FLEDGLING NETWORKS UPN, WB ALREADY PONDERING MERGER

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Chris-Craft, Viacom and Time Warner officials met recently to discuss merging the year-old UPN and WB broadcast TV networks, sources told Electronic Media.

Chris-Craft Industries Senior VP Bill Siegel and Evan Thompson, president of Chris-Craft unit United Television, visited Warner Bros.' West Coast lot Aug. 30 to broach the subject in a 30-minute meeting with Warner Co-Chairman and CEO Bob Daly and his top lieutenant Barry Meyer, sources say.

A top official of Viacom, owner of Paramount Communications, one of the original UPN partners, followed up with a phone call to Time Warner Chairman-CEO Gerald Levin about the idea, sources say.

Mr. Daly and Chris-Craft Industries Chairman-President Herb Siegel initiated what remain very preliminary conversations in July when they met informally at Allen & Co.'s entertainment conference in Sun Valley, Idaho.

All discussions thus far have broken down quickly over how to mesh the interests of Chris-Craft and Tribune Broadcasting Co., a WB equity partner with stations in New York and Los Angeles that compete with Chris-Craft stations.

Warner Bros. executives have said no deal is possible unless it meets with Tribune's approval, sources say.

"The stumbling block in putting these together is not so much between Warner Bros. and Paramount. The stumbling block has always been between Chris-Craft and Tribune," said one source.

"Now it gets that much more complicated, because Paramount has been out buying stations. In theory, everyone agrees, but as a practical matter, it is just not easy to pull off."

Chris-Craft's Mr. Thompson did not return calls.

UPN President and Chief Executive Officer Lucie Salhany said, "We do not respond to stupid rumors."

One UPN/WB merger scenario said to have been broached would see Chris-Craft assume half of Warner Bros.' equity in WB for assuming half the costs, sources say. That's very similar to the deal that Viacom now enjoys with respect to UPN, after revising its original partnership agreement with Chris-Craft last year.

WB Managing Partner Jamie Kellner originally proposed during the earliest stages of WB that Tribune and Chris-Craft both join the new network and that they split affiliations in New York and Los Angeles or carry split schedules in both markets. That plan was rejected by Chris-Craft, said one source close to those talks.

If talks proceed, Viacom, which holds an option to acquire half of UPN that must be exercised by January 1997, will have a strong say.

With a merger between Time Warner and Turner Broadcasting System nearing, Mr. Daly says the studio is more firmly committed to WB and its Kids WB programing.

WB is focused on the success of its new Saturday morning and weekday Kids' WB service, which Warner sees as the first step in a vertically-integrated revenues plan.

"This is a real positive for our network because with all those cable channels, there are so many ways to cross-promote," Mr. Daly says.

UPN's programing strategy is rooted heavily in prime-time and based upon Viacom's "Star Trek: Voyager's" ability to generate top ratings, advertising revenues and a promotional base to help funnel viewers into other UPN shows.M

Mr. Tyrer is Los Angeles bureau chief for Electronic Media; Ms. Mermigas is financial editor.

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