Now that they’ve gotten hitched, Sumner Redstone and Mel Karmazin face the more difficult task of consummating their corporate marriage.
The merger of Viacom and CBS was hammered out with such lightning speed — in barely a week, according to several industry insiders — that the two toppers had virtually no time to figure out key details. Unfinished business includes:
- Revised exec reporting structures for the various units of the new entity. Karmazin has operational control of everything, but the long-term responsibilities of many high-ranking execs underneath remain fuzzy. Turf wars among the likes of Leslie Moonves, Jonathan Dolgen and Kerry McCluggage seem inevitable.
- How to deal with units with duplicated functions. Viacom will now own three syndie arms (King World Prods., Paramount Domestic Television and Eyemark Entertainment) and three key primetime suppliers (CBS Prods., Paramount Television and Spelling Television). That all will survive intact seems doubtful.
- Who will run the combined CBS O&Os and Paramount Television Stations group. CBS recently appointed broadcast vet John Severino as its stations czar, while Par’s station group is headed by the well-respected Tony Cassara.
- The best way to take advantage of the content synergies within the new company. At first glance, the older-skewing CBS broadcast web doesn’t appear to mesh with Viacom’s youth-friendly cable holdings MTV and Nickelodeon. Industry analysts, however, see plenty of opportunities, particularly in the area of advertising sales.
“Mel did a great job of selling Sumner on how to do the deal,” one industry insider familiar with last week’s negotiations said. “But they haven’t figured out anything about the mechanics of how it’s going to work.”
In terms of potential personality battles, it’s unlikely the no-nonsense Karmazin will allow any extended conflicts to play out. Within a year of the 1995 merger between Westinghouse and CBS, chairman Michael Jordan was ousted and Karmazin took over that job.
“This will work if the people involved want it to work, and Mel will make it work,” said a high-level insider at one of the companies involved in the merger.
Clash of the execs?
Just which execs might clash won’t be known until Karmazin determines who’ll be reporting to whom in the new Viacom.
CBS Television topper Leslie Moonves, who just inked a new long-term deal with the Eye, is a cinch to remain as supreme commander of all CBS network and station functions. The real question is whether he’ll extend his power base. How the role and function of execs like Paramount TV chairman Kerry McCluggage will change is also in question.
While many say it’s unlikely Viacom will follow the Disney/ABC model and merge the CBS network and Paramount production units, it’s not unthinkable that Moonves might somehow become a key player at Paramount.
Tension between Paramount and CBS may be lessened by the fact that the Eye, unlike ABC, already has an ownership stake in most of the programs it airs. And once the merger is complete, CBS will become a shining example of vertical integration, owning at least part of every show it airs, save for Carsey Werner’s “Cosby” and 20th Century Fox Television’s “Chicago Hope.”
MTV eyed CBS cablers
As for cable, even before Redstone and Karmazin negotiated their plan to merge Viacom and CBS, Viacom’s MTV Networks had its designs on CBS’ cable assets, Country Music Television and TNN.
CMT is a 39 million subscriber channel that plays nothing but country music videos. While the business isn’t big or sexy, CMT is quite profitable and MTV bigwigs have long believed the web would make a good fit with its music webs MTV and VH1.
CMT will generate about $103 million in revenue this year for its $34 million in programming expenses, according to Paul Kagan Associates.
Last year, MTV Networks bigwigs put together a plan to buy CMT from CBS. The deal was not consummated.
Unlike Warner Bros., which can sell its hit theatrical films to TNT and TBS after their pay-TV runs, Paramount has no such corporate outlet for its films.
If the Viacom/CBS deal is completed, Paramount could put some of its films’ broadcast premieres on CBS. And, if TNN’s content definition were tweaked to be more mainstream, the cable web could become a logical broadcast outlet for Paramount films and off-network, CBS-owned TV shows.
While MTV and CBS probably won’t team up anytime soon to promote an Eye fall lineup, MTV could prove to be a powerful tool to help promote special events like the Grammys and the Super Bowl.
MTV Networks’ VH1, aimed toward the boomer aud, has already worked with the Eye extensively to promote CBS music specs and some pics. The potential for synergy will be demonstrated later this fall, when VH1 will air the cable preem of the Eye rock mini “Shake, Rattle & Roll” just weeks after it bows on CBS. VH1’s rebroadcast, coming during the key Christmas selling season, will feature numerous plugs for a soundtrack CD tied to the mini.
Industry analysts also see potential for synergy between CBS and Nickelodeon. The Eye has been an also-ran in the Saturday ayem kids race, but could become an instant player if Nick programming simply started airing on CBS — much the same way as Disney helped ABC become the top-rated kidvid web two years ago.
(Richard Katz contributed to this report.)