The House That Tisch Sold

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Larry Tisch was a great businessman who amassed a vast fortune through hotels, movie theaters, tobacco, insurance and, yes, broadcasting.

He may have been an even greater philanthropist. When he died at 80 last week, his many beneficiaries lined up in The New York Times
to thank him for his generosity. Clearly, he made New York City a better place in many ways.

His 1986 investment in CBS was yet another testament to his business acumen. When he cashed out in 1995 by selling the company to Westinghouse Electric, his investment had grown by $1 billion.

But despite all this, we have to say he wasn't much of a broadcaster. He increased the value of CBS, but he did it not by improving its competitive position or by steering it into new businesses. He did it mostly by aggressively cutting costs without apparent regard for long-term consequences. Tisch got richer as CBS got poorer.

Case in point: In December 1994, Tisch allowed Fox to outbid CBS for the NFL rights. It seemed to make sense: Football was a big money loser. But it turned out to be a disaster. With the NFL, Fox went from an upstart to an equal of the Big Three, a status it has retained ever since.

Then Fox used football to pry away major-market affiliates from CBS. That forced CBS to scramble to find replacement affiliates and scrap plans for reducing or cutting compensation. Also, the loss of football's promotional value undoubtedly dragged down the network's prime time ratings.

Tisch had little respect for CBS the institution or its traditions, carefully nurtured by Bill Paley over six decades. Tisch slashed the budgets of CBS News. Where others saw excellence, he saw too many people with too much money.

Tisch missed the boat on cable. He spun off CBS's book, magazine and music divisions, garnering hundreds of millions of dollars. Yet he decided not to invest any of the take in cable networks as his broadcast rivals did at the time. There would be no CBS News Network on his watch.

The Tisch broadcasting legacy has at least one bright spot. Hoping for a second revenue stream, Tisch led the fight for retransmission rights for broadcasters in 1992. Unfortunately for him, cable operators refused to pay for those rights. But the other networks, notably Fox and NBC, used the rights to secure carriage for their cable neworks—a tactic that has proved enormously lucrative over the years.

Certainly, the CBS of the mid 1980s needed to grow up. After all, the reason Paley invited Tisch into the company was that it had become a takeover target of the junk-bond sharks. All could see that CBS was fat and that its parts were greater than the whole.

Tisch brought the discipline but not the vision. He took a great company and made it small.

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