Karmazin: CBS and Time Warner Inc. need to merge

The best corporate marriage in the media business right now would be a merger of CBS Corp. and Time Warner Inc.

So says former CBS Corp. and SiriusXM Radio boss Mel Karmazin, who, although retired from the big-media world he helped rule not too long ago, remains vital and very much engaged in the media business.

The comments by the 71-year-old mogul, who was interviewed in a one-on-one session at the NAB Conference in Las Vegas on Tuesday, came after a Bloomberg report last month said that CBS chief Les Moonves and Time Warner CEO Jeff Bewkes discussed a possible union last year and decided not to do it.

Still, Karmazin noted, "CBS doesn't have a studio, and it's dependent on a lot of third-party people to [produce its programming]." Remarking that Time Warner does indeed have a very powerful studio, he added, "What's amazing about Time Warner is they have CNN, and CBS doesn't have a 24-hour news network. The combination of CBS News and CNN could make a lot of sense."

Other synergies noted by Karmazin are the sports assets controlled by Time Warner's Turner Sports unit, which has NBA and NCAA men's basketball rights. These, he said, could be combined with CBS Sports' portfolio to create a "good alternative for ESPN."

Although all of this is merely speculation, Karmazin remains a respected and influential voice in the media business, and Time Warner Inc. certainly can't afford to sit still.

Sources close to the company say the decision to transition HBO to an a la carte model energized the company's stock to the point that it relieved the pressure on Bewkes, who famously resisted Rupert Murdoch's attempt to take over Time Warner last year.

However, many pundits--including Karmazin--predict a wave of media-business merger activity to unfurl later this year, should the FCC approve Comcast's (NASDAQ: CMCSA) $45.2 billion takeover of Time Warner Cable (NYSE: TWC).

The conventional wisdom is that Bewkes is possibly out of bullets to goose Time Warner Inc. stock further, and Murdoch and 21st Century Fox could come back around for another pass.

Addressing other issues, Karmazin lauded a recent CNBC decision to ditch Nielsen ratings, noting that a cable channel with an affluent Wall Street audience that's unmeasured by the research company shouldn't be using its metrics.

"Advertisers may still want to use Nielsen, but if I were running a network today I would tell my sales staff not to use those numbers," Karmazin said.

Moving onto other topics, Karmazin noted that while he was at CBS, he tried, unsuccessfully, to buy The Weather Channel, which today is an independent network struggling to maintain carriage on pay-TV systems.

"What leverage does The Weather Channel have with an MSO?" Karmazin said.

Also noting the leverage of the major broadcast networks--he said CBS, NBC, ABC and Fox have never lost a retrans battle with a pay-TV operator--Karmazin also commented on the vulnerability of Viacom in the multichannel market.

"I don't know how many people would cancel their subscription if Comcast were to one day say, 'I'm not going to carry BET.'"

For more:
- see this Bloomberg story

Related links:
US senator skeptical on Sirius-XM competition claims
US rivals XM and Sirius agree to combine
SeaChange's Samit: Cable has already hit 'tipping point' to OTT dominance

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