such as RKO, which was owned by TBS, the parent of TCM. Predictions that within 10 years AMC would be driven out of business by TCM pushed Kate McEnroe, AMC's executive vice president and general manager, to ask, "If AMC is going out of business in 10 years, does that mean that A&E, ESPN and HBO are going out of business?" She noted that those cable networks also did not own their products.

ATTRACTING YOUNGER VIEWERS

Turner Classic Movies (TCM) has traditionally appealed to an older audience. In 2003 the average age of its viewers was 56. That year TCM, hoping to attract younger television watchers, launched a series titled Under the Influence. According to the network, the new series reached out to viewers who were between 18 and 34 and who might not be familiar with movies from the 1930s to the 1960s. "A lot of our audiences are older Americans who have a built-in relevance to our movies, but our challenge is to create that relevance among younger viewers," Tom Karsch, TCM's senior vice president and general manager, told Multichannel News. The series featured contemporary stars talking about classic movies they had been inspired by, as well as screenings of more recent films that would resonate with the target audience, such as Ferris Bueller's Day Off and Austin Powers: International Man of Mystery.

AMC responded to pressures from TCM with aggressive advertising and consumer marketing campaigns that began in 1994. The network also shifted from its all-movies format to develop original programming that appealed to a broader audience. In 2002 AMC was still in business and tackling TCM's successful "31 Days of Oscar" campaign with its own event, the 10th annual Film Preservation Festival. Programming included documentaries of highlights from 1970s movies, as well as screenings of movies like The Last Waltz, This Is Spinal Tap, and Saturday Night Fever.

While AMC and TCM were battling for classic movie viewers, A&E Television Networks in 2002 was updating its 14-year-old flagship program, Biography. According to a report in Crain's New York Business, the program had "become somewhat stodgy and plodding." The show had lost its appeal to younger viewers as well as to older audiences who preferred faster-paced, edgier cable programming. The network reported that the viewership of Biography had slipped from 1.6 million in 2000 to 1.1 million by 2002, and the audience of 18- to 49-year-old viewers had dropped from 494,000 to 288,000.

To revitalize its floundering network, A&E updated its programming and launched a campaign designed to lure back viewers. To increase its appeal to younger viewers, the network updated the movie celebrities and other people it profiled. Included were such contemporary actors as Tom Hanks and Jerry Seinfeld, rather than performers from the past like actress Judy Garland or actor and former president Ronald Reagan, who typically attracted an older audience. A television spot promoting a Biography segment on soccer player Pelé featured a close-up of Bill Clinton with a voice-over saying, "You've scored more than any player in history." Other changes included a program titled TVography, which profiled a television program rather than a person, and man-on-the-street interviews on Biography subjects. To promote Biography further and to celebrate the program's 15th anniversary, A&E launched a 10—city tour in 2002 that included stops in Los Angeles, Denver, and Chicago.

MARKETING STRATEGY

In 2002, for the eighth year, TCM used the "31 Days of Oscar" campaign as a marketing strategy to promote its library of Academy-winning or -nominated films and to attract viewers. It was the first year, however, the network had taken a tongue-in-cheek approach. The three ads of the campaign were spoofs of the classic movies Rocky, Ben-Hur, and The Dirty Dozen. The ads, which were laced with humor, were designed to appeal to young adults as well as to older film afficionados. Tom Karsch, TCM's executive vice president and general manager, said in an interview with Multichannel News that, while "31 Days of Oscar" had always been the gem in the network's crown, it was time to make the campaign more entertaining. "It was time to have some fun with it, and do something a little different, and call attention to the festival in a nontraditional way," he said. TCM executives declined to provide the cost of the campaign, but Karsch told Multichannel News that the eighth edition of "31 Days of Oscar" was the network's biggest promotion to date. In terms of marketing support from affiliates, he put the value overall to be "in the millions."

TCM devoted almost its entire 2002 marketing budget to production of the "Rocky" ad, which featured residents of a retirement home starring in a remake of the classic movie. During the ad senior citizens duked it out in a boxing ring, throwing knockout punches and reciting memorable lines from the movie, including "Rocky, you're breaking the ribs" and "Can you take off you're hat? I always knew you was pretty." A voice-over at the end of the ad stated, "31 straight days of Oscar-nominated movies. It's bound to have an effect. Watch Rocky and 300 other commercial-free classics … all March long."

The hilarious remake of Rocky was such a hit with audiences that TCM ordered additional ads focusing on two other classic films. TCM's agency, nicebigbrain, staged the second ad as an elementary school version of Ben-Hur, with second- and third-graders playing the parts. Hearing a seven-year-old recite the classic line "Your eyes are filled with hate, Ben-Hur. That's good, hate keeps a man alive," followed by a cough that steamed up the child's glasses, or seeing a child throw himself under the hooves of a hobbyhorse generated laughs and more praise for the campaign.

"Dirty Dozen on Ice," a spoof on the film The Dirty Dozen, was the third ad in the campaign. Described as "laugh-out-loud funny" by Adweek, it was set in an ice arena, with the prisoners training for their suicide mission while executing all of the jumps and moves of seasoned figure skaters. The skaters shouted, "Let's go kill some Nazis," before crashing through a picture of Adolf Hitler. Then came the order "Blow it, Jefferson," and with the skills of a hockey star the character tossed hand grenades into the vents. Both the "Ben-Hur" and "Dirty Dozen on Ice" ads used the tagline "When every great movie is a classic, it's bound to have an effect."

The ads were shown as trailers in theaters in New York, Los Angeles, Atlanta, and Denver, and they were aired as television spots on affiliated stations in New York and Los Angeles, on the Turner networks, and on radio stations. TCM also partnered with sister network Home Box Office (HBO) to generate consumer awareness and increase the ratings for the "31 Days of Oscar" programming.

OUTCOME

Although TCM's "31 Days of Oscar" had long been considered successful, the campaign hit a high note with its 2002 effort. "Rocky" and "Dirty Dozen on Ice" won recognition from Adweek as Best Spots, and "Rocky" also won a 2003 Cannes Lions Bronze Award. Promax recognized campaign and the ads with a list of gold awards in several categories; the overall campaign won in the category Program Campaign Using More Than One Media, and "Rocky" and "Dirty Dozen on Ice" won in the categories Funniest Promo and Branding/Image Campaign, respectively. In addition, "Rocky" won in the Out-of-House Program Promotion category.

As further evidence of the success of the campaign, a report in Electronic Media noted that "31 Days of Oscar" resonated with younger viewers. This was the target audience TCM was hoping to reach.

FURTHER READING

"A&E Tour Salutes 'Biography.'" Multichannel News, April 15, 2002.

Chunovic, Louis. "Rules for Winning TV Ad Campaigns: Sessions at CTAM Touts Simplicity, Single-Mindedness." Electronic Media, July 22, 2002, p. 20.

Cox, Ted. "A Rockumentary Built on Sand: AMC Tries to Give '70s Music Movies Their Due, but It Can't Be Bothered with Anything of Substance." Arlington Heights (IL) Daily Herald, August 30, 2002.

Dill, Mallorre. "The Ice Brigades." Adweek, July 15, 2002, p. 22.

Donohue, Steve. "AMC's Golden Go-To Guy: Net Keys Promo Campaign around Upcoming Oscars." Multichannel News, January 1, 2005.

Forkan, Jim. "Oscar Fever Heats Up for TCM, E!" Multichannel News, February 25, 2002.

Goetzl, David. "Aging 'Biography' Goes for Hipper Memoirs: A&E Revamps Show for Younger Viewers." Crains's New York Business, September 9, 2002.

Haugsted, Linda. "Mini Cinema." Multichannel News, July 8, 2002.

Hogan, Monica. "TCM Draws On Oscar Star Power." Multichannel News, February 21, 2000.

Karrfalt, Wayne. "The Fine Art of Allure: Every Screen Legend Requires Special Promo Care—and So Does the Channel That Spotlights Them." Broadcasting & Cable, April 12, 2004.

Katz, Richard. "TCM Demonstrates Turner's Muscle." Multichannel News, April 17, 1995.

Lippert, Barbara. "Two Thumbs Up: TCM Takes Clever Aim at the Failings of Modern Movies." Adweek, April 21, 2003, p. 30.

Mitchell, Kim. "New Rate Card in Mail for New Turner Network." Multichannel News, February 21, 1994.

"TNT and Turner Classic Movies Announce the Ultimate Academy Award Television Tribute." Business Wire, February 15, 1995.

Umstead, R. Thomas. "TCM Courts Younger Viewers with Series." Multichannel News, January 20, 2003.

                                          Rayna Bailey

TBS VERY FUNNY CAMPAIGN

OVERVIEW

Although it reached 88 million households in 2003, the daily average viewership of the cable Turner Broadcasting System (TBS) Superstation had dropped to 979,000, down 6 percent over the previous year. Viewers tuning in each day during prime time had slipped 5 percent, to 1.7 million. Further, the average age of viewers was skewing older, rather than the younger adult demographic craved by advertisers. In addition, with programming that included reruns of old black-and-white sitcoms, action movies, and Atlanta Braves baseball games, the TBS offerings in general entertainment and the station's lack of focus were becoming liabilities in the huge cable television arena.

To focus its programming, establish a clear identity with viewers, and attract a younger audience, TBS in 2004 reinvented itself by borrowing a strategy that, three years earlier, had been successful for sister station Turner Network Television (TNT). While TNT had positioned itself as the network for drama, TBS claimed the flip side of the coin and relaunched itself as the place for comedy. To support the makeover, the network dropped its "Superstation" moniker and adopted the tagline "TBS very funny." Working with Publicis New York, it also launched a rebranding campaign that included television spots set in a TBS call center, with operators responding to callers' descriptions of funny situations. One spot, for example, showed a caller asking if a boss's verbal abuse of a coworker was funny. The operator listened to the description of the situation and then told the caller that it was "very funny" and that the caller could laugh. The campaign also included print, online, and outdoor ads. Although network executives did not release the cost of the campaign, the New York Times, estimated the budget at $50 million.

Based on industry and viewer response, the campaign appeared to accomplish its goals of making people laugh, helping to establish TBS as the network for comedy and attracting a younger viewing audience. The campaign won awards, and critics in such publications as Adweek and Advertising Age's Creativity described the television spots as "inspired," "verbally adroit," "outrageously funny," and "one of the best TV promo campaigns in the history of the genre." While the network's number of daily viewers in 2004 averaged 940,000, similar to the number in 2003, TBS reported that in 2005, one year after the launch of the campaign, the average age of prime-time viewers had dropped from 40 to 37 and that the age of daytime viewers had dropped to 31.

HISTORICAL CONTEXT

In 1970 the Atlanta-based outdoor advertising executive Ted Turner bought a struggling television station and renamed it WTCG, for Turner Communications Group. Turner created the "superstation" concept in 1976 and began broadcasting the station's programming to cable systems via satellite. The fledgling network attracted viewers with reruns of old black-and-white television favorites, such as The Andy Griffith Show and Leave It to Beaver, Atlanta Braves baseball games, and championship wrestling. In 1979 the network was renamed the Turner Broadcasting System (TBS) and went on a growth binge. Among the channels added to the TBS family were Cable News Network (CNN), Turner Classic Movies (TCM), Turner Network Television (TNT), and TBS Superstation. When the network was acquired by Time Warner in 1996, changes were not far behind. While broadcasts of the Atlanta Braves games and old sitcoms were sacred and remained in place, Time Warner gave wrestling the ax. The original programming was combined with sitcoms and old movies to further enhance TBS's position as a general-entertainment network.

As the clutter of cable networks grew, increasing by some estimates to more than 500 channels, the number of viewer options that originally had made cable programming a success became a handicap. Robert Thompson, of Syracuse University, said that "the whole business model had to change. Now you have to play by a whole different set of rules." To stand out in the crowd, networks were forced to begin establishing brand identities. The Lifetime channel became known as the network for women, MTV was the channel for music, and TBS sister station TNT redefined itself as the place for drama. These changes were the impetus behind the move by TBS in 2004 to establish its own identity in order to create a niche, find an audience, and rebuild sagging viewership. Armed with research indicating that 25 percent of viewers considered themselves comedy fans who believed in the old cliché that "laughter is the best medicine" and with a library that included some of the best sitcoms and comedic movies ever produced, TBS was positioned to establish itself as the network for comedy. In 2004 TBS dropped "Superstation" from its name and embraced the moniker "Very Funny," and the change from a general- to a focused-entertainment network was under way.

TARGET MARKET

With programming that ran the gamut from baseball and professional wrestling to reruns of old movies and TV sitcoms, TBS had always considered itself a "general-entertainment" cable network, but it lacked a clearly defined identity and target audience. Throughout the 1980s and 1990s the TBS audience was slightly older than the ideal, with viewers typically in their mid-40s. In addition, the network was gradually losing its audience. In 2003 the network's average daily viewership was 979,000, down 6 percent from 2002. Further, the slip in prime-time viewers was 5 percent, to 1.7 million, from the previous year. Thus, TBS had an audience that was both older than the optimum and one that was declining.

The "TBS Very Funny" campaign was specific not only about programming lineup but also about the audience it intended to reach. As TBS prepared to launch the campaign, company executives explained during a meeting with advertisers that its target audience consisted of well-educated, upscale young adults in the 20- to 30-something age group. Steven Koonin, the TBS executive vice president and chief operating officer, told the New York Times, "In cable, unless you stand for something, you're doomed. TBS will be for young adults who want television to make them laugh."

COMPETITION

At the end of 2003 A&E Television Networks was in the midst of change. Faced with ratings problems, the network had earlier begun to revamp its programming, and by November 2003 A&E reported that its efforts to turn the numbers around were working. In the first two weeks of that month viewers had increased to 1 million, 11 percent over the same period during the previous year. Viewers in the 25- to 54-year-old age group, A&E's target market, were up 22 percent, to 422,000. To keep the momentum going, A&E launched a new branding campaign "The Art of Entertainment," which was adapted for its three main programming genres: "The Art of Biography," "The Art of Documentary," and "The Art of Drama." As part of its rebranding efforts, A&E embraced reality television in the vein of Survivor and Queer Eye for the Straight Guy by introducing its own reality show, Airline. The network also updated its programming on Biography, with episodes on such contemporary celebrities as Pierce Brosnan and The Rock. In 2004 A&E was losing some of its former core audience, viewers in their 60s, and compared to 2003, its total viewership had dropped about 13 percent, to 1.15 million. The network, however, reported double-digit increases in viewers of its target audience, those between the ages of 25 and 54. Abbe Raven, A&E executive vice president and general manager, said during an interview with Variety, "As the interests of our core audience broadens, so will we. We're reaching to newer audiences but continue to satisfy our loyal viewers."

As TBS and A&E took aim at young adults and baby boomers with their marketing and programming, ABC focused on a different audience, namely, families. To interconnect its cable networks—ABC Family, Disney Channel, and Toon Disney—ABC Cable introduced the tagline "Imagination is part of the deal" and a campaign to support it. Ben Pyne, ABC Cable's senior vice president of affiliate sales and marketing, said of the new strategy, "It defines what we've always tried to do, but now we're coming out and saying it." As part of the attempt to build brand identity, ABC Cable introduced a redesigned website and a public-affairs effort under the theme "Learn Together" that encouraged parents to be more involved with their children and their activities. An increase in viewership among adults was taken as evidence that the strategy was working. In the first quarter of 2004 the Disney Channel, with a target audience of children under the age of 17, reported an average prime-time audience of 406,000 adults between 18 and 49, indicating that parents were spending time watching television with their kids. Rich Ross, the president of Disney Channel Worldwide, said that the network was making an effort to reach out to parents: "We have families in our shows, so we think it makes a difference because kids and families can see themselves."

MARKETING STRATEGY

The "TBS Very Funny" rebranding campaign used a series of five television spots to answer the question of what was funny while at the same time tickling viewers' funny bones. The campaign, with a budget estimated at $50 million according to the New York Times, was created for the network by its agency, Publicis New York. In addition to television spots that ran on the Turner networks and on other Time Warner affiliates, the campaign included trailers that ran in movie theaters, print and billboard ads, and special promotions that ran on the updated TBS website.

Created with the intent of strengthening the image of TBS as a place for comedy, the television spots were set in a call center, with operators responding to viewers who dialed an 800 number (800-TBS-FUNNY) to tell their funny stories and to have them rated. In one spot a factory worker called to ask if her sloppy boss's continuing verbal abuse of a coworker was funny. After listening to the worker's detailed explanation of the abuse, the operator told the caller that the situation was "really quite funny" and that she could laugh. Another spot featured an office worker calling to find out how funny it was that her boss repeatedly called a coworker by the wrong name. After listening to the details, the TBS operator decided that the situation was only "mildly funny." One spot, titled "Strange Fruit," took place in an art gallery. After listening to the caller's description of a woman telling her older male companion that she wanted to buy something "really big and really expensive," the operator concluded, "Fake fruit, pompous jerk and arm candy."

In the background of each spot were brief glimpses of scenes from some of TBS's most popular comedy programming, such as Seinfeld. Also featured were cameo appearances by supporting cast members from various programs shown on TBS, including Marcel the monkey from Friends; Estelle Harris, who played Mrs. Costanza on Seinfeld; and Mario Cantone and Willie Garson, who appeared as Anthony and Stanford, respectively, on Sex and the City. Working with the New York-based agency Cliff Freeman & Partners, TBS created additional campaigns to promote individual television programs, including Sex and the City.

SANITIZED SEX PLAYS ON TBS

In 2004, as part of its prime-time programming, Turner Broadcasting System (TBS) entered into an eight-year agreement with Home Box Office (HBO) to buy and show in reruns the pay channel's hit series Sex and the City. Before launching the reruns, however, TBS editors cleaned up the steamier dialogue and scenes so that the program fit the strict guidelines of basic cable standards. The network also created a marketing campaign that used print ads and television spots featuring young actors who portrayed the show's adult female characters as teens. Other ads used the trendy new forum of Web logs, or blogs. These ads, introduced during the 2004 national elections, appeared on 50 political blogs with the theme "Vote Carrie," highlighting the character played by Sarah Jessica Parker. Web users who clicked on the ad were taken to VoteCarrie.org, a blog spoof that described her political platform and encouraged users to E-mail their comments. Including Sex and the City in its programming and the new campaign promoting it were designed to appeal to TBS's target audience—affluent, well-educated, computer-savvy young adults.

Although TBS already had been using its full roster of comedy programming for several years, the "TBS Very Funny" campaign was designed to rebrand the network as the authority on television comedy. The effort also was intended to shift TBS from its reputation as a general-entertainment superstation toward a more focused, clearly defined image as a place for entertainment. The strategy was borrowed from sister network NT, which had successfully reinvented itself with the "We Know Drama" campaign as the network to turn to for drama. Koonin called the TBS rebranding effort "a full-fledged media push. We're literally changing everything on the network, the look and the lineup." Changes to the program lineup included reruns of contemporary sitcoms the network already owned, such as Friends, Home Improvement, and Seinfeld, as well as the addition of reruns of the Home Box Office (HBO) hit Sex and the City. The network also announced plans to develop original comedy programming, such as a reality show based on the original Gilligan's Island television series. The popular TBS series Dinner and a Movie remained on the schedule, but comedy movies were to dominate prime-time programming on weekends.

OUTCOME

If getting a laugh from viewers, driving home the message that TBS was, as Koonin put it to Broadcasting & Cable, the "epicenter of funny," and reaching the target audience were the desired results, then the "TBS Very Funny" campaign was a success. Following its launch, a report in Advertising Age's Creativity praised the television spots as "outrageously funny." The campaign also appeared to resonate with the target audience of young adults. In 2005, following the launch of "TBS Very Funny," the network reported that the average age of viewers tuning in during prime time had dropped from 40 to 37.

In addition, the "TBS Very Funny" campaign was honored by the advertising industry. It received a 2005 Gold EFFIE, as well as a Silver CLIO for the spots "Name," "Wings," and "Strange Fruit."

FURTHER READING

Colford, Paul D. "Publishing Column." New York Daily News, October 5, 2004.

Elliott, Stuart. "TBS Puts Serious Money into Promoting Itself as a Place for Laughs." New York Times, April 22, 2004, p. 3.

Hill, Lee Alan. "'Sex and the City' Special Report: Promax & BDA." TelevisionWeek, June 20, 2005.

"License to Laugh." Advertising Age's Creativity, June 1, 2004, p. 14.

Lippert, Barbara. "TBS' New 'Very Funny' Campaign Lives Up to Its Name." Adweek, July 12, 2004, p. 26.

Martin, Denise. "Young at Art: In a Demo Sea Change, Cultured Cabler Embraces Celebs and Reality." Variety, February 2, 2004.

Miller, Stuart. "ABC Cable: A Four-Network Initiative Involves Parents and Kids." Broadcasting & Cable, June 28, 2004.

Moss, Linda. "ADC Cable Touts Imagination." Multichannel News, May 3, 2004.

"A New Look at TBS." United Press International, May 15, 2004.

"Ready for Takeoff: A New Programming Strategy and Branding Campaigns Aim for Some Bigger Audience Numbers Next Year." Multichannel News, December 8, 2003.

Romano, Allison. "Comedy Tonight: TBS Brands Itself the 'Very Funny' Network." Broadcasting & Cable, April 26, 2004.

Umstead, R. Thomas. "The Parent Trap: Kids Programming Is Getting a Lift from a Silent Minority of the Viewership Base, and Advertisers Are Taking Note." Multichannel News, May 17, 2004.

―――――. "TBS Says Joke's on Us: Net; Our Sitcoms, Reality Shows Will Skew Younger." Multichannel News, April 26, 2004.

Wilbert, Caroline. "TBS Fashions a Makeover: Image Is Geared to Younger Viewers." Atlanta Journal-Constitution, February 21, 2004.

"The Work." Advertising Age's Creativity, June 1, 2004, p. 27.

                                                  Rayna Bailey

Turner Broadcasting System, Inc.

One CNN Center
100 International Boulevard
Atlanta, Georgia 30348
U.S.A.
Telephone: (404) 827-1700
Fax: (404) 827-2437
Web site: http://www.turner.com

Wholly Owned Subsidiary of Time Warner Inc.
Incorporated: 1965
Employees: 8,000
Sales: $8.4 billion (2003 Time Warner's Networks Group)
NAIC: 515210 Cable and Other Subscription Programming; 533110 Owners and Lessors of Other Non-Financial Assets; 711211 Sports Teams and Clubs; 713990 All Other Amusement and Recreation Industries

As a subsidiary of media giant Time Warner Inc., Turner Broadcasting System, Inc. (TBS) operates as the leading provider of programming for the basic cable industry. Its holdings include TBS Superstation, TNT, Cartoon Network, Turner Classic Movies, Turner South, CNN, CNN Headline News, CNNfn, CNNRadio, and CNN International. The company also owns the professional baseball team Atlanta Braves and oversees nascar.com and pga.com. Founder Ted Turner left Time Warner in 2003 to pursue philanthropic interests.

Beginnings

The history of TBS is closely tied to the personal history of its flamboyant founder, chairman, and president, Robert Edward "Ted" Turner III. Alternately seeking and shunning media attention, Ted Turner has accumulated colorful nicknames, including "Captain Outrageous," "the Mouth of the South," and "Terrible Ted," and has earned a reputation for daredevil tactics. Turner's freewheeling entrepreneurial style was reflected in the strategic and financial risks the company took under his leadership.

Turner became president and chief operating officer of a $1 million billboard enterprise, Turner Advertising Company, upon his father's suicide in 1961, which occurred shortly after the elder Turner concluded an agreement to sell the firm's recently acquired Atlanta, Georgia, division. Turner offered the buyers $200,000 to rescind the deal and persuaded them to accept his offer by shifting employees and contracts to another division, threatening to destroy financial records.

In 1970, Turner's firm merged with Rice Broadcasting Company, Inc., a small Atlanta UHF television station. The transaction took the resulting company public, with Turner as majority stockholder, under the new name Turner Communications Corporation.

Turner Communications bought the right to broadcast the Atlanta Braves major league baseball games, then bought the team in 1976. The Braves were said to be losing money at the time and were on the verge of being transferred to another city; Turner's acquisition kept popular broadcasts on the air and provided diversification for his growing company. Turner increased his sports presence in 1977 by acquiring the National Basketball Association's Atlanta Hawks.

Expanding into Cable in the Late 1970s and Early 1980s

After reading that the cable television network Home Box Office (HBO) was transmitting programs nationwide via satellite, Turner saw an opportunity to expand his station's audience enormously and to make it more attractive to advertisers by beaming its signal to cable TV systems throughout the country. The resulting SuperStation WTBS, begun in December of 1976, became, in effect, another TV network. However, start-up costs were substantial, cable operators who signed up tended to have questionable credit records, and advertisers were reluctant to invest. Nevertheless, in the course of a few years the concept proved viable as WTBS-TV gradually became profitable.

Meanwhile, Robert J. Wussler, a 21-year veteran of CBS, joined TBS in April 1980 as executive vice-president, an office he would hold for several years. At CBS, Wussler had been instrumental in the expansion of satellite usage in news coverage—which began as early as 1962—and in the development of the mini-cam for on-the-spot news coverage. His career included positions as president of the CBS television network and of the CBS sports division.

In its early years, Turner's SuperStation aired primarily reruns and sports. In June 1980, however, Turner created the Cable News Network (CNN) subsidiary to broadcast live news on a 24-hour basis. News bureaus were established in major cities throughout the United States and the world. The live, 24-hour format encouraged a more direct and unedited presentation of the news than the networks provided, as well as instant availability at viewers' convenience. The minimal editing and absence of star anchors sparked both positive and negative reactions: some thought the format lacked polish and professionalism, while others felt it brought viewers closer to the news items at hand. In January 1981, shortly after CNN began operation, another subsidiary, Turner Program Services, was created to serve as the syndication arm of TBS.

In January of the following year, Turner formed a second all-news television network. Officially named Headline News, the network aired a sequence of half-hour segments edited from the live material shown on CNN. If CNN was conceived as "a newspaper you can watch," in Turner's words, then Headline News permitted a quick scan of the top stories at any time. Just months later, in April of 1982, CNN Radio commenced operations, offering a 24-hour, all-news format on a network basis in the radio market.

By this time, the broadcast market was becoming increasingly competitive. TBS benefited as cable became available to an increasing portion of U.S. households. CNN's success pressured the three established networks to acknowledge the audience CNN had tapped and to provide late-night and early-morning news broadcasts for this group. In addition, Satellite News Channels (SNC)—a second 24-hour cable news headline service—opened direct competition, promising financial incentives to combat the loyalty of CNN's cable operators and viewers.

In January 1985, TBS spent $60 million for a 75 percent interest in an Atlanta real estate complex that contained approximately 470 hotel rooms and 775,000 square feet of office and retail space. By 1987, the company had acquired the remaining 25 percent of the facility, which was renamed CNN Center and housed the corporate offices as well as the Atlanta headquarters for CNN, Headline News, and CNN Radio.

In 1982, CBS had declined to comment on industry rumors that it wished to buy CNN but was not as quiet in April 1985, when TBC filed a preliminary exchange offer with the Securities and Exchange Commission (SEC) for CBS. CBS immediately bought back nearly six million shares of its common stock—amounting to almost $1 billion—forcing Turner to withdraw his offer in August. The aborted bid cost TBS approximately $20 million in underwriting, legal, and accounting fees, but Turner argued that the action, which forced CBS into significant borrowing to finance its repurchase and absorbed management time and attention, at least hindered CBS as a competitor.

In later years, Turner defended his bid for CBS as an attempt to protect his own company's vulnerability. In addition to the three major networks, there were by this time more than 25 independent ones, including Fox, Tribune, HBO, USA, Viacom, Time, and Showtime. Turner was worried that networks, as the distributors of television programming, could be held at the mercy of program producers, and he described his bid to gain control of CBS as an attempt to strengthen his bargaining position with them.

Turner also took a small step into the production business in the 1980s. He helped found the Better World Society in 1985, a nonprofit organization that produced documentaries on ecological and environmental issues. Turner's global consciousness was also behind his company's contribution to the Goodwill Games with the former Soviet Union. These games, patterned after the Olympics, were held in order to bring U.S. and Soviet athletes away from recent political boycotts of the Olympics and back into sporting competition. Conceived and organized in 1985, they were first held in Moscow in July 1986. TBS's production costs associated with the Goodwill Games amounted to more than $25 million, a sum not completely recovered through the increased revenues that resulted from the broadcast syndication of the games.

The MGM/UA Purchase in 1986

TBS's ventures into original programming were dwarfed, however, by its acquisition of the film company MGM/UA Entertainment in 1986. Turner contended with Kirk Kerkorian, the 50.1 percent owner of MGM/UA, which was losing money and valued on Wall Street at about $825 million in August 1985. Kerkorian was represented by Drexel Burnham Lambert, an investment-banking firm famed for dealing in high-risk junk bonds. In an unusual move, and with the consent of all parties, the bankers switched sides and represented Turner when it became apparent that he needed their expertise to finance the deal that was being discussed.

Company Perspectives:

We thrive on innovation and originality—encouraging risk-taking and divergent voices. We value our customers—putting their needs and interests at the center of everything we do. We move quickly—embracing change and seizing new opportunities. We treat one another with respect—creating value by working together within and across our businesses.

In the end, TBS bought MGM/UA Entertainment for $1.4 billion in March 1986, immediately sold the United Artists portion back to Kerkorian for $480 million, and assumed $700 million of MGM debt, resulting in a net purchase price of more than $1.6 billion. Because the purchase price was almost twice the street price, Drexel Burnham Lambert was at first unable to create securities acceptable to Turner and to potential investors. After Kerkorian was persuaded to accept approximately $475 million less in cash in return for a new issue of TBS preferred stock, financing for the remainder could be secured. When critics questioned the purchase price, Turner cited the enduring merit of the classic films in MGM's library, the programming security he sought from this entertainment base, his fear of being outbid by another buyer, and, characteristically, his disinclination to haggle.

The new issue of preferred stock carried two provisions. The first was a necessary payment of $600 million of notes in September 1986. To meet this requirement, Turner was forced to sell all MGM assets except the film library; many were bought by Kerkorian himself just before the September deadline. The second provision involved dividend requirements that threatened corporate control, depending on market performance.

The entire MGM deal weighed heavily on the TBS's financial statements. As Turner conceded in his 1986 report to shareholders, "The financial representation of 1986 is what it is—a net loss of approximately $187 million on revenue of more than $556 million." (In 1985, TBS had earned a net income of $1 million on $352 million in revenues.) Interest payments, together with amortization of the MGM purchase price, would lead to what Turner described as "substantial accounting losses in the foreseeable future."

In 1987, Turner called on the support of the cable industry to deal with the preferred stock problem created as a result of the MGM deal. A group of 31 cable operators—the companies that provide local cable service and choose what cable networks subscribers can get—headed by TeleCommunications Inc. (TCI), paid nearly $565 million for 37 percent of TBS. This capital secured Turner's control of voting stock and introduced new directors to Turner operations, including John Malone, president of TCI; Michael Fuchs, chairman of HBO; and Jim Gray, chairman of Warner Cable. While the backing of the cable industry virtually guaranteed the success of the Turner networks, the presence of major cable operators on Turner's board also posed certain problems. Since cable operators such as TCI purchase programming from TBS, Turner commented in the New York Times, the operators "don't have much incentive to see us make healthy profits." Nevertheless, the rescue deal succeeded in keeping Turner afloat.

Although Turner's MGM purchase was criticized for putting TBS in nearly unmanageable debt, within two years the company's prospects were looking up. TBS's new Turner Network Television (TNT) channel, which was based on the MGM film library but also offered original programming, did exceptionally well. With eight of fifteen places on Turner's board in the hands of the cable consortium, TBS was moving more slowly and deliberately than in the past. Turner himself pointed to the completion of cable wiring in metropolitan areas as critical to his industry's growth, noting that major events would not receive adequate coverage while cable remained unavailable to large blocks of viewers.

In 1989, Turner Broadcasting made several important moves, including a $1.6 billion refinancing of its debt. The company also launched Turner Pictures, a filmmaking division, and Turner Publishing, a subsidiary that developed TBS properties for book publication.

With the onset of 1990s, Turner brought the Goodwill Games to Seattle, Washington. The games, intended to take place every four years, generated about $60 million in subscription and advertising revenues and created production costs of nearly $95 million. Naturally these figures skewed the company's overall performance statistics for the year: profit fell by about $65 million from 1989, and revenue increased significantly, reaching $1.39 billion. TBS instituted a one-dollar-per-viewer surcharge to cable operators for carrying the games, resulting in a blackout of TBS for nearly 17 percent of the 54 million households receiving the network. Ratings for the Goodwill Games were not as high as expected, and Turner felt obligated to compensate advertisers with costly "make good" time.

CNN's coverage of early 1990s events in the Persian Gulf resulted in spectacular ratings for the Turner networks, which beat out all other broadcast networks for the ten-week period from January 14 to March 24, 1991. CNN set new industry standards for war coverage during Operation Desert Storm, committing nearly 2,000 staff members, more than 4,000 hours of airtime, and $17.1 million to war-related telecasts. On the night of the invasion, 11 percent of U.S. households were tuned to CNN, compared with less than 1 percent on an ordinary day. The network's reputation soared when, at a press conference following the initial bombing runs, General Colin Powell and Defense Secretary Richard Cheney revealed that some of their information was coming from CNN.

Changes in the 1990s and 2000s

Turner continued to create specialized networks for particular markets in 1991, launching the Airport Channel and the Checkout Channel. The Airport Channel is broadcast in strategic places in airports, including gates and baggage claim areas. Its programming consists of a 30-minute loop of live news and features lifted from CNN as well as several advertising spots. Revenues for the Airport Channel approached $10 million for its first year, with broadcasts in Dallas-Fort Worth, Miami, Cincinnati, Denver, Minneapolis, and Washington, D.C.

Key Dates:

1961:

Ted Turner becomes president and COO of Turner Advertising Co.

1970:

Turner's firm merges with Rice Broadcasting Co. Inc. and forms Turner Communications Corporation.

1976:

SuperStation WTBS is launched.

1980:

Turner creates Cable News Network (CNN).

1986:

MGM/UA Entertainment is acquired.

1988:

The company establishes Turner Network Television (TNT).

1992:

Turner launches the Cartoon Network.

1996:

Time Warner buys Turner.

2001:

AOL and Time Warner merge.

2003:

Turner resigns as vice-chairman of Time Warner; Philip Kent is named chairman and CEO of Turner Broadcasting System.

Late in 1991, TBS purchased Hanna-Barbera Productions for $320 million. Turner and its joint-venture partner, Apollo Investment Fund, thus gained access to more than 3,000 half-hours of animated programming, including such classics as Yogi Bear, The Flintstones, Scooby Doo, and The Jetsons, as well as a total of 350 series and films. Prior to the purchase, TBS already owned approximately 800 animated half-hours, primarily from the MGM library. These included Popeye, Tom and Jerry, and a collection of Warner Bros. cartoons produced before 1948. With this impressive animation array in hand, Turner announced in early 1992 the creation of the Cartoon Network, a 24-hour animation channel for basic cable systems.

TBS strengthened its foothold in the film industry when it acquired Castle Rock Entertainment and New Line Cinema Corporation in 1993 and 1994, respectively. It also created Turner Classic Movies in 1994. Despite its growth over the past several years, Turner's appetite remained unsatisfied. By now, his competitors had gained substantial ground through merger activity. A February 1994 Wall Street Journal article claimed that Turner "wants a network more than ever. He says he is interested in new business alliances. And for the first time ever, the restless chairman, chief executive, and founder of Turner Broadcasting System Inc. says he is prepared to give up his 51% voting control of the company to accomplish those goals." In the same article, Turner revealed, "I don't like being the ninth—or 10th-largest—player in the game. Now Viacom, which was my size, is twice as big. Sony, which owns Columbia, is 10 times as big.… Murdoch is a lot bigger."

True to his word, Turner began to seek out a colossal deal of his own. He courted both NBC and CBS to no avail. Then, in 1995, he began talks with Time Warner Inc. After complex negotiations with Time Warner's Gerald Levin and TCI's John Malone, Time Warner finally agreed to acquire TBS for $7.6 billion. While it was met with resistance by certain shareholders and the Federal Trade Commission, the union was eventually cleared and completed in 1996. TBS and its subsidiaries fell under Time Warner's corporate umbrella, creating the largest telecommunications firm in the U.S. at the time with annual revenues reaching at $19 billion. Turner—named vice-chairman of Time Warner—and Levin immediately set plans in motion to reduce Time Warner's $17.5 billion debt load by cutting costs and eliminating certain cable holdings.

Under new ownership, TBS continued to look for ways to remain competitive in the cable industry. In 1999, it launched Turner South, its first foray into regional entertainment. The company debuted Boomerang, a classic cartoon network, the following year. Meanwhile, TBS's parent was once again on the prowl. Indeed, by 1999 Time Warner was looking for a deal that would ease its foray onto the Internet scene. As an old economy media company, its stock price was languishing compared with new Internet-based companies that were growing faster and faster each day. Levin, a well-known industry guru that had masterminded the deal between Time Inc. and Warner Communication Inc. in 1989 and launched HBO on cable networks across the nation, believed that moving onto the Internet was imperative for his company's future growth. Time Warner had tried on several occasions to launch Web sites related to music and videos but had yet to secure success in the online arena.

Despite his initial objections to the deal, Turner found himself in the middle of the one of the most contested mergers of the new century. The $112 billion union of online access provider America Online Inc. and Time Warner was the largest merger in U.S. history, creating a media powerhouse capable of touching consumers' lives over three billion times each month. Turner was named vice-chairman of AOL Time Warner but relinquished his role in early 2003. By that time, the merger had failed to produce successful results. Turner's stake in the company, once valued at $10.7 billion, had fallen to $1.4 billion. In October 2003, the company officially dropped AOL from its name, reverting back to Time Warner Inc.

TBS entered a new chapter in its history without its founder at the helm. Indeed, TBS dealt with several changes as a subsidiary of the new Time Warner. Over 400 jobs were cut at its CNN unit, and it sold its World Championship Wrestling unit. In March 2003, Philip Kent took over as chairman and CEO and launched a restructuring effort that organized TBS into three business segments—entertainment, news, and animation. While its parent company struggled, TBS remained one of its most profitable subsidiaries. TNT, TBS, and Cartoon Network continued to hold top spots in the industry, while Turner Classic Movies secured its 66 millionth subscriber in 2003, and CNN/U.S. achieved its highest audience levels in over a decade that year.

Principal Competitors

The NBC Television Network; Viacom Inc.; The Walt Disney Company.

Further Reading

Brown, Rich, "Turner Animated over New Channel," Broadcasting, February 24, 1992.

"A Contest Without a Cause," Newsweek, August 6, 1990.

"Crowd-Calmer," Forbes, February 17, 1992.

Harris, Kathryn, "Time Warner and Turner: Why Levin Is Willing to Risk Everything for a Deal," Fortune, October 2, 1995, p. 38.

Konrad, Walecia, "The Scoop on CNN's Bottom Line," Business Week, February 4, 1991.

Sellers, Patricia, "Ted Turner Is a Worried Man," Fortune, May 26, 2003.

Shapiro, Eben, "Ted's Way: Brash as Ever, Turner Is Giving Time Warner Dose of Culture Shock," Wall Street Journal, March 24, 1997, p. A1.

——, "Time Warner Completes Turner Deal," Wall Street Journal, October 11, 1996, p. B17.

Sharpe, Anita, "Two Dreamers, One Dream: To Be Media Kings," Wall Street Journal, February 4, 1994, p. B1.

Williams, Christian, Lead, Follow, or Get out of the Way: The Story of Ted Turner, New York: Times Books, 1981.

—updates: Robert R. Jacobson;

Christina M. Stansell