CBS chief wants television merger with NBC

THE PROSPECT of a huge merger that would reshape America's television industry was raised yesterday as the chairman of CBS, the largest TV network, said that he wanted to buy its rival NBC. Though the deal raises huge issues of competition and finance, it intrigued the market.

His comments came as CBS's owner, Westinghouse, completes a corporate makeover. "If Exxon and Mobil can combine, then why can't I buy NBC?" said Mel Karmazin, speaking at the American Association of Advertising Agencies. NBC has recently lost Seinfeld, its top-rated show, and the National Football League, which is now televised by CBS.

Several of the television networks have been lobbying the Federal Communications Commission to repeal regulations that prevent networks from taking each other over. Mr Karmazin has made a number of comments recently about wanting to take over another network, and expanded on his thoughts yesterday after comments from an executive of Saatchi and Saatchi that media consolidation would hurt advertisers.

It was highly unlikely that Disney would sell ABC, Mr Karmazin said, and nor would he expect Rupert Murdoch to sell Fox. But NBC was not a good fit with General Electric, its current owner, he said.

GE responded swiftly that it was a "perfect fit". Its chief executive, Jack Welch, has said that NBC is worth up to $20bn, but Mr Karmazin said he would be prepared to "overpay" for the network, as he did for the rights to televise football.

That gamble paid off, bringing in new viewers and winning market share. There has already been speculation that NBC would be spun into a new business unit.

Mr Karmazin's comments shocked the market, which was unsure how seriously to take them. He has gained a reputation for shooting from the hip since he took over at CBS. The company is owned by Westinghouse, which last year sold its remaining nuclear energy business to British Nuclear Fuels, completing its transition to a media company.

It would be in line with recent trends in the US for vast mergers, however, and for rapid consolidation in the media business as networks, telecommunications and cable companies and Internet groups put together new configurations. Competition for the networks no longer just comes from each other, but from a wide variety of sources, and they are also dipping their toes into new media.

Mr Karmazin also said that CBS would move into the Internet, setting up a new subsidiary called CBS-plus.

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