Universal Studios Inc., one of the few major studios that doesn’t own a U.S. network, signaled earlier this month that it would switch continents rather than fight reality.
Universal is creating a new network in Europe, thus bypassing the fierce competition and eroding market share of the six American networks.
The new network, which begins airing in France in November, will be called “13th Street The Action Suspense Channel” and will also be launched in Germany and Spain next year.
Analysts say Universal, which is 80 percent owned by Montreal-based Seagram Co. Ltd., is turning to Europe because competition in the U.S. market is simply too intense.
“It would be extremely difficult for another entity to try to patch together another major network, now that there are three additional networks besides the original big three,” said Andrew Van Houten, managing director at New York-based investment bank BT Alex Brown.
Just over 10 years ago, the big three (ABC, NBC and CBS) were joined by the Fox Broadcasting Co., which has become a serious challenger to the other nets.
This success prompted two other giant studios, Time Warner Inc. and Viacom Inc., to create their own networks The WB and UPN. Walt Disney Co. joined the fray by buying ABC last year, leaving Universal and Sony Corp. the only major studios without broadcast TV networks.
Universal does share joint ownership of a cable network with Viacom the USA Network. But ownership of that network is the subject of a messy lawsuit with Viacom, complicating Universal’s plans to use USA as a distribution outlet.
Sources close to the case say Universal is expected to acquire full ownership in the projected settlement. A Universal spokeswoman declined to comment, but said an agreement is expected to be reached in the coming weeks.
Arthur Rockwell, research director with Yaeger Capital Markets, said as things are now, the USA Network represents Universal’s best hope of breaking into the U.S. television business.
Meanwhile, the European network will be an outlet for Universal’s television and film libraries. Dubbed versions of “Miami Vice,” “The A-Team” and “Magnum P.I.” will be featured on 13th Street, in addition to locally produced programming needed to meet quotas in each country.
For now, say industry observers, the studio is expected to wait things out in the domestic market and take advantage of foreign opportunities.
“Whether they can do anything about the network situation is speculative, but this is an aggressive and deep-pockets company, these people don’t have much debt, they’re slow and patient,” said Rockwell.
Andy Safir, president of the L.A.-based economic consulting firm Recon Research Corp., said starting up a network overseas is the safest bet.
“If you screw up in a foriegn country it’s less important than if you screw up in L.A.” he said.
Safir points out that The WB and UPN have been getting less than stellar ratings. Since their debuts, each has cost its corporate parent hundreds of millions of dollars in losses.
“They have done rather poorly. Both of them are struggling networks,” said Safir. “It was a gutsy move when they did start.”
