The death of Spanish dictator Francisco Franco during the first season of Saturday Night Live served as the source of the phrase. Franco lingered near death for weeks before dying. On slow news days, United States network television newscasters sometimes noted that Franco was still alive, or not yet dead. The imminent death of Franco was a headline story on the NBC news for a number of weeks prior to his death on November 20.
After Franco's death, Chevy Chase, reader of the news on Saturday Night Live's comedic news segment Weekend Update, announced the dictator's death and read a quotation from Richard Nixon: "General Franco was a loyal friend and ally of the United States. He earned worldwide respect for Spain through firmness and fairness"; as an ironic counterpoint to this, a picture (similar to the photo shown here) was displayed behind Chase, showing Franco alongside Adolf Hitler.
From that point on, Chase made it clear that SNL would get the last laugh at Franco's expense. "This breaking news just in", Chase would announce - "Generalissimo Francisco Franco is still dead!" The top story of the news segment for several weeks running was that Generalissimo Francisco Franco was still dead. Occasionally, Chase would change the wording slightly in order to keep the joke fresh, e.g. "Generalissimo Francisco Franco is still valiantly holding on in his fight to remain dead." The joke was sometimes combined with another running gag in which, rather than having a sign language interpreter visually interpreting headlines to aid the deaf, the show would provide assistance from Garrett Morris, "head of the New York School for the Hard of Hearing", whose "aid" in repeating the story involved cupping his hands around his mouth and shouting the headlines that Chase repeated. The line was also perceived as a slap at then-NBC Nightly News main anchor John Chancellor, who due to his background as a foreign correspondent, felt the network should weigh its news more heavily toward world events, keeping Franco's deathwatch at the top of the headlines. The gag ran until early 1977.
Thirty years later, the phrase is still in use. James Taranto's Best of the Web Today column at OpinionJournal.com uses the phrase as a tag for newspaper headlines that indicate something is still happening when it should be obvious, such as "Hunt for Bin Laden Still On" by Fox News. It has used the tag more than 60 times. More recently, on February 8, 2007, during Jack Cafferty's segment on CNN's The Situation Room on the day of the death of Anna Nicole Smith, he asked of CNN correspondent Wolf Blitzer "Is Anna Nicole Smith still dead, Wolf? It was also used occasionally on NBC's irreverent wee-hours news program NBC News Overnight in the early '80s.
The practice of American television networks continually reporting that ailing world leaders are still alive remains widespread. Famous examples include Yasser Arafat in 2004, Pope John Paul II in 2005 and Fidel Castro in late 2006-early 2007.