CBS Inc., which has been badly shaken since key affiliates defected to Fox, entered into a strategic alliance Thursday with Westinghouse Broadcasting that will provide the network with outlets in five important markets.
The deal gives CBS a valuable boost at a time when morale at the network is also down over its scuttled merger plan with QVC Inc. That agreement collapsed after Comcast Corp. made a $2.2-billion counteroffer this week for the home shopping channel.
CBS executives have become increasingly concerned over a leadership vacuum developing because of Chief Executive Laurence A. Tisch's apparent willingness to entertain offers for the company. On Thursday, there was no progress reported on that front, though analysts and others continued to speculate that Walt Disney Co., Turner Broadcasting Co., Barry Diller or one of the major station groups might emerge with a bid.
Tisch had hoped a merger with QVC would re-energize the network's management by bringing aboard Diller, QVC's chairman. Now, with the merger torpedoed and Tisch in a wind-down mode, executives inside the company say the network is, in effect, without a chief executive.
While the deal with Westinghouse won't address the leadership problem at CBS, it should temporarily quell criticism that the network is on the skids. Under the agreement, Westinghouse Broadcasting--also known as Group W--will convert the affiliations of TV stations it owns in Philadelphia, Boston and Baltimore to CBS and renew CBS affiliations in San Francisco and Pittsburgh.
CBS, which also owns a TV station in Philadelphia, has agreed to sell it or swap it for another TV station. The proceeds from the sale of that station, which would total between $300 million and $400 million, will go to finance a joint venture between CBS and Group W to acquire more stations.
In addition, CBS and Group W will jointly produce and distribute "first-run" syndicated programs, a lucrative part of the TV business where all the networks have been eager to expand. CBS and Group W stations reach nearly a third of all TV homes in the country.
"The most difficult thing in syndication is securing clearances (for new shows) with a launch base, and this deal goes a long way to solving that problem," said Peter Lund, executive vice president of CBS/Broadcast Group.
CBS shares rose $5.50 to $313.50 on Thursday, while Westinghouse gained 50 cents to $12.375. Meanwhile, QVC added $1.44 to $43.44, and Comcast rose 50 cents to $15.625. The big loser in the CBS-Group W deal is NBC, which will lose key affiliations in Philadelphia, Baltimore and Boston--and must now scramble to replace them.
"CBS wins because this ensures their affiliations in some major markets where Fox is likely to be a player for an upgrade or change of station." said Matt Shapiro, vice president at MMT Sales, a New York-based station consultant. "NBC is the one that gets potentially hurt, because they could end up on a UHF station in Boston and Philadelphia."
Fox, which is on a weak UHF station in Philadelphia, would probably be interested in buying the CBS-owned station there because it would help with its National Football League deal. Fox has the broadcast rights to NFL games, including home games of the Philadelphia Eagles, starting this season.
Moreover, NBC may face an ugly problem in Boston. The CBS affiliate there is owned by Ed Ansin, who also owns a TV station in Miami that had its NBC affiliation yanked by that network several years ago, when NBC bought a station there. Ansin later affiliated his Miami station with Fox, but the experience embittered Ansin toward NBC.
Now NBC is likely to ask Ansin to affiliate on his station in Boston, but he is likely to remember NBC's snub in Miami and force the network to affiliate on a less desirable UHF station in Boston.