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Management of Television's Big 3 a Study in Contrasts


It was like the boa constrictor swallowing the elephant.

In March, 1985, a modest-sized player in the media business, Capital Cities Communications Inc., agreed to buy ABC Inc. for $3.5 billion. The deal ushered in a new era of bottom-line orientation for the profligate TV networks, which were hurting from softened advertising and facing an onslaught of competition from cable operators and the prospect of even more from telephone companies and computers.

Months later, RCA, the owner of NBC, announced a $6.5-billion merger with General Electric Co. Then, in 1986, CBS' biggest shareholder, Laurence A. Tisch, wrested control of that company from its longtime chairman.

Flash ahead a decade. The industry roiling of 1985-86 looks like a warm-up when matched against the mega-deals that burst into the spotlight last week: Walt Disney Co.'s surprise $19-billion offer for Cap Cities/ABC and Westinghouse Electric Corp.'s $5.4-billion bid for CBS. All eyes are now on NBC, which may be pondering a partnership or acquisition of its own.

Along the way, each network has taken its lumps and had its moments in the sun.

What happened in the intervening years to turn ABC, a laggard for much of its existence, into the hottest property in broadcasting and to render CBS, the onetime "Tiffany network," a pale also-ran? And how did GE's cost-conscious approach position NBC for the tumultuous times ahead?

Here's a look back at how the Big Three have been managed. Their styles are a study in contrasts, with widely divergent results.


Larry Tisch is no dummy. Born in Brooklyn, he enrolled at New York University at age 15 and went on with his younger brother Preston Robert Tisch to build Loews Corp.--an empire made up of hotels, insurance, cigarettes and watches--from some down-at-the-heels New Jersey hotels.

But his decision in the 1980s to strip CBS of its interests in records and publishing and to whack away at even the broadcasting base in the name of saving money looks today like a classic management blunder. He chose to liquidate assets at a time when vertical integration was accelerating among other entertainment companies.

"Tisch's approach of paring down to the core business and then not doing the core business very well really stands out," said Grant Tinker, a producer who knows Tisch well and in the early 1980s engineered a resurgence at NBC as its chairman.

The irony is that, in the mid-1980s, CBS Chairman Thomas Wyman had initially embraced Tisch as a white knight who would protect the company from the likes of Ted Turner, the brash, ambitious founder of Cable News Network. Turner in 1985 proposed buying CBS for $5.8 billion. CBS fought him and won, in large part thanks to the support of tycoon Tisch, whose Loews holding company had accumulated 25% of CBS shares.

The tables turned the next year, when Tisch teamed with CBS founder William Paley to oust Wyman and take over the company. Tisch installed himself as acting CEO and, without a hint of remorse, set about carving CBS down to a pure-play broadcaster. No matter that the company's Columbia Records was ranked No. 1 in the world. Tisch sold it off, along with publishing and other operations. From a payroll of 38,000, CBS shrank to 6,500.

The idea of a broadcaster unencumbered by other operations initially held some appeal for Wall Street, but then Tisch began cutting into the bone of his revered network, the home of such news luminaries as Edward R. Murrow, William Shirer, Charles Collingwood, Eric Sevareid and Walter Cronkite.

Bureaus were closed, correspondents who had dodged bullets on assignment in war zones were summarily axed, and big names like Bill Moyers and Diane Sawyer bolted for jobs elsewhere. Morale basically never recovered.

The cutbacks got so messy in 1987 that news anchor Dan Rather and a CBS producer signed an Op-Ed piece in The New York Times that was a bitter indictment of Tisch's management: "CBS Inc. is not on the skids. CBS Inc. is a profitable . . . corporation whose stock is setting new records. But 215 people lost their jobs so that the stockholders could have even more money in their pockets. More profits. That's what business is all about."

Tisch also chose not to invest in cable, which was becoming a medium of choice around the world. As a result, CBS missed out on a global boom from which rivals ABC and NBC have both profited. CBS also, to its detriment, skewed its programming toward older audiences, rather than the 18- to 49-year-old crowd coveted by advertisers.

Oddly, for an obsessive cost-cutter like Tisch, the sky often seemed to be the limit when it came to CBS bids for contracts to broadcast baseball, football, basketball and the Olympics. But last year he got cold feet and, in a bombshell, ceded the rights to televise National Football League games to Rupert Murdoch's upstart Fox network. That set in motion a string of events that arguably led to Tisch's decision to sell out to Westinghouse.

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