Viacom Inc. and Chris-Craft Industries Inc. ended their United Paramount Network partnership after a bitter court fight, but that is not the end of their story.

Federal regulators and Wall Street investors are clearing their throats, and the two companies have other unsettled business, even though Chris-Craft said it would sell its half of UPN to Viacom.

Eight Chris-Craft television stations remain UPN affiliates in key markets, including Los Angeles and New York. The companies must decide whether the affiliation will continue past January, when current agreements expire.

Apart, Viacom and Chris-Craft face new problems. Viacom must now absorb all of UPN's future losses. It's an unpleasant prospect because the network has lost $800 million since it began in 1995. And Viacom still needs to get permission from the Federal Communications Commission to own two networks.

Meanwhile, Chris-Craft has angered some shareholders who say the company overplayed its hand.

Among the critics: Gordon Crawford, senior vice president of Capital Research & Management in Los Angeles, which held 6.7 percent of Chris-Craft shares as of December. He contends that Chris-Craft spurned opportunities to sell its TV stations and network stake at a good price.

"They're running it poorly as a family fiefdom," Crawford said in an interview.

For almost two decades, Crawford has overseen his firm's big investments in media companies. He talks politely and carries a big stick: When he opposed the management of CBS Inc. in 1995, and Storer Communications a decade earlier, those companies were sold within a year.

Since 1968, Chris-Craft has been controlled by New York investor Herbert J. Siegel, 71. The company, which sold its namesake boat business in 1981, prospered from shrewd investments in Twentieth Century Fox Film Corp. and Warner Communications Inc. The company reaped more than $1 billion from the sale of Warner to Time Inc. in 1990.

Stock surges

But investors who expected another big score by Chris-Craft have been disappointed. In the past decade, Siegel has added just a few TV stations, started UPN and invested the company's cash in U.S. government securities.

He brought his two sons into management, but outsiders are still unclear about the company's strategy.

"Herb has to step up and do something for his shareholders," says Mario Gabelli, the money manager and longtime investor who controls 24 percent of Chris-Craft shares. "He could buy back shares."

Through most of 1999, Chris-Craft's stock traded in the $40 range. Then came the FCC's decision to relax TV station ownership rules, sparking a three-month rally starting in August. As the owner of 10 stations, Chris-Craft stood to benefit from the "duopoly" decision, which allows broadcasters to own two stations in a local market.

In September, Viacom and CBS announced a merger agreement that grew out of talks of combining their stations. Investors speculated that Chris-Craft might be next: Its shares rose to $77.25 in November.

Behind the scenes, however, Chris-Craft and Viacom were at an impasse over their jointly owned network. Chris-Craft had refused to approve the UPN budget for the past two years and "consistently opposed" Viacom's programming ideas, according to an affidavit filed in court by a Viacom executive.

In February, Viacom triggered a buy-sell agreement. Chris-Craft responded with its lawsuit, contending that Viacom breached its agreement not to compete with UPN when it agreed to acquire the rival CBS.

New York State Supreme Court Justice Herman Cahn concluded that Viacom had not breached the UPN partnership because it hadn't yet completed its CBS merger. The judge ruled that Viacom was entitled to trigger the buy-sell agreement in the interim.

The decision was a blow to Chris-Craft, which had only four days to respond to the Viacom offer to sell or buy its half of UPN for $5 million. Chris-Craft elected to sell.

Missed opportunity?

Throughout the drama, Chris-Craft hasn't disclosed any details about its discussions with potential buyers.

"It's my understanding that they received an extremely generous offer from CBS, and the management chose to ignore it," says Crawford, the money manager who also oversees a 1.5 percent stake in CBS (as of December) as well as investments in two Chris-Craft-affiliated broadcast companies: BHC Communications Inc. and United Television Inc.

If there was an offer, it was withdrawn by early February when Viacom said there were no pending discussions to buy any Chris-Craft assets other than UPN. Now investors can only guess whether Chris-Craft might fetch a higher or lower price without its UPN stake.

In the same vein, Chris-Craft must decide whether it's advantageous to continue its UPN affiliation beyond January. If Viacom wants to preserve the existing UPN network, it might yet bid for the Chris-Craft stations.

Chris-Craft isn't unique in its struggle to find a way to capitalize on the FCC's relaxed ownership rules. Neither Barry Diller's USA Networks Inc. nor Walt Disney Co.'s ABC Group has made a move, although Diller, for one, has said he is seeking a broadcast partner.

Some broadcasters are angling for greater freedom from FCC rules, including restrictions on network ownership. Currently, a broadcaster can't own both a traditional network like CBS and the fledgling UPN. Viacom and CBS have asked the FCC to waive the rule.

In its petition, Viacom says that UPN hires minorities for many of its shows ("The Parkers," "Moesha") and has gained popularity with black viewers. If forced to divest, Viacom said it might have to shutter UPN if it can't find a buyer.

Still, there is the adage, "Be careful what you wish for." If the FCC accedes, Viacom may find it politically difficult to reduce UPN's minority-appeal programming or shut down the network if it continues to hemorrhage.

Kathryn Harris is a columnist for Bloomberg News.

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