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Taxes Drive Malone's Fox Stations Talks

Liberty may end up with small-market outlets

Liberty Media’s discussions to take control of some of Fox’s TV stations have nothing to do with Chairman John Malone’s new love for broadcasting. It’s all about his long-held loathing of taxes.

Malone—the onetime “godfather” of cable—is moving closer to a deal to unwind Liberty’s $10 billion stake in News Corp. in a deal that may give it Fox’s TV stations in small markets.

As first disclosed by B&C last September, News Corp. is offering Malone stations generally outside the top 25 markets to dissipate the threat of having an outsider control so much stock.

Liberty has amassed 16% of News Corp. equity and 17% of its shareholder votes, making Chairman Rupert Murdoch uncomfortable about Malone’s motives.

Malone’s primary goal is to have News Corp. buy him out. What catches his eye is the stations’ usefulness in limiting his tax bill. Federal tax codes ordinarily call for a seller to pay taxes on the profits of a stock sale. However, Malone wants News Corp. to structure a deal as a “cash-rich spinoff,” which would require News Corp. to tuck some operating assets in with cash or News Corp. debt.

Liberty would have to hold the stations (which are worth around $800 million), along with any cash and securities, in a subsidiary for several years. But Malone could get immediate, tax- deferred access to the cash by selling investors a derivative security created around the new subsidiary.

News Corp. and Liberty wouldn’t comment. But in a report to clients on June 20, UBS SecuritiesAryeh Bourkoff recounted a meeting with Roger Ailes, chairman of both Fox Stations and Fox News Channel. Ailes wouldn’t directly address the Liberty discussions but acknowledged that he considered only 25 of his 35 stations to be “core assets.”

The stations under discussion include Kansas City, Mo. (the 31st-largest TV market), Milwaukee (No. 32) and Salt Lake City (36). One market is tiny: Gainesville, Fla., No. 162.

Selling these smaller stations would shrink the Fox stations group’s reach from 45 million homes to fewer than 40 million.

Tribune Gets 'Two And a Half Men’

Tribune’s acquisition last week of off-network rights to Warner Bros.Two and a Half Men starting in fall 2007 left doubts about whether the deal was large enough to achieve the record $3 million per episode in cash license fees sought by the studio.

Neither side commented on price, although it appears that Men was unable to stir the same aggressive bidding war between Fox and Tribune that, in 2004, allowed the second cycle of Everybody Loves Raymond to surpass $2.5 million per episode.

Still, with demand outpacing supply as the TV business moves into the digital era, Tribune “stepped up in a big way,” says Warner Bros. Domestic Television Distribution President Dick Robertson.

The station group locked up Men for the entire duration of the series, starting with the first four years. The deal will be extended by 39 weeks for each additional network season.

Tribune gets daily runs of what it terms an “impact sitcom” to replace the loss of Raymond and Seinfeld, both moving to Fox. Marc Schacher, VP of programming and development for Tribune, says its 20 stations will likely air the two daily runs of Men—mandatory during the first three years of the contract—in the 6-8 p.m. period and in late fringe.

With broadcast exclusivity a big issue for stations, Robertson confirmed that Men will move to cable in the fourth year under a standard deal (B&C, 6/12, p. 2). Initially, the syndicator asked cable to pay a premium, which would have led to a simultaneous broadcast-cable launch.

Warner Bros. made much of Tribune’s acquiring the right to stream five full episodes per week of Men for free on its stations’ Websites, splitting the ad inventory with the studio. Broadcasters, however, have said they see the streaming provision as more a “value-added” element than a deal driver.—Jim Benson

CBS Broadens Mobile Video Push

CBS has signed a deal with weather-information provider Weather News Inc. (WNI) to deliver local news, weather and sports content from 10 of its owned-and-operated stations—including New York, Chicago and Los Angeles—to Sprint subscribers for a $4.99 monthly fee. CBS O&Os are contributing video to WNI’s “LiveLocal” service, which currently counts more than 80 stations nationwide as partners.

CBS appears to be hedging its wireless bets with the WNI deal, as 16 members of the CBS Television Stations Group—including nine of the aforementioned markets—are already involved with Capital Broadcasting’s News Over Wireless venture, which also provides station content to Sprint video-enabled phones for $4.99 a month. The News Over Wireless video service is currently being promoted under a “Wireless” tab on the stations’ Websites, which leads subscribers to information on the specific services they can get on their mobile phones. Although only Sprint is currently handling video from CBS stations, both Verizon and Sprint already carry graphic and text-based weather services from News Over Wireless and WNI.

Jonathan Leess, president/general manager of CBS Television Stations Digital Media Group, says mobile video is a natural extension of the “Always On” strategy that CBS stations began implementing in late 2004. He notes that both deals guarantee CBS stations exclusivity in their markets, in that neither WNI nor News Over Wireless can partner with other network affiliates.—Glen Dickson

NBC’s 'Talent’ Opens Strong

The strong opening of NBC’s America’s Got Talent Wednesday, June 21 surprised even network executives, who were equally perplexed at the meek debut of Treasure Hunters.

Talent, an American Idol-like competition from Simon Cowell and hosted by Regis Philbin, earned a 4.6 rating/14 share in the advertiser-friendly 18-49 demo for its two-hour debut, growing each half-hour and winning its time slot.

But according to sources with knowledge of the figures, NBC was projecting, and selling, a ratings level in the low-three range. Declining to confirm that figure, NBC Executive VP of Program Planning and Scheduling Mitch Metcalf does say the numbers were higher than expected.

“I’m surprised, sure,” he says. “Quite honestly, you never know. Fox’s So You Think You Can Dance is a solid franchise, and to beat that is very gratifying.”

But Metcalf says he was “puzzled” by the modest opening of the series Treasure Hunters, which averaged a 2.5/7 in the 18-49 demo for the Sunday-night June 18 airing of its first two hours. Although some of the show’s potential audience was no doubt glued to an overtime thriller that night between the Miami Heat and Dallas Mavericks in the NBA Finals on ABC, Metcalf says the network was a little surprised.

“Sometimes, there’s just no good answer,” he says. “It grew over the night, but, for whatever reason, the starting point was what it was.”—Ben Grossman

A&E Ups Dubuc

A&E Television Networks (AETN) has promoted Nancy Dubuc from senior VP, programming, A&E Network, to senior VP, non-fiction programming and new media content, AETN.

Dubuc adds to her duties overseeing program development for the History Channel and all new-media content initiatives for AETN. She will continue overseeing development of A&E’s non-fiction programming.—Anne Becker

NBC Agency Plans To Restructure

Vince Manze, president/creative director for the in-house company that creates NBC’s promotion campaigns, says he’s likely to restructure The NBC Agency to reflect the way media is changing.

“The agency was established some 10 years ago in what I call the fat times,” Manze said following a panel discussion at the Promax/BDA convention in New York last week. “I believe now we’ve got to take a look at how we’re staffed and what we do in a changing time.” The agency employs 250. —P.J. Bednarski

ATAS Picks Hall of Famers

The Academy of Television Arts & Sciences has announced its latest inductees to the academy Hall of Fame:

  • Former NBC Nightly News anchor and best-selling author Tom Brokaw
  • Sitcom behind-the-camera star James Burrows (Frasier, Will & Grace, Friends, Wings, Night Court, Taxi)
  • Leonard Goldberg (of Spelling-Goldberg), whose TV-movie credits include the acclaimed Brian’s Song and Something About Amelia
  • William Shatner, who has become the poster-actor for second acts, having shattered the typecast of Captain Kirk with the equally memorable Denny Crain of ABC’s Boston Legal
  • TV host Regis Philbin (Who Wants To Be a Millionaire, Live With Regis and Kelly), on camera 15,000 hours, more than anyone else in TV.

Details of the induction ceremony are to come, but it will be in Hollywood.—John Eggerton

Rather, CBS Split

CBS and veteran anchor Dan Rather have parted ways, ending his 44-year career at the network. CBS did not specify a departure date, but Rather’s contract is up in November.

The two sides had been working on a new deal but couldn’t reach an agreement. Rather wanted an active role in 60 Minutes, while the network offered him an office and an assistant but no defined place in its news operation. But Rather says he very much wants to keep reporting.—Allison Romano


Comcast Content President Jeff Shell’s name was spelled incorrectly in a profile of G4 TV President Neal Tiles in the Brand Builders Special Report (6/19, p. A2).

NBC Tops Murrow Awards

NBC took home six Radio-Television News Directors honors for “excellence in electronic journalism,” including the overall-excellence award. Meanwhile CBS TV, the home of Edward R. Murrow, came away empty-handed from the awards named for that iconic newsman (CBS Radio, also Murrow’s digs, won four).

Several Gulf Coast TV stations, including WWL New Orleans and WLOX Biloxi, Miss., won awards for their continuing coverage of Hurricane Katrina. In fact, storm stories swept the continuing-coverage categories.

Other network-TV winners were cable’s CNN and ESPN with two apiece, as well as ABC and Univision with one each.

In all, 80 Murrow awards were handed out. TV winners of the overall excellence award for depth and scope of coverage: NBC News (network); KING Seattle (large-market); KATV Little Rock, Ark. (small-market); KARE Minneapolis (sports reporting and writing); and KHOU Houston (investigative reporting and hard-news feature).—John Eggerton