Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 3, 1994 TAG: 9402030191
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: The New York Times
DATELINE: LENGTH: Medium
Several analysts said the problems had arisen because the USA Network was overpaying for programs produced by its parent companies' studios, Paramount and Universal. USA Network, jointly owned by Paramount and MCA Inc., is one of the nation's highest-rated cable networks.
Paramount said it would post an after-tax loss of $18 million from its share of USA Network's operations for the quarter ending Jan. 31.
It attributed the loss to the "underperformance" of several series. MCA, which is owned by Matsushita Electric Industrial Co. of Japan, is expected to take a similar loss.
Analysts said the USA Network had paid too much for series that its parent companies had sold directly to the channel, bypassing the broadcast syndication market for reruns.
For example, the network paid about $600,000 each for 116 episodes of "Major Dad," a situation comedy produced by Universal.
To attract enough advertising to earn back that investment, analysts said, the show would have to attain a rating of about 2.5. It has been getting an average rating of 1, or roughly 500,000 households with cable.
Paramount said the channel expected to take a pretax charge of $78 million for the year that ended on Dec. 31. Paramount does not usually break out the USA Network's earnings.
Executives at USA Network declined to comment on the charge.
Paramount also said Wednesday it would report a loss in its motion picture operations, largely because of the poor performance of the film "Addams Family Values."
by CNB