UPN Future Endangered After Viacom/Chris-Craft Talks End

On Friday, Viacom, parent company of CBS, UPN and Paramount Pictures, put out a one-paragraph media statement, saying that: "Viacom announced today, in response to market speculation, that it has ended discussions with Chris-Craft and its subsidiaries regarding any acquisition."

For the past few months, Viacom had been talking to Chris-Craft to obtain its set of television, which reach about 20% of the American television market. These talks started after Viacom bought Chris-Craft's 50% share in the UPN network a few months ago, leaving Chris-Craft with little more than a group of stations serving as UPN affiliates. Many industry watchers believed Viacom and Chris-Craft would be a perfect match, despite the tensions that had arisen between the two companies over the money-losing UPN.

However, just a few hours after the announcement that Viacom no longer was in talks with Chris-Craft, the company said it was in merger talks with another media company. According to a Reuters source, this company is News Corp., the giant media company that also owns the FOX network. Reportedly, News Corp. will pay $85 a share for Chris-Craft, or $3.5 billion in total, at least 5% more than Viacom was willing to pay.

Unfortunately for UPN, this deal could have some very damaging effects for the netlet. Much of UPN's market share comes from the 10 UPN-affiliated television stations Chris-Craft operates, including KCOP in Los Angeles and WWOR in New York, respectively. With the UPN affiliation agreements of the Chris-Craft stations expiring in January, UPN could suddenly be without coverage in America's most important markets.

An option that would prevent this would of course be that the Chris-Craft stations, under News Corp. ownership, would simply continue as UPN affiliates. However, analysts cited online generally agreed that UPN's value lies mostly in its group of stations, not in the content it offers. A more profitable option suggested by some would be for Viacom to start operating the UPN affiliates it does own as independent stations, taking advantage of the Paramount and CBS programming assets, instead of continuing to pay UPN's losses. A few months ago former CBS head and now Viacom COO Mel Karmazin already warned UPN that it would have to make a profit in order to keep operating, and combined with this new development it makes the network's future look more and more uncertain.

On the other hand, UPN did just finish one of its most successful television seasons yet, seeing 'WWF Smackdown!' bring in a large ratings increase compared to last year. In addition, UPN recently announced it would be relaunching as the Paramount Network, leading to a lot of positive buzz. Finally, some observers quoted on the CBS Marketwatch site stated that a Chris-Craft-Viacom deal is still a possibiliy, as this isn't the first time the two companies have stopped talking, and they fit very well together. However, this was before rumours leaked out on the News Corp. interest.

If News Corp. does indeed end up buying Chris-Craft and ending the UPN affiliations in January, this could already have potentially major effects for 'Voyager'. Without a local UPN affiliation, there could be a possibility that viewers in Los Angeles and New York would not be able to see the second half of Voyager's final season. However, as these Chris-Craft stations would still require some content for the near future, it seems very likely they would simply sign a temporary deal to continue airing some UPN shows, similar to what is done now in many areas without an UPN affiliate.

More on News Corp. intending to obtain Voyager can be found in this Reuters article, while an article looking at the effects of this on UPN can be found here.

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