A day after renewing a contract that continues Oprah Winfrey's highly rated talk show for two more years, King World Productions Inc. settled a lawsuit Tuesday with Sony Corp. that had held up production of the "Hollywood Squares" game show for nearly two years.
Both deals, and the launch of a talk show this fall featuring Roseanne, are an attempt by King World to offset declining fortunes from the syndicator's two aging mainstays, "Jeopardy" and "Wheel of Fortune."
"King World has been reborn over the last three months," said Jeffrey Logsdon, an analyst at Cruttenden Roth who credited the momentum to a new president and chief operating officer, Jules Haimovitz, who joined King World in June. The company had been preoccupied by attempts over the last two years to shop itself.
CBS on Tuesday quickly signed up with King World to broadcast "Hollywood Squares" on most of its 14 television stations, marking the first programming deal struck by Mel Karmazin since he took charge of the network's television group this summer as chairman and chief executive of the CBS Station Group, which also includes its radio stations.
Neither CBS nor King World would comment on the value of the deal, but sources said it exceeds $50 million, underscoring the importance of finding powerhouse programming to drive prime-time ratings.
CBS said it will pair the game show with "Entertainment Tonight" starting next fall in the hour before prime time in markets including Los Angeles. "Entertainment Tonight" is now paired with "Hard Copy" or "Real TV."
CBS stations have trailed ABC and Fox in the ratings in the important slot preceding prime time because of its weaker program lineup. ABC has the benefit of the two top-rated syndicated shows, "Jeopardy" and "Wheel of Fortune," while Fox airs reruns of popular shows including "Home Improvement" and "Seinfeld" in those time slots.
Sources say NBC is searching for a show to replace the unsuccessful "Access Hollywood" entertainment program.
Terms of the deal with CBS were not disclosed, although Haimovitz said that "Hollywood Squares" could generate as much revenue for the company as the two other game shows it distributes. King World takes in roughly $125 million in annual revenue each from licensing "Jeopardy" and "Wheel of Fortune" to television stations nationwide.
King World distributes those two long-running shows under a contract with their producer, Sony. But the contract prevents the syndicator from producing competitive game shows.
King World sued Sony to nullify the clause and enable it to produce "Hollywood Squares" and other game shows.
King World has been under pressure from Wall Street to put its enormous cash horde of $800 million to better use. The company does not own the programs that generate the bulk of its profits. "The Oprah Winfrey Show" accounts for 40% of the company's revenues and "Wheel" and "Jeopardy" account for another 40%.
Under the legal settlement, Sony and King World will co-produce "Hollywood Squares" and King World will distribute it to the remaining 70% of the country not reached through the CBS stations.
Shares of King World rose 81 cents to close at $41.56, near its all-time high.
"Hollywood Squares" was one of the most-popular and longest-running game shows in the 1970s. King World said the stars and host of the updated "Squares" will be announced within a few weeks.
New York-based King World is looking to "Hollywood Squares" and a new talk show from Roseanne to guard against a slide in ratings of its two existing game shows and the unknown status of Winfrey after the 1999-2000 season.
While the deal was a coup for CBS, sources said it casts into question the future of the company's Eyemark Syndication, which was formed last year to develop programming that takes advantage of its large station group. One CBS source said with the addition of "Hollywood Squares" the schedule is mostly filled up.