NEW YORK — If Westinghouse Electric Corp. completes its bid to buy CBS Inc., the new owner is expected to give CBS Entertainment President Leslie Moonves the money and autonomy he needs to program the television network out of third place in the prime-time ratings. But, given the price tag for CBS and the recent history of cost cutting at Westinghouse by Chairman Michael H. Jordan, observers believe Jordan may make cuts in other areas at the network once Westinghouse acquires it.
"Westinghouse will run CBS the way [Chairman and Chief Executive Laurence A.] Tisch has run CBS," said one former Westinghouse executive who was with the company for many years. "They'll be looking for ways to cut."
Since Jordan became chairman of Westinghouse in 1993, he has moved to improve the fortunes of the company by selling off several unprofitable businesses, streamlining operations and reducing the work force by 7,000. The company is planning to sell other assets to finance its CBS bid.
"Jordan is a finance guy like Tisch, and each division of CBS will have to justify itself to him," said Nell Minow, a money manager at Washington-based Lens Inc. "He will have to sell off the weak parts of Westinghouse to buy CBS, and he has no sentimental attachment to people and divisions of CBS."
In recent years, Westinghouse has improved the profit margins of its local TV stations in part by reducing staff, decreasing local programming and consolidating some operations between its radio and TV divisions.
When Westinghouse acquires CBS, analysts and observers of the company say, it will move to put the combined TV stations under one management and the combined radio stations under another.
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"They're still going to need two station managers in cities where CBS and Westinghouse both have TV stations," said one financial analyst, "but you don't need two different corporate managements to run the TV division."
However, when it comes to running prime time, Westinghouse is expected to leave Moonves alone.
The former president of Warner Bros. Television and the producer of "ER," "Friends" and other hit sitcoms, was hired by CBS in June. His compensation package reportedly is worth more than $20 million over four years.
"Moonves is one of the best assets that CBS has," said Dillon Read media analyst Ed Atorino. "You've got to spend money to develop and produce hit shows, and Moonves is a guy who knows how to create hits. Westinghouse is not going to mess with him--they're betting that he can turn CBS around in prime time."
There is speculation that Westinghouse might bring in a minority partner after the deal to invest in programming. Jordan did not rule out such a possibility when he announced the CBS deal Tuesday.
Westinghouse's initial interest in CBS was for the stations. "Jordan began by looking to expand Westinghouse's base of TV stations," said one executive with knowledge of the CBS-Westinghouse discussions, "and then he made the leap to buying one of the most important communications properties in this country."
Under the deal, the companies' combined TV stations would reach an impressive one-third of the country, with many of the stations in large, urban markets.
"We have some ideas for programming that we believe will benefit the stations," William Korn, chairman of Westinghouse Broadcasting Co., said in an interview Tuesday.
CBS, which traditionally has been strong with older viewers in smaller markets, has already embarked on a strategy to attract younger viewers with hip, new shows. This strategy is expected to benefit the bottom line of the new company's urban stations.
In sports, one CBS executive predicts, CBS-Westinghouse will be more aggressive in trying to regain National Football League games from Fox Broadcasting Co. Tisch has maintained that Fox overpaid for NFL football. But, said the executive, many stations "in this new station group have an NFL franchise. There will be much more of a push to get NFL football back in the new company. It may not be a big moneymaker for the network, but it would bring in a lot of local advertising revenue to the stations."
At CBS News, staffers are concerned that there may be further cuts in staff and news-gathering operations at the division, which has already suffered cutbacks under Tisch. The division is said to make a profit. But, said one news producer, "Westinghouse has a background in running local news operations, and everybody always thinks they can cut news budgets. There probably are a lot of cuts that could be made in Hollywood, but nobody from the outside ever thinks they know how."
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One executive who has worked with Westinghouse believes the company might make a dramatic move with "CBS This Morning" by turning programming in the first hour of the show over to the local affiliates. The news show has trailed the other networks' offerings.
