WB, UPN will tie one on
This article was updated at 8:26 p.m.
A correction was made to this article on Jan. 25, 2006.
And then there were five.
CBS Corp., Warner Bros. Entertainment and Tribune Co. surprised the TV biz Tuesday by shuttering two struggling outlets — the WB and UPN — and merging the two into a new — now fifth — web called the CW Television Network.
Move will unite shows from both nets — such as UPN’s “Everybody Hates Chris” and “Veronica Mars” and WB’s “Gilmore Girls” and “Smallville” — in a bid to create a dominant player in the 18-34 demo.
“The CW is going to be a real competitor — a destination for young audiences and diverse audiences and a real favorite among advertisers,” said CBS chief exec Leslie Moonves, who made the announcement with Warner Entertainment chairman-CEO Barry Meyer and Tribune Co. CEO Dennis FitzSimons.
New net is structured as a 50-50 joint venture of CBS and Time Warner and will be distributed on CBS- and Tribune-owned stations reaching 95% of the country.
With the announcement, WB chairman Garth Ancier and Frog Entertainment prexy David Janollari are both out of a job.
Dawn Ostroff, current president of UPN, will become prexy of entertainment of the new entity, and WB chief operating officer John Maatta will become COO at the new net.
WB sales president Bill Morningstar will assume similar duties at the CW.
In a memo to Frog staffers, Ancier said he will stick around to help with the transition but has opted to depart to focus on new-media ventures.
“I have had the genuine honor of being an architect of two successful startup broadcast networks over the past 20 years and am yearning to try something different,” he said.
As for the entertainment presidency, Warner Bros. TV Group prexy Bruce Rosenblum said choosing between Janollari and Ostroff was the merger’s “toughest decision.”
“We have a great fondness for David,” he said. “Dawn has done a great job at UPN, and the decision was for the benefit of the network long term.”
It’s unclear where Janollari will land, but Rosenblum said he hoped to find a way to keep the exec somewhere in the Warner Bros. camp.
The merger of the two entities –which had been considered off and on since they were both founded in 1995 — is an admission that while there may be room for a fifth broadcast net, there wasn’t enough ratings mojo or advertising dollars for a sixth, especially when both were pursuing the same younger, female audiences.
The WB and UPN came close to merging in 1995 — even coming up with a plan on how to divide up their stations. But UPN’s co-owner at the time, Chris-Craft, nixed the deal. It took 11 years, but the merger finally happened.
Moonves and Meyer began talking about the deal at Thanksgiving, quickly tapping CBS’ Nancy Tellem and Rosenblum to spearhead the merger.
“We realized this was a unique moment in time. If we didn’t do something now, we’d regret it later,” Meyer said.
Execs noted that the timing was serendipitous — the WB’s affil agreement with its chief station group, Tribune, was expiring in August, at the same time UPN’s pact with News Corp. — which owns the net’s key stations — was also up.
Rosenblum said both sides realized that there was ultimately only room for a fifth net.
“The opportunity to build a true fifth network and make it competitive with the Big Four is an opportunity neither company wanted to pass up,” he said.
The merger confirms rumors that had been swirling for months that Warner Bros. had been looking to merge the WB with another operation (Daily Variety, Dec. 19). Speculation had previously focused on a strategic alliance with a net such as ABC or NBC or merging back-door duties with Warner Bros. TV.
“We explored a lot of different business arrangements,” Rosenblum confirmed.
Meyer said that while he never contemplated shutting down the Frog, “We were looking at cutting back original programming (and running) more repeats.”
Meyer, Moonves, Tellem and Rosenblum have known one another for decades, dating back to when they were all execs at Warner Bros.
Close relationships between CBS and WB suits will help, but Meyer said “some structural answers” were built into the deal to help avoid potential problems.
For one thing, any shows from Warner Bros. TV or CBS Par Network TV will immediately become co-productions if greenlit to series. Studio that developed it will take the lead in producing.
What’s more, “If we ever have an irreconcilable difference, we have set up (a system for) binding arbitration,” Meyer said. “It’s draconian, but it’s the surest way to ensure we never have to use it. It’s not something we’re worried about.”
Tellem said that while the CW will operate as a stand-alone net, CBS will give guidance to the new net in areas such as marketing, research and business affairs — though she said the new net will not use the Eye’s infrastructure.
Both UPN and the WB targeted young female viewers, but UPN skewed more toward urban viewers with its Monday comedy block targeted at African-American viewers, while the WB skewed more suburban. Both have significant audience overlap, as well as significant challenges. Neither was profitable.
“This new network makes sound business and creative sense at every level — for our viewers, advertisers, affiliates and for the shareholders of our companies,” Meyer said.
Net will be staffed by a combination of UPN and WB execs, and an undisclosed number at their respective Brentwood and Burbank headquarters will be laid off as a result of the merger.
The CW also plans to build a new HQ rather than move into either existing digs.
Going forward, network management will have to start making some tough decisions on whom to take along to the CW.
“Hopefully, it will be a blend of best of senior executives of both networks,” Rosenblum said.
Move comes as the WB has struggled in the ratings and watched as UPN — the perennial sixth place net –targeted its young, female demo and moved ahead of it in the ratings.
But with merged schedules, Ostroff said the network will have a No. 1 or No. 2 show each night in the 18-34 demo, making the CW a bigger player in the battle for advertising dollars.
“I think what people are going to find is all the programming appealing to this one demo is now going to be under one roof,” Ostroff said. “It’s going to be one-stop shopping.”
As for the name itself, the execs said they weren’t married to the CW — and that the network moniker could change before its September launch.
Tribune’s 22.5% stake in the WB will be liquidated when the weblet is shuttered in exchange for a 10-year affiliation agreement for Tribune’s 14 former WB stations.
The shutdown of the UPN and the WB will set affiliates not owned by CBS or Tribune scrambling. Fox TV Stations Group owns nine UPN affils — including WWOR in Gotham, KCOP in L.A. and Chicago’s WPWR — and will have to find other sources of programming for the fall.
The new CW execs expect to have a schedule ready to present to advertisers at the May upfront negotiations, where broadcasters make bids for roughly 80% of their advertising for the coming year.
But advertisers cautioned that there’s no way to know whether viewers will follow their shows to a new network and what the impact of mixing the two will be on audiences.
“Advertisers are obsessed with the young demos,” said Brad Adgate, senior VP of research at Horizon Media. “If they can keep the core viewers that the two networks enjoyed, advertisers and viewers will be happy with that.”
The subtraction of a network will also reduce the amount of commercial inventory for sale, which may benefit network ad rates or accelerate migration of dollars to cable.
The co-ownership structure has plenty of precedence. But most 50/50 partnerships have fizzled through the years, as two competing congloms usually wind up at odds over their differing agendas.
Chris-Craft and Viacom got into a legal tussle over the ownership of UPN before Viacom finally
took it on solo; other nets with two parents, such as USA Network and Comedy Central, also saw those arrangements come to a close eventually.
But Rosenblum said he doesn’t think the CW will encounter that same kind of dysfunctional ownership.
“There are a handful of things that make this different,” he said. “We have a close alignment of interests — a desire to service content for both CBS Corp. and Warner Bros.”
(Josef Adalian and Michael Schneider in Hollywood contributed to this report.)