KARMAZIN'S RISE AT CBS ALARMS AD AGENCIES: ADVERTISERS COULD FACE PRESSURES IF TV STATIONS BOOST PERFORMANCE

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Mel Karmazin's appointment as chairman-CEO of the new CBS TV and radio station group has set off warning bells at ad agencies, where a number of executives worry about the possibility of rising rates at the network's owned-and-operated TV stations.

At the same time, agency executives and CBS insiders wonder what effect Mr. Karmazin's rapid ascent inside CBS will ultimately have on the network TV sales force.

Joe Abruzzese, president of sales for the CBS Television Network, is a protege of-and was appointed to his present post by-Peter Lund, who left as president-CEO of the CBS Television & Cable Group in a reorganization that saw more power shift to Mr. Karmazin.

OVERSEEING 14 TV STATIONS

Under the new CBS setup combining oversight for TV and radio stations, Mr. Karmazin will add responsibility for the 14 TV stations, most of which are underperforming. He continues to oversee CBS' 77 radio stations; he previously was chairman-CEO of CBS Radio.

Some media executives are distressed that CBS might use the combination of its radio and TV stations to create ad packages that advertisers might feel forced to buy.

"How is Mel going to leverage his domination of radio with the TV stations?" asked Page Thompson, U.S. media director for DDB Needham Worldwide, New York, who added, "I'm already concerned about various practices of CBS Radio."

LINKING RADIO, TV RATES?

Among those concerns, Mr. Thompson said, are the prices advertisers have to pay in markets where CBS is the dominant or close to the dominant broadcast player. A possible scenario, he said, is making the radio rates really attractive only if you buy a certain number of spots on the local CBS TV station.

"Right now, with the CBS TV stations doing so poorly, Mel might not have as much leverage as he might think," said another agency media executive. "But the moment the TV stations are doing better, advertisers are in trouble."

Mr. Karmazin, who did not return phone calls, inflamed a number of ad executives in remarks he made in the March 3 Barron's.

"We have brought once-rival [radio] stations under the same group umbrella," Mr. Karmazin was quoted as saying. "It used to be that they competed, that media buyers would play off against each other. Now we have the ad sales managers talk to each other every morning. That adds up to higher prices and better margins."

Mr. Thompson, who said Mr. Karmazin was careful not to say such inflammatory things in a 2-hour meeting he had with him, noted that this was the kind of strategy he suspected was behind much of the consolidation of TV and radio stations.

In that same Barron's story, Michael Jordan, chairman-CEO of CBS parent Westinghouse Electric Corp., said: "To say that the performance of these [TV stations] is abysmal would be complimentary. Still, the good news is that things are really so rotten that there is nowhere to go now but up."

"At what cost to advertisers is what I want to know," was the reaction to Mr. Jordan's remarks by another top agency media manager.

EFFECT ON NETWORK SALES

Another unknown is what influence Mr. Karmazin-who will be the largest single shareholder of CBS when it splits from Westinghouse's industrial divisions-will have on the network sales group.

"I've heard that one agency wanted to do a deal combining a bunch of our radio stations with a TV network buy, and we turned it down," said one CBS insider. "I think we were worried about discounting our rates on the network side, and just the precedence such a deal would have. But in the reign of Karmazin, that kind

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