CBS MARRIES MTV; VIACOM'S BUYOUT MAY GIVE YOUTHFUL VIGOR TO NETWORK.

Byline: Marla Matzer Staff Writer

The biggest media merger in history will likely mean a face lift for broadcast television's highest rated network and possibly the end of one of TV's lowest-rated networks.

In a May-to-September match, Viacom Inc. - which rocks with its MTV and VH1 networks - agreed to buy CBS Inc. with its empathies on attracting older viewers with shows like ``Touched By an Angel'' in an all-stock transaction valued at $37.3 billion.

The new Viacom and its CBS network flagship will be the third-largest media company in the world, behind Time Warner Inc. and The Walt Disney Co. It will be a dominant presence in broadcast and cable television, radio, movie and TV production, book publishing, outdoor advertising and the Internet.

The Viacom-CBS deal tops Disney's $19 billion purchase of Capital Cities/ABC in 1996, and leaves NBC as the only network not owned by a parent company that also controls a Hollywood studio. ABC is owned by Disney; Fox was started by News Corp., the same company that owns Twentieth Century Fox; and the WB Network is controlled by Time Warner, parent of the Warner Bros. studio.

Analysts were predicting that the merger would put pressure on these and other media companies to make more deals in a consolidating market.

Different programmers

The two networks that come under the merger - UPN, half-owned by Viacom and Chris Craft Industries, and CBS - could scarcely be more different as programmers. CBS, the highest-rated broadcast network, goes for the older audience with news shows like ``60 Minutes'' and series like ``Walker, Texas Ranger''; UPN, among the lowest rated, has marched relentlessly down the age scale and, many would say, down the taste scale as well with such programs as ``WWF Smackdown.'' ``Smackdown'' is bringing wrestling back to network TV from cable this fall, in all its violent and profane glory.

But the two companies' other holdings appear to be a match made in heaven, offering something for everyone on the entertainment spectrum - and for advertisers as well.

Viacom owns Paramount Pictures along with cable's MTV Networks (MTV, VH1, Nickelodeon, Nick at Nite and TV Land) and Showtime Networks and the Simon & Schuster publishing house, among other media holdings.

What this offers for CBS is access to younger viewers. Though the network was No. 1 in the ratings last year, it failed to turn a profit because it was only fourth among 18- to 48-year-old viewers, which advertisers hold a premium on.

In addition, Viacom's Paramount Television has been a major supplier to network television from ``Happy Days'' to ``Cheers'' to ``Frasier,'' the type of hip comedy CBS has had trouble developing.

Meanwhile, CBS is in the midst of acquiring King World, which has ``Wheel Of Fortune,'' ``Jeopardy,'' and ``Oprah.'' It also owns cable channels CMT (Country Music Television) and TNN (the Nashville Network), which mesh nicely with MTV's rock-and-pop-oriented channels. The local CBS affiliate, KCBS-TV (Channel 2), was one of the first television stations in the West. CBS also owns 163 radio stations - including L.A. stations KNX-AM (1070), KFWB-AM (980), KTWV-FM (94.7), KCBS-FM (93.1), KLSX-FM (97.1), KRLA-AM (1110), KROQ-FM (106.7), and KRTH-FM (101.1) - and the largest outdoor advertising (AKA billboard) operation in the country.

`Duopoly' in 6 markets

There are six U.S. markets, including Los Angeles - KCOP-TV (Channel 13) and KCBS - where Viacom would have a television ``duopoly'' - that is, two stations in one city.Currently, the combined companies' viewership totals about 41 percent of American television watchers, 6 percent above the Federal Communications Commission limit, and it might not be worth the fight to Viacom to hold on to the low-rated UPN in its present form though Viacom is expected to ask for an exception.

Analysts' opinions varied about the fate of UPN.

``I think it would be kind of hard to fold (UPN) into CBS, though it does have some valuable programming assets CBS would probably like to get its hands on, such as `Star Trek,' '' said Steve Cesinger, head of media and entertainment research at Los Angeles-based Greif & Co. Cesinger added, ``It would be my guess that they'd try to spin UPN out in some manner.''

Derek Bain, a media analyst with Silicon Valley-based Paul Kagan & Associates, was somewhat more optimistic about UPN being given a little longer to prove itself. ``They made it sound in today's conference call like they were going to give it another shot. . . . If they can't raise the ownership cap, Viacom could conceivably sell some of its station ownership to Chris-Craft,'' suggested Bain. But, he conceded, ``It obviously can't go on forever like that, with the ratings in the basement. They'll have to really start to turn it around.''

But that's not the story CBS and Viacom were telling Tuesday, however. In a conference call discussing the deal, CBS President Mel Karmazin - who will become president and chief operating officer of the merged companies, making him second in command to Viacom chief Sumner Redstone - would say only that the transition in ownership in the near-term future would be ``seamless'' to television viewers.

``I don't see anything that will be obvious to the consumer other than a stronger company and a bigger investment in programming,'' Karmazin said. CBS spokesman Chris Ender said the company had ``nothing to add'' to that statement at the present time. ``The ink isn't dry on the deal yet,'' demurred Ender.

UPN receives support

A UPN representative referred any questions on UPN's fate to CBS, though UPN did put out a one-paragraph statement. It read, in part: ``UPN has received strong assurances from its parent companies that they are fully committed to the network's long-term operation and prosperity. . . . We are looking forward to a season of resurgent ratings growth and profitability.''

The first place viewers are likely to notice an impact of the merger is in cross-promotion between networks the same way ABC and ESPN promote sporting events or NBC does with its cable channels like MSNBC. Before the merger, CBS announced concert specials for this season with pop stars Shania Twain and Ricky Martin. Now, tie-ins with MTV and/or VH1 would seem likely.

And this injection of youth is precisely what CBS craves. With assets like Nickelodeon, MTV and VH1 along with Paramount Televison, CBS will be able to develop a younger audience. Actually, a very young audience, if it can tap into programming from the kids powerhouse Nickelodeon to boost its Saturday morning children's lineup, which suffers from poor ratings.

In the meanwhile, Viacom will be able to promote Paramount movies on the CBS network as well as on its radio stations. And Viacom's MTV and Nickelodeon among others have very popular Web sites, which also tap into the youth culture.

Given the fact networks and movie studios have put a premium on ``enter-teen-ment'' recently, it wouldn't be surprising to see ``Touched By a Teen Angel'' on the CBS schedule next year.

Wire services contributed to this story.