Several recent strategic moves by Paramount suggest the entertainment giant wants to replicate the success of Fox and go after the Big Three, creating a fifth network.
After threatening for months to make major broadcast buys, the company moved last week to acquire WKBD-TV Detroit from Cox Enterprises for an estimated $ 150 million (Daily Variety, June 17). Par insiders say this is part of a blueprint that could eventually increase its station empire to the Federal Communications Commission limit of 25% of the country.
In addition, Par chairman Martin Davis has talked with Herb Siegel about forming an ad hoc network comprised of Siegel’s Chris-Craft/BHC/United Television station group and the Par station group, according to industry sources.
An alliance between Par (with stations in Detroit, Philadelphia, Raleigh, Fort Worth, Houston, Washington and San Antonio) and Chris-Craft (stations in New York, Los Angeles, San Francisco, San Antonio, Minneapolis, Salt Lake City and Phoenix) would give anew entity coverage in more than 30% of the country.
A Par spokesman declined comment and Siegel could not be reached. But at least some on Wall Street think such a pairing makes sense, on paper anyway.
“If one looks at what Fox has done and looks at what the logistics are for a company in this operating environment, there’s no logical reason for it not to happen,” said money manager Mario Gabelli, whose funds own a 6% chunk of Par and 30% of Chris-Craft.
“Both parties can get what they want — Paramount access to distribution and Siegel access to program production — without anyreal money changing hands,” Gabelli said. “It’s a very cost-efficient way to get your own distribution.” Both Davis and Siegel head companies that are cash-rich. Par is sitting on close to $ 1 billion and Siegel has about the same amount on the books. Moreover, the two station groups overlap in only one market: San Antonio.
Par has been looking for ways to maximize outlets for its programming — the company explored an NBC purchase and has also talked with network exex about leasing whole time periods or nights.
And the company, with its “Star Trek” syndie franchise and money machines like “Entertainment Tonight” and “Arsenio,” already has a network-size sales force in place.
According to industry sources, Siegel contacted Fred Silverman several months ago to examine ways to build his station holdings into a programming service. Chris-Craft was a key player in the Warner TV programming consortium that launched “Kung Fu: The Legend Continues” and “Time Trax.”
“Someone in the next six months or a year will launch a fifth network,” Silverman said. “There’s a limited window of opportunity. There’s only room for one more.”
But some naysayers believe Par does not have the moxie to go ahead with a fifth web launch.
The company has long flirted with a stab at network glory but has never gotten off the dime. In 1990, Par tried to launch a fifth ad hoc network in association with MCA, but the Fox weblet managed to squelch the plan.
Recently, TV station brokers say, Par walked away from a purchase of at least two of Combined Broadcasting’s three stations located in Miami, Philadelphia and Joliet, Ill.
“They’ve talked about a fifth network here for years,” a high-level Par insider said. “But it’s never happened. They’re still pissed off Fox took the initiative and we didn’t.”
If Par were to go ahead with a fifth network launch, there would be obstacles , not the least of which is assembling a station group. To move beyond 60% coverage, Par would be fighting with Fox in markets representing approximately 40% of the country where there’s only one commercial station not affiliated with one of the Big Three.
And there are those who think Par needs Chris-Craft more than the other way around. The station giant could seek out another avenue, perhaps building on its own station empire that reaches more than 18% of the country.
“If Herb Siegel had the will to start a fifth network, he could do it,” said QVC chairman Barry Diller. “He doesn’t need Paramount. He has the base with his stations in New York and Los Angeles.”
Diller knows about network startups, having masterminded the Fox launch. Indeed, some industry observers believe it may be Diller who beats Par to the punch once again. Diller’s prime partner in QVC, the John Malone-controlled Liberty Media, has an option to buy the Silver King station group, which was spun off from the Home Shopping Network. Liberty also controls HSN.
Wall Street savants think Malone and Diller may be cooking up a way to circumvent FCC regs prohibiting cross-ownership of cable systems and TV stations in the same markets and will eventually start the first interactive broadcast network, using the 12-station Silver King group — which includes stations in Newark, Baltimore, Cleveland and Tampa — as a base.
“I don’t think Martin Davis wants to get beat out a second time,” said a Wall Street media analyst who follows Par. “The prospect of Diller building on the Silver King group may push Paramount to go ahead this time around.”