To NBC brass, top talent is worth the high price tag

Published July 7, 1998|Updated Sept. 13, 2005

NBC News has discovered the high price of success _ and is eagerly paying.

The network has showered its top talent with millions of dollars in raises, locking them into long-term contracts in an attempt to keep the good times rolling.

After starting last summer with a contract that pays Tom Brokaw $7-million annually, the signing spree has reportedly made Geraldo Rivera, Katie Couric, Jane Pauley and Stone Phillips $5-million-a-year players, at least. Tim Russert and Brian Williams also won big raises.

"Your first reaction is, maybe they ought to do what the NBA is doing and have a salary cap," said former NBC News president Reuven Frank, once in charge of watching the bottom line.

Instead, the sky's the limit. Rivera's deal, a reported $30-million over six years, and that for Today host Couric, which by some accounts tripled her salary to as much as $7-million, were particularly eye-popping.

NBC's success drove the deals. Nightly News is on its longest top ratings streak since 1967, the Today show demolishes the morning competition, Meet the Press is the new king of Sunday morning political chat and Dateline NBC is such a feared franchise that other networks are copying its expansion blueprint.

The broadcasters who have talked about their contracts, such as Couric, note that the increased ratings for news shows bring in millions of dollars in extra revenue. Why shouldn't the people behind the success benefit?

NBC executives won't talk about their strategy, but it's clear they want to keep their big names happy and hope that, as years go by, the contracts become relative bargains.

Some of the deals were made even before contract deadlines drew near. After signing Brokaw, NBC approached heir apparent Brian Williams to extend his contract to 2002.

At roughly the same time that Dateline NBC anchor Stone Phillips signed last month, NBC extended the contract of his partner, Jane Pauley, even though it had at least a year to go. The team is reportedly in place for at least five more years.

Given the money these shows bring in, many in the industry believe NBC is far from being profligate.

"One thing you can say about G.E.," Brokaw said about NBC's corporate parent, General Electric, "is that it knows its bottom line."

The importance of keeping successful programs intact at a time when the networks' share of the television audience is declining is a lesson that NBC extends to its entertainment shows. NBC struck a deal in January to pay the makers of ER $13-million per show to keep it on the network, and Helen Hunt and Paul Reiser are each reportedly being paid around $1-million per episode for another year of Mad About You.

With its placement on NBC's prime-time schedule for five nights a week next fall, Dateline NBC is arguably just as important to the network's ratings success as any entertainment show.

"This doesn't blur the line between news and entertainment. It reminds us that there is no line," said Robert Lichter, director of the Washington-based Center for Media and Public Affairs. "Journalists don't make big bucks, entertainers do. So smart journalists become entertainers."

NBC is by no means a pioneer in generously rewarding news figures. Roone Arledge's stable of stars at ABC _ Barbara Walters, Diane Sawyer, Ted Koppel, Peter Jennings _ set the pace in the early 1990s.

But ABC's current experience may illustrate the downside of the strategy. With its ratings and revenues down, the network is looking to cut costs. It's not chasing some lower-level correspondents when they look elsewhere for work. It recently lost Judd Rose and Mark Potter to CNN. Paying big money to top-line talent means less cash is available for camera crews, keeping far-flung bureaus open and other newsgathering tasks, television consultant Al Primo said.

"If things get tough, they're going to shrink news coverage before they shrink salaries," Frank said. "And they're going to shrink staff before they shrink star salaries."

Widely divergent salaries may also spoil the spirit of teamwork that helps lift successful news divisions, Frank added.

But the risks in losing a big-name talent are far greater, at least in NBC's eyes. Executives shudder at the thought of Good Morning America with Couric.

"I don't think they have any other choice," said Paul Schulman, whose company buys advertising time from networks. "If they had not come up with the bucks and ABC had picked off Katie Couric, it would have really come back to haunt them."