CBS Fights to Lure Lucrative WWF Away From USA Network

The USA Network cable channel is at risk of losing wrestling, one of the most valuable franchises in television and the programming that keeps USA among the nation’s top-rated cable outlets.

CBS chief Mel Karmazin is pulling out all the stops to win both broadcast and cable rights to World Wrestling Federation programming, bringing to bear the collective might of CBS and its proposed merger partner, Viacom Inc.

In addition to an equity investment of $100 million or more in WWF, sources say CBS is offering up its billboards, radio and TV stations, cable channels and broadcast outlets to air and promote wrestling as well as the XFL, a new football league WWF is developing.

Under its contract with WWF that comes up for renewal in September, USA has the right to match any rival offer--and is broadening its package to include ticketing, electronic retailing and promotion through its Ticketmaster, Home Shopping Network and various online properties.

But analysts question whether USA Networks Inc., which owns USA and is controlled by Barry Diller, can compete against CBS when it lacks a broadcast network and cannot match other aspects of the rival deal.

“Losing wrestling would devastate USA,” said Derek Baine, an analyst at Paul Kagan Associates. “They’ve put on a lot of new programming, but most of it hasn’t worked.”

The negotiations underscore the widening gap between the haves and have-nots in the fast-consolidating media world. Analysts say the pending mega-mergers of Viacom and CBS and of America Online and Time Warner Inc. highlight the distribution and production weaknesses of companies such as USA Networks, NBC Inc., Sony Pictures Entertainment and MGM.

CBS and USA Networks both declined to comment on the pending negotiations. The WWF did not respond to queries.

After the merger, Viacom-CBS will own two broadcast networks, CBS and UPN, a movie and TV studio, the nation’s largest television and radio station groups, the largest TV syndication arm, a billboard advertising company and a stable of cable channels including MTV, Nickelodeon and TNN. The company could promote wrestling across all of those channels, while casting wrestlers on CBS prime time shows and specials.

By contrast, USA has a strong Internet presence, but it can’t come close to delivering the eyeballs through its weak TV station group and its three cable channels that its rival bidder can. A CBS source says it can promise that consumers are left with eight or nine impressions a day through its array of radio, TV and billboards.

WWF could continue splitting the rights between two companies as it does today, giving USA the cable rights it has enjoyed for the last 17 years, while keeping the broadcast programming on the UPN network, which has surged in the ratings since adding wrestling to its schedule this season. UPN is a 50-50 joint venture of Viacom and BHC Communications Inc.

But sources say WWF Chief Executive Vince McMahon prefers a single partner and saw the opportunity to use wrestling as a lever to get an equity investment and prime broadcast space for his proposed football league.

Wall Street has punished the stock of WWF since it unveiled plans for the football league, which is so costly and difficult to start that majors such as Time Warner and NBC balked last year after studying the idea.

WWF shares dropped 6 cents on Monday to $11.62 a share, down from a high of $25.25 before the XFL plan was unveiled earlier this month. WWF went public in October and currently is valued at $780 million.

Hoping to set off a bidding war for wrestling, McMahon approached both CBS and News Corp., which owns regional sports cable networks, the Fox broadcast network and FX cable channel.

“This is better than the NFL,” said a CBS source. “The NFL lasts only 16 weeks, but WWF delivers 14 rating points every week of the year and there is no licensing fee.”

Indeed, USA pays no licensing fees, as is typical for programming, but rather gives WWF 80% of the commercial time within the four wrestling segments it airs weekly.

While News Corp. relished using wrestling to build the ratings at FX, sources say talks broke off in January when McMahon insisted on linking XFL broadcasts to the deal. Fox could not accommodate the Sunday airings of the XFL on Fox because of its recent commitment to televise NASCAR races.

CBS, however, is considering putting XFL games on UPN, helping the struggling network attract more male viewers. CBS, too, is eager to use wrestling to broaden TNN, which over the last year has been moving beyond its historic focus on country lifestyle programming to reach a larger audience with male-oriented programming. Wrestling could fill the hole on TNN left by NASCAR, which it lost to Fox and NBC.

But the CBS bid has a complicating hitch. Viacom-CBS may lose its stake in UPN to network partner BHC. Sources say CBS is proposing a contingency plan for selling WWF programs to a syndicate of TV stations nationwide.

Sources say Diller has considered becoming BHC’s partner in UPN to trump CBS by using UPN for itself.

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Wrestling Rankings

World Wrestling Federation one-hour Monday night programs on the USA Network took the top two spots in cable programming recently, followed closely in the No. 3 spot by World Championship Wrestling’s “Monday Nitro Live!” program on TNT. The top programs’ audiences, in millions of viewers, for the week of Feb. 14:

Sources: UltimateTV.com, Nielsen Media Research, company Web sites

Researched by NONA YATES/Los Angeles Times