Cap Cities/ABC Delays Plan for All-News Cable Channel

By JANE HALL

May 24, 1996 12 AM PT

TIMES STAFF WRITER

NEW YORK — Capital Cities/ABC will postpone indefinitely its planned 24-hour cable television news network because the cost of launching a competitor to Cable News Network was too high, network executives said Thursday.

The development leaves channels proposed by NBC and by News Corp., parent of Fox TV, as the challengers to Turner Broadcasting System’s CNN.

ABC officials said their all-news network would have to spend nearly as much as the $800 million that sources say Rupert Murdoch’s News Corp. will pay to launch its channel. Murdoch recently offered cable-system operators $10 per subscriber to carry the channel, which has announced plans for a fall debut. ABC’s venture was supposed to have launched in early 1997.

Cable operators usually pay networks to carry their channels.

“Rather than engage in a bidding war for subscribers, we have decided to seek other, more immediate ways to expand our investment in the ABC News brand,” said Robert Iger, president of the Walt Disney Co. unit.

“ABC News has a terrific concept for a news network, but we had to take a hard look at what it would cost us in today’s cable environment,” Geraldine Laybourne, president of Disney/ABC Cable Networks, said in an interview.

The decision puts on hold a longtime dream of ABC News President Roone Arledge.

“I’m going to get out of these wet clothes and into a dry martini,” Arledge said in an interview. “I’m obviously disappointed, but the economics of launching the news service have simply gotten out of whack” with Murdoch’s offer.

NBC, a unit of General Electric Co., also is getting into the 24-hour news game with its MSNBC channel in July. But it has a major distribution advantage over ABC and Fox because it is converting its existing America’s Talking cable network to the new operation. Executives there say MSNBC, which NBC owns with Microsoft, will have 20 million subscribers when it begins.

A spokesman for Fox News said the company “absolutely” is going ahead with its plans. CNN President Tom Johnson said: “We consider ABC a splendid news organization, and this in no way affects our plans to strengthen CNN. It takes deep pockets and patience to do cable news. We spend $500 million annually on news-gathering alone.”

Both Arledge and Laybourne disputed industry speculation that the news channel was shelved because ABC’s new owner, Walt Disney Co., was more enthusiastic about pursuing other cable plans, such as a children’s network and a movie channel.

Disney Chairman “Michael Eisner and other Disney executives have been very supportive of the news channel,” Arledge said. “Disney gave us the go-ahead to start the channel, which the previous management at Cap Cities had been reluctant to do.”

“I was concerned about the problems with distribution,” said Laybourne, who moved to Disney in December from her job as president of the Nickelodeon cable network. “But I was enthusiastic about the programming plans, and I’ve been out there promoting the channel to cable operators.”

Industry observers said they believe the ABC channel is effectively dead. But Arledge said: “It’s absolutely not dead. It may come back, and we’re going to work on other ways to project ABC News into cable.”

Sources said ABC may try to launch an all-news block within a cable network that it owns.