COMPANY TOWN : Networks May Be Ripe for Picking

Nearly a decade ago, all three major networks changed hands within 15 months. Now media executives are debating whether the proposed merger of CBS Inc. and QVC Inc. will smoke out new bidders--either for CBS itself, or for its Big Three brethren, NBC and Capital Cities/ABC.

Amid the hype over multimedia, old-fashioned networks have regained their luster because they deliver the broadest audience to advertisers and own hugely profitable stations in the biggest markets. But the list of potential suitors is shorter than many people might imagine because of stringent legal curbs on ownership by foreign companies and cable TV operators.

As CBS Chairman Laurence A. Tisch noted Thursday, “We’ve had no serious overtures from other buyers, but we weren’t seeking overtures.”

Only one major Hollywood studio owner--Walt Disney Co.--is viewed as a prospective suitor, because it is not encumbered by massive debt and ownership conflicts. But sources say Disney Chairman Michael D. Eisner, who worked with QVC Chairman Barry Diller first at ABC and then at Paramount, is unlikely to engage in a bidding war for CBS, out of friendship for Diller and his well-known reluctance to overpay for an asset.

“He would definitely (bid for a network) at the right price, but his concept of the right price is very different,” one Eisner friend said Thursday. The Disney chairman himself was unavailable for comment.

Cap Cities and Disney are often viewed by Wall Street and Hollywood executives as an ideal match, but there was no evidence Thursday of business talks. Indeed, one source said Cap Cities is seriously considering a bid for Ziff Publishing, which would be a $2-billion investment far removed from the tinsel of Hollywood.

Federal law prohibits a company with more than 25% foreign ownership from obtaining a broadcast license. That rule in effect eliminates Sony Pictures, Matsushita’s MCA Corp. and the Credit Lyonnais-controlled Metro-Goldwyn-Mayer Inc., as well as Montreal-based Seagram Co., which has shown an appetite for media with its 15% stake in Time Warner.

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An equal problem is posed for companies that have cable TV operators as large--or intractable--shareholders, because the Federal Communications Commission bars ownership of cable TV systems and TV stations in the same market. Sources said Turner Broadcasting System recently tried to pursue talks to acquire NBC but was hamstrung by opposition from Time Warner Inc., the nation’s second-largest cable TV operator and a 19% shareholder in Turner.

QVC has some of the same cable TV shareholders--namely Time Warner, Tele-Communications Inc. and Comcast Corp.--but has structured its deal to reduce their voting stake to 5% in the post-merger CBS, to comply with an ownership limit set by federal regulators.

Media executives Thursday raised doubts that Turner would revive its NBC effort, since it would result in big cable companies such as TCI and Time Warner having a stake in two of the nation’s leading broadcast networks. A Turner spokeswoman declined to comment.

Still, four top media executives predicted that the other two networks will change hands or find merger partners in the next three years. General Electric would be willing to sell NBC for more than $4 billion, industry sources said, while Cap Cities/ABC is on the prowl for big acquisitions that might result in a new management succession.

Cap Cities/ABC Chairman Thomas S. Murphy, 68, returned to the chief executive’s post early this year when 65-year-old Daniel B. Burke stuck to his plans to retire. Although a number of Hollywood executives believe that Cap Cities Executive Vice President Robert A. Iger is being groomed for the job, not all outsiders are convinced.

“Ironically, many of the issues that are receiving headlines today were issues that the networks were dealing with eight years ago,” said Stuart N. Brotman, a Lexington, Mass.-based management consultant who served as a telecommunications adviser in the Carter Administration.

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NBC changed hands in 1985 because it was an RCA subsidiary caught up in a friendly, $6.28-billion sale to GE. Earlier that same year, American Broadcasting Cos. was sold to Capital Cities Communications for $3.5 billion, in part because ABC founder Leonard Goldenson was searching for a strong management team.

“And CBS had to adjust to a post-Paley environment,” Brotman said, alluding to a parade of executives who were chosen--and then rejected--by the late CBS founder William Paley until Loews Chairman Laurence Tisch acquired effective control in 1986.

Although Tisch has not demonstrated such fitfulness, the 71-year-old executive had no chief operating officer nor family member who wished to succeed him. “The family is very supportive of this deal. They have great respect for Barry Diller,” the CBS chairman declared Thursday.

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Insta-suit: It didn’t take long for someone to challenge the CBS-QVC union. Two CBS Inc. shareholders, Sue Kahn and Eli Wechsler, Thursday sued in New York State Supreme Court to block the proposed merger. The stockholders charge that the merger would shortchange them by undervaluing their CBS shares. Tisch and Diller, who are also named in the suit, are accused of breaching their fiduciary duty to by failing to auction off CBS’ assets or independently evaluate them.

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Letterman’s Top 10 Ways CBS Will Be Different After Merging With QVC (From Thursday’s “Late Show With David Letterman”):

10. You know that stopwatch on “60 Minutes”? It’s yours for $49.95!

9. Many things will change, but Connie Chung will still be married to that dweeb Maury.

8. I’ll get paid in cubic zirconias.

7. Once per episode of “Murder, She Wrote,” Jessica will look right at the camera and yell, “We’ve got blenders for sale!”

6. Fox executives will be able to call in and buy whatever sports CBS has left.

5. The CBS “eye” logo and QVC “chipmunk” logo will be combined into a spooky eye-chipmunk creature.

4. No matter what, we’ll still be working for TV weasels.

3. Little number in corner of screen will go up every time Bob Barker scores.

2. During the evening news, Dan Rather sells (his) pants.

1. Goodby “Tiffany network”--hello “Kmart network.”