Vol. 6 No. 30 THE NEWS MAGAZINE OF THE MEDIA July 22, 1996 $2.95 MARKET INDICATORS Murdoch's New World National TV: Quiet Vacations and client presentations eat up Buys out Perelman for $2.5 billion, may gain from TW-Turner mergerPAGE 2 byers' time: business trickles in. With third q _tarter mosly done, MAGAZINES fourth-quarter prime is still getting increases of Guccione 10-12 percent. College football chugging along, Eyes a Rival while NFL is still robust. For 'Details' Net Cable: Slow Cable sales staffs have `Spin' publisher s owed down. Upfront is pretty much a wrap to take an Italian and fourth-quarter, scat- title American ter has not yet begun. Pass the suntan lotion. PAGE 5 TELEVISION Spot TV: Cold Dead July followed by mad August insures fifth Growing quarter in a row of sub- par performance. Elec- Pains at UPN tion ads in September unlikely to help. Cereals, Network wooing fast food, movies are agencies, mulling especially weak. sales changes adio: Mined PAGE 6 Spot is still very tight in Los Angeles and San WASHINGTON Francisco, but the Big Apple is soft to the core GOP's Secret despite WAXQ-FM's return to classic rock and TV Weapon WOHT-FM's No. 1 status. Retail fashion have final- Arthur Finkelstein ly shown up. The dollars and sense knows a good thing Magazines: Chipper - when he finds it of TV's glory race Asian autos are back in a big way. Computers, PAGE 21 casual apperel are 3 0 > strong. Bee- picking up. Publishers can relax. 4 PAGE 2 Laura K.Jones AUG 0 21996p./.......k. July 22, 1996 MEDIAWEEK The media world's best-known one-man band gobbled up a junior partner, then got a leg up for his all -news cable channel from an unlikely ally Rupert Rules NEWS CORP.-NEW WORLD DEAL /By Michael Freeman switch and reciprocal -programming agreement with Fox. On Top of the 'World' All 10 of New World's VHF stations are Fox network affiliates (nine of the stations are in the RUPERT MURDOCH'S DEAL LAST WEEK TO ACQUIRE NEW WORLD top 40 markets) and represent 12.8 percent U.S. broadcast coverage. The merger with Fox's 12 Communications and create the country's largest TV -station group hasowned stations (currently at 22.1 percent cover- age) will make Fox the U.S.' largest station -group positioned the Fox network as a significantly more powerful bidder for big- owner, with 34.8 percent national reach, just un- ticket entertainment and sports programming. With 22 owned -and-oper- der the new federal guidelines restricting owner- ship to 35 percent. In terms of "raw" market cov- ated Fox and New World stations covering 34.8 percent of the country, erage, Fox-New World would account for 40.4 percent U.S. coverage, but four market ADIs Murdoch's fourth network has come forth indeed. at nearly $165 million for 1996, the cost is high. have their coverage cut in half because they Although Murdoch may haw been coyly lured But combined with the Fox stations' cash flow to the bargaining table by New World chairman (estimated at $400 million), "it could be only Ronald Perelman, News Corp.'s expensive $2.5 two to three years before Rupert pays this off," billion, stock -based buyout for the 80 percent of Rockwell said. A Homecoming New World that it did not already own may even- Just three months ago, Perelman, who had tually pay long-term dividends for Fox. Thebeen seeking $29 per share for New World, Murdoch gets 'Premiere' agair, immediate loser in the deal was Perelman'sbroke off talks with Murdoch after the News MAGAZINES / By Jeff Gremillion bait-syndicator King World Productions, whose Corp. chairman balked at going higher than $23 board had approved a $1.5 billion merger with per share(Mediaweek,April 22). Perelman's premiere,the hot potato of entertainment mac New World only to be left at the altar. leverage ploy with King World drove Murdoch azines, is once again getting a new owner wit Faced with the prospect that Perelman was back to the table with a $27 -per-share offer, News Corp.'s acquisition of New WorldCon within days of completing a deal with King which will end up costing News Corp. an addi- munications. Rupert Murdoch's purchase c World-thus making a News Corp. buyout of tional $400 million. The deal also includes the New World brings Premiere back to something like it New World even more costly-Murdoch made assumption of $700 million in debt held by New original ownership arrangement. Hachette Filipacct a preemptive move. "It was as if Perelman put World. News Corp.'s total debt load is estimated launched the title in 1987 in partnership with Murdoct the dice on the table and left Murdoch with lit- at $8.3 billion after completion of the deal. Hachette later bailed out, leaving Premiere in Mw tle choice but to take a roll," said Art Rockwell, Last week's deal seals a News Corp.-New doch's hands. Murdoch sold the title in 1991 to K -I media anaylst for Los Angeles-based Yaeger World courtship begun in May 1994, when News Communications. Then last May, Perelman's Ne% Capital Markets. At a price that is 14 times Corp. paid $500 million for a 20 -percent stake World, in a 50-50 partnership with Hachette, bougt cash flow for the New World stations, estimated in New World in a precedent -setting affiliation - the magazine for $21 million. July 22, 1996 MEDIAWEEK http://www.mediaweek.com PAGE 3 include weaker -signal UHF Fox stations. News The addition of the New World stations and Milwaukee (WIT!, which carries Green Corp. executives expect the new combination to should be a major asset in Fox's future negoti- Bay Packers games). With Fox's $1 billion, four- gain approval from the Federal Communications ations for programming, particularly for sports. year NFL rights deal set to expire after the Commission by next winter. With its NFL broadcasts, Fox will own stations 1997-98 season, a beefed-up Fox O&O group The new combination will eclipse Westing- in eight of the league's top 10 markets, on will put News Corp. in a stronger negotiating house-CBS' 14 -station which the network's package of NFC games are position to head off a challenge from CBS. The new station group (31 percent cover- carried. New World has stations in Dallas "This has to scare the daylights out of the master: Murdoch age) and Tribune Broad- (KDFW), Detroit (WJBK), Tampa, Fla., other networks," said analyst Rockwell. -with grows Fox to 22 casting's 16 -station group (WTVT), Phoenix (KSAZ), St. Louis (KTVI) Scotty Dupree and Mark Gimein TV properties (25 percent). with almost 35 Arthur Siskind, exec- WARNER-TURNER MERGER /By Michael Burgi percent coverage utive vp/general counsel TIME and board member of News Corp., said the company viewed the 10 - station New World group as the "core asset" The Uninvited Guest driving the deal. Media analysts suggest Mur- doch has considerably less interest in New GERALD LEVIN, THE CHAIRMAN/CEO OF TIME WARNER, MAY HAVE World's entertainment divisions and will likely downsize, merge and possibly sell off certain scored a major victory last week when the Federal Trade Commission approved properties. Fox sources said late last week that the media giant's proposed $6.3 billion merger with Turner Broadcasting Sys- Chase Carey, chairman/ceo of Fox Television, had asked department heads to make proposals tem. But the changes that the FTC extracted from the dealmakers-notably, on how to best assimilate key New World enter- that Time Warner must carry a cable news channel that would compete direct- tainment assets. Immediately after the deal was ly with CNN, Turner's established leader in cable news-clearly benefits an out- announced last week, New World Entertain- ment chairman Brandon Tartikoff announced sider: Rupert Murdoch, chairman of News Corp. push hard not only to keep its A -T homes but to his resignation. It's not clear yet whether Murdoch, whose Fox gain additional TWC subscribers. Wright said at News Corp.'s Siskind noted that New News cable news service will launch on Oct. 7 last Monday's press conference that he expects World's stations are "underperforming." He under the hand of TV titan Roger Ailes, will pick MSNBC to double its sub count by 2000. expects that Fox Television Stations president up the entire windfall from the FTC's action. One cable operator executive noted that TCI Mitchell Stern "will make necessary changes" Rival MSNBC, which launched last week to 23 also stands to gain from a Time Warner-Fox in an attempt to double the stations' cash flow million subscribers, currently has 3 million Time News alliance. TCI recently agreed to carry Fox within two to three years after the merger. "It's Warner Cable subs, thanks to a rollover from News in exchange for a 20 -percent stake in the not a reflection on how we view New World America's Talking, the NBC -owned cable service service. To have Fox on Time Warner systems in management," Siskind said. "But we'd like to that MSNBC has replaced. But TWC is review- addition to TCI's would give the new news chan- think the Fox O&Os' better performance is due ing that arrangement-those 3 million subs are nel access to nearly half the country's cable sub- to certain synergies we benefit from in the own- not guaranteed to MSNBC.