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Two nets one basket

Viacom puts CBS chief Moonves over UPN 12/16/2001 07:00:00 PM Eastern

After an apparent power struggle at the top of Viacom, the media giant's two broadcast networks ended up with the same boss, and more such moves may emanate from last year's CBS-Viacom merger.

CBS President and CEO Les Moonves added oversight of UPN to his growing list of responsibilities, and insiders believe that combining Viacom's two powerful syndication studios, King World and Paramount Domestic TV, can't be far behind, though Moonves disputes that. Also, Paramount's network programming division is without a leader: Paramount Television Group Chairman Kerry McCluggage, who had overseen UPN since its inception, resigned in the wake of the Moonves announcement.

Moonves, the first executive to run two broadcast networks at the same time, is expected to make several changes at UPN, including firing President Dean Valentine. Earlier this year, Valentine filed a $22 million breach-of-contract suit against the network he runs. His contract expires in September.

Viacom executives say the move to integrate the two networks will save the company millions in redundant areas—chiefly advertising, accounting, promotion and marketing—with layoffs likely.

CBS and UPN will maintain separate on-air identities and affiliate relationships, according to Viacom President Mel Karmazin. "With sole ownership and key long-term affiliation agreements in place, and 2001 upfront and season launches that resulted in higher revenues and ratings," he observes, "there is no better time to bring UPN together with CBS."

UPN has been run by Paramount since its launch in 1995, with numerous programs funneled from the studio to the network, including the last two Star Trek
series. UPN, which Viacom bought outright from Chris-Craft a year and half ago, has lost more than $500 million since its launch and had struggled to find an audience. With the addition of Buffy the Vampire Slayer
and Enterprise
this season, however, its long-term outlook is more promising.

Since Viacom and CBS merged in May 2000, there have been constant rumblings that Moonves would take over UPN and, possibly, the Paramount TV Group. He already had responsibility for Paramount's 18 local stations, as well as the 16 CBS owned-and-operated stations.

Insiders say the battle to run UPN was waged at the top, with Karmazin in Moonves's corner and Chairman Sumner Redstone backing McCluggage.

Moonves, who has helped bring CBS's ratings up and median age down in recent years with shows like Survivor
and CSI: Crime Scene Investigation, says rumors of a turf war are not true. "It's total BS. They are both smart businessmen, and, ultimately, this was a smart business decision. I know people want to blow that up, but I can tell you categorically all of that is untrue."

One top Paramount executive, however, disagrees. "The bottom line was that this was a power struggle. Certainly, Mel and Sumner have different opinions on this. This has been a topic of conversation within the company for quite some time."

No matter how it came about, UPN is expected to benefit from CBS resources and programming muscle. "I think this will be great for UPN," says one top Viacom executive. "The most fundamental problem with UPN, aside from the insane management turmoil, has been the lack of resources. Because the company was never sure whether to be 100% behind it or not, the lack of resources was just a tremendous disadvantage in a really competitive environment. That will change under Les."

Says William Moll, president of Clear Channel TV, owner of nine UPN affiliates, "I think this is a very positive move, and it's being viewed that way by the affiliates. It's been hanging in the air for so long. It's (a) good to have it resolved and (b) to have it resolved in the favor of the stability and economic clout and abundant resources that CBS will add to it."

Moonves is expected to make his first appearance at UPN's West Los Angeles offices this week, where he'll meet with top staffers, including Valentine. COO Adam Ware's contract is up in February, and his long-term status is also unclear.

UPN programmers are currently wrapping up development for next fall. The question UPN executives are asking is whether Moonves will bring in CBS programming or utilize what's already in the hopper. Insiders also say CBS Sports events and other specials could wind up on UPN.

"It's way too early for me to make any big decisions," Moonves says. "I think I have to analyze where the two organizations will work together, where we can maximize sales revenues, and where we can look at doing things more efficiently."

The new marriage between UPN and CBS was made possible by the FCC's relaxing dual-ownership restrictions earlier this year. The FCC said all networks, except for the Big Four, could be co-owned. Since then, NBC has announced plans to purchase Spanish-language Telemundo. NBC already owns a minority stake in the Pax network, an arrangement showing signs of strain because the Telemundo deal, in Pax founder Bud Paxson's view, makes it impossible for NBC to acquire all of Pax. Pax is taking NBC to arbitration over the matter.

The Paramount syndication division may be next to feel radical change. Viacom executives have always shot down notions of combining King World and Paramount Domestic TV, but insiders say that is changing. A tough syndication ad market and the possibility of saving more than $25 million a year are said to be making it a lot easier for Karmazin to do what he does best: cut costs.

Karmazin says, "There is definitely no truth to" merger talk, but he and Redstone reportedly met with King World head Roger King last week to discuss several issues, including a potential merger. Such a move would surely mean another power struggle. Would King or Paramount syndication chief Joel Berman run a unified force? Would syndication report to Moonves or to Viacom Entertainment Group chairman Jonathan Dolgen? Viacom executives had no comment.

Moonves would say only, "Both organizations are doing extremely well, even in this tough marketplace. If ain't broke, don't fix it sort of applies here. I don't think there are plans to fold them together."

With the departure of McCluggage, it's unclear whether his position will be filled. Moonves denied rumors that he would take on Paramount's overall TV assets, and Paramount Domestic TV programming head Greg Meidel's name has been mentioned for a potential top UPN position or as a McCluggage replacement.

September
October