Karmazin primed to buy big-market affils

Feb 25, 2002  •  Post A Comment

Viacom President and Chief Operating Officer Mel Karmazin says he’s just getting started on a deregulation-spurred buying binge.
Topping his list are big-market TV and radio stations-preferably among the top four in any city-cable program services and a second major broadcast network.
But none of it is automatic, he indicated, even in the wake of last week’s U.S. Appeals Court ruling favoring a lawsuit that Viacom co-sponsored.
“Do we have an interest in acquiring CBS and UPN affiliates in major markets? Absolutely. Do we want to get into smaller markets? No. Do we have a goal of owning all of our affiliates? Absolutely not. But I do see us buying so that we’re up around the 40 [percent] to 45 percent coverage range,” Mr. Karmazin told Electronic Media.
If the Federal Communications Commission lifts the TV station ownership cap thrown back to it by the appeals court, Viacom will move quickly beyond its current 38 percent coverage of the United States. It is in talks with TV station groups about acquiring individual properties such as KCAL-TV, the Los Angeles independent it is buying from Young Broadcasting. Mr. Karmazin said he is not negotiating to buy KRON-TV, Young’s former NBC affiliate in San Francisco, where CBS already owns two stations.
“It is very difficult to find companies that own major-market CBS affiliates that have an interest in selling them,” Mr. Karmazin said. “For instance, Cox likes being our CBS affiliate in Seattle. The same is true of Gannett in Washington and Belo in Houston,” Mr. Karmazin said.
There is no predominantly CBS-affiliated major station group that could be an acquisition target for Viacom. So Viacom is looking to cherry-pick TV stations in the top 20 or so markets where it now only has one or none. Those prospective markets include New York, Chicago, Washington, Atlanta, Houston, Seattle, Tampa, Cleveland, Denver, Sacramento, Orlando, Baltimore, St. Louis, Portland and Indianapolis.
“There is no group that we would probably buy, because most have a mix of ABC, NBC and CBS affiliates. I would have no reservations whatsoever about being an affiliate of one of the other networks, because I like running profitable TV stations. I’m just not sure they would feel comfortable having Viacom as an affiliate,” Mr. Karmazin mused.
Although Viacom has expressed interest in acquiring Univision, Mr. Karmazin said that such a deal would require the company to “dismantle” many of the major-market TV station duopolies it has in Los Angeles, Philadelphia, San Francisco, Boston, Dallas, Detroit, Minneapolis, Miami and Pittsburgh.
Even under more extensive cross-ownership deregulation, Viacom is not interested in acquiring cable systems or newspapers and is not prepared to push the envelope (as it has in the past) with TV station or broadcast network acquisitions, Mr. Karmazin said.
He added that Viacom will not test Washington’s patience by trying to acquire a second major broadcast network ahead of enabling deregulation, even if the new round of imminent deregulation puts General Electric’s NBC and Disney’s ABC in play. Washington powers that be remain sensitive to over-the-air broadcasting issues such as protecting the number of independent broadcast network news organizations.
“There is no basis for going to court on it. In our discussions, there is no reason to believe at this time that GE is prepared to sell NBC or Disney is prepared to sell,” Mr. Karmazin said. “Right now, Viacom has more assets than any of the companies you mentioned. So maybe some of those companies can grow to our size, but no one can get bigger. If we grow to the allowable limits, nobody else will have more.”
Still, Viacom will continue advocating for maximum deregulation through its filings and meetings with FCC commissioners and legislators to allow for true TV station duopolies (the ability to own two of the top four TV stations in any market) and the ability to own two major broadcast networks. Viacom, the largest radio broadcaster, also wants radio station ownership caps lifted.
“I’m not suggesting there won’t be deals,” Mr. Karmazin said. “But I don’t see the floodgates opening and every day reading about television transactions because of this.”