Smackdown showdown - Broadcasting & Cable

Smackdown showdown

Barry Diller's USA Network fights to keep the WWF
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Smacked over the head by corporate synergy, Barry Diller was scrambling last week to maintain the hammerlock his USA Network had on cable rights for the World Wrestling Federation.

Diller tried to avoid getting tossed out of the WWF's cable ring by upstart Viacom-CBS and petitioned the court to enforce USA Network's right to match any rival offer for the network's top-rated programming.

A Viacom-CBS deal would be a huge boost for the moribund TNN, formerly The Nashville Network, which CBS is trying to move beyond a hick image that limits not just viewership but even distribution in certain parts of the country.

After carrying WWF matches and commentary shows for 17 years, USA Network risks losing the most popular programming in cable, which helps support its claim of top-rated basic network.

USA Network executives have emphasized in recent weeks that their immediate financial loss won't be critical, because the WWF top executives Vince and Linda McMahon have enough clout to not only control all the advertising time during their show but also demand a license fee. But promos during the WWF shows let USA Cable President Steven Chao promote the rest of his schedule.

Under USA Network's existing WWF deal, which expires in September, Diller has the right of first refusal to match any competing offer for the rights. Diller's problem is that Viacom-CBS' deal is wide-ranging, combining cash with bits and pieces plucked from their vast combined media holdings.

Aside from the basic agreement to put WWF's matches on TNN and move one show to MTV, the proposal includes a book deal, a 13-episode commitment by UPN to air a WWF-produced drama, plus promotion on radio and billboards. Elements that USA could meet included TNN's agreement to carry some games from the WWF's XFL football league.

All this and more were offered "as a complete integrated package," a phrase aimed at thwarting Diller's matching rights. Diller's own TV and Internet portfolio couldn't hope to precisely match those elements.

Hence the Delaware Chancery Court fight. USA Network executives agreed to match the as-yet-undisclosed cash terms offered by Viacom and CBS. Now, USA says, that's all it is required to do. USA attorneys literally crossed out the parts of the Viacom-CBS offer letter they didn't consider "pertinent'' and sent it back to Linda McMahon.

"These properties are beyond the subject matter of our prior agreements and our rights of first refusal..USA Network has no obligation to meet those unrelated portions of the CBS-Viacom offer,'' wrote Richard Lynn, USA Network's senior vice president of business affairs. USA Network's lawyers went to court seeking a declaratory judgment that the network did indeed meet the terms of its existing contract.

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