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Infinity Broadcasting May Get Bigger Voice

From Bloomberg Business News

Mel Karmazin, president of Infinity Broadcasting Corp., is uneasy in front of a microphone.

“I’m nervous. I’ve never done these before,” he said at a news conference to discuss his agreement to sell Infinity to Westinghouse Electric Corp. for about $4.9 billion.

But it didn’t take long for Karmazin, 53, to warm to his task. When some equipment broke down, he quipped: “We need audio. We don’t care about video.”

As of today, Karmazin had better get used to having a higher profile. No longer strictly a creature of radio, he may soon bring his ambitions to one of the nation’s most prominent broadcasters. Westinghouse, which owns 39 radio stations and 15 television stations, bought CBS Inc. for $5.4 billion last year.

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The proposed transaction would result in a company with gross advertising billings of about $1 billion. Karmazin joked that the biggest change in Infinity will be that he’ll have to raise advertising rates because the new company will be so powerful.

Karmazin, who will run all of Westinghouse’s radio stations when the sale is completed, may just get away with such chutzpah. After all, the combined companies would own 83 radio stations and have more than three times the ad revenue of its nearest competitor, Jacor Communications Inc.

He has won raves from industry experts. “Radio has been a flat to shrinking medium, but here you get a very positive story of a growing company,” said Barry Fischer, deputy media director of the New York advertising agency Wells Rich Greene.

Karmazin founded Infinity in 1972 after getting his start at CBS’ radio operations in 1967. Its growth is typified by WFAN-AM in New York, the sports-oriented station he bought in 1991. Since then, WFAN’s revenue has quadrupled.

Infinity earned $54.5 million on revenue of $325.7 million in 1995, contrasted with a loss of $9.2 million on sales of $150 million in 1992.

Analysts predict that Karmazin, who is expected to join the Westinghouse board, would blend in well with Westinghouse and CBS executives. That’s because one of his strengths is his ability to work with people and be a loyal, fair-minded boss. At Infinity, he’s managed to accommodate his star employees, “shock jock” disc jockeys Howard Stern and Don Imus, whose temperamental demeanors might grate on others’ nerves.

“He understands the power of personality in the radio business,” Fischer said.

Fischer praised Karmazin’s frequent defenses of Stern, the vulgar host of a controversial radio show, as an example of his loyalty to his employees.

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“Not a lot of people would have taken such a public stand,” Fischer said.

Infinity has been fined more than $1 million since 1992 for alleged indecent programming on Stern’s show.

People who know Karmazin credit him with a strong mind that can move quickly from idea to idea. For example, he is known for holding meetings in his office while standing up, so a visitor is not encouraged to stay long.

Westinghouse rebuffed Karmazin’s occasional overtures in the last four years regarding a Westinghouse-Infinity combination. After the passage this year of the Telecommunications Act, which took away the limits on the number of radio stations a company could own nationwide, the transaction became more appealing to CBS.

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It is appealing to Karmazin as well. He owns 7 million shares of Infinity and would walk away from the transaction with a 2% stake in his new employer. With a Westinghouse market capitalization of about $7.6 billion, that comes to an ownership stake worth about $152 million.

Westinghouse has to hope that Karmazin can continue to motivate Stern and keep him from giving the Pittsburgh-based giant a bad name.

“I don’t think that Westinghouse will interfere with anything,” said David Devin, analyst at Moran & Associates in Greenwich, Conn.

But Stern, who is busy starring in a film of his best-selling autobiography, “Private Parts,” may give Westinghouse a hard time on his daily radio show.

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But “they can probably take it in stride,” Devin said.

It may also be a problem if Stern or Imus hanker to appear on CBS-TV. Imus sparked a flood of controversy recently with his remarks about the president’s Whitewater problems and alleged womanizing.


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