USA's Diller Pins Redstone in Court

Cable World, April 17, 2000 by Mike Reynolds

Sumner Redstone, Mel Karmazin and Vince McMahon may make an unlikely tag team, but they could soon be grappling with Barry Diller over McMahon's World Wrestling Federation.

To the victor: the rights to basic cable's perennially top-rated programming.

Viacom chairman Redstone and USA boss Diller -- who fought tooth-and-nail over Paramount Pictures a decade ago -- are again embroiled in what could become a mega battle for the rights to televise Raw is War and other WWF programming. Industry observers had expected the popular programming to move to CBS' TNN. But Diller usurped his old foe Redstone last week by exercising a contractual right to match a proposal by Viacom/CBS, which are merging operations.

USA also filed a complaint against WWF, Viacom and CBS, seeking a court injunction to uphold its programming rights, which USA said were spelled out in its contract with the WWF in 1998.

But Redstone, a feisty character, who beat Diller in the Paramount war and is no neophyte when it comes to getting his way using the legal system, shouldn't be discounted out just yet, observers said last week.

Most insiders believe that Viacom/CBS will let McMahon and WWF take the lead legal role, yet Redstone has sued plenty of companies in the past to get what he wants. "This gets down to strict contract interpretation," said one source. "Will the right of first refusal hold up on the cable rights alone? Clearly, Viacom/CBS is offering so much more than just televising the WWF."

The developments came about six weeks after the WWF invoked what a spokesman called "cancellation rights" for four hours of its programming on USA, effective this September. Another hour was already slated to expire at that point, according to WWF.

One network insider said the timing of USA's announcement and legal gambit was not coincidental. "The Viacom/CBS deal was on the brink," the source said. "It was going to be announced (last week) or early (this week). Barry Diller realizes how valuable WWF is to USA overall, but even if the courts rule in USA's favor, how can you patch that relationship? Vince thinks its time to move the WWF to a bigger stage."

USA maintains in its complaint that the Viacom/CBS deal would shift top-rated Raw is War to TNN on Monday nights, and LiveWire and WWF Superstars to TNN on weekends, and push Sunday Night Heat to MTV. The Viacom/ CBS deal, which is said to be worth about $100 million, would also include WWF coverage on UPN as well as cable coverage of WWF's proposed XFL gridion league. It would also include a one-hour dramatic series on UPN, which Viacom recently wholly purchased. The deal also includes a slew of marketing options across the stable of Viacom/ CBS holdings.

CBS declined to comment. Viacom did not return phone calls.

"Now that USA has matched the outstanding offer, its contract protects USA's fights for the next five years," USA said in a statement. "Upon resolution of this matter, USA intends to continue its two decade-long prosperous relationship with the WWF."

WWF was loathe to pick sides in the mess but a WWF spokesman said "we're still assessing our options at this stage. We ... are weighing two deals that provide various opportunities for WWF."

With WWF's TV home still undecided, upcoming advertising avails for both USA and Viacom/CBS remain up in the air. USA's upfront presentation is slated for April 27, while CBS/UPN will announce their lineups for the 2000-01 season next month.

Although WWF holds most of the inventory in its shows 85% -- according to several sources -- the ratings lift it can supply certainly serves to benefit a network's schedule overall.

Moving Raw is War, would take a significant bite out of USA's lead in the cable ratings. Ray Giacopelli, USA Cable's VP-research, told Cable World recently that USA would have lost 0.3 points from its 2.4 average rating in primetime during February without the show.

Conversely, should TNN ultimately pin the WWF fights, Lifetime TV's top research honcho Tim Brooks forecasts a significant primetime pump that could vault TNN into the mid-ones" ratings range.