A Cut Above the Ordinary

By George Russell

Only three months ago, Laurence Tisch, 63, was being toasted as a hero at the Manhattan headquarters of powerful CBS. The billionaire chairman of Loews had suddenly emerged, to resounding cheers, as the No. 2 network's acting chief executive officer, after a dramatic boardroom confrontation with Ousted Chairman Thomas Wyman, 57. Many CBS employees hoped that the changeover, which also brought back Network Founder William Paley, 85, as acting chairman, would mark the onset of a new golden age for the tradition-minded broadcasting giant and the end of months of upheaval and austerity. CBS, exulted 60 Minutes Correspondent Morley Safer, was on its way "back to the future."

These days CBS's future seems to have arrived, and the huzzahs are rare in the company's corridors. Instead, there is much muttering and trembling, as the tightfisted Tisch continues to direct a rapid and ruthless austerity campaign that has so far cost 1,200 of CBS's 15,500 employees their jobs. Tisch has also lopped off entire lines of the sprawling conglomerate's business (1985 revenues: $4.8 billion), and is said to be looking for buyers who will take on others. Meanwhile, speculation is increasing that the next item to get the ax may be the "acting" portion of Tisch's CEO title. As Tisch himself has put it, "I've been bitten by CBS. It's got great potential."

The increasing dominance of CBS's largest stockholder (he controls 24.9% of the outstanding shares) was underlined once again last week. As Tisch and Paley emerged from a three-hour regular monthly session of the 14-member CBS board, word spread that directors had once again avoided choosing a Wyman successor. A seven-member search committee, headed by former Defense Secretary Harold Brown, has met three times so far but has set no deadline for its task. The main reason for the committee's lassitude is that Tisch is not yet finished with his task of reorganizing the company.

There is considerable irony in Tisch's campaign. Cost-conscious bloodletting, in a bid to fend off corporate raiders who were swarming around the company, had stirred widespread unhappiness with Wyman and helped to bring Tisch to power in the first place. But the chops did not stop with Wyman's departure. Far from it. It was easy enough to explain a wave of 700 firings that had begun in July as the result of an austerity plan approved before the outgoing chairman's downfall. But then in October came 400 more, decreed by Tisch, followed by an additional 100 in November. The firings have hit every level, but the highest-ranking casualties of all came early in Tisch's reign with the September removal of CBS Publishing President Peter Derow and 14 of his assistants. As a CBS News employee with 14 years' experience puts it, the feeling is that "we're all vulnerable."

The September mood of euphoria at CBS suffered accordingly. Says one mid- level executive: "Half the people here curse Tisch." A television producer at the Manhattan headquarters known as Black Rock described employee morale as "pulverized with fear." Staffers soon coined a bitter name for the layoffs: to be fired was to be "tisched." In the past few weeks, as the wave of firings seems to have again subsided -- at least for a time -- the mood at CBS has become quietly resigned. Says one employee: "The feeling here is follow the rules, do your job, don't make waves."

From Tisch's point of view, the cutbacks have been necessary to cope with the dreary advertising climate that is affecting all three broadcast networks. This year overall ad revenue for the networks is projected at $8.2 billion, down from $8.3 billion in 1985. CBS's share of that is expected to be about $2.4 billion. (Front-runner NBC, which took over the top slot last year, will probably bring in about $3.7 billion.) CBS broadcasting profits slumped last year to $361 million, from $409 million in 1984; this year they may do no better. Tisch has lauded the network as being in "fabulous shape financially." But in an October interview with Broadcasting magazine, he predicted that the networks "have a couple of tough years ahead of them."

Tisch's response has been methodical and austere, the same style that characterized his tenure at Loews, a $17.5 billion insurance, hotel and tobacco conglomerate, which he operated with a minimum of staff and ceremony. Tisch ordered CBS's accounting firm, Coopers & Lybrand, to conduct a department-by-department investigation of the bulky corporate bureaucracy that had grown up during Wyman's tenure.

Across the CBS empire, entire departments withered. The corporate public relations staff in Manhattan was reorganized and suddenly reduced from 21 people to four. The investor-relations department, which deals with stockholder concerns, dropped from eight bodies to two. The corporate personnel office, in charge of hiring, collapsed from 120 employees to 50. Despite widespread protests, 26 CBS pages -- trainees who earned $6 an hour -- were fired. So were two doctors and four nurses. Corporate charity was frozen at 1985 levels of $7 million. Staff perks like limousines were cut back, and three executive dining rooms were shut down. Tisch has even banned company-subsidized birthday parties for employees.

One of Tisch's most dramatic early moves was to sell off CBS's entire educational and professional publishing operation for $500 million, to giant Harcourt Brace Jovanovich. The same day he shed a music-publishing affiliate, ( CBS Songs, to three entrepreneurs for about $120 million. Rumors persist -- and have been denied -- that Tisch is also looking to sell CBS's highly profitable records division, which is expected to earn more than $100 million this year after expenses.

Two areas that Tisch has notably avoided touching are the CBS News and Entertainment divisions, which the returning Paley has now taken on as his responsibility. CBS News was badly roiled by Wyman and his division president, Van Gordon Sauter. Rather than cut staff there, Tisch and Howard Stringer, Sauter's replacement, have taken the small, symbolic step of rehiring three of 144 staffers fired under the old regime. On the entertainment side, Paley has had a major say in setting the fall schedule. So far the network has been able to bask in the favorable reception given to such new prime-time offerings as Designing Women, The Cavanaughs and My Sister Sam. None of the new CBS shows, however, are in the national Top Ten, and CBS still lags behind NBC in the prime-time Nielsen ratings.

Throughout all the bloodletting, Tisch has tried to inject a personal flavor into his relations with CBS staff. When a CBS News employee recently wrote Tisch a note asking for a meeting, Tisch speedily invited her in for a half-hour chat about her work as a producer. Following a recent dinner that Tisch had with the CBS News Washington bureau employees, a producer pronounced himself "extremely impressed" with the acting CEO's interest in and curiosity about bureau operations. Tisch's pruning of the corporate bureaucracy is also beginning to get grudging acknowledgment from the survivors. Says an employee in the CBS finance department: "They have done a good job of getting rid of paperwork. All that's gone. This is really a new company." Agrees Fred Anschel, an analyst at the Dean Witter Reynolds investment firm: "Tisch is doing all the right things."

Other networks evidently agree. At nearby NBC, whose parent RCA was swallowed by General Electric a year ago for $6.3 billion, a wave of across- the-board firings is also under way. So far, between 100 and 150 employees have been laid off. NBC executives would not say how many of the company's approximately 8,000 employees will ultimately be affected.

Is the new austere style at CBS a success? The full effect of Tisch's cutbacks may not be known for another year. Some financial analysts wonder, though, whether Tisch and other network bosses have not overreacted to the current dark climate for television advertising. Tisch's position seems to be, however, that if and when advertising rebounds, CBS will be in a stronger position than ever to earn record profits.

With reporting by Bonnie Angelo and Jeanne McDowell/New York