In the Eye of the Storm : Tisch Is Confident He’s Put CBS on the Proper Course

When New York businessman Laurence A. Tisch made his first investment in CBS Inc. nine years ago, he was dubbed a short-term player. Wall Street expected him to sell his CBS shares quickly for a tidy profit.

But Tisch confounded the skeptics and is now completing his eighth year as CBS’ largest shareholder and chief executive. Instead of a short-term player, critics now say he’s a short-term thinker whose miscalculations are coming home to roost. As evidence, they cite Fox Broadcasting Co.’s raid last week of eight CBS affiliates, and CBS’ loss of National Football Conference broadcast rights to Fox for the next four years. These critics predict that CBS’ value will inevitably diminish under a protracted Tisch regime.

Tisch--in Los Angeles on Thursday for a meeting of CBS affiliates--shrugs it all off with his characteristic blunt confidence. “I think we’re doing the right thing by shareholders,” the 71-year-old chairman said in a breakfast interview. “I think long-term, not short-term.”

With understandable pride, he points to 1993 earnings of $316.8 million, or $20.39 per share--nearly double the results of the previous year. Among the networks, CBS ranked No. 1 last year in daytime, prime-time and late-night ratings, in a “triple crown” feat accomplished only once before in network television, when CBS dominated the 1983-84 season.

His long-term strategy? To invest in programming.

“If I thought that we could not increase our earnings every year for the next five years, I would say, ‘Jeez, maybe we have to be a little more daring or something.’ But we see a clear path for increased earnings every year,” Tisch said.

“We’ve built this asset; we haven’t diminished it,” he continued, citing the increased market value of CBS’ radio stations as an example. The radio properties could fetch $800 million if they were for sale, compared to $400 million or $500 million five years ago, he said.

Indeed, Tisch worked hard to turn the network around, and he won the respect of some of Wall Street’s most prominent analysts, who praise his discipline. “The crazies are not in charge of this thing, and football is the classic example of that,” said David Londoner, a managing director of Wertheim Schroder in New York. By his calculation, CBS would have reduced its per-share earnings by 25% if it had matched Fox’s winning bid for a four-year package of Sunday football games.

Still, the criticism persists. By selling off CBS’ recorded music business and publishing, the company’s remaining broadcast business is hobbled by government restrictions and is vulnerable to economic downturns or new competitors. And unlike the other networks, CBS has not invested in cable television or business overseas.

“His primary asset is getting attacked, and he’s got nothing else to draw on. If I were him, I’d sell it,” said one big media investor who holds Capital Cities/ABC stock. But the investor--who spoke on the condition of anonymity--mused that Tisch does appear to relish his status as a network chief, adding, “I don’t know how much he likes it as a toy.”

To such talk, Tisch responded: “How could it be a toy after eight years? I don’t run around after stars; you don’t see me at the parties. I’m not there because it’s a game or a toy.”

Tisch does move in New York’s most powerful social circles, with a style that is both hospitable and purposeful. Few doubt that he enjoys hobnobbing with power brokers, but frivolity is not a Tisch trait. As a youth in Brooklyn, he worked in his father’s clothing business and his New Jersey summer camp, then entered New York University at age 15. Tisch has a master’s degree in industrial engineering from the University of Pennsylvania. During World War II, he worked in Washington on military codes. In 1946, he dropped out of Harvard Law School to invest in a resort hotel with his close-knit family.

Over the next decade, the Tisches built a chain of resorts before Larry and his younger brother, Preston (Bob), invested in Loews Theaters. After the death of their father in 1960, the Tisch brothers merged their hotels with the theater chain and Larry became chief executive. Loews became their vehicle for shrewd investments in cigarette manufacturer Lorillard, CNA Financial and, eventually, CBS. Although the theater chain was sold in the 1980s, the Tisch family still controls 26% of Loews Corp., which boasted $13.7 billion in 1993 revenue. Loews controls 19.6% of CBS.

Although Tisch has characterized his CBS holdings as a legacy to be passed on to his family, he acknowledged Thursday that none of his children have expressed interest in joining the CBS executive ranks. Nor does he think his brother, Bob, would step in as chairman should anything unforeseen happen to him. He said the question of succession would fall to the CBS board.

Like Loews, CBS has no chief operating officer. CBS directors have not questioned the need for one, Tisch said. With just one business, he said, CBS Broadcast Group President Howard Stringer in effect fills the role. The management is lean but collegial, Tisch said. “You don’t have to go through channels.”

For advice, the CBS chairman said he relies on Stringer and other top executives. Outside the company, “I don’t have advisers.” Still, he insisted that no company spends more time “looking to the future” than CBS.

“We don’t have our heads buried in the sand. But you show me the niche where we can be successful. I’d like to see it!” Tisch said. Broadcasting, he said, has a “bright future,” although he foresees trouble for cable TV operators who will have to engage in a price war with telephone companies to expand their businesses.

“We have over $1 billion in cash that’s earning 7%, 8%, 9%,” he said. “What better security does a company have than to have that liquidity and those earnings that can’t disappear on you?”

The Bloodshot Eye Network

While CBS Inc.’s earnings increased sharply last year and it continues to top the network ratings race, concern over its recent loss of affiliates to Fox Broadcasting Co. has contributed to a fall in its stock price.

Monthly stock closes, June 2: $273

Source: Bloomberg Business News