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News
UPN's fate up in the air
August 14, 2000: 8:25 p.m. ET

Personalities may have played a part in Chris-Craft deal, leaving UPN on a limb
By Staff Writer Franklin Paul
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NEW YORK (CNNfn) - News Corp.'s purchase of Chris-Craft once again throws the spotlight on media titans Rupert Murdoch and Sumner Redstone. But what concerns many TV viewers is the unknown fate of another leader: What happens to Captain Janeway?

That's Kathryn Janeway, (played by Kate Mulgrew) skipper of "Star Trek: Voyager," once the flagship program on UPN network, which airs on most Chris-Craft stations in many major cities, such as New York's WWOR-9.

Now that Murdoch's News Corp. (NWS: Research, Estimates), owner of the Fox television network, has agreed to buy Chris-Craft Industries Inc. (CCU: Research, Estimates) and its 10 television stations, it's unclear whether UPN will exist a year from now, when "Voyager," a program about a space ship trying to get home, concludes its final season.

graphicAnalysts speculate that Fox may eventually choose against carrying UPN programs, perhaps in favor of its own shows and sports events. Faced with a diminished market for UPN's 10 hours weekly of programs, Redstone's Viacom, which owns the UPN network, may pull the plug early next year - right as Voyager enters the home stretch.

Viacom (VIA: Research, Estimates) acquired UPN outright from Chris-Craft for $5 million earlier this year. Affiliate agreements for the stations acquired come up for renewal in January.

"When negotiations come back up for affiliate agreements in January, it could very well be that UPN will lose that distribution," said Linda Bannister, senior media analyst with Banc of America Capital Management.

"If that were to be the case, Viacom has to sit down and take a hard look at this asset, and decide whether or not they want to strike new affiliation agreements, or basically shut down the network," she said. Since the network is operating at a loss, shutting it down would be beneficial to Viacom's cash flow.

"Now keep in mind, this network is not yet profitable for Viacom. So by shutting down the network, actually cash flow estimates will go up," Bannister said.

Representatives for Viacom and Chris-Craft were unavailable to comment on the future of the network.

One analyst suggested that there remains a chance of UPN's survival, considering that advertising and other contracts have already been sealed for the coming television season, even though News Corp. executives shrugged off the issue during a conference call earlier with analysts.

"I think there's at least a 50-50 shot that UPN continues," said SG Cowen media analyst Edward Hatch. "Things may move around. But so much of the programming has already been pre-sold for one or two years, that I don't know how much leeway News Corp. has to shut UPN down if they wanted to."

Market experts also note that UPN's programming, which includes "Moesha," starring singer Brandy, could wind up somewhere on the CBS network schedule.

UPN's Voyager and its leaders


The threatened early demise of Voyager is something of a metaphor for the rocky relationship between Viacom Chairman Sumner Redstone and Chris-Craft chief Herbert Siegel.

Back when "Voyager" debuted, on Jan. 16, 1995, both men sang optimistic praises and vowed their long-term commitment for the United Paramount network, which was jointly operated by the Paramount Television Group, which is a part of the entertainment operations of Viacom, and BHC Communications Inc., a subsidiary of Chris-Craft.

But over time the relationship faltered, as did the ratings of most UPN shows, though many analysts consider the network to still be in its adolescence, still trying to find its niche.

Analysts suggested that a classic clash of titans played a part in the mismanagement and unclear direction of UPN, which only scored a recognized ratings hit this in the last year with a wrestling program, "WWF Smackdown."

graphic"I think sometimes it's difficult to run something by committee; the management of both companies are strong-willed types of individuals," said James Goss, media analyst for Barrington Research in Chicago. "They both have their own way of doing things. That makes it hard to have the flow you need and to create the sixth network."

"Strong-willed" might be an understatement for moguls such as Redstone, and for Mel Kamarazin, president of Viacom and formerly the leader of CBS, which was acquired by Viacom earlier this year. Both are known as outspoken media barons with acquisitive natures.

In fact, Kamarazin reportedly led the extended talks merger talks with Chris-Craft, talks whose end was announced on Friday, amid much wrangling over the price of the deal.

"Viacom walked away from the deal on Friday ... because the price just got to the point where they didn't feel it was beneficial to shareholders," Banc of America's Bannister said.

While no media baron, Siegel has been a player in the media business for decades, and has been labeled as tough by his peers. In 1964, he tried to buy Paramount Pictures -- then a small independent studio -- in a hostile bid. The man who headed the stockholder protection committee for Paramount was Sumner Redstone.

Years later, Siegel began to scoop up stock in 20th Century Fox, and after several deals were completed, increased his stake to more than 58 percent.

But analysts said that unlike Redstone, Siegel, assured a steady cash flow from his television stations, did not have very aggressive plans for UPN, or, for that matter, Chris-Craft.

"The 12 biggest years in history in terms of media growth, and they haven't done a thing," Hatch said.

Added one analyst who requested anonymity: "Viacom felt that UPN had to be run in a little less methodical way, responsive enough to roll with changes in the marketplace to get momentum going. This is a fast-paced business."

"I'm sure they all wanted it to work, they all had investments in it," the analyst added. "But when they weren't getting along as smoothly in trying to make things happen, then Viacom turned up the heat by exercising that buy-sell agreement."

Viacom earlier this year bought Chris-Craft's 50 percent stake in UPN for $5 million, after invoking a clause from their agreement allowing it to do so.

"I'm sure that aroused some negative feelings," the analyst said.

However, Hatch notes Chris-Craft may have made the most important choice - opting for a higher selling price - when it came time to sign off on its sale.

"Maybe personalities played part in the discussion," he said, "but in the end, money talks." Back to top

  RELATED STORIES

News Corp. buying Chris-Craft and 10 stations - Aug. 14, 2000

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.