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CBS fantasizing about NBC?
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February 25, 1999: 1:59 p.m. ET
CBS chief Karmazin louder about eyeing GE-owned rival, but FCC is still a hurdle
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NEW YORK (CNNfn) - Comments by CBS Corp.'s chief executive Mel Karmazin Thursday brought into wider view a notion that once would have been unthinkable in TV land: a merger of big-name networks.
But so far, it's still unthinkable.
Media analysts insist that the new CBS chairman is merely fantasizing until federal rules change to allow a single network have a wider televised presence.
Speaking at a conference in New Orleans sponsored by the American Association of Advertising Agencies, Karmazin floated an idea he has often aired in trade papers: that CBS would be interested in buying rival NBC if federal laws were to change.
Karmazin even went so far as to say he would "overpay" for NBC, which is now owned by light-bulb, financial-services and media empire General Electric (GE).
For now, that's a far-fetched prospect. Karmazin has made no bones about his dislike for the current federal rules that prevent CBS from gobbling up more space in the televised universe.
Current Federal Communications Commission rules forbid one company from owning two broadcast networks, or owning more than one television station in the same market.
A third federal regulation limits the total "reach" of company stations to 35 percent of the national audience. CBS now reaches 33% with its 14 stations, so it is effectively blocked from buying a single TV station.
Such a deal could be mouth-watering for NBC, which has seen ratings tumble after losing hit show "Seinfeld" and the money-making deal to broadcast National Football League games.
"I'll wait and see. I wouldn't hold my breath," said Tom Wolzien, a media analyst at Sanford C. Bernstein. "You'd need massive changes in regulations to do that."
Late last year, GE Chairman Jack Welch told Wall Street analysts that NBC was worth $20 billion.
According to reports, Karmazin said a buyout wouldn't be unwarranted amid the current corporate merger wave, adding, "If Exxon and Mobil can combine, then why can't I buy NBC?"
CBS filed a request with the FCC several months ago to let the network own multiple networks and stations, Wolzien said.
Karmazin said he would be interested in any major network, but said he felt Disney (DIS) isn't likely to sell its ABC network.
In an off-the-cuff review of the network's plans, Karmazin said CBS "has no fear that the Internet will displace television" adding however that the company plans to unveil a number of Internet initiatives in the next two months.
-- from staff and wire reports
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