INTERNATIONAL: MEDIA OWNER PROFILE; Electrical giant aims to take CBS back to the top position

By RICHARD COOK, campaignlive.co.uk, Friday, 06 December 1996 12:00AM

Westinghouse’s Michael Jordan has ambitious plans for the US network. Richard Cook reports

Westinghouse’s Michael Jordan has ambitious plans for the US network.

Richard Cook reports



CBS/Westinghouse owns the largest television and radio broadcaster in

the US and runs one of the country’s ten largest cable TV

marketing/distribution groups. It is the network of Walter Cronkite and

Bill Cosby and now it is ‘coming fourth in a three-horse race’,

according to analysts.



This jibe is aimed at the fact that, although there are only three

recognised TV networks in the US - ABC, NBS and CBS - the progress made

by Rupert Murdoch’s Fox Television, a would-be fourth network, has been

considerable. Things aren’t actually that bad for CBS yet, but in the

cut-throat world of US network TV, CBS is increasingly finding itself

cast as the perennial loser.



The network has been ranked last for the past three seasons in terms of

primetime ratings. It has the oldest audience profile of the three

networks and is the most downmarket. ABC has led the pack in ratings

terms, with NBC snapping at its heels and able, with shows like Friends,

to offer advertisers a youthful demographic.



In contrast, CBS has looked increasingly out of shape and moribund. Its

flagship programme - one of the few time-slots it does win against the

other two networks - is the less than inspiring Doctor Quinn Medicine

Woman, and that is on Saturday nights, traditionally less important for

advertisers. This season’s network hopes are resting on a US remake of

the UK’s One Foot in the Grave, starring Bill Cosby in the Victor

Meldrew role and toned down for transatlantic sensibilities.



At the root of the great network’s problems is the existing corporate

structure and the legacy left by its former chairman, the mostly

unlamented Laurence Tisch, who is remembered as a man who managed to

trim costs, but to the detriment of diversification. CBS remains the

top-ten media company with the narrowest portfolio of media interests.

Heavily US-dominated, that portfolio includes the CBS networks in

television and radio, and not much else.



First things first: in a media world where the pecking order is being

established not just by the size of your owner’s pockets, but also by

what synergistic benefits their ownership can have, CBS is in an

unfortunate position. ABC, through its tie-up with Walt Disney, became

the first network with a Hollywood-based corporate parent and

consequently assumed a position of enormous strength. When the deal goes

through, ABC should, for example, be able to persuade some of the top

movie talent to parade their charms on TV.



More important even than that, however, is the fact that ABC is now in a

position to take advantage of synergistic benefits to pay for more than

the traditional investment in programming. ABC has a whole range of

back-end opportunities, from programme syndication through product

licensing and cable sales, and it can pay more for programmes. It no

longer relies on what revenues can be raised through advertising. The

networks currently pay around dollars 1 million per hour episode, but

that is likely to change. ABC could spend twice that and make its money

back from the network run and foreign sales.



NBC doesn’t have anything like Disney’s resources, but it does have a

number of cable operations and has branched out into international

channels and online services - all of which would be able to help share

the programming cost. In fact, NBC purchased long-term rights to the

Olympic Games for more than dollars 1 billion this year, citing these

sources and the fact that its parent company, General Electric, is an

industrial giant with considerable financial resources, as the key

reasons why it was able to pledge so much cash.



CBS is not in the same situation and, as the network with the lowest

current ratings, it is consequently under the most pressure. Its new

owner, Westinghouse, is an industrial giant that announced a loss in its

last results, while CBS doesn’t have the breadth of media interests to

be able to compete on programme budgets.



Or didn’t, anyway. When Westinghouse announced its intention to take

over CBS in August last year there was considerable scepticism.

Westinghouse was, after all, primarily a producer of temperature control

devices. But its chairman and chief executive, Michael H. Jordan,

quickly installed the well-respected Peter Lund as president and chief

executive officer at CBS and announced his vision for a new-look

company.



Jordan said he had three goals: ‘Our first priority is to re-establish

CBS as a leader in the industry. Second, we will create a global media

organisation with CBS as the cornerstone. And third, Westinghouse is

committed to investing the necessary resources to fulfil our vision for

CBS.’



Certainly things have moved swiftly since then. In June this year,

Westinghouse announced a merger with Infinity to create the largest

radio broadcaster in the US. And then Jordan announced that he was

splitting Westinghouse up and demerging the electric company and the

broadcasting operation. Jordan will be left in charge of this company

and better placed to achieve the global diversification of media

interests that he gave as the reason behind the original CBS takeover.



It will be a long road, and CBS is starting behind its principal rivals,

but Jordan remains convinced that the world’s fourth-largest media

company will have to be truly international and diversified if it is to

continue to occupy a seat at media’s highest table.



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CBS at a glance

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CBS Television Network

Covers all US television households and has more than 200 affiliated

stations. The network also comprises Television Network Sales, and a

research and planning arm.

CBS Entertainment

Develops and schedules programming.

CBS News

Operates a worldwide news organisation, serving CBS Television and

Radio.

CBS Sports

Has broadcasting rights for a number of major US and international

sporting events, which it broadcasts on the CBS network and sells on to

other broadcasters.

CBS Television Stations

Currently operates 14 television stations across the US, all of them in

major markets.

CBS Radio

Consists of 18 AM and 21 FM stations, plus 485 affiliate stations across

the country, mostly on the AM wave band with which it provides news and

information programming. In addition CBS has two syndicated programming

units, the CBS Talk Radio Network and CBS Radio Programmes.

CBS Enterprises

Encompasses programme distribution and video merchandising companies.

Westinghouse Media Operations

Group W Satellite Communications

A cable television marketing and distribution company, which

incorporates the world’s leading Spanish-language news channel,

TeleNoticias, which is distributed in more than 20 million homes in 22

countries. GWSC also distributes cable channels in the US including the

Discovery Channel, A&E and the Nashville Network. GWSC is the part owner

of Country Music Television, a worldwide 24-hour country music network.

Infinity Broadcasting

Westinghouse’s proposed merger with Infinity will create the US’s

largest radio broadcaster - 83 radio stations in 16 markets with 69 of

those in the top ten markets.

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This article was first published on campaignlive.co.uk

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