Merger gains and pains
As Viacom-CBS try to meld their various parts, suitors line up to buy pieces, staffers fret about jobs
Steve McClellan , Joe Schlosser and John M. Higgins -- Broadcasting & Cable, 5/7/2000 8:00:00 PM
Now that the Viacom-CBS merger has closed, the hard work begins: integrating the various pieces in the new conglomerate.
That task began last week with the folding of CBS Cable into the MTV Networks division. That move wasn't a total surprise, given that MTVN is one of the dominant cable program groups in the industry with such popular channels as MTV, Showtime and Nickelodeon.
Viacom also will sell several CBS Cable assets, including regional sports networks in Washington-Baltimore (Home Team Sports), Minneapolis (Midwest Sports Channel) and satellite uplink service provider Group W Network Services. Suitors chasing the sports networks include FOX Sports, which has a fat portfolio of regional networks; Comcast Corp., which operates a regional net in Philadelphia but also has a giant system cluster in Home Team Sports' Washington-Baltimore market; ESPN; and the owners of the teams appearing on the two channels.
The cable realignment puts CBS' Cable properties TNN and CMT under the supervision of MTVN chairman Tom Freston. The executive fallout: Lloyd Werner will leave CBS Cable; Don Mitzner will remain as part of the transition team, but only for a while.
TNN's head, Tom Hall, will stay.
Freston said he didn't have TNN and CMT's future laid out in detail. "With CMT, we want to take the niche that it's in, which is very viable, and soup it up and regain some of the distribution it lost" to rival Great American Country, which has been offering operators $5 per subscriber launch fees, he explained.
As for TNN, "I love its distribution, love the fact that it's been able to assemble an audience. They haven't had any money to invest in programming."
The departing Werner concurred. "I think everybody understands that, for the past five to six years, we've underspent in programming and underspent in advertising and promotion." Mel Karmazin "has been milking them" to offset problems in other parts of CBS, Werner said.
While the cable realignment is done, some shifts within the West Coast operations are expected soon. And there's much angst within the company's Hollywood ranks over how their divisions may be affected.
An internal e-mail sent to all CBS-Viacom employees by Viacom chairman Sumner Redstone and Viacom president Mel Karmazin last Wednesday evening promised, "We will keep you informed in the coming weeks as we move ahead with integration plans."
It's the disintegration plans that many worry about. Nearly everyone in Hollywood working under the new Viacom banner is waiting to find out if he or she is going to have a job.
According to sources, CBS Television President and CEO Leslie Moonves will probably add oversight of the Paramount Stations Group. Moonves already oversees the CBS O & Os as well as the CBS Television Network and all of CBS' syndication operations, which include the merged King World-Eyemark unit and CBS Broadcast International.
Viacom, of course, has its own collection of syndication units, including Paramount Domestic Television Distribution and Worldvision.
Some sources from within the Viacom-owned syndication studios said that the two divisions will be kept running as separate competing studios, while others seemed sure that they would be blended together in an effort to maximize revenues and cut costs.
One CBS executive said, "There is just too much product between King World and Paramount to bring them together. Paramount Domestic Television has added Spelling Entertainment, Worldvision Enterprises and Rysher's programming for syndication within the last 12 months.
One wild card: where UPN will be put. Viacom executives expect to retain full ownership of the Weblet after changes are made in the FCC's network ownership rules. But who will be running the network and what kind of programming it will carry remain questions.
There was speculation last week that it would make sense to shift UPN to Moonves' purview, so that the two networks might more efficiently explore joint-sales efforts and other ventures.
Last week, Redstone said in a Los Angeles Times article that CBS Sports and CBS News programming might be added to the UPN roster in the coming year.
The fact is, UPN is not dead. Under network head Dean Valentine and programming chief Tom Nunan, UPN has revived itself with WWF Smackdown and a few new series. "UPN has gotten some traction this year. The question is can they parlay that into something advertisers, stations and viewers want.in a big way?" asked one top Hollywood executive.
Several weeks ago, Viacom reorganized its Washington operations, putting Carol Melton, former vice president for governmental affairs at Viacom in charge. Washington veteran Marty Franks was promoted last week to executive vice president, CBS, reporting to Moonves, and senior vice president, Viacom, where he'll take on special projects for Karmazin.
The FCC approved the merger last Wednesday (May 3) at 5:30 p.m., and the merger was completed the next day at a little before 9 a.m. A week earlier, the Justice Department indicated to Viacom that it would not stand in the way of the merger. Sources said Justice had suggested that Viacom sell off one of its top-rated syndicated programs, but the company balked and got its way in the end.
CBS will have to sell a total of seven radio stations to comply with government restrictions on same-market radio/TV cross-ownership, according to an FCC order approving the decision. Rules forbid a company to control more than seven radio stations in a market where it owns a TV station.
In markets where a company has a TV duopoly, no more than six radio outlets may be held. Consequently, Viacom-CBS must sell two radio stations in Baltimore and Dallas and one station in each of Chicago, Los Angeles and Sacramento, Calif.
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