IS CBS SUNK?

By Richard Zoglin

THE DECISION CAME SWIFTLY AND with little drama. CBS shareholders, in a meeting last Thursday at New York City's Museum of Modern Art, voted overwhelmingly to approve a $5.4 billion buyout offer from the Westinghouse Electric Corp. Before the vote, however, chairman Laurence Tisch had to face the usual gauntlet of indignities. One disgruntled stockholder rose to celebrate "being liberated from the Tisch regime." Another castigated the chief executive's record and said he had "presided over the destruction of CBS as a cultural and educational leader." (Tisch defended his decision to sell off the record and publishing divisions and said CBS is still "a good broadcasting company.'') A CBS correspondent, Scott Pelley, even flew in from Hawaii so he could pay tribute to the great days of CBS--days, he implied, that were gone. It would be appropriate, he concluded, "to take this moment and say, 'Goodbye, old friend.'"

There was always a whiff of faded romance in CBS's corporate culture--this is, after all, the network once known as the Tiffany of broadcasting. But nostalgia for the golden era of CBS has lately been supplemented by a sense that the network has been irreparably tarnished. Of all the bad days that Black Rock has endured (and is there another company whose internal soap operas are more frequently played out for the public?), these are undoubtedly the worst. In prime time, CBS's ratings have suffered an almost total collapse: its Nielsen average so far this fall is 9.5--a nearly 20% drop-off from one year ago, pushing the network ever deeper into third place (in one ignominious week in September, it even fell to fourth, behind Fox). Earnings were off 55% for the first nine months of 1995 compared with last year. The network has lost an archipelago of important affiliates, as well as such longtime executives as former broadcast chief Howard Stringer. Even David Letterman, one of the network's few bright spots, has fallen behind Jay Leno in the ratings, prompting the moody late-night host to talk about quitting when his contract is up in five years.

And now CBS's most prestigious news program, 60 Minutes, is at the center of a controversy that has raised questions about the network's commitment to first-rate journalism--and about the program's own journalistic practices as well.

The flap is especially painful for CBS because 60 Minutes has long managed to remain aloof from the network's ups and downs--a steady symbol (and often vocal defender) of the old standards and traditions. The controversy stems from a 60 Minutes story that was to include an interview with a former tobacco-industry executive seeking to blow the whistle on alleged misdeeds by his former employer. But the interview was killed after CBS lawyers raised concerns about possible lawsuits that the network could face from the tobacco industry if it were to run.

60 Minutes ran a bowdlerized version of the story (without the interview) a week ago, at the end of which correspondent Mike Wallace announced that he and his colleagues were "dismayed that the management at CBS had seen fit to give in to perceived threats of legal action against us by a tobacco-industry giant." Wallace, Morley Safer and other CBS newsmen continued to voice their concerns in print and TV interviews, raising alarms that CBS's corporate bosses might be getting weak-kneed in the face of aggressive (and potentially expensive) threats of libel. It was CBS journalists on their most impressive high horse. "The public knows about this story because Mike and I made a calculated decision to tell them," executive producer Don Hewitt told Time in a phone interview early last week. "In most companies, it would be put on a dusty back shelf."

By the end of the week, however, Hewitt and Wallace were no longer talking, after a published report suggested that CBS lawyers may have had legitimate cause for concern. According to the Wall Street Journal, 60 Minutes made a number of unusual arrangements with the tobacco-industry source--later revealed to be former Brown & Williamson executive Jeffrey S. Wigand. He was reportedly paid a $12,000 "consultant fee" for work he had done on a previous 60 Minutes segment; was promised that the network would indemnify him against any possible libel suit resulting from the story; and given a pledge that the interview would air only with his permission. When his lawyer asked for a promise that Wigand would be indemnified not only against potential libel suits but also against any lawsuit that might ensue from his breaking of a confidentiality agreement with his former company, the CBS lawyers balked. On their advice, CBS News president Eric Ober decided to scuttle the interview.

The issue, it seems, was not libel. CBS lawyers feared the network might be vulnerable to a suit on the grounds of "tortious interference"--inducing one party to break a legal contract with another. Attorneys are divided over whether the network could successfully have been sued on such grounds. By paying money to Wigand and agreeing to indemnify him against a lawsuit, some contended, CBS had put itself at serious risk. Attorneys who have been involved in litigation against the tobacco industry, however, insisted that the network was needlessly timid. "I think it's appalling they would fold over such an iffy theory of law," says John P. Coale, a Washington lawyer who represents 50 law firms pursuing a class action against tobacco companies.

Legal issues aside, the revelations of behind-the-scenes dealmaking at 60 Minutes disturbed many journalists at CBS. Paying consulting fees to outside "experts" who help on stories is not uncommon in TV news; but some questioned whether, in this case, the payment compromised both Wigand and CBS. What most appalled some at CBS News was the notion that 60 Minutes would give a source veto power over whether to run his interview. One senior CBS producer expressed outrage that the 60 Minutes journalists would go on talk shows and cloak themselves in the First Amendment when they had cut such a deal--a deal, he asserted, that would not be countenanced elsewhere at the news division. The new information so disturbed Morley Safer that he wrote a letter to Charlie Rose, apologizing for some of the remarks he made on Rose's PBS show a few days earlier. "I am dismayed that the principals involved in the story who had been so vocal on this issue misled their colleagues," Safer wrote.

If CBS's scrapping of the Wigand interview prompted instant speculation that news decisions had fallen victim to the corporate bottom line, it was force of habit. Since taking control of CBS in 1986, Tisch has been a bottom-line boss. He sold off key pieces of the company (notably CBS's publishing and music divisions), instituted drastic cost-cutting measures and shied away from paying big bucks at key junctures. Two years ago, CBS lost its perennial Sunday-afternoon N.F.L. football franchise when it was outbid for the games by Rupert Murdoch's Fox network. A few months later the network lost eight important affiliates to Fox when Murdoch acquired the 12-station group owned by New World Communications--stations that Tisch had earlier passed up a chance to buy. To replace the stations, CBS has been forced to switch to weaker UHF outlets in major cities like Detroit, Atlanta and Milwaukee; ratings there have dropped precipitously.

The affiliate losses have contributed to CBS's ratings woes, but so have some overly aggressive scheduling moves. The network launched an unusually large slate of 11 new shows this fall, tried to attract younger viewers and made a risky schedule shift by moving Murder, She Wrote from its longtime Sunday-night time slot and replacing it with two sitcoms. Nearly every move backfired. Murder, She Wrote (now on Thursdays) has dropped from ninth in the ratings to 59th; Sunday-night viewership has fallen 25% (60 Minutes has dropped from sixth place in the ratings to 13th); and not a single new show--young, old or in-between--has been a hit.

Les Moonves, the highly regarded former head of Warner Bros. Television who became president of CBS Entertainment in July, admits the network made some programming mistakes--among them, trying "to change the demographic profile of the network too much, too fast." CBS's traditionally older audience simply did not go for hip young shows like the much hyped Central Park West. "It should have been aimed a little more middle-of-the-road," says Moonves. Yet he is predictably upbeat about the chances for a CBS turnaround: "There's a change in attitude and morale. Everybody is feeling like this is a rebuilding year, but we can do something here."

The network business, of course, is a cyclical one, and CBS, like every other network, has bounced back from bad times before. Yet in the new, crowded TV landscape, with network audience shares continuing to drop (and CBS facing the extra handicap of a depleted affiliate lineup), the question is whether this time a network has sunk so deep it can't rise to the surface again. "I'm not so sure the cyclical nature of the network business will operate the same way again and again and again for CBS," says Alan Bell, president of Freedom Broadcasting, which owns three CBS affiliates. "It's not the same CBS it was the last time they were on the bottom. It's much more demoralized and disorganized. It has lost many major-market stations. And any kind of merger is a real culture shock."

That culture shock so far is largely one of uncertainty. Until the Westinghouse takeover is completed (it awaits final approval from the Federal Communications Commission, which is expected in the next few weeks), chairman Michael Jordan and other company officials have declined to give any details of their plans for the network. But Westinghouse, a veteran broadcaster that owns five TV and 16 radio stations, is known in the business as an aggressive cost cutter. Observers both inside and outside CBS think that doesn't bode well. "Larry Tisch has cut costs considerably over the years," says Dennis McAlpine, media analyst at Josephthal, Lyon & Ross. "The headquarters at Black Rock is decimated. There isn't that much [left] to get rid of. And this is at a time when they're supposedly going to attract new programming to build the network up." Christopher Dixon, an analyst at Paine Webber, is a little more bullish, citing the strong station lineup that will result. "With the combined stations group, not just in television but also in radio, you've got an enormous affiliate base that, if revitalized, can give them the leverage to allow CBS to regain its position."

In the end, though, it is people like Bell, the station-group executive, who will have to be satisfied. "Westinghouse has been very slow off the mark to say what they're going to do," he says, adding that if the company doesn't get its act together fast, he will think about switching affiliations. "I have a responsibility to the family that owns these stations to do the very best that I can for them. And it's difficult with what is happening. CBS is like a giraffe with a sore throat: you've got a lot of sore throat." And a lot of people watching to see if the patient regains its voice.

--Reported by Margot Hornblower/Los Angeles, John Moody and William Tynan/New York, and Elaine Shannon/Washington

With reporting by MARGOT HORNBLOWER/LOS ANGELES, JOHN MOODY AND WILLIAM TYNAN/NEW YORK, AND ELAINE SHANNON/WASHINGTON