Viacom Says KCAL Won't Become a UPN Station

By CLAUDIA PESCHIUTTA
Staff Reporter

Now that Viacom Inc. has snapped up L.A.'s last independent VHF station and created yet another local television duopoly the waiting game begins.

Specifically, what will the New York-based media giant do with KCAL-TV (Channel 9), which it will acquire from Young Broadcasting Inc. for $650 million in cash?

For the moment, it appears that Viacom, which also owns and operates KCBS-TV (Channel 2), will maintain KCAL's sports and primetime news programming.

"We intend to operate KCAL as an independent station, taking advantage of the wealth of Viacom assets," Mel Karmazin, Viacom president and chief operating officer, said in a statement. "We intend to build on the preeminent presence they have established in sports and news in the Los Angeles market."

One rumor already being shot down is that Viacom would make KCAL an affiliate of the United Paramount Network (UPN) at the end of its current agreement with local KCOP-TV Channel 13, part of News Corp.'s Fox television group.

"We did not just buy KCAL to turn around and turn it into UPN," said KCBS Vice President and General Manager David Woodcock. "We bought it for its unique position in the market...because of its local news, sports and first-run programming." KCAL executives declined to comment on the pending purchase.

Looking at consolidation

The station's sports line-up of L.A. Lakers, Anaheim Angels and Anaheim Mighty Ducks games probably won't change. The "KCAL 9 News" has not generated good ratings in the 8-11 p.m. time slot but the news block has strengthened the station's presence.

Woodcock said that the three-hour news block would be kept. "They have a very strong brand with their three hours of primetime," he said. "They've carved out a very strong position in the market."

At some point, the deal likely will lead to staffing adjustments as Viacom, owner of the CBS and UPN networks and Paramount studios, looks for ways to consolidate operations and cut costs.

One likely possibility is that KCAL and KCBS will combine resources of their respective news departments and take other cost-saving measures.

"Certainly, there will be some streamlining of departments and efficiencies and all of that so there could be some people who are displaced but, again, we want to be as competitive as we can going forward," Woodcock said.

Despite being the nation's largest independent station, KCAL's advertising revenues have been on the decline due to the loss of some Lakers broadcasts and the general downturn in ad spending.

"The station did not do well in 2001 but, you know, get in line," said Victor Miller, an analyst with Bear, Stearns & Co. KCAL's margins tend to be lower than the industry average because of the station's expensive sports contracts, Miller added.

Off to a strong start

"When the revenue was where it ought to be, the station made a lot of money and when revenue fell off then the bottom line fell off like a rock falling off a cliff," said Young Chairman Vincent Young in a conference call with analysts last week.

Young said he wasn't very enthusiastic when Viacom contacted him last year about buying the L.A. station. "I said, 'Well, this isn't the best time to sell because we've not had a great year...and they said, 'Well, we're still interested,'" he recalled.

Viacom's $650 million purchase price is almost double the $368 million Young paid Walt Disney Co. for the station in 1996.

Pending the approval of the Federal Communications Commission, expected in four to six months, the transaction would give Viacom an eighth duopoly and a stronger presence in L.A., the nation's second-largest television market.

If the KCAL deal is approved, Viacom could be forced to sell off one of the seven L.A. radio stations owned by subsidiary Infinity Broadcasting Corp. FCC regulations limit a company with a television duopoly from owning more than six radio stations in the same market.

It's too soon to tell if Infinity will lose a station because Viacom will apply for a waiver from the FCC and continue lobbying for changes to media ownership rules, said Pat Duffy, vice president and general manager of KRTH-FM (101.1) and spokesman for Infinity's L.A. cluster.

"This could take a year before anything's resolved," he said.

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