Now, they say, Karmazin is likely to close UPN before the fall prime-time season begins rather than lose $150 million over the next year on the network. He could not air CBS programming on the former UPN-affiliated stations without violating the contract he has with CBS affiliates.
Television executives also question how Wall Street will react to the rich price News Corp. would pay. Broadcast properties have fallen out of favor with investors, with TV station groups trading at near-lows because of the high costs of their conversion from analog to state-of-the-art digital technologies and the uncertainties of the payoff for doing so.
News Corp. would pay a 37% premium over Chris-Craft's closing price Friday. The shares plunged $8 after Viacom's announcement that merger talks were dead, closing at $62 on the New York Stock Exchange. But the takeover speculation has propped up the stock for the last year.
News Corp. shares fell 88 cents to $49.75, and Viacom Class A gained $1.31 to $71.94, both on the NYSE.
With the purchase, News Corp. would run afoul of federal rules that forbid broadcasters from owning stations that reach more than 35% of the nation. Technically, the Chris-Craft group would give News Corp. a 54% reach. But because the four overlapping Chris-Craft stations wouldn't count toward News Corp.'s total under the duopoly rules, the count would be only 40%.
That means it could be forced to sell two or three of the 10 stations.