CBS sets new order

NEW YORK — The aftershocks from last week’s abrupt departure of Peter Lund reverberated at CBS Friday, with execs saddened by Lund’s exit but less fearful of its short-term impact than they were when the news first broke.

On Friday, the company belatedly announced a revamping of its corporate structure, merging radio and TV station groups under Mel Karmazin with the rest of the TV and cable businesses reporting directly to Westinghouse Electric Corp. CEO Michael Jordan.

The moves followed Lund’s resignation, on the eve of CBS’ fall-schedule presentation, after Jordan removed him from authority over the TV stations (Daily Variety, May 23).

“While I wish he had decided to remain at CBS, I respect his choice,” Jordan said in a statement, refusing —like Karmazin — to grant interviews but airing support for Lund’s three hand-picked programming chiefs, entertainment prexy Leslie Moonves, news chief Andrew Heyward and sports president Sean McManus.

Early speculation had Karmazin taking on the entire TV operation, so the more limited nature — at least for now — of his broadened scope relieved some programming execs, who sought to downplay the prospect of any major impact.

“In the cold light of day things are fairly settled,” said one news division exec. “People realize this didn’t have much to do with us,” he added, although some had raised the specter of former CEO Laurence Tisch, who dismantled the company and slashed news and other divisions.

Broader responsibilities

“I don’t see us being personally affected by this,” said one sports exec, while in the West Coast entertainment division, most expect Jordan to give a wide berth to Moonves, who will take on broader responsibilities with Lund’s exit.

Jonathan Klein, the CBS Television Stations prexy thought to be in jeopardy, is said to be staying put under Karmazin’s new command.

But a lingering queasiness comes from the notion that stations alone may not satisfy Karmazin for long, particularly if his efforts to boost their profits don’t yield improvement in CBS’ valuation by Wall Street.

“In the end you have to look at what job does Mel really want?” said one division chief. “He is totally driven by the stock price, and if he thought he could get the stock price up by running other things, he would want to do that too. But what it comes down to is a degree of patience; in TV, you don’t turn things around too quickly.”

Karmazin should be pleased by investors’ reaction to his own ascent: Westinghouse stock rose 11% Friday to close at $18.875 on heavy volume, after languishing in the $17 range for months. That’s in part because many expect Karmazin to improve the network’s 14 O&O stations with the same techniques used to make its 77 radio outlets enormously profitable. Karmazin became Westinghouse’s largest individual shareholder when Jordan acquired Infinity Broadcasting last fall for $4.9 billion in stock and assumed debt.

Jordan’s untested management skills at directly running the network also leave some antsy.

In the past, said one longtime Lund loyalist, Jordan has “seemed to be a sort of coach, a devil’s advocate in meetings, but he gives people who have a right to make decisions the ability to make decisions. With that style, I think things will run as they have before. But the question is, what happens when there are conflicts between two of those parties, and someone has to arbitrate that conflict and make the ultimate decision? Peter was great at effecting that compromise and making people feel they had been given a fair hearing.”

Perhaps the worst aspect of last week’s drama was the bungled management of the executive changes, the latest in a series of public relations slip-ups under Jordan’s watch. Lund’s exit caught most CBS execs by surprise, and the timing couldn’t have been worse.

The news loomed like a cloud over a lavish party to celebrate the unveiling of the Eye web’s fall schedule. “It was like a little Fellini movie going on,” joked one exec, while another reflected prevailing disgust felt by several execs, describing the ill-timed disclosure as “like a knife in the gut.”

According to sources, Jordan badly misread Lund and believed he’d simply go along with plans to undercut his authority. They didn’t recognize the damage his resistance — and resignation — would have on the eve of CBS’ upfront sales market and the summer affiliates meeting that begins Wednesday at the Century Plaza Hotel.

But ad buyers doubt CBS will immediately suffer from the fallout, although they won’t quickly forget it. “I don’t think it’ll have any impact on their upfront sales efforts,” said Bill Croasdale, chairman of media operations at Western Intl. Media in Los Angeles. “If they have the programs we want to fulfill the demographic requirements we need for our clients, we will buy CBS.”

Nonetheless, other advertisers said the picture of instability undermines the momentum CBS gained with its May sweeps performance and encouraging fall schedule, and they most fear a backlash if Karmazin alienates Moonves by pushing for more authority over programming.

Affils gathering this week, like CBS execs, are “disappointed” by the well-respected Lund’s departure, since “he’s been a key guy in the relationship between the network and affiliates,” said affil board chairman Howard Kennedy, G.M. at KMTV Omaha. Lund helped repair damage caused by Tisch, although others criticized him as emblematic of a bygone CBS culture they believe must change.

Overall, said Kennedy, with positive reaction to the new fall lineup, affils are likely to have mixed emotions: “On the one hand everyone wants to be euphoric, and on the other hand everyone’s going to be sad about missing a pal.”

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