The Sky's the Limit]

By Janice Castro

For Dan Casey, it was the story of a lifetime. A television cameraman for WSB-TV, the Atlanta affiliate of ABC, Casey narrowly escaped death last week as a Georgia tornado flattened his mobile broadcasting van. Casey's tape of the tornado was dynamite. Alerted that evening by WSB that the story was being transmitted by satellite, ABC News decided to use the gripping footage as its lead on Nightline. By the time it did, however, thousands of viewers had already seen Casey's emotional report on Cable News Network, an ABC rival.

Much the same humiliation befell NBC's network news operation after last month's California earthquake. KRON, the NBC affiliate in San Francisco, tried to transmit its footage of the disaster to NBC via satellite. But for more than an hour after the tremor, a glitch-prone NBC network was unable to broadcast any live reports. Meanwhile, CNN, which had access to the same satellite signal, was airing KRON's vivid images of the destruction.

What's going on here? In almost any other industry, CNN's coups would be viewed as nothing short of piracy. But television is a business built on tenuous alliances. While the three major broadcast networks -- ABC, CBS and NBC -- have long been the dominant U.S. television programmers, they own only 20 stations. The other 620 that carry network programming are known as affiliates. These stations have traditionally served as supplementary news sources for the networks, but only loyalty and a common stake in competing against the other networks have prevented the affiliates from gathering and selling their stories elsewhere. Until now.

Affiliation with a network no longer offers the protection from local competition it once did. To stand out amid increasingly stiff competition, many local stations are turning to expanded news programs. Journalism is local television's biggest money spinner, typically accounting for at least a third of a station's revenues and an even higher share of profits.

At the same time, technology is breaking down the links that join networks to their affiliates, and is blurring the lines that distinguish big stations from small ones, and network affiliates from the country's 400 independent stations. The main culprit: satellites. By providing a relatively inexpensive electronic highway over which video signals can be transmitted, satellites have created a new industry of program suppliers that can offer local stations a broad variety of material once available only from the networks.

The growth of cable has also undermined network influence by dramatically expanding the number of channels available to viewers. During the past ten years, as cable has extended its reach to 56% of U.S. homes, the average network share of television audiences has plummeted, from 90% to just 61%. At the same time, the network share of television advertising revenues has diminished, from 45% in 1979 to 36% last year. Cable operators absorbed much of the ad spending that the networks lost, according to Alan Gottesman, who follows the broadcasting industry for Paine Webber.

Cable's growth has made it harder for local stations to win viewers as well. The affiliates are especially hard hit, since they must take 21 hours a week of increasingly unwatched prime-time network programming. They are reluctant to give up that burden, since they receive at least $140 million a year each from the networks for shouldering it. Independent stations have somewhat more latitude, but both groups are hungry for programming that sets them apart from cable and from each other. Among their alternatives are better movies and syndicated reruns of popular network sitcoms like Cosby, Cheers and, beginning next year, Golden Girls. But those do not come cheap. Cosby reruns can cost a station as much as $350,000 an episode.

Yet news coverage is just about the most profitable thing a station can do, in part because production costs typically are less than half those of entertainment shows. And since news stories can be used repeatedly on broadcasts throughout the day, stations can sell more advertising time a minute of material, further increasing their profit margins. Moreover, many advertisers will pay premium rates to run their commercials during news shows because such programs generally attract consumers with higher average incomes.

At ABC affiliate WCVB in Boston, news shows accounted for 39.5% of the station's revenues last year. WCVB boasts that it has the largest news staff of any U.S. station -- 350 reporters, producers, anchors and technicians -- as well as two trucks equipped with satellite uplinks to beam stories back to the station from remote locations. News departments at dozens of U.S. stations today own their own satellite-transmitting trucks, up from only a handful five years ago.

To bolster the reputation of their profitable newscasts, local stations send their anchors scurrying all over the world to report major international news stories that were once the domain of network reporters. California anchors fly off to Central America, Beijing and Tokyo. When East Germany began to break / down the Berlin Wall two weeks ago, dozens of local U.S. news teams headed to Berlin from markets as big as Seattle and as small as Manchester, N.H. Says John Spinola, general manager of Westinghouse-owned station WBZ in Boston: "Every time I look around, we've got someone out of the country."

Like newspapers that subscribe to the Associated Press and other wire services, hundreds of stations are also expanding their reach, and often cutting costs, by subscribing to video news services, swapping coverage with other broadcasters, or making deals to get their stories on cable stations. WWL, the CBS affiliate in New Orleans, has its own all-news cable channel. Half a dozen video news services offer prepackaged stories to fill out local newscasts. One of the largest services is Conus, a news cooperative with 100 U.S. member stations. Other leading entries include Group W Newsfeed, a division of Westinghouse, and Visnews, an international video news wire. Recognizing the potential of these nonnetwork sources, NBC last year bought 38% of Visnews.

For 220 broadcast stations, though, perhaps the most important new partnership is the one they have formed with CNN. Both KRON and WSB are among the 121 network affiliates that are CNN partners. The Atlanta-based cable network airs stories provided by its partners via satellite, and distributes the stories to other station partners for their use. Broadcasters believe local viewers who catch their news teams on cable may be more likely to tune in the station if they like what they see. Says Peter Herford, a former CBS News executive who directs the Benton Broadcast Fellowships at the University of Chicago: "All of these factors are pulling apart the traditional relationship between the networks and their affiliates."

Until now, the broadcast networks had not viewed the CNN partnerships as much of a threat, since most of the stories involved never ran on the networks anyway. Those days are gone. When NBC News delayed switching to live coverage the night of the California earthquake, for example, CNN effectively replaced the network for CNN's 45 NBC affiliates by feeding them the live coverage from KRON in San Francisco and KNBC in Los Angeles.

A frustrated Michael Gartner, president of NBC News, later told the New York Times that the arrangements his affiliates had made with CNN "must be explored sooner or later." But the NBC affiliates rebuffed Gartner's suggestion. "It's too late for the networks to go back to the old way, when / they were the only ones we associated with," said Bob Jordan, news director of NBC affiliate KCRA in Sacramento. "Too many affiliates have other partnerships now and are unwilling to give them up."

As local stations become increasingly aggressive, the networks are trying to reshape their own news products to offer affiliates something more than the day's headlines. All three networks, for example, run long special features during the regular evening newscasts and are experimenting with new concepts, such as 48 Hours on CBS and ABC's Primetime Live. Some news thinkers go so far as to wonder whether the network evening newscasts have a future. Says Andrew Stern, who teaches broadcast journalism at the University of California, Berkeley: "At some point you have to ask, What do the local stations need the networks for? The answer does not seem to be news."

Other analysts are less pessimistic. After all, the quality of network newscasts is still higher than the crime-and-accident-heavy fare on most local stations. Instead of trying to make the day's headlines interesting to viewers who may already have seen them twice, some critics suggest that the networks offer more in-depth analysis. Says Herford: "Maybe Nightline is the model for the future evening newscast. Maybe the networks should tackle the one or two most important issues every day during that half hour."

Considering the respect that Nightline and 48 Hours have won within the TV industry, and the millions of people who regularly watch the shows, it may be that network executives are ready to admit something that viewers know instinctively. Audiences who see satellite-fed video headlines round the clock on every channel may be ready for something more substantial at the dinner hour.

With reporting by Robert Ajemian/Boston and Tara Weingarten/Los Angeles