Less than a year after taking on additional duties for CBS' television stations, Mel Karmazin has expanded his power, becoming the second-in-command to Chairman and Chief Executive Michael Jordan.
While continuing to oversee CBS' 14 television stations and the world's largest radio group, soon to number 150 stations, Karmazin will take on cable and broadcast programming. In addition to the network, CBS owns two country music channels and the Eye on People cable channel.
The move consolidates the power of one of Wall Street's favorite media executives, as well as clears up speculation about the standing of Leslie Moonves, who becomes the most powerful network executive on the West Coast under the management changes announced Tuesday.
Los Angeles-based Moonves becomes president and chief executive of CBS Television, adding responsibilities for sports, news and affiliate relations to his current duties overseeing syndication, international, entertainment, sales and marketing.
"It gives me control over all the content," said Moonves. "It's important that all three divisions [entertainment, news and sports] remain autonomous, but with the crossover of sports and newsmagazines into prime time, they should be more integrated, especially in terms of sales and marketing."
Moonves takes charge of sports at a critical time for the network. In January, CBS knocked NBC out of the bidding for professional football with an eight-year, $4-billion offer that analysts predict could cost the network as much as $100 million a year in losses. CBS is now pressing its affiliates to chip in, but is meeting with resistance.
Over the last three years, Jordan has turned Westinghouse Corp. into a pure broadcaster by shedding and buying assets. But Wall Street began taking notice when Karmazin sold his Infinity Broadcasting radio group to the company two years ago and became CBS' largest shareholder.
Karmazin is a Wall Street darling for his history of producing results and his obsession with a tight rein on spending. When he added the television station group to his responsibilities last year, CBS' stock shot up dramatically.
CBS shares rose 44 cents to close at $35.81 on the New York Stock Exchange.
Cost cuts, new sales initiatives and changes in sales commissions instituted by Karmazin are dramatically improving cash flows at CBS' 14 television stations, which have long under-performed the ABC and NBC groups.
But the network itself is losing money and there has been speculation that Karmazin would like to find a way to separate that part of the business, perhaps by selling it, so that Wall Street would recognize the full value of the stations.
While Moonves gets high marks for improving morale at CBS Entertainment since he took charge nearly three years ago, critics point out that the millions of dollars he has spent on stars such as Bill Cosby, Ted Danson, Sally Field, Tom Selleck and Ann-Margret have done little to bring in younger viewers that advertisers pay the most to reach.
At the network level, CBS lost more money than Fox last year, while ABC and NBC were both profitable. And Moonves makes more money than either Jordan or Karmazin.
While sources close to the two executives say their relationship is on solid ground, analysts wonder whether that will change under the new reporting structure. Both are strong-willed personalities.
The move also renewed speculation on Wall Street about Karmazin's ambitions for the top job.