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CBS, Warner Bros. Plan New Network

Say goodbye to the WB and the UPN.
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The WB and UPN are off to 7th Heaven.

CBS

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and

Time Warner's

(TWX)

Warner Bros. set up a new television network. The companies also said they'll fold their WB and UPN network startups this fall.

The companies said the new network will be called the CW.

Tribune's

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(TRB)

Tribune Broadcasting and CBS's UPN affiliates set 10-year affiliation agreements.

"This new network will serve the public with high-quality programming and maintain our ongoing commitment to our diverse audience," said CEO Les Moonves. "It will clearly be greater than the sum of its parts, delivering excellent demographics to advertisers, and building a strong new affiliate body. Additionally, The CW will be able to draw from the creative talent and production resources from the top two television production studios in the business, while also seeking programming from all sources -- independent producers or other studios. With this move, we will be creating a viable entity, one well-equipped to compete, thrive and serve all our many publics in this multi-channel media universe."

Both WB and UPN have had brief periods of ratings success, with the younger-skewing WB in particular enjoying a period of rising fortune. But neither has achieved ongoing ability to establish itself as a network ratings leader. The result: high TV production and marketing costs and declining audiences for television have put pressure on both networks. Together they should be able to reduce costs and overhead. A merger also brings scale to the combined entity, allowing it to better compete in a world with a fragmented audience.

"This is a very exciting day for Time Warner and its shareholders in the creation of what we believe will be a very strong and viable fifth broadcast television network," said Time Warner operating chief Jeff Bewkes. "This new network will have all the strategic asset value as an outlet for our programming that The WB presented us, but with a much firmer and more secure financial present and future."

The companies said the combination of Tribune's 16 major market stations and the 12 CBS-owned UPN major market affiliates give the CW instant coverage in 48% of the country. The rest of the network's distribution system will be a combination of selected current UPN and the WB stations. The full distribution of the new network is expected to exceed 95% of the country.

Dawn Ostroff, president of UPN, will become president of entertainment, and John Maatta, chief operating officer of the WB, will become chief operating officer of the CW.

"I'd like to thank Dawn Ostroff and all the talented people at UPN who have worked so hard," Moonves said. "For many years UPN had financial losses, but under CBS's guidance, UPN has been able to effect a dramatic creative turnaround in a short period of time."

On Tuesday, CBS shares rose a dime to $25.92, Tribune fell 28 cents to $29.62, and Time Warner rose 6 cents to $17.15.