INTERNATIONAL: CBS’s chief executive implements extreme moves to save the network from extinction - CBS may have invented modern TV but now it has hit hard times. Can it survive, Alasdair Reid asks?

Can Mel Karmazin save CBS? The US network has been in the doldrums for years, and even its star chat-show host, David Letterman, began making on-air jibes last year at his employer’s expense.

Can Mel Karmazin save CBS? The US network has been in the doldrums

for years, and even its star chat-show host, David Letterman, began

making on-air jibes last year at his employer’s expense.

The in-joke was that CBS, once dubbed ’the Tiffany network’ (after the

swanky Manhattan jewellery store), had become Woolworths.

Over the past few months, there has been something of a ratings


But this autumn has been one of the most painful periods in its history

with the start of a cost-cutting drive that will see more than 300 jobs

lost, including many of its senior ad sales executives. Meanwhile,

there’s been speculation about further radical restructuring plans,

possible mergers and joint ventures.

Karmazin, who was promoted to the position of chief executive in

October, was effectively running the network already as its chief

operating officer, but his elevation is seen as the start of a new era

Karmazin is bold - last year he was behind a dollars 4 billion deal to

bring NFL American football back to the network - and has a feel for

popular programming. He talks a good game too and CBS has been crying

out for strong leadership; but a combination of both internal and

external factors will make his task a tough one.

The internal factor is CBS’s heritage. It was the dominant and most

glamorous US network in television’s first golden age in the 50s and

60s, inventing many of television’s now-familiar forms along the way.

For example, the structure of television news, developed under the

legendary Walter Cronkite, and the hard-hitting popular current affairs

strand, 60 Minutes.

CBS is indeed the stuff of legend - but the legends aren’t cutting it

any more. And it’s not merely a raw ratings problem. For instance,

earlier this year one of its reliable performers was a programme called

Diagnosis Murder, starring the veteran Dick van Dyke. Although Diagnosis

Murder occasionally made it into the top 20 Nielsen-rated shows, it was

commanding ad rates roughly half those of smaller-audience shows on Fox,

which specialises in targeting younger, more affluent viewers.

In short, the brand has become tired. A reluctance to innovate going

back as far as the 70s has bequeathed CBS by far the oldest and most

downmarket audience of all of the US networks.

Although it took a world record audience for the ’Who Shot JR?’ episode

of Dallas in 1980, for much of that decade CBS was virtually leaderless

due to squabbles over the succession. In 1995, it was bought for dollars

5.4 billion by Westinghouse, itself a smokestack corporation

specialising in power stations.

The cumulative effect of that history may prove hard to counter,

especially as history continues to run against US network television in


For at least a decade now, all of the major networks have been forced to

manage decline as cable continues to eat into their audiences. And it is

a painful process across the board - both NBC and ABC have also been

axing jobs recently.

But CBS is in a far more precarious position than its rivals, especially

ABC and Fox which are part of huge, vertically integrated multimedia

companies linked to Hollywood studios.

ABC, NBC and Fox also hedged their bets by diversifying into cable, thus

maintaining a relationship with migrating audiences while earning new

revenue streams from pay-TV. CBS missed the boat - and 95 per cent of

its revenue still comes from advertising. True, it has recently begun to

flirt with cable, acquiring two second-tier stations - the Nashville

Network and Country Music Television. It also launched its own station,

Eye on People, but almost immediately got cold feet and sold a 50 per

cent stake to Discovery Communications.

Half-hearted initiatives like this won’t save CBS and Karmazin knows it.

Losses on the television network side are borne against profits from its

outdoor and radio businesses - and Karmazin, who first joined CBS when

it acquired his Infinity Broadcasting network of radio stations, will be

keen to develop this side of the group.

But CBS stands or falls on its TV network performance. Karmazin has

already indicated that he will seek to improve the financial health of

the network by continuing to cut costs. One radical initiative mooted in

September was merging CBS’s news gathering resources with those of Time

Warner’s CNN. He is also trying to convince advertising agencies that

ageing middle America is still worth targeting.

Meanwhile, the network’s new marketing initiatives have begun the long

task of repositioning it as urban, young and trendy.

And, of course, it’s in a classic bind - that old chestnut about

innovating without alienating the existing audience. When it first began

to court younger audiences a couple of years ago, the results were

embarrassing and middle America switched off.

CBS immediately panicked and brought back reassuring faces such as Bill

Cosby and Ted Danson. But it’s a nettle that has to be grasped. The Dick

van Dyke generation won’t be with us for very much longer. And if it

doesn’t reinvent itself, neither will CBS.


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