NETWORK MERGER TAKES NATPE BY SURPRISE

Broadcasters and program syndicators at NATPE were stunned by yesterday’s news that The WB and UPN would merge into a single new network, The CW.

Its impact reminded one longtime NATPE veteran of the 1991 convention in New Orleans, when normal business stopped with the flash that the U.S.had begun bombing Baghdad. The same thing happened yesterday when they heard the news of the merger, he said. “People rushed to their phone, and left meeting to see how it would affect them.”

And many were affected. The move will leave scores of unhappy TV stations without network affiliations and forces them to scramble immediately to fill their primetime hours this fall. But syndicators see those hours as a brand new market. “They’re thrilled,” said Clear Channel Television’s Bill Moll.

CBS reportedly broke the news at NATPE in Las Vegas at what was supposed to have been a routine meeting of its UPN affiliates yesterday morning. After the meeting, the news quickly spread throughout the convention.

“You have lots of pissed-off affiliates,” said one TV station rep. “They were blindsided. The affiliates and the network executives were all together at the King World dinner [on Monday night] and no one let on that this was coming. It’s incredible that it would be announced this way.”

CBS’s UPN and Time Warner’s The WB have been battling to be the fifth network for 11 years. The merger ends that battle and the heavy financial loses each has sustained. By one estimate, the networks had combined losses of $900 million since their launches in 1995. The CW launches this fall. The WB and UPN will continue to offer their primetime schedule until the launch and then cease operation.

CBS and Time Warner will be 50-50 partners in the new venture. Tribune Broadcasting will relinquish its 22.5% interest in The WB, but it will pick up The CW affiliation in 16 markets. CBS will substitute The CW for UPN in 12 markets. Together, the two groups will cover the top 13 television markets, 20 of the top 25 markets and have a total coverage area of more than 48% of the country at launch this fall.

Dawn Ostroff, currently president of UPN, will become The CW’s president of entertainment  and John Maatta, currently COO of The WB, will become COO of the new network.

Apparently out are WB Network Chairman Garth Ancier and WB Entertainment President David Janollari.

The new network will “clearly be greater than the sum of its parts, delivering excellent demographics to advertisers, building a strong new affiliate body,” said CBS CEO Les Moonves at the formal announcement is New York.

The 16 Tribune affiliated stations will be those in New York, Los Angeles, Chicago, Boston, Dallas, Washington, Houston, Miami, Denver, St. Louis, Portland, Indianapolis, San Diego, Hartford, New Orleans and Albany. Tribune will have to program its stations in Philadelphia, Seattle and Atlanta as independents because it is being trumped by network co-owner CBS there.

The CBS CW markets will be Philadelphia, San Francisco, Atlanta, Detroit, Tampa, Seattle, Sacramento, Pittsburgh, West Palm Beach, Norfolk, Oklahoma City and Providence.

In markets where there is neither a CBS station nor a Tribune station, the current UPN and WB affiliations will have to compete for the CW affiliation. “It will become an auction,” one broadcaster said. “And they will be bidding on something that doesn’t have a hell of a lot of value to begin with,” he added, referring to the lackluster ratings of The WB and UPN. “But their only option is to be independent.”

Clear Channel Television is confident that it will win the CW franchise in Memphis where it currently has one of the strongest UPN affiliates in the country, said Clear Channel’s Moll. “In other markets, it will be a jump ball and we’ll have to see who comes down with the ball.”

Fox is apparently one of the biggest losers in the affiliate shakeup. The station group will be losing its UPN programming in several major markets, trumped by either CBS or Tribune. “They are going to be hosed,” said one broadcaster.

In New York, for instance, Tribune’s WPIX, which now has The WB, has dibs on The CW. That leaves the Fox’s WWOR, which now has the UPN affiliation, out in the cold.

Broadcasters wondered how Fox will react. “Will Rupert go out and create a mini-network on his own to fill the niche?” asked one. Rupert is Rupert Murdoch, chairman and CEO of News Corp., which owns the Fox stations.

The Post-Newsweek station group is unaffected by the merger, but group head Alan Frank offered hope to those that are. “All those stations are losing their primetime and primetime is what identifies a station, but operating as an independent is not necessarily a bad thing,” Frank said. He noted that Post-Newsweek’s Jacksonville station, WJXT, successfully made the transition after losing its CBS affiliation in a dispute with the network.

It will be interesting to see how the syndicators respond to new opportunity, Frank said. Twentieth Television is offering an English-language telenovela, 65 shows over 13 weeks. “Will that become a primetime vehicle?” he asked.

The syndicators will benefit from the sudden appearance of new primetime shelf space, but their reaction was muted. “A lot of jobs just got lost in the industry, and that’s never a good event for the business,” said Frederick Huntsberry, president, NBC Universal Television Distribution. “But at the same time, I think this could also be an opportunity from a syndication perspective, with the advent of more independent stations being in the marketplace. Who’s going to do business with them, and what those opportunities look like, it’s too early to tell.”

The CW will stick to The WB scheduling model, offering programming six nights a week—Monday through Friday nights from 8-10 (ET/PT) and Sundays from 7-10 (ET/PT). That’s 13 hours in all.

The new network will also air programming outside of prime: Sundays from 5-7 (ET/PT), Monday through Friday from 3-5 (ET/PT) and Saturday morning. Altogether, the network will program 30 hours a week.

The CW will fill those hours with a mix of current The WB and UPN programming. The network partners cited America’s Next Top Model,  Beauty and the Geek, Smallville, Gilmore Girls, Supernatural, Veronica Mars, Everybody Hates Chris, Girlfriends, Reba. WWE’s Smackdown, which has been a mainstay at UPN, is expected to survive too, they said.

In addition, The CW will also broadcast the schedule of children’s programming now known as Kids’ WB!, a five-hour original programming block on Saturday mornings from 7 a.m. to noon.

All programming, marketing, scheduling, publicity and research functions will report to Ostroff.

Maatta will be responsible for the network’s business operations. Bill Morningstar, The WB’s executive VP of advertising sales, will become the head of sales, reporting to Maatta. Other responsibilities that will report to Maatta include business affairs, network distribution, legal, finance and human resources.

“The CW launches as a strong competitor to the Big Four,” said Moonves. “That’s good for our business, for the viewing audience and for free, over-the-air broadcasting. It is also good news for our shareholders, who will benefit from a much stronger business model, improved economics for our stations and new opportunities for our production businesses.”