Fasten your seat belts, UPN

Upfronts are next bump in road for netlet

Coming soon, from the network that brought you “WWE Smackdown”: Media barons Sumner “Red Bull” Redstone and Rupert “Mad Dog” Murdoch step into center stage and battle for the soul of underdog weblet UPN.

Murdoch, whose Fox TV Stations owns UPN’s top affils, dropped the first bodyslam in February. The News Corp. subsidiary announced its intention to sue Viacom over money it said the stations were owed.

Blindsided by the move, Viacom says the charge is bogus, and it indeed appears to be more of a negotiation tactic than a real grievance.

What’s really at stake is the future of UPN on its News Corp.-owned New York and Los Angeles affiliates–and with it, ultimately, the future of the whole network.

Yeah, yeah, you’ve heard this one before: UPN’s ratings head south, its top dogs duke it out in court and rivals whisper of the netlet’s imminent demise.

Old story, different year. It’s not easy being UPN.

The net’s execs deserve combat pay, given the internal drama they’ve experienced regularly since launch in 1995. From ex-CEO Dean Valentine’s legal battle against UPN owner Viacom to the bitter end of Viacom’s 50/50 partnership with former co-owner Chris-Craft, UPN’s ups and downs could fill a juicy book.

Now a key chapter is about to unfold, as UPN heads this week to New York for the advertiser upfront presentations.

It’s no secret that UPN — now firmly under the watch of CBS CEO Leslie Moonves and entertainment prexy Dawn Ostroff — is in need of a ratings infusion.

The netlet is up year-to-year on Monday nights, but has suffered double-digit dips on every other night — particularly Wednesdays, where “Buffy” and “Enterprise” stumbled hard.

Not only did those two shows’ ratings collapse, but most of the netlet’s new entries came up flat. Season to date, UPN’s household numbers are down 15% vs. last year.

A fall strategy that takes advantage of the net’s solid, urban-appeal Monday night comedies and fills the hole left by the departing “Buffy” will be key to erasing that decline.

But even more importantly, the net’s performance next season could determine whether News Corp. or Viacom swagger as they enter the renegotiation ring.

UPN’s agreement with WWOR, New York, and KCOP, Los Angeles, expires in August 2004, and preliminary talks to revisit that deal have already begun with News Corp., which has owned the stations since acquiring Chris-Craft in 2001.

When the blood clears, UPN could wind up with a change of ownership, a shuffling of affiliates, another network makeover, a wholesale shutdown … or the status quo.

“The time to address it is now,” says one exec familiar with the situation. “Ultimately Viacom wants things to work out, but Fox will hold its feet to the fire.”

One possibility has Fox partnering with Viacom to co-own UPN, or taking it over completely. News Corp. had seriously considered buying into the netlet when it first took over the Chris-Craft stations — but Murdoch had his designs on DirecTV, and decided not to go through with a UPN partnership.

News Corp. could also shake things up by making a play to affiliate with the WB; the Frog net’s pact with Tribune outlets is also up next year.In the worst case, Viacom could decide to shutter UPN, blame it on Fox and find new homes for its shows on CBS, cable or syndication. Or Fox could yank its affiliations, decide to turn the stations into sports- and movie-centric indies, and leave UPN to scramble for new affils.

But the most likely–and least sexy — scenario has Viacom managing to strike a deal with Fox to keep its affils — with serious concessions like compensation and pre-emption clauses.

After all, no one wants to be the conglom that killed a broadcast network, particularly one that services a strong African-American audience.

Negotiations could be moot if the Fox stations exercise an option (which expires at the end of August) to simply extend the terms of its affiliation deal with UPN through 2005-06.

But it’s more likely that News Corp. will let that date pass.

After all, Fox has a number of grievances with how Viacom is running UPN: Not only its lackluster ratings, but a belief that CBS execs naturally favor their own network, leaving UPN with sloppy seconds. Plus, there’s that lawsuit, in which Fox alleges UPN owes backpay to the former Chris-Craft stations.

“If you’re Fox, you can afford to drag your feet,” one observer says.

Right now, the Fox stations (led by Mitch Stern) have most of the leverage in any sort of talks. There aren’t any available stations in New York to move UPN to should WWOR go indie. Fox wasn’t going to dare drop UPN from its stations as long as “Buffy” (produced by sib 20th Century Fox) was on the air, but that show goes off this month.

It didn’t have to be this way.

Had Viacom purchased the Chris-Craft/United stable of stations back in 2001, UPN’s fate wouldn’t be a question. An agreement had been reached and press conference was even scheduled to announce it.

But at the eleventh hour News Corp. swooped in with an offer worth $5.4 billion. Viacom execs — angered at the last-minute bid, when it thought it had already shaken hands with Chris-Craft — opted not to make a counteroffer.

“Viacom’s biggest screw-up was not making the Chris-Craft deal,” one insider says.

Meanwhile, even though News Corp. wound up acquiring the stations, things still wouldn’t be so contentious if UPN were on firmer footing.

But UPN still bleeds red ink, to the tune of $80 million last year. It lags far behind the other nets when it comes to upfront dollar tallies. And even Viacom leaders have publicly read UPN the riot act in the past.

“UPN will become profitable or it won’t exist,” Mel Karmazin said at a 2000 Merrill Lynch investment conference. “We already have the CBS network, which is highly profitable. We don’t need another network.”

Redstone has also hinted in the past that he’d be willing to sell UPN, while Murdoch has never ruled out taking an ownership stake in the weblet.

Of course, UPN’s fortunes could shift again, should the network recover this fall.

Optimistic UPN execs are bullish on their development, which includes a new sitcom produced by power couple Will Smith and Jada Pinkett-Smith, as well as a remake of the 80s hit “Hotel” from uberproducer Aaron Spelling.

And here’s another positive sign: Karmazin and Redstone haven’t made good on those three-year-old threats to shutter UPN — yet.

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