Disney’s Sherwood Blows Up Capitol in TV Drama Amid Ratings Push

(Bloomberg) -- In “Designated Survivor,” the ABC series that premiered Wednesday, Kiefer Sutherland plays a U.S. cabinet member who has to step up to the presidency and save the country after a terrorist attack kills the rest of the leadership.

While the stakes aren’t nearly as high, Ben Sherwood, the co-head of Walt Disney Co.’s media networks, faces his own daunting task, battling traditional TV’s loss of viewers to cord-cutting and reviving ABC. In the past season, the broadcaster suffered a 15 percent drop in prime-time viewing among 18-to-49 year-olds -- the group most coveted by advertisers -- the steepest decline among the big four.

As one of Disney’s most-senior executives, Sherwood, 52, oversees a portfolio that includes ABC and the Disney Channel, as well as investments in the Hulu streaming service and A+E Networks. He could be in line to succeed Chief Executive Officer Bob Iger, who came up through ABC and is set to retire in June 2018. But that’s only if his current assignment goes well.

“A lot of these challenges Disney is facing are structural, industry headwinds,” said Anthony DiClemente, an analyst at Nomura Securities, pointing to viewer losses even at seemingly bullet-proof networks such as the sports channel ESPN. “It’s just a really tough environment.”

Sherwood has taken steps this year to bolster ABC’s prospects. In February, he replaced ABC entertainment President Paul Lee, architect of last season’s dismal results, with Channing Dungey, making her the first black person to hold that role at a broadcast network.

Last week, Sherwood brought on Bruce Rosenblum, the former head of television at Warner Bros., to oversee advertising, affiliate relations and program sales at the Disney/ABC group. The appointment will let Sherwood, a former TV news producer, give more attention to the creative side of the business.

“The challenges we face, we’re fully focused on,” Sherwood said in an interview following the Rosenblum appointment. “We have a strategy to improve our ratings and improve our financial performance. Channing is doing a great job and made some smart decisions. I can’t wait to see ‘Designated Survivor,’ ‘Speechless,’ all of our shows. There’s a lot of excitement in the air.”

One Hand Tied

The flagship broadcast network was the highest-profile part of the business when former Disney CEO Michael Eisner engineered the $19 billion acquisition of Capital Cities/ABC Inc. in 1996. Other channels, most notably ESPN, which is run by John Skipper, have risen in importance since then. Still, ABC is near and dear to Iger, who joined the network in 1974.

While audience ratings and profit from broadcasting are down in 2016, ABC still earned about $1 billion in operating income last year, about 7 percent of the company’s total.

Industry executives say the network has had to compete with one hand tied behind its back since Disney moved sporting events such as “Monday Night Football” to ESPN in 2006. Under Lee, ABC focused on “empowered women” and minorities with a lineup that included “Grey’s Anatomy,” “Scandal” and “How to Get Away with Murder” from producer Shonda Rhimes.

“It’s a very female network,” said Dave Campanelli, director of national TV buying at Horizon Media in New York.

With “Designated Survivor,” chosen by TV Guide as the most-anticipated new show of the season, ABC potentially has the kind of thriller that can deliver broad appeal, like Fox’s “24,” which also featured Sutherland. The show drew 10 million viewers in its premiere, twice what “Nashville” got in the same slot last year, and was in second place overall for the night after Fox’s “Empire,” according to Disney.

In House

Like “Speechless,” a comedy about a family with a special-needs child starring Minnie Driver, “Designated Survivor” is produced by ABC’s in-house studio, meaning the network gets to keep more of the revenue and control where the program runs later.

Airing at 10 p.m., “Designated Survivor” is being welcomed by local ABC station owners, who like to have a hit show leading into their 11 p.m. newscasts. Sherwood is winning points with them, too.

“He’s been fully engaged, which we see as a very positive thing,” said Emily Barr, chief executive officer of station owner Graham Media Group and chair of the ABC affiliates board. “He’s a very smart strategic thinker.”

News Guy

Sherwood, who started at ABC News in 1989, has written two novels and a 2009 book called the “The Survivor’s Club” in which he let himself be submerged upside down in a Navy training tank to see how people react to stressful situations. He ran ABC’s “Good Morning America” and later the entire news division. When he took that job, he moved from the 13th floor executive suite in New York to the fifth floor where ABC’s news producers sit.

Greg Foster, an Imax Corp. executive, has known Sherwood since nursery school. His friend still calls him on birthdays.

“He did that when he was kid,” Foster said. “He’s always been about building a relationship, building connections.”

Under Sherwood, “Good Morning America” dethroned NBC’s “Today” as the top morning program for the first time in 16 years in 2012. “Today” regained first place in the 2015-2016 season among viewers most targeted by advertisers. ABC still leads in total viewers.

He also signed a partnership with Yahoo! Inc. that lifted ABC to No. 1 in the online news category in the U.S. The relationship is being reassessed with the acquisition of Yahoo’s media business by Verizon Communications Inc., according to Sherwood. “We are working closely on new ideas,” he said.

Sherwood had much less luck with Fusion, a cable channel focused on young Hispanics that ABC founded with Univision Communications Inc. in 2013. Disney contributed its ABC News Now cable channel to the joint venture. In April, Disney pulled out.

Fusion Venture

“We had the right idea, there’s a fantastic market out there, multicultural millennials,” Sherwood said. “We came to the conclusion, chances would be better for success if one company ran it.”

Sherwood landed in hot water earlier this year after he neglected to tell TV host Kelly Ripa that he was moving her “Live with Kelly and Michael” co-star Michael Strahan to “Good Morning America.” Ripa left for a week in protest. Sherwood and other ABC executives apologized.

Sherwood has beefed up ABC’s online offerings, adding original short-form videos with stars such as Ty Burrell from “Modern Family.” In a deal negotiated with Warner Bros., ABC now has the right to offer all episodes of that studio’s shows online during the season. He’s also sought to streamline the process of getting local station content on Disney’s Watch ABC app.

Sherwood said he’s trying to create memorable programming and find ways to generate revenue, online and over the air.

“There’s no one opportunity greater than the other,” he said.

--With assistance from Lucas Shaw To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net. To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Lisa Wolfson, Rob Golum