The TV Issue

How Fox Went From Small Outcast to Broadcast Powerhouse

Network Owes Its Success to Perseverance, Willingness to Take Chances, Coveted Connection to Young Viewers

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Adam Ware will never forget his deflating visit to KCIT, a former independent TV station in Amarillo, Texas, at the time broadcasting on UHF. He was a fresh-faced 22 and had recently landed a position courting affiliates for the fledgling Fox network. "The managers at the station were former ABC and CBS local-affiliate managers," Mr. Ware recalled. "You were a media god to work at one of the Big Three local affiliates. You were mortal to work at the newspaper or radio station. To work at an independent turned Fox ... well ..."

Today Fox is a force to be reckoned with -- it led the four big networks in drawing adults ages 18 to 49 this season, according to Barclays Capital, and it boasts the highest-rated show in prime time (though CBS is still the nation's most-watched TV outlet). Back in the fall of 1986, it was a fly-by-night known for a series of bold-but-wacky (some might say "cheesy") maneuvers. Initially, the network ran prime-time fare only on weekends. Early lowlights included fizzled show debuts, such as "The New Adventures of Beans Baxter." A plan to revitalize "Charlie's Angels," known as "Angels '88," took so long to get off the ground it was soon known as "Angels 89" -- and still never got on the air. An early upfront presentation took place under a leaky tent with faulty loudspeakers.

Leaders Barry Diller and Jamie Kellner were trying to launch what many media sages believed to be a quixotic effort: a fourth broadcast network that ran largely on the force of will of its owner, Rupert Murdoch; the caffeine-charged excitement of its very young executive staff; and an audacious series of TV shows that would make people laugh or raise their eyebrows. But in those early days Fox never really conjured up something that had the imprimatur of a mass audience.

"As much as people were looking for an alternative, our distribution system was pretty shaky, and then in the first year, all of the programs had basically failed," remembers Jon Nesvig, a veteran NBC ad-sales executive who took over Fox's ad sales in 1989 and became what many Fox executives acknowledge was "the adult in the room." He stayed on until the end of last year. "There were some people who took you seriously, but our initial battle -- which we were fighting constantly -- was to get bought out of the same pool as the other networks, rather than the syndication pool. There were a number of agencies who wouldn't let us play with the big boys."

No one considers Fox an also-ran today. The network has the top-rated show in "American Idol," and seems to have largely retooled the vaunted program despite its signs of age. By focusing on shows that appeal to the younger end of the demographic skew, and giving stations the opportunity to run more local fare (Fox has just two hours of prime time, no evening newscast, no late-night outpost, no morning wake-up show), the network has trumped many of its rivals. It takes educated gambles on big entertainment concepts and sports while keeping its own operations extremely lean.

Now comes the true test for Fox. Should it successfully launch the Simon Cowell vehicle "X Factor" this fall, it could have two mass-attracting tentpoles that give it domination over the boob-tube landscape (to say nothing of "Terra Nova," a big-budget sci-fi drama slated for this fall that taps into time travel and dinosaurs and counts Steven Spielberg among its backers). "Neither one of these are going to enter into it quietly," said Kevin Reilly, Fox's president-entertainment. "They are meant to generate a lot of excitement and attention. We'd hope to reap the dividends accordingly."

There's more at stake than ratings . Historically, the network operates at a deficit owing to costs of broadcasting marquee sports properties and other entertainment. Nomura Securities estimates rivals CBS and ABC, which run more hours of programming, are more profitable. Yet Fox could help News Corp. take the lead in wringing new revenue that the networks need to survive in a chaotic digital-media landscape, suggested Nomura analyst Michael Nathanson.

Because of top-shelf properties such as "Glee," NFL football, "Idol" and the rest, Fox may have a better chance than others in forcing cable and satellite providers -- and, suggests Mr. Nathanson, even TV stations that so long ago gave Mr. Ware such a tepid response -- to pay Fox "retransmission fees" that would result in new cash flow for the network and parent News Corp. "There's an increased focus by management to try to get the business more profitable."

And then there's the usual programming concerns: should the shows fail, Fox would be overly reliant on "Idol," which for all its success has been around for some time, and a stable of other maturing programs. "X Factor" would also help Fox harness the power of its broadcasts of post-season baseball, which can disrupt the launches of its fall TV season.

In interviews compiled over the last four years from current and former Fox executives, one element rings again and again: Fox owes its success to perseverance, a willingness to throw spaghetti at the wall again and again and again to see what sticks -- and then a readiness to move when it does.

Still, it faces the same challenges as its rivals, both short and long term.

This past fall was particularly tough, with an intriguing Fox drama, "Lone Star," tanking after just weeks on the air. Looking further out, Fox must, like CBS, ABC and NBC, find some way to keep getting maximum revenue even as its audience spreads out to the latest digital viewing windows -- though, of course, News Corp. has a mixed record with new-media properties (MySpace, anyone?). Yet by doing what Fox does so well -- embracing the opportunity to break with long-held conventions -- Fox could be in better shape to maneuver as TV's longstanding business model slowly comes undone.

The history books are dusted with corporate names -- DuMont and Metromedia among them -- that attempted to launch a fourth national TV network and failed. So when Mr. Murdoch and Mr. Diller announced their intention to try just that, antennae went up. In a brazen move in 1986 using six TV stations News Corp. purchased the year before, the executives announced a late-night talk show starring "Late Night with Johnny Carson" guest host Joan Rivers. The idea was to help independent stations (not affiliates of the other networks) compete against big-network content, most notably Mr. Carson's program. News Corp. said it would put at least $100 million into the much-derided effort, which was the subject of a public feud between the talk-show hosts. Within months Ms. Rivers had flopped, only to be succeeded by guest hosts and then the barely-recalled "Wilton North Report."

Undaunted, Fox moved into Saturdays and Sundays, hoping to trump established shows watched by older viewers (think CBS's "60 Minutes") with out-of-the-box fare such as "Married... with Children" and "21 Jump Street." Rivals scoffed. "We viewed Fox as a really, really minor network," said Joe Abruzzese, president-ad sales, Discovery Networks, who worked in ad sales at CBS when Fox launched.

And then something happened that should have put Fox out of business, but instead gave it a huge boost.

In 1989, a Michigan woman named Terry Rakolta started a campaign to get advertisers to pull support for "Married... With Children," which contained blatant sexual innuendo and frank discussion of topics typically verboten in more traditional sitcom fare. One might think offending the nation's biggest sponsors would spell doom for a fledgling network, but the incident had the opposite effect, said Brad Turell, a former senior VP and spokesman for Fox in some of its earliest days. "It was probably the greatest single galvanizing moment for our audience, because all of the people we were trying to appeal to went, 'Yeah, right on!'" he remembered. "Married..." would last on air until 1997.

After that spark of publicity, Mr. Diller, Mr. Kellner and crew were able to gain more traction. "The Simpsons," based on some video vignettes of a dysfunctional animated family that appeared during Fox's "The Tracey Ullman Show" launched to great fanfare in late 1989. The show became a pop-culture phenomenon that continues to this day. At first, however, launching the program was a gamble. "The normal way to have done it would have been four specials, and at the end of the four specials, maybe then you'd try a series," recalled James L. Brooks, one of the show's executive producers. "We fought very hard for a series commitment."

As all this took place, there was still no guarantee Fox would become respectable, let alone survive. So the people who ran it picked a strategy that continues to serve the outlet well today. "We didn't know what the right approach was," said Garth Ancier, who served as an early president of entertainment at Fox. "So we took a lot of different approaches."

"Cops," a Fox series debuting in 1989, was unlike anything then on network TV, composed purely of over-the-shoulder camera views of actual police rounding up drunks, settling domestic disputes and making arrests. The show was originally made for Fox-owned TV stations, not the network, recalled Stephen Chao, who served as president of Fox Stations from 1988 to 1992. "Cops," along with another effort, "America's Most Wanted," didn't look like other Saturday-night prime-time properties, which at the time included NBC's "Golden Girls" and ABC's "Mr. Belvedere." As TV's Saturday-night audiences waned, Fox's low-cost fare would prove durable. These days, other networks largely run movies and repeats, but Americans are still watching to see what the bad boys are gonna do when they come for you.

Fox continued to gain traction by doing things that weren't expected. In 1990, it had the temerity to put "The Simpsons" on opposite "The Cosby Show," the sparkplug of NBC's vaunted Thursday-night lineup. Fox also launched teen soap "Beverly Hills 90210," which would in 1992 begat "Melrose Place." Over the next few seasons, Fox would launch "Martin" and "In Living Color," not to mention the long-running "X Files," serving niches of the viewing public that didn't always feel super-served by rivals.

What really put Fox on the map from a business perspective, however, was Mr. Murdoch's willingness in 1993 to spend big to pluck from CBS the rights to broadcast all of the NFL's National Football Conference matchups.

The price tag? A reported $1.6 billion -- astounding for a network still in its relative infancy. Yet News Corp. was buying a starry sports property to lure more of its top demographic -- young men -- and was purchasing a huge promotional platform that could trumpet its prime-time lineup. Mr. Murdoch "has always tightly controlled what costs he could, while getting spending done for franchise product," said Mr. Nesvig.

By 1992, however, Fox was heading into transition. Mr. Diller, who had been chairman and chief executive of Fox Inc., left to pursue new ventures, and Mr. Murdoch took direct supervision of his Fox entertainment properties. Mr. Kellner opted to depart in 1993. His replacement, Lucie Salhany, departed in 1994. Former Fox executives suggest Mr. Murdoch was putting more pressure on staff to originate bigger shows that would appeal to broader audiences -- in some cases clashing with visions of Fox as a place for younger viewers who wanted alternative fare.

Indeed, in 1997, Fox turned in the best performance in its history to that point, coming in second to only NBC in its ability to reach young viewers. Yet as upstarts like Time Warner's WB gained heft (launching in 1995 and founded by, interestingly enough, Mr. Kellner), Fox had more competition for that coveted audience.

Even as Fox lost some of its momentum, the network never stopped trying new things. Among its most memorable (and controversial): a spate of reality-based shows and games, including "Temptation Island," "When Animals Attack" and, perhaps most famously, "Who Wants to Marry a Multi-Millionaire," a 2000 prime-time entry that drew controversy when the multimillionaire offered for marriage turned out to have problems in his past.

"I had an edgy sensibility and Fox was already an edgy network," said Mike Darnell, the network's president-alternative entertainment. "It was very rare in the early days that I didn't get something on the air," even though the reality fare often was difficult to sell to advertisers. Yet the network's early efforts at reality ("Survivor" wouldn't debut on CBS until 2000) have helped it as the genre has matured. Today, many of Fox's tentpoles are programs with reality elements in them, ranging from "American Idol" to "Kitchen Nightmares" and "Hell's Kitchen."

When Gail Berman arrived at Fox in 2000 as its president of entertainment, she recalled being told by higher-ups that the network suffered from having too many leaders in a short period of time. Her marching orders: lead the outlet out of malaise. "The goal was not to abandon our audience, but to broaden our audience and not lose the young part of it wherever we expanded," she said.

The network did so by trying things others wouldn't. After launching "24," a spy drama founded on the concept of showing 24 hours of a day in real time, the network gave the show time to build itself. In 2005 came a master stroke: deciding to run "24" only in the second half of the season so as to have no breaks in original episodes. It was quintessential Fox rule-breaking, eschewing the conventional fall-program launch.

The series joined "American Idol," also broadcast only in the back half of the season, and helped create a juggernaut -- more or less sundering the typical broadcast-network "season" into two distinct halves. "The hits on our network would be hits on any network," said Preston Beckman, exec VP- program planning and research, at Fox. "What we've done is take shows and made them into events."

When other networks held back, Fox indulged in very controlled but unabashedly noticeable product placement, as witnessed by enlisting Coca-Cola, AT&T and Ford to support "Idol" and weaving Cisco and Ford Motor into "24." This year, it's sold Pepsi an integration into "X Factor" reported to be in the $60 million range.

In last year's upfront market, Fox didn't push as hard for price hikes from recession-weary ad clients, and in doing so, increased its dollar volume at the expense of rivals who wanted more money as the economy improved. "Glee" is popular with the young folks advertisers like to reach, but the show is also supported by the sales of its music on iTunes.

Like every other TV outlet, Fox's future is clouded by a hodgepodge of emerging technologies that let audiences turn TV from a mass medium into a personal one. Yet the network is betting on content and tactics that push for broad viewer involvement. To get there, Fox will have to continue to take the path others avoid.

And you can bet it won't be shy in doing so. Some of Mr. Nesvig's fondest memories, in fact, are times when his charges "went opposite to what was expected in the conventional wisdom." In the end, he said, "I think they were our best moments."

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