Staff Reporter

It is inconceivable to think of television without the major Hollywood studios, or vice versa. Walt Disney Co., Warner Bros. and Fox Entertainment Group Inc. now have their own networks. Paramount Pictures, in partnership with Chris-Craft Industries, created UPN. And just last week, Viacom Inc., owner of Paramount Pictures, agreed to acquire CBS Corp.

It wasn't always that way.

Early in the 1950s, movie pioneer Walt Disney offered NBC patriarch David Sarnoff access to his company's film library if the network would help finance Disney's dream of creating a theme park.

Sarnoff could not have been less interested. His network was airing live programs created at studios in New York. Who needed a film library? Sarnoff passed. So did CBS.

Only ABC the weakest of the three networks, having been formed from NBC's forced 1943 divestiture of its weaker "blue" radio network jumped at the deal. It ponied up $500,000 for a 35 percent stake in Disneyland.

But ABC remained ensconced in New York. So did the others.

In the early days of TV, variety shows and dramatic plays were forerunners of today's prime-time fare. The format was pulled directly from radio and sometimes from Broadway stage plays. So were the stars.

Perry Como sang on CBS, Arthur Godfrey hosted a show for CBS, and ABC offered "The Adventures of Ozzie & Harriet."

New York was the center of network television, just as it had been for radio. And presiding over this new medium were the blue-chip advertising agencies, such as Young & Rubicam, J. Walter Thompson and Grey Advertising. Those agencies' clients were an elite group of advertisers that sponsored entire shows.

There was "Texaco Star Theater," "Colgate Comedy Hour," "Lux Video Theater" and "Kraft Television Theater." With a single company sponsoring an entire show, TV programs were more closely aligned with particular advertisers that left footprints on every decision from script development and casting to the day of the week and time a show would be aired.

Giving advertisers such full creative and programming control provided much-needed and cheap product for the fledgling networks. But network executives soon began to realize that advertisers were in some ways hampering their quest to reach ever-larger audiences. Even when their show was slumping, advertisers still demanded the best time slots, whether or not their programs had the greatest chance of capturing the largest audiences.

At the same time, America was shifting from a manufacturing-based economy to a marketing-driven one. Suddenly companies, seeing the success of TV advertising, were clamoring for exposure. To take advantage of the situation, networks began changing the rules and taking control of their schedules from powerful sponsors.

Something else helped, too. The quiz show scandals of the late 1950s shifted the power back to network executives, who were embarrassed by revelations that such shows as "The $64,000 Question" had been rigged by sponsors.

"The networks reacted to revelations of fraud in the television quiz shows, many of which were licensed directly to sponsors, with declarations of ignorance and victimization, arguing that the scandals demonstrated the necessity of even stronger network control of program production and procurement," writes author William Boddy, in his book "Fifties Television."

By the 1964-65 season, the number of single-sponsor shows had declined to 12, down from 75 in the 1955-56 season. Instead of one sponsor for a show, there would be many, buying one-minute slices of advertising time. Later that unit would be whittled to 30 seconds.

To meet their new programming needs, networks turned to independent production companies in Hollywood. Initially, producers packaged their shows with particular advertisers, and then sold those prepackaged programs to the networks.

As a result, the clout of independent producers soared from the late 1950s through the end of the 1960s. During this time, production companies like Desilu, which had created "I Love Lucy," began cranking out a steady stream of hits. While Desilu did "The Untouchables," "Our Miss Brooks" and "Mannix," Screen Gems produced "Naked City," "My Three Sons" and "Bewitched."

"The greatest influence was the fact that most of the production and talent was out here (in L.A.), and in order to maintain proper contacts they (network management) had to be here," said Tom Sarnoff, son of David Sarnoff and a longtime television executive who heads his own production company, Sarnoff Entertainment Corp.

By the early 1970s, sitcom factories like MTM Productions, which produced "The Mary Tyler Moore Show," and Norman Lear's Tandem Productions, which created "All in the Family," had become dominant on the scene.

Networks also thrived during the 1960s and '70s. At least initially, producers didn't realize how much money was being made from advertisers, who became willing to pay much higher sums as color TV became dominant in the early 1960s and audience-measuring techniques became more sophisticated.

A Federal Communications Commission study found that between 1960 (when investigative hearings began into the quiz shows) and 1965, the combined profits from network operations more than doubled. Profits from syndication increased to $7.7 million in 1964, up from $1.9 million in 1960. The exploding profits drew the attention of the major Hollywood studios, which until then had shown little interest in the TV medium.

Worried that the networks were gaining too much power, Hollywood studios and independent producers moved to rein them in. The result was FCC rulings in 1970 that prohibited networks from syndicating their own shows. That meant networks would have to continue relying on independent producers and Hollywood studios' in-house production units for programming.

The relationship between Hollywood studios and networks has gotten much closer since the early 1990s, when the FCC loosened rules against cross ownership of media outlets. The announcement last week that Viacom has agreed to acquire CBS is the latest indication of the continuing integration of Hollywood and network TV.

Another factor driving the integration has been the sheer cost of network programming. In the 1960s, a movie of the week cost about $350,000 to produce. One episode of "All in the Family" cost about $400,000 in the 1970s.

By comparison, NBC paid $13 million per episode for the rights to "ER" last season. To contain skyrocketing programming costs, networks moved to create their own in-house production arms and to press for a slice of any new show they put on their schedule.

At the same time, competition for the best shows and best talent has escalated to proportions that require hands-on involvement by the senior-most television executives. With so much at stake, network executives could no longer afford to shun Los Angeles.

"The higher-level decision-makers were 3,000 miles away from where the major creative people were. They lost relationships and could eventually lose great projects," said Jerry Isenberg, a professor at USC's School of Cinema Television and chair of the caucus for producer/writers and directors.

Today, while the corporate headquarters of the Big Three networks remain in New York, it is primarily because their parent companies are still based there. The real power behind television is in its programming, and Hollywood is the source of that. Said Ron Simon, television curator of the Museum of Television & Radio, "The axis of prime-time television has switched to the West Coast."

Staff Reporter Frank Swertlow contributed to this article.

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