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.