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Mar 8, 2004  •  Post A Comment

Viacom Digs In for Retransmission Fight

Viacom Chairman and CEO Sumner Redstone said Monday that he and his executive team are “prepared to hang tough” against EchoStar Communications in the retransmission fight that could result in the satellite operator removing all Viacom-owned networks from the DISH Network by midnight Monday.

“One thing I have learned is that you should not ask for what the other side cannot give you,” Mr. Redstone said at a Bear Stearns investor conference in Palm Beach, Fla. “No way is there that Viacom can give or will give [EchoStar CEO] Charlie Ergen a better deal that we would give to [Comcast President] Brian Roberts or [News Corp. Chairman and CEO] Rupert Murdoch. If Charlie Ergen wants a good deal, he can’t walk in with 12 million subs and say he wants a better deal than anyone else in the universe.”

Meanwhile, Mr. Redstone said he would not rule out acquiring a cable system sometime in the future, but said nothing is currently on the horizon.

“I can see the day in our company, we would add more distribution, a cable system,” he said. “It’s not in cards today, but we will look at all opportunities and should it come up, we might own it.”

Mr. Redstone’s comments come as several large media companies begin to examine the landscape and decide whether the winning strategy is to own both content and distribution in the wake of News Corp.’s acquisition of a controlling stake in DirecTV parent Hughes Electronics and a proposed bid by cable giant Comcast for The Walt Disney Co.

Meanwhile, Mr. Redstone dismissed suggestions that Viacom President Mel Karmazin and he have a frosty relationship, saying that his “relationship with Mel is fine.”

“But you should know it’s also fine with [MTV Networks Chairman] Tom Freston and [CBS President] Les Moonves.”

Martha Stewart Omnimedia Shares Fall: Shares in Martha Stewart Living Omnimedia sank nearly 9 percent Monday, the first trading day after she was convicted of conspiracy, obstruction and lying to investigators in connection with her sale of nearly 4,000 shares of ImClone Systems stock.

Shares in the lifestyle brand closed at $9.90 a share Monday in heavy trading, after tumbling nearly 23 percent Friday following the announcement of Ms. Stewart’s conviction.

The stock slide took place against the backdrop of Ms. Stewart’s meeting a probation officer Monday morning and then dashing to her Manhattan headquarters to sit down with her company’s board to decide whether she would step down from the board, as many observers expected her to do Monday.

In that vein, Ms. Stewart stepped down from the board of directors of cosmetics maker Revlon. She had served on the board since 1996.

Pontiac, USA, Hopper in on Film With GTOs: Dennis Hopper will co-star with a Pontiac GTO in a TV movie that is the result of an integrated marketing deal between General Motors and USA Network. “The Last Ride” is in pre-production and is scheduled to appear on the network in the second quarter. The film is an action picture, with the GTOs old and new bringing together three generations of a family.

“Normally, a marketing partner is brought in late in the process after a script is complete and production has begun, making it more difficult to realized the full potential of a project,” said Dino Bernacchi, Pontiac advertising manager. “Because we already had a great relationship with [executive producers] Rob Cohen and Bruce Mellon, and USA Network really wanted to do something different, we think we can work together to market a great piece of entertainment that will really stand out from all the other clutter in the marketplace.” GM, which is reintroducing the GTO, and will be marketing and promoting both the movie and the car. Also starring in the picture are Will Patton, Chris Carmack and Fred Ward.

Viewers Welcome ‘Jordan’ Back: “Crossing Jordan” returned to NBC’s schedule in a winning way Sunday night. The third-season premiere of “Jordan” won the 10 p.m.-to-11 p.m. hour with a 4.9 rating/13 share in adults 18 to 49 and 12.7 million total viewers, according to Nielsen Media Research fast affiliate data.

“Jordan” beat second-place “The Practice” (3.4/9 in adults 18 to 49) by a 44 percent margin. It retained 96 percent of its lead-in audience from “Law & Order: Criminal Intent” and outperformed NBC’s season-to-date average for the time period by 20 percent.

NBC won the night in adults 18 to 49 with a 3.9/10, followed by ABC and Fox (tied at 3.3/9), CBS (2.4/6) and The WB (1.3/3). In total viewers, CBS won the night with 11.7 million viewers, followed by NBC (11.4 million), ABC (8.9 million), Fox (7.5 million) and The WB (2.9 million).

Fox Marketing Execs Boosted: Fox has upped three executives in its marketing department. Rafe Oller was promoted to senior VP, creative marketing and branding, from VP/creative director. Brian Dollenmayer and Scott Lauritzen were promoted to senior VPs, on-air promotion. Both were VPs of on-air promotion. All three executives will report to Roberta Mell, executive VP of marketing for Fox Broadcasting Co.

Roberts Defends Comcast Bid for Disney: Comcast President Brian Roberts defended his bid for The Walt Disney Co. today, saying the offer on the table has a 10 percent premium attached to it already. He stressed to Wall Street that he has no intention of bidding against himself to snag the fabled studio.

“We are not asking them to sell out,” Mr. Roberts said during a Bear Stearns media conference for investors in Palm Beach, Fla. “We are saying, ‘Here’s 42 percent of the combined enterprise.'”

Mr. Roberts emphasized that following through with the $54 billion merger proposal currently on the table “is not something we have to do. … If it doesn’t happen, life goes on.”

Comcast made the unsolicited offer Feb. 11, proposing to combine the country’s largest cable operator with the entertainment giant, whose assets include Disneyland and Mickey Mouse. The bid has been rebuffed repeatedly by Disney’s management and board.

Addressing market questions about why the Philadelphia-based cable operator chose to make a play for Disney so soon after digesting its $54 billion acquisition of AT&T Broadband, Mr. Roberts said, “You don’t get to pick the time of your opportunities, they pick you. This was a company at a moment in time that [it made sense] to go to shareholders to consider strategic alternatives.

“If you put the two companies together in a rational way, the resulting company will be better for both sets of shareholders.”

Disney has been embroiled in a fight between its board and a growing number of shareholders who are unhappy with the company’s lackluster performance and the perceived absence of accountability among the company’s management. Last week, investor unrest reached its zenith when a whopping 43 percent of the shareholder vote involved in electing the board withheld its support for Disney CEO Michael Eisner. Disney’s board responded by stripping Mr. Eisner of his chairman title and naming former presiding board member George Mitchell as nonexecutive chairman.

“This is a company that’s got some issues,” Mr. Roberts said. “The stock said so, the shareholders said so, the cash flow said so.”

Mr. Roberts dismissed assertions from some Wall Street analysts that Comcast’s bid for Disney represents an admission by the cable operator that its outlook as a content distributor is dim. “To do this because we are worried we are going to be commoditized, the facts don’t bear this out,” he said. “We have tremendous plans to deal with the future.”

Hollings to Introduce TV Violence Initiative: Sen. Ernest Hollings, D-S.C., confirmed plans Monday to include legislation that would bar broadcasters from airing “excessively violent” programming between the hours of 6 a.m. and 10 p.m. in an anti-indecency bill that’s slated for a March 9 vote by the Senate Commerce Committee.

In a statement, Sen. Hollings said his TV violence initiative will be offered as an amendment Tuesday morning, when the committee votes on legislation that would raise indecency fines from a maximum of $27,500 to $275,000.

By a 49-1 margin, the House
Energy and Commerce Committee approved a similar measure last week that would raise the maximum fine for an indecent broadcast to $500,000.

The House bill also makes clear that entertainers are subject to the levies and that broadcasters who run afoul of the prohibition can jeopardize their licenses. The House bill is expected to go to a vote on the House floor this week.

The watchdog Consumers Union on Monday urged lawmakers to include cable TV in its crackdown against indecency by approving an amendment requiring cable operators to offer programming a al carte-giving consumers the right to select and pay for only the channels they want.

The cable TV industry has long made clear its opposition to the proposal, which could undermine financial support for many cable TV channels. But in a March 8 letter to the Senate Commerce Committee, Gene Kimmelman, the consumer group’s senior director of public policy and advocacy, said a la carte would ensure that the cable TV marketplace would be more responsive to concerns about violent and indecent programming.

“The right to select the channels [consumers] want may save many of them money on their skyrocketing cable bills,” Mr. Kimmelman wrote.

The watchdog group said it supports an amendment that would limit the ability of the Federal Communications Commission to further loosen media ownership rules. In addition, it endorsed an amendment that would “study the value of the V-chip at preventing this programming and setting aside violence-free family viewing time.”

Pegasus Reports Narrow Q4 Loss: Satellite operator Pegasus Communications Monday reported a narrowed fourth-quarter loss to $37.7 million, or $6.63 a share, from red ink of $60.6 million, or $10.25 a share, a year ago. Revenue slipped 3 percent to $220.9 million.

For the year, the Bala Cynwyd, Pa.-based rural-market satellite operator, reported a narrowed loss of $170.9 million, or $29.91 a share, vs. a year-ago loss of $185.1 million, or $30.96 a share. Revenue declined 4 percent to $862.9 million.

The results come against the backdrop of an announcement last month by satellite titan DirecTV to discontinue mediation talks between the two companies to settle a dispute over the terms of a contract between DirecTV and the National Rural Telecommunications Cooperative, of which Pegasus is a member.

The spat centers on whether DirecTV violated the terms of a reseller agreement with the NRTC members, which sold DirecTV services to rural customers. NRTC and DirecTV last year reached a settlement, and every operator except Pegasus signed on. Pegasus and DirecTV had been trying to negotiate an agreement until DirecTV, which as of the start of the year is under ownership by News Corp., abruptly ended the talks.

Viacom Stations Pull ‘Martha’: The Viacom-owned television stations that have carried syndicated series “Martha Stewart Living” have pulled the show off their schedules indefinitely as of today, Viacom confirmed. The decision to pull the show, distributed by fellow Viacom company King World, followed Martha Stewart’s conviction on Friday by a federal jury of two counts of making false statements, one count of conspiracy and one count of obstruction.