UPN, WB Network to fold; the CW emerges
WB Network, UPN to shut down as the CW emerges
Jan 25, 2006
Moonves, president and CEO of CBS Corp., and Meyer, chairman and CEO of Warner Bros. Entertainment, began hammering out a deal in top secret that hit the entertainment industry like a bomb when it was unveiled Tuesday morning at a news conference in Manhattan. UPN and WB will shut down their respective operations later this year while their parent companies, CBS and Warner Bros., join forces in a new 50-50 broadcast network venture to launch in the fall.
Dubbed The CW ("C" is for CBS and "W" is for Warner Bros.), the network slated for launch in the fall will comprise programming and executive talent from both of its predecessors. Tribune Co., WB's station partner, and CBS Corp.'s UPN-affliated O&Os have signed 10-year affiliation agreements with the CW. Moonves, Meyer and others stressed that the catalyst for the joint venture largely was because UPN was coming to the end of its affiliation deal with News Corp.-owned stations in New York, Los Angeles, Chicago and six other major markets in August, while Tribune and WB had been in protracted negotiations over a new long-term affiliation pact.
"This is a historic occasion. This will be the new fifth broadcast network," Moonves said during the packed news conference at the St. Regis Hotel. "There are moments in time," Meyer added. "This is the moment in time."
The news came as a shock to even senior executives at both networks, let alone the TV station affiliates of UPN and WB, both of which launched 11 years ago this month in a fierce race to claim the mantle of "fifth" broadcast network just as Fox Broadcasting Co. was hitting its stride as a full-fledged member of the Big Four.
As the surprise wore off Tuesday, industry insiders were left with more questions than answers about the partnership's specific plans for the new network and the impact of the UPN-WB streamlining on Hollywood's creative community and for the networks' respective station affiliates.
The CW will be overseen by a board comprising an equal number of CBS-appointed members and Warner Bros.-appointed members, though the number of board seats was still to be determined. Dawn Ostroff, who has headed UPN since early 2002, will become president of entertainment at the CW; WB chief operating officer John Maata will move into the same role at the CW. WB executive vp Bill Morningstar will oversee advertising sales for the new venture. Beyond that, details of staffing decisions and myriad other practical matters about the timing of the shutdown of UPN and WB and the launch of the CW were few and far between.
Nancy Tellem, CBS Paramount Network Television Entertainment Group president, and Bruce Rosenblum, Warner Bros. Television Group president, were cited by Moonves and Meyer as key architects of the deal. Each will serve as the point person within their respective companies for the CW. Garth Ancier, current WB chairman, was said to have played a key role in paving the way for the launch of the CW but bowed out of seeking an executive role with the new venture and is set to resign his post. The fate of WB entertainment president David Janollari, who joined the network in mid-2004, was unclear as of Tuesday evening.
"It was a very tough decision," Tellem said of the final call to name Ostroff head of programming at the new network, noting that she, Moonves and Janollari worked together in the 1990s, when the three were at Warner Bros. Television.
The CW will program 13 primetime hours across six nights as well as a "Kids' WB!" block on Saturdays and two hours of syndicated programming in the weekday afternoons, essentially mirroring the WB model. While a schedule won't be released until the upfronts in May, the new network is sure to carry such hits as "Gilmore Girls," "Supernatural" and "Smallville" from WB and "America's Next Top Model," "Veronica Mars" and "Everybody Hates Chris" from UPN.
Thanks to existing programming on both networks, CW will debut armed with "hit shows every single day of the week," Moonves said.
Executives involved in the deal said that no money was changing hands per se in the deal between CBS Corp. and Warner Bros. Both companies will absorb losses in shutting down their existing networks as well as significant startup costs for the launch of the CW. Sources said the two networks had discussed joining forces on and off for years -- even before they went on the air -- and that it was the timing of the affiliation deals expiring that spurred both sides to get the deal done.
"On a practical level, on a strategic level and on an economic level, it just made so much sense for us all to acknowledge that there was an opportunity for us to build a true fifth network via a joint effort from CBS, Warner Bros. and the Tribune Co.," Rosenblum said.
Both sides said it also was about the growing realization that neither network was going to grow much in the future if the status quo remained. While UPN has made gains, CBS executives said long-term projections showed that the CW would grow faster than UPN joined together with WB. And Time Warner and Tribune haven't been happy with ratings declines at WB, especially at a time when Time Warner is facing extreme scrutiny of its operations from investors.
"We saw a challenged landscape for keeping small networks alive," Meyer said.
Wall Street had a lukewarm reaction to the news. Merrill Lynch analyst Jessica Reif Cohen issued a research note, calling it "a mild positive for both CBS and Time Warner" but also a deal that was "unlikely to have a significant impact on either company's financials or stock price." Shares in CBS Corp., newly spun off this month from its former parent Viacom, closed up 4% on Tuesday at $26.89; Time Warner shares gained 1.1% to close at $17.27. On Wednesday, CBS shares dropped 50 cents or .86% to close $26.40; TW shares fell 12 cents or .12% to close at $17.15.
Madison Avenue was more enthusiastic about the new venture. Shari Ann Brill, vp and director of programming at Carat USA, said the CW plays to the strengths of both UPN (particularly comedies) and WB (family dramas and action-hero dramas like "Smallville") along with a growing franchise in reality with "America's Next Top Model" and "Beauty and the Geek."
"If they work with their established hits, they're going to hit that target in the bull's-eye," Brill said.
Tribune Co., which invested in WB with Warner Bros. in the early 1990s, will become a major affiliate of the CW. Sixteen of the new network's affiliates, including such big markets as New York and Los Angeles, will be owned by Tribune. Twelve more will be CBS-owned UPN affiliates. Tribune and the CBS-owned UPN stations account for more than 48% of the country; the rest will be a mixture of existing UPN and WB affiliates.
"From Tribune's perspective, it was the best of both worlds," said Tribune Co. CEO Dennis FitzSimons, who attended the news conference.
Seven markets overlapped Tribune and CBS' existing lineup of UPN and WB affiliates. Tribune-owned stations won out to carry the CW in Dallas, Miami, Boston and New Orleans, while CBS' existing UPN affiliates will remain in the CW fold in Atlanta, Philadelphia and Seattle. Both CBS and Tribune will be faced with finding alternative primetime programming for stations in those markets where their stations will not be aligned with the CW, just as News Corp. now is forced to find substitute programming as of the fall for its current roster of UPN affiliates, which include WWOR-TV New York, KCOP-TV Los Angeles, WPWR-TV Chicago and WDCA-TV Washington.
"We certainly view a change like this as an opportunity for us," News Corp. spokesman Andrew Butcher said. Sources said that news of the CW venture caught News Corp. off guard Tuesday.
There's no word on the number of layoffs that will occur at WB and UPN in preparation for the shutdown. Those details will emerge in the next several months, Moonves and Meyer said. The headquarters for the CW also have not been determined, though they won't be at the former homes of WB in Burbank or UPN's headquarters in West Los Angeles.
Meyer and Moonves have a long-standing relationship, having worked together in the past and having known each other for more than 20 years. That's true of the other two catalysts of the deal, Rosenblum and Tellem, whom Moonves credited with keeping both sides on track toward the common goal. All four executives worked together in the 1980s and early 1990s at Lorimar Television and Warner Bros. Television.
"It really does underscore (the value of) relationships," Moonves said. "This could have fallen apart 20 different ways."
Instead of separate UPN and WB upfronts -- as has happened over the past decade -- there will be one CW upfront occurring during the broadcast network upfront week in mid-May. It's likely that most of the 2006-07 season schedule will include the cream of the crop from UPN and WB.
"Every show that's on the bubble will probably not be back," said Brad Adgate, senior vp research at New York-based Horizon Media. "That will make them a stronger network."
Another key part of the structure will have both CBS' Paramount Network Television and Warner Bros. Television jointly own programs developed for the CW through either studio, which is designed to help both sides avoid issues of one studio or the other fighting to get a favored project on the air.
As for the new network's moniker, Moonves said the two sides settled on the acronym "CW" without much debate.
"We couldn't call it 'the WC,' for obvious reasons," Moonves joked.
Paul J. Gough reported from New York; Cynthia Littleton reported from Los Angeles. Georg Szalai in New York contributed to this report.