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Viacom Gets All Comedy's Laughs Now

It's hardly a stretch to imagine the boys from South Park sharing a corporate home with MTV's The Osbournes and guy channel Spike TV. Now, with Viacom Inc. buying out AOL Time Warner's stake in Comedy Central, the channel that's just for laughs gets a chance to thrive off both a big-media parent and its well matched cable portfolio.

After much speculation, Viacom, which already owns half of Comedy, agreed last week to pony up $1.23 billion in cash for AOL's 50% stake. It was likely difficult to part with young, male-skewing Comedy Central, but, struggling to pay off a hefty debt, AOL is forced to sell even valuable assets. The deal is expected to close late in the second quarter.

AOL still retains a 50% stake in Court TV, partnered with Liberty Media. Eventually, some industry observers venture, AOL will try to buy the rest of Court TV.

The net's ownership structure paves a clear path for a single owner in the "not too distant future," said Court TV Chairman Henry Schleiff. He contends AOL is the likely buyer and for good reason: "There has never been a case when owning a largely analog, fully distributed cable network [like Court TV] is other than a pretty good thing."

In the Viacom family, Comedy Central will join MTV Networks, Viacom's cable portfolio comprising MTV, VH1, Nickelodeon, Spike TV (formerly TNN) and BET. Comedy Central President Larry Divney is staying on. Like the company's other successful channels, said MTVN Chairman Tom Freston, Comedy will enjoy a good measure of autonomy.

Clearly, Viacom now has reason to invest in growing Comedy, which was a 0.7-rated network in prime for the first quarter. When it was still a joint venture, said Viacom COO Mel Karmazin, "if we had the opportunity of putting $1 million on MTV or putting $1 million on Comedy Central, obviously, that money went to MTV because we owned 100% of it."

Expect Comedy to get more promotion and increased budget for programming and development.

And Dan Rather at Viacom's CBS, who has won four Peabody Awards for news excellence, has a peer in Comedy's Daily Show
Jon Stewart host, who received television's highest honor in 2000 for the show's "Indecision 2000" coverage of the presidential election.

It could cost some Comedy jobs, though, particularly in areas where there is overlap, like back-office departments and affiliate sales. Freston, who held a town meeting with Comedy's New York and Los Angeles staffers last Tuesday, wouldn't comment on possible job cuts. Comedy employs about 350 staffers.

But Karmazin alluded to it. Under the AOL-Viacom ownership structure, Comedy operated as an independent network on distribution. It has grown to 82 million homes and is nearly fully distributed. "Now they will be part of Viacom," Karmazin pointed out, "and we expect advantages there."