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Karmazin takes the reins
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October 28, 1998: 7:15 p.m. ET
CBS board names former Infinity chief to replace retiring CEO Michael Jordan
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NEW YORK (CNNfn) - Michael Jordan, who oversaw CBS Corp.'s transformation from an industrial conglomerate to a broadcasting giant, will retire at the end of the year.
And the man the New York-based broadcaster named Wednesday to succeed Jordan at the helm of the venerable CBS television network and radio group -- Mel Karmazin -- comes as little surprise to Wall Street insiders who have anticipated the promotion ever since CBS bought Karmazin's former business, Infinity Broadcasting Corp., in December 1996.
Jordan, who is now 61, has intimated in recent months that he had no intention of remaining in the job much longer.
Meanwhile, Karmazin, as president and chief operating officer, has become an increasingly visible and vocal presence on the managerial front, lending a skilled touch to the streamlining process that began in earnest after the former Westinghouse Electric Corp. purchased CBS in November 1995.
As the big television networks face some of their toughest ratings challenges in recent years, executives are placing a higher premium than ever on savvy business management.
With viewership squeezed by the sudden proliferation of cable channels and the Internet, and with production costs for new shows edging higher, the traditional broadcast bastions are finding themselves hard-pressed to retain once-loyal audiences.
At the same time, ABC, CBS, Fox and ESPN have hiked advertising rates on pro football games after agreeing to pay the NFL $2.2 billion a year through 2005 for broadcast rights. The only problem: ratings are off about 11 percent as some industry analysts hint that the giant football deal is beginning to look like a fumble.
A growing role across the network
As president and COO, Karmazin has overseen an expanded empire, with a growing role in all aspects of the network's business.
In his new role, Karmazin will chart CBS's strategic course while continuing to oversee CBS Television, including the network and its related branches, CBS cable and the CBS Station Group, which is composed of CBS Radio, the 14 CBS-owned television stations and TDI, the company's outdoor business.
Porter Bibb, a media specialist at Ladenburg, Thalmann, said he saw little significance in the timing of Karmazin's promotion.
In a statement Wednesday, Jordan said CBS was well on its way to finally shedding the cumbersome assets left behind by Westinghouse and transforming the broadcaster into "one of the finest media companies in the world."
"I can think of no more appropriate time to move on to other challenges, and no better person to carry CBS forward than Mel Karmazin," Jordan added.
How Karmazin chooses to carry the company forward remains unclear, however. Bibb suggested Karmazin may opt to spin off the network to another media firm such as Time Warner, the parent company of CNN, or Viacom.
Wall Street may view a decision to jettison the network but retain the CBS-owned local stations and radio group as a booster for the company's books.
CBS already has proposed a public offering that would include up to one-fifth of Infinity Broadcasting and a spinoff of its 155 radio stations and outdoor advertising assets.
Jordan has held the top posts at CBS Corp. since June 1993. The company was known as Westinghouse Electric Corp. until Dec. 1, 1997,
When Jordan took the helm, Westinghouse owned five television and 18 radio stations. Jordan oversaw several major acquisitions, of CBS Inc. in 1995, Infinity Broadcasting in 1996, Gaylord Entertainment Co.'s cable properties TNN and CMT in 1997, and this year, the radio broadcasting operations of American Radio Systems.
The ascension of Karmazin, who joined CBS in 1996 when the network bought his Infinity Broadcasting business, comes a little more than six months after his last promotion to his current post.
Karmazin joined CBS in January 1997 as chairman and chief executive of CBS Radio, after the merger of CBS Radio and Infinity Broadcasting, where he had served as president and chief executive officer since 1981.
In May 1997, Karmazin was named chairman and CEO of both the radio and television station operations of the CBS Station Group.
Shares of CBS (CBS) ended up 1/4 at 25-3/8 Wednesday on the New York Stock Exchange.
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