Last week, in the oddest pairing since Dan Rather and Connie Chung, CBS announced a tentative deal to merge with QVC, Inc., the giant home-shopping cable network. If it was a timely move by Tisch to move on and bring in new blood, it was a major coup-and an extraordinary comeback-for Barry Diller, QVC’s boss. Diller, 52, will succeed Tisch as chief executive (Tisch, 71, remains as chairman), a job that will finally allow him to run the stage media trophy he had sought unsuccessfully in Paramount. While CBS, on paper, is dominant over QVC in the new $5 billion entity, Tisch promised: “Barry will be the boss.”
At first glance, the deal looked like the Tiffany network meets cubic zirconium; the network that brought us Edward R. Murrow and “I Love Lucy” joining forces with the network that hawks cosmetics and jewelry to the telephoning masses. “Bill Paley must be turning over in his grave,” lamented one media analyst, referring to the CBS founder. But that was unfair. Diller is no mere cable pitchman. Considered a shrewd and creative programmer, he made his name at ABC and Paramount and built Fox TV into a contender. Analysts expect Diller to invigorate CBS programming with a younger spin, and push the hidebound network into cable and other nonbroadcast areas, belatedly joining competitors. “CBS won’t be a single-act player anymore,” said analyst Tom Wolzien.
Wall Street was enthused, bidding up CBS stock $50 in one day to $313. But that run-up sparked speculation that other companies might make an uninvited takeover bid for CBS. The network has been rumored to be for sale for years, and the QVC merger heightens that possibility. The most frequently mentioned company has been Walt Disney, although executives there dismissed a possible bid. Tisch was adamant that CBS wasn’t for sale. “This company will not be shopped,” he said. Given the company’s size and regulatory hurdles, he added, he doubted other companies will attempt a takeover.
The QVC merger will eventually close a tumultuous and mixed eight-year reign by Tisch. Tisch began buying CBS stock in the mid-1980s, when the company was in turmoil after repeated hostile takeover attempts. As CEO, he slashed thousands of jobs, including a chunk of the venerable news division. Despite promises, he sold off nonbroadcasting divisions. A disaster area for a few years, the network made a comeback starting in 1990. Shows like “Murphy Brown” flipped its prime-time ratings from third to first; advertising dollars poured in. Still, Tisch refused to spend money to hop on the media highway, declining investments in cable networks. He proudly said that the company was earning 12 percent a year by sticking its $1 billion in the bank. Other broadcasters, meanwhile, were building cable ties; ABC owns ESPN and NBC owns CNBC. Tisch’s caution made CBS vulnerable. Fox outbid CBS for the football broadcasts and wooed the affiliate stations with open checkbooks.
Tisch insisted last week that he wasn’t acting out of weakness. “We think we will be No. 1 next season; our affiliates will all be replaced,” he said. But by combining with QVC, Tisch will have abandoned several of his stated principles: he will be diversifying and, more ironically getting into bed with archfoe cable television. Of course, by cashing out now, Tisch, a broadcasting neophyte when he first bought CBS stock, will do well. His profits on this deal would amount to at least $325 million, plus he will hold 10 percent of the combined entity’s stock. His original investment was $743 million.
If Tisch’s motives are ambiguous, Diller’s are crystal-clear. A tough, abrasive and tenacious executive, Diller has wanted to run a big media company for some years, to play in the same league as people like Rupert Murdoch and Ted Turner. Responsible for imbuing the Fox network with a young, edgy feel (and such hits as “Married… With Children”, he left Murdoch’s network in 1992 to search for his own company. People snickered when he bought control of downscale QVC, but it was merely a springboard for Diller. And he indeed used it to go after Paramount, ultimately losing the drawn-out battle to Viacom. His succinct parting words are now legend: “They won. We lost. Next.”
Next was CBS. What will he do with the network? Most think his first job is to protect the network’s shaky top-ranked ratings by tilting its programming more toward younger, 18-to-35 viewers. He may also start additional cable networks, and try ventures in interactive television. Last week Diller talked vaguely about enhancing the pre-eminent CBS “brand” name. To his credit, he refused to use “synergy” to justify the merger. Thank God; we don’t think Dan and Connie care to pitch jewelry.
