On Television
FRANK, REUVEN
On Television A SLIGHT CASE OF MERGER By Reuven Frank Many Reasons were given for the $37.3 billion merger of CBS with Viacom in early September. Improving television was not one of...
...NBC's executives like to say they are headed in a totally different direction...
...Then it started all over again...
...True believers insist a more profitable company will produce and present better programs...
...Experience says otherwise...
...At about the same time, broadcasting's founding generation moved on, to be replaced by investors, entrepreneurs and executives to whom all businesses were at bottom the same...
...If the FCC does not act, this monster of an entity will have a total market value of about $72 billion...
...There was no mention of reopening foreign bureaus, or restoring the declining dignity of network news and the relevance of its local counterparts...
...Except there is another complication...
...How much is represented by shareholder value...
...Over almost 20 years, these videos, paid for and provided to MTV and its several imitators by recording companies, have become more and more extravagantly crafted, sometimes costing millions...
...News magazines may have become part of that cycle, and will disappear when a bored audience has had enough of the format...
...Then two things happened...
...They have bought as large a share as possible in several Internet and cyberspace ventures, and see the future there...
...Popularity with audiences is cyclical...
...In 1995, Time Warner merged with Ted Turner's company, consisting of CNN, several other cable networks, some movie properties, and some TV stations...
...After it bought CBS, the manufacturing bits were sold off, the Westinghouse name discontinued, and what remained of CBS was merged with a flourishing radio broadcasting company...
...That company's chief executive, Mel Karmazin, arranged the sale to Viacom...
...Alas, they confuse news as entertainment with news that is sometimes entertaining...
...They have also built some very successful cable networks here and abroad...
...So is the Showtime premium cable movie channel, HBO's rival...
...Well, yes...
...The TV season that began in September promises to be the most profitable yet...
...Besides its television network, among the treasures CBS brings to the marriage are a clutch of television stations in maj or markets, almost 200 radio stations, some minor cable networks, a big outdoor billboard company, and King World, which syndicates TV programs like The Oprah Winfrey Show and Jeopardy...
...At a recent convention of TV news directors an expert warned that they are losing their audience to the new threat, especially in the case of local news where the audiences are younger than those for the network reports...
...The CBS network, newly successful after some bad years, is noted for its appeal to older audiences...
...It is a cable network featuring current popular music...
...But NBC is still heavily engaged in being a major television network, and must present a full program schedule, including 22 hours a week of prime time entertainment...
...Optimists have meanwhile assured us that the rise of network magazines—despite the elimination of documentaries— will give new status and importance to news divisions...
...MediaWeek, a trade publication, was more subtle: "The combination will expand the reach and diversify the demographic profiles of both media giants...
...Managers of stations and networks, who typically came out of sales or operations, were often unsophisticated about this sense of responsibility...
...This would seem to indicate NBC's strategy is a wise one...
...They knew, though, that they had to supply news, and something called public affairs, as well as observe certain minimums of taste...
...They freely use dazzling graphic tricks and visual concepts conceived by young directors who make names in this unlikely medium and go on to fortune and recognition in the movie industry...
...MTV stands for Music Television...
...For perhaps half a century after broadcasting began, those working in it felt obligations beyond turning a profit and adhering to FCC requirements and certain acts of Congress...
...Nevertheless, one may postulate that Americans intuitively feel organs of communication and information, while obliged to sustain themselves as economic entities, are somehow different from companies selling steel ingots or corn flakes or computer software...
...MTV and Comedy Central are particularly popular with younger audiences...
...Nothing was said about spending more minutes of any broadcast hour on content and fewer on commercials and network self-advertising...
...There was no talk of improving the toothless and farcical rating system forced on a reluctant industry a few years ago with the now forgotten aid of the White House...
...Indeed, the shares of both rose when the deal was announced...
...Redstone's comment appeared in the Times' account of a meeting in Shanghai attended by several hundred U.S...
...From its start as a simple attempt to emulate the inexpensive success of the radio disc jockey, it has grown into one of the most elaborate and profitable cable undertakings...
...What the reporters neglected to tell us was the reason: The young are moving to the Internet, the World Wide Web, chat rooms, and video games...
...There was a period when the top shows were cowboy shows, then cop shows, then medical shows...
...What the merger will do, as almost every news account said reflexively that first day, is enhance shareholder value, the shibboleth of all business activity...
...its audiences and income shrank...
...The combined TV stations of the two corporations will cover 41 per cent of the U. S. population, and the Federal Communications Commission is being asked to amend or waive the requirement limiting a single ownership to 35 per cent...
...The average American discovered capitalism, and ignoring the code of the market came to be regarded as almost unethical...
...Where radio plays existing, widely available records, MTV shows especially produced "videos," often featuring famous recording artists...
...Only weeks ago, after years of bemoaning network pandering to the very young, the press happily discovered some programs fit for grown-ups...
...That's who we're after...
...Only NBC has not yet done so, and the consensus is that it better find one soon...
...That is why, according to the trade publications and the talk around the water coolers, it needs a movie studio...
...By producing its own shows it could avoid being whipsawed—as it was when the studio that produces its very popular hospital drama, E.R., raised the price at contract renewal time to $ 1 million an episode...
...The catch is that as of yet no one has figured out how to profit from Internet news...
...So are five amusement parks, the Nickelodeon and Comedy Central cable networks, half of the UPN television network, a few TV stations, and Simon & Schuster...
...CBS was squeezed dry...
...After the FCC rescinded its rules against vertical integration, Disney acquired ABC, Rupert Murdoch built the Fox network out of a station group he had bought to add to his worldwide media empire, and NBC disappeared into General Electric...
...Redstone justified his presence with the observation, "There are 3 billion people in Asia, and 2 billion of them are in the MTV generation...
...He was presumably unaware he was advising reporters to imitate the way Walter Duranty reported from the Soviet Union for the New York Times in the early '30s, and the way, soon after, too many covered Hitler's Germany for much of the American press...
...Sponsored by Fortune magazine, its proceedings were replete with praise of China's leaders...
...Its news division staff was decimated...
...One way or another, therefore, every possible segment of the population will be covered and no advertiser will be able to avoid dealing with the combined company...
...After all, for every tycoon with multimillions in stock options and bonuses, or every top official with a golden parachute—two have already bailed out of Viacom blessed with eightfigure settlements—there are untold thousands whose pension plans and 401 (k)s hold shares in the two companies and will gain from their increased profits...
...The new buyer was Westinghouse, a major American manufacturer that had fallen on hard times...
...Perhaps significantly, it would still be only the secondlargest media conglomerate in the world...
...Granted, the quality of television must be in the eyes of the beholders, but few viewers have been heard expressing the belief that it is rising...
...That's true...
...So money matters...
...Television audiences, however, will notice no difference...
...business leaders...
...In fact, within days of the merger proposal Sumner Redstone, the Viacom chief executive who is to head the merged company, warned all journalists—including, one assumes, CBS'—not to exercise their journalistic integrity in a manner "that is unnecessarily offensive to the countries in which you operate...
...No plan was reported for searching out comedies that do not rely exclusively on sex, or for reducing blatant violence...
...But Tisch was able to sell it, at a large profit...
...It keeps courting those few still available, while denying it has any such intent...
...What, then, of the status and importance of news divisions...
...It is a brave soul who will these days even try to define the public interest...
...Or, as the late, great Fred Allen used to say: "Imitation is the sincerest form of television...
...How much is inherent in big ratings...
...In short, the sheer scope of the Viacom/CBS holdings position the merged company to play a serious game of hardball with advertisers...
...Media conglomerates, it is held, have to adapt to changed economic conditions by acquiring a movie studio...
...Improving television was not one of them...
...MTV is enormously popular with teens and twentysomethings, and is central to the record business explosion of recent decades...
...The shifting institutional shape of television provides no guarantee of a concern for the public interest...
...There is similarly a limit on the combined number of radio and TV stations any one owner may have in a single market...
...It may be naive to express indignation, or even surprise, that the merger comes down to money...
...Otherwise, some units will have to be sold off...
...They also forget the lesson of the made-for-television movie, with its emphasis on obscure diseases and their miracle cures, tear-jerking reunions of the long separated, and heroic battles against insurmountable odds: It has virtually disappeared, and its topics have become the currency of the network magazines now parading across prime time by the dozen...
...Paramount Pictures is too...
...There was a period when the difference affected how people behaved...
...The whole sequence of events reflects the accepted wisdom in media business circles and harks back to 1989, when Time Inc., Henry Luce's original publishing empire, bought Warner Communications, as the old Warner Brothers motion picture company had come to be called...
...In 1986 CBS was sold to Laurence Tisch, an investor who never tempered his ample business acumen with his almost equally ample philanthropy...
...It is owned, as you may have gathered from Redstone, by Viacom...
Vol. 82 • October 1999 • No. 12
