When has Jamie Kellner ever tweaked anything? That's the question many Turner Broadcasting System executives are asking as they ponder what the arrival of WB President Kellner means to their futures.
While Kellner maintains that he plans to go slow as he takes over as chairman and CEO of AOL's new, combined TV-network group, Turner executives don't believe it. Kellner is a veteran of Fox Network's earliest, and most aggressive, days and of upstart WB Network, which has grown-though not thrived-by breaking TV molds and targeting teens with intermittently high-quality programming.
Kellner tried to be reassuring. "It's a great group of people, it's a family," he said. "It's a good company. I will try not to mess anything up; I'll tweak it."
That's not widely believed. "Kellner is not a status quo guy; he turns everything on its head," said one AOL executive.
Whatever. It's his family of programming services now, from twangy Turner South to lonely CNNfn and The WB, of course, and in the synergy-centric new world of AOL Time Warner, working together is job one. Warner Bros. and Turner executives didn't always see it that way.
Kellner has always exploited demographic niches, aiming much younger than the Turner networks do. He excels in developing series but is taking over four news networks and two entertainment nets subsisting largely on original movies, theatrical releases and sports. Kellner has huge problems as CNN fades under attack from Fox News Channel. Entertainment networks TNT and TBS have shown strong improvement in their delivery of adults 18-49, up 20+% for the year to date. But the networks have essentially the same Nielsen household ratings they did in 1996. By all measurements, Cartoon Network is a smash.
And everyone is heading into an economic downturn that is likely to hammer Turner's entertainment operation harder than other cable network groups, because Turner's demos are readily obtainable all over the dial.
Kellner essentially replaces TBS Chairman Terry McGuirk, a longtime lieutenant to TBS founder and AOL Time Warner Vice Chairman Ted Turner. McGuirk will step down and be vice chairman of TBS. AOL will fold WB into TBS, which includes TNT, TBS Superstation and CNN. The mission is to push the cable networks to cooperate as much with the broadcast network as they do with each other.
The WB probably should have been tucked into the cable operation as soon as Time Warner acquired TBS in 1996. But no division, even The WB's parent division Warner Bros., wanted to take the network's red ink on its bottom line. Also, the intense political rivalries between Warner Bros. and other parts of the company made extensive cooperation difficult.
"They've eliminated the structural stupidity of the past," said Sanford Bernstein media analyst Tom Wolzien. "It always was a dumb way to run it."
Kellner acknowledges the historical turf wars, adding that he's as guilty of territorialism as anyone else, never sharing programming with TNT, for example.
"The big opportunity is if we can start developing programming from WB to TNT and TBS," Kellner said, pointing to NBC's deals to allow USA Network to rerun fresh episodes of Law & Order: Special VictimsUnit within a few days after they first air on the broadcast network. "We'll be stronger than our competitors because our networks are stronger."
Now, perhaps, The WB will be as aggressively cross-promoted on TNT as TBS and CNN are.
More important, Kellner knows how to program networks and, particularly, knows how to develop series. TNT and TBS have been hugely successful and profitable with their formula of theatrical movies, lots of sports plus a smattering of original movies. But neither network has ever accomplished much in series TV, unless you count Ripley's Believe It or Not. McGuirk's move is easy to comprehend: He didn't want to be the hatchet man. Yes, after 28 years at the company, it's a good time for any multimillionaire to take things slowly. And, as McGuirk confided to an industry executive six months ago, even after Time Warner first bought TBS, "he viewed himself as working for Ted, and Ted's not really involved anymore."
But just as important, according to insiders, is that, between a recession-induced anorexia and AOL's quest for efficiency, McGuirk saw restructuring and layoffs in TBS' future and didn't want to swing the ax. While layoffs have swept CNN, Warner Music and Time Inc., Turner's entertainment networks have been pretty much untouched.
"He's looking at it and saying, 'This is family. I'm not going to downsize all these people,'" said one Time Warner executive.
AOL executives say that there are no further layoffs planned. But when AOL sees how the Turner networks fare in the upfront ad market, Wall Street executives think, employees will be in the crosshairs once again. AOL senior executives "want to shoot people," said one analyst. "They want to make Turner a lot leaner."
There's nothing subtle about the exit of TBS President Steve Heyer, who "will be leaving the company to pursue other interests," the company said. The good news is that those other interests are running a business-ventures unit at Coca-Cola.
Heyer is an ad-sales wiz and former consultant who was considered the golden boy who would rise high at Time Warner. He has been credited with success in his relentless research-driven campaign to close the price gap between a commercial reaching a thousand viewers on cable and the same spot reaching a thousand viewers on broadcast.
Executives close to Heyer say that he wanted to run all of Turner but determined months ago that AOL COO Bob Pittman wouldn't let him do it, preferring a seasoned programming executive with a less abrasive management style.
The most immediate question is, who will be swept up in the inevitable executive shuffle? WB insiders say that, since Kellner remains the top executive at that network, he isn't looking to raid it for talent. TBS insiders say that division heads haven't spent enough time with Kellner to decide who should be nervous. But everyone has noticed that Kellner's old Fox pal Garth Ancier is still on the street after exiting NBC.
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