Ops Blue Over Clues on CBS

Cable operators expressed displeasure last week with what
they considered an inevitable consequence of the CBS Corp.-Viacom Inc. merger: Nickelodeon
preschool programming will start airing Saturday mornings on CBS later this year.

"We don't understand what value this brings to us
in cable," one top-10-MSO official said. "As a cable operator, we don't
like it."

Nick and CBS reportedly have reached an agreement in
principle for some shows from the "Nick Jr." block -- which includes fare such
as its signature Blue's Clues, Gullah Gullah Island and Maisy -- to
run as a branded block on the CBS broadcast network Saturday mornings this fall. Nick runs
its preschool programming during the week, and it airs shows targeted toward older kids on
Saturday morning.

Nick and CBS officials declined to comment last week, but
word leaked about their plans when Nelvana Ltd. -- a Canadian company that has been
producing CBS' Saturday-morning kids' block -- said it wouldn't be doing so
this fall. Instead, Nelvana signed a long-term agreement to create PBS' first
Saturday-morning kids' block this fall.

When CBS unveiled its pending $37 billion acquisition of
Viacom in September, there was rampant speculation that some of Nick's marquee
programming would eventually find its way onto CBS, as the broadcast network's
Saturday kids' numbers have been in a slump.

Nick benefits from the deal by getting to use CBS as a
promotional platform when its branded Nick Jr. programming appears on the broadcast
network. CBS, in turn, can promote its Saturday block on Nick.

"Up to a certain point, it's great promotion for
the Nickelodeon network and multichannel offerings," said Gregg Graff, general
manager of Insight Communications Co. Inc. in Columbus, Ohio. "But if it's too
extreme, it could take away from Nick."

The top-10-operator executive quoted earlier wasn't
happy about Nick's unique programming being available on broadcast.

"It just dilutes the value of cable," the
executive said. He added that a broadcast-basic subscriber who will be able to see Nick
shows on CBS isn't going to upgrade to expanded basic.

"Generally speaking, we're not in favor of taking
cable-exclusive programming and putting it on broadcast television, because we'd like
to keep the value of programming unique to cable," a programming executive at another
top 10 MSO added.

And a programmer at a third top-10 MSO said, "I'm
not crazy about paying for programming that's now available for free."

Another cable-industry source said he wasn't surprised
at the Nick-CBS plan. "It's the future as consolidation takes place," he
said. "Cable operators can't do anything about it. That horse is long out of the

Sources said CBS and Nick haven't yet decided exactly
which Nick Jr. shows will air on CBS on Saturdays.

This wouldn't be the first time Nick made its
programming available to other outlets. It syndicated some shows in the late 1980s. And
the kids' network at one time discussed providing kids' shows for its corporate
sibling, United Paramount Network.