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
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
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.
CBS at a glance
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.
Develops and schedules programming.
Operates a worldwide news organisation, serving CBS Television and
Has broadcasting rights for a number of major US and international
sporting events, which it broadcasts on the CBS network and sells on to
CBS Television Stations
Currently operates 14 television stations across the US, all of them in
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.
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.
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.
This article was first published on campaignlive.co.uk
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