Chapter 746: The Circle

[Chapter 746: The Circle]

In earlier times, the explosive popularity of a television show could only be illustrated through a long-term analysis of ratings trends. To understand viewer opinions, television stations had to rely on newspaper surveys and random telephone interviews. This method of gathering information was incredibly inefficient and often inaccurate.

However, with the rise of the internet in recent years, this situation changed rapidly. After the airing of America's Next Top Model, although it didn't generate much buzz in traditional media, its popularity among ordinary audiences became very apparent online.

The Yahoo forum section for America's Next Top Model saw an influx of nearly 180,000 new members within just one week. The show became a hot search term on Yahoo's search engine as well.

Cindy Crawford's personal homepage enjoyed a significant surge in followers. Before the show aired, she only had about 10,000 fans, but within a week of the show's premiere, this number skyrocketed to 120,000, and it continued to grow rapidly.

Since the personal homepage feature had only recently been introduced, while the overall user count was high, the social networks related to it were still in their developmental stages. Most popular figures only had fan bases in the low six figures, unlike later years when some reached hundreds of millions. Thus, thanks to the buzz generated by America's Next Top Model, Cindy Crawford's fan count far surpassed that of her contemporaries and even attracted attention from traditional media.

As the topic continued to gain traction, a week passed quickly. Based on last week's viewer feedback, everyone felt confident about the ratings for the second episode.

However, when America's Next Top Model second episode's viewership stats were released, they exceeded all expectations. The peak viewership reached 3.5 million, with an average of 2.8 million, achieving a rating of 1.6, breaking every ratings record held by Lifetime Television.

While the viewership numbers didn't compare with those of network television, the ratings for the key demographic of viewers aged 18 to 49 were impressive, particularly since America's Next Top Model drew a primarily young female audience. The 1.6 rating even rivaled that of typical episodes aired on public television.

The production and promotion of America's Next Top Model had always been closely linked with Project Runway. Spurred by the popularity of America's Next Top Model, the premiere of Project Runway on the following Thursday also celebrated impressive numbers, with an average viewership of 2.6 million and a peak at over 3.1 million.

Although Project Runway was a fashion production show, under Eric's guidance along with the Survivor team's oversight, this reality program was far from the professional and rigid format viewers might have expected. Initially hesitant about this somewhat specialized reality show, audiences quickly embraced it, enjoying the contestants' fierce competitions and the transformative design process turning any material into gorgeous fashion.

As ratings climbed, traditional media quickly recognized the news potential in these two reality shows and began covering them, further amplifying the fame of America's Next Top Model and Project Runway.

...

In the following weeks, the ratings for both reality shows showcased a parallel upward trend. In less than a month, both shows broke the 4 million average viewership mark simultaneously, with America's Next Top Model being notably more popular than Project Runway -- the highest viewership for the fourth episode even climbed to 4.6 million.

Within a month, as the buzz from both reality shows spread, more and more people started to take notice of Lifetime Television. Driven by the viral conversations sparked by America's Next Top Model and Project Runway, many began to search for Lifetime in their cable packages. When they discovered it wasn't available, numerous viewers opted to switch their cable subscriptions.

As a result, Lifetime's subscriber count rose from 34.5 million to over 40 million in just one month. Those cable operators who carried Lifetime's signal managed the transition smoothly. However, those lacking Lifetime were having a much harder time -- especially the unluckiest operator, Time Warner.

This all began during the initial planning of Lifetime's reform. Once the two reality shows were greenlit, Jeffrey Katzenberg personally contacted executives from Comcast, Tele-Communications, and Time Warner, hoping they would expand the coverage of Lifetime's signal.

However, since Lifetime had not yet made a significant impact, the major operators responded coolly to Katzenberg's requests. Despite his efforts, the subscriber count only increased by a meager 3 million before America's Next Top Model aired.

While Comcast and Tele-Communications remained indifferent to the rise or drop of Lifetime's subscribers, largely basing their decisions on viewership data, Time Warner's response was quite different. Understandably concerned that Lifetime's rise could pose a significant threat to their WB network -- already catering to young viewers -- they opted not to cooperate in expanding Lifetime's subscriber base. Instead, prior to the fall season, they slashed Lifetime's user count by 800,000 through package adjustments. Even more insidiously, those cuts largely concentrated in major markets like New York and Los Angeles.

The stylish women in cities like New York and Los Angeles were a key demographic for both America's Next Top Model and Project Runway. Once this news reached Katzenberg, he didn't hold back from berating Time Warner's cable division head over the phone.

...

As the weeks passed, the fallout from this heated topic continued. If America's Next Top Model and Project Runway hadn't been such hits, the 800,000 viewers denied Lifetime would have been inconsequential. But now, with both shows becoming widespread conversation pieces among young women, anyone discussing a contestant's unfortunate elimination on America's Next Top Model or a stunning outfit from Project Runway faced the awkwardness of not being able to contribute to the conversation, leaving them entirely out of the loop.

In the U.S., cable operators maintained regional monopolies. Companies such as Comcast, Tele-Communications, and Time Warner strategically divided their territories to avoid unnecessary competition. In remote areas, residents often had only one option for cable service.

In such situations, subscribers had to accept their fate. In contrast, major metros like New York and Los Angeles were fiercely contested markets, with plenty of competition preventing any monopolistic trends from taking root.

Consequently, those users unable to find Lifetime on Time Warner's packages began switching to Comcast and Tele-Communications to watch America's Next Top Model and Project Runway.

By October, when Time Warner's cable division recounted its subscriber numbers, they were shocked to discover they'd lost 460,000 in just one month.

What does that number mean?

Time Warner's total cable user base was only 15 million. After cutting 800,000 lifetime TV users, only 3 million users remained with access to lifetime TV stations, which is the lowest level among the major operators. The root of all this, of course, is the competitive relationship between Time Warner and Firefly. 

However, this one-month loss equated to 3% of Time Warner's total user base. To put it into perspective, the entire year of 1994 saw Time Warner gain only 1.6 million subscribers. If this trend continued, Time Warner's cable business could see itself regressing to levels from two or even three years prior.

Caught in a bind with a struggling summer film slate, Terry Semel summoned Time Warner's cable division head, delivering a stern reprimand after hearing the distressing news. Originally, Time Warner had planned to handle the situation discreetly, but somehow, the details slipped out into the public sphere.

Suddenly, headlines about "Time Warner's Cable Business Decline" were dominating the media. While everyone recognized the situation stemmed from Time Warner's attempt to suppress Lifetime's growth, the strong rise of America's Next Top Model and Project Runway seemed to backfire, costing them dearly.

If losing 3% of users in just one month was shocking, how much more would they lose over the year? This question lingered in the minds of many, especially the shareholders.

In response, the management began facing increasing pressure from various fronts. It became clear that someone would have to accept responsibility for the situation.

With Time Warner's internal politics being as tangled as ever, the cable division encompassed several factions, all aware of the origins of this debacle. If any other company faced this situation, they would likely handle it the same way. Consequently, this blowback couldn't accurately be labeled a management misstep. Terry Semel wouldn't risk compounding the issue by stirring up further disputes internally, ultimately deciding to cast one of his top executives in the cable division as a scapegoat.

A few days later, Time Warner announced that a vice president from the cable division would soon be resigning due to a poor decision, providing some semblance of accountability.

Yet, the matter was far from resolved. Lifetime's visibility continued to skyrocket while Time Warner had lost 460,000 subscribers. If they didn't quickly restore access to Lifetime's signal, the situation could worsen.

Cable operators ran on their terms, and licensing requirements dictated when a network could be carried. Everything hinged on which party had the upper hand.

After addressing external pressures and shareholder concerns, Terry Semel personally dialed up Katzenberg.

His call was routed to Katzenberg's secretary, who returned with a familiar, frustrating response: "Mr. Katzenberg is unavailable... and we're not sure when he will be reachable."

After struggling to get through several times, Terry had little choice but to phone Robert Iger, who had just taken over leadership of Firefly Television.

Iger was eager to help but explained that A&E Cable Network was a joint venture with Hearst and operated as a distinct cable channel. Thus, he couldn't intervene in Lifetime's affairs.

With no way forward, Terry felt he had to reach out directly to Anne Sweeney, president of A&E.

Sweeney was more straightforward: "I'm sorry, Mr. Semel, but I don't have the authority to make these decisions anymore."

Having been rebuffed three times in his office at Time Warner's Manhattan headquarters, Terry was ready to throw his phone out the window in frustration.

Watching the gloomy sky beyond the office window, he took several deep breaths, attempting to calm down.

Terry understood this was Firefly's way of retaliating against Time Warner's earlier decisions, essentially leaving them in the lurch for months.

However, given the current situation, Time Warner could not afford to wait. If their cable subscribers dwindled by several hundred thousand next month, the blame would undoubtedly fall on him as CEO.

As he pondered whether to personally fly to Los Angeles and engage Katzenberg directly, an idea struck him: Firefly's youthful foundation, Eric Williams, was likely in East Hampton.

Though he had never visited, the address of Eric's East Hampton estate was easy to find. After a few calls, he secured the details swiftly.

After some contemplation, Terry instructed his secretary to prepare a car. He planned to head to East Hampton himself. After all, as the absolute head of Firefly Group, securing Eric Williams' direct agreement would far outweigh the exhaustion of navigating repeated discussions with Katzenberg and other superiors.

Moreover, even while he recognized Eric's exceptional ability to build a significant enterprise in such a short time, Terry secretly believed that the younger man would be easier to negotiate with than the shrewd Katzenberg. After all, no matter how talented a person may be, navigating the complexities of running a business demands time and experience.

*****

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