Studios, network owners may find time right for sale


There is a basic reason that one, and possibly two, broadcast television networks may be close to being sold to companies that operate Hollywood studios: For both buyers and sellers, the time is right, and may never be more so.

The broadcast business, once considered shaky, has made a strong financial comeback in the last year. And the owners of the two networks in question, NBC and CBS, have indicated a desire to relinquish control.

Perhaps most significant, the two studios in the middle of the rumors have powerful incentives to protect their lucrative positions as suppliers of network programming.

Time Warner is in the middle of negotiations to buy the NBC network, and the Walt Disney Co. may be moving toward talks to buy CBS.

As producers of many popular prime-time shows, both Time Warner and Disney rely on network television to distribute their programs. But that relationship could start to change next year, when federal regulations that have kept networks from producing much programming for themselves are set to expire.

Networks will almost certainly reduce the number of programs ++ they buy from outside suppliers, giving the studios strong reasons to want to control the distribution system themselves.

"Broadcast television is not going to go away," said Larry Gerbrandt, senior vice president of Paul Kagan Associates, a media research firm. "And if it's not going to go away and you're a studio, then you ought to own one."

Officials of Time Warner and General Electric Co., which owns NBC, declined to comment on their discussions yesterday, leaving Wall Street uncertain about how to react. And CBS executives continued yesterday to deny they received any recent overtures from Disney.

Both NBC and CBS have longtime owners that have previously tried to walk away from the network business.

Just two months ago, Laurence Tisch, the chairman of CBS, agreed to turn over control of that network to Barry Diller before the proposed merger between CBS and Diller's company, QVC Inc., collapsed.

At the time, Mr. Tisch, 71, said he had simply had enough. But it is also true that analysts for years have criticized his stewardship of CBS as far too cautious. Alone among the networks, for example, it has failed to diversify into the cable business.

GE, which has owned NBC since 1986, has seen the network decline in almost every area. The chairman of GE, John F. Welch Jr., came close to selling the network to Paramount Studios in 1992.

Certainly GE's bottom-line results have been discouraging. The network, earning about $500 million a year at the time of the acquisition, has seen years since then when it lost money.

Under the plan now being discussed, GE would retain the one part of NBC that has consistently earned money: the seven NBC "owned and operated" television stations in large cities, including WNBC in New York.

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