The New York financier and his lieutenants won't articulate that vision. But others in the know aren't discouraging rumors that SCI's seven stations could be the cornerstone of a fifth television network. If that's his ambition, Perelman faces imposing obstacles, not least of which is the fact that business building isn't the forte of this erstwhile corporate raider. Perelman, who made his billions in the '80s junk bond market and his biggest splash with the 1985 takeover of Revlon, is reportedly richer than Murdoch or Ted Turner. But he has not proven himself to be their creative peer.
Because his arsenal of assets is thin, Perelman will find network building an uphill battle. Besides the SCI stations--CBS affiliates in Atlanta, Cleveland, Detroit, Milwaukee and Tampa, an NBC affiliate in San Diego and an independent in Boston--he owns TV programming entity New World Entertainment and distributor Genesis Entertainment. Perelman means to supply the SCI stations with shows churned out by both, but they're hardly programming powerhouses. Because producing new series for the networks was a money loser, New World pulled out of the business in 1991 to focus on maxi-series and made-for-cable movies. Its most-watched series, The Wonder Years and the soap Santa Barbara, are now off the networks, while Zorro, which it produced for the Family Channel, was cut last year. Moreover, Genesis, one major offering, The Whoopi Goldberg Show, was recently scuttled. Increasing his programming output to network standards would take time, although Perelman will have the cash to do so with The Wonder Years now entering syndication. Still, he,d have to buy the bulk of his programming from outside at first.
Besides what to air, there's also the problem of where to air it. Perelman isn't about to dump CBS, top-rated fare from his SCI chain. But the most glaring need if he's to construct a network is a stable of unaffiliated stations in key markets, particularly New York and Los Angeles. The sole remaining station groups fitting that bill are owned by Chris-Craft Industries and Tribune Co. Perelman's emissaries have approached Chris-Craft about a possible production venture or broad alliance. But Chris-Craft, which recently replenished its coffers through the sale of a huge piece of Time Warner preferred stock, may have its own agenda. The company is both on the prowl for more stations and is reportedly seeking a programming deal with Paramount or another major studio.
Should Perelman manage to put together a deal, he would face the tough chore of lining up small-market stations not already taken by Fox. Perelman then would have to persuade them to abandon existing network ties--a feat achievable only if he first builds a flourishing large-city viewership--or arrange with cable operators to carry his fare.
Perelman has yet to marshal anywhere near the potent array of programming and broadcast properties that Murdoch forged together to create his thriving Fox network. What's more, in trying to duplicate Murdoch's feat, he'd bump up against bigger and better-heeled rivals whose ambition mirrors his own. For now, his aims necessarily will be humbler, such as devising low-cost game and talk shows for SCI's daytime schedule through New World and Genesis and selling advertisers package deals.
However grand or meager Perelman's media empire turns out to be, he faces the vital task of protecting his investment by juicing up the stations, long-static revenues and cash flows. At least the 8 times operating cash flow he paid for them is within the bounds of sanity. The preceding owner, George Gillett, anted up 15 times cash flow in 1987, just as demand for media assets peaked. Perelman believes the stations, prospects are bright, but most analysts call his prophesy of a 23% surge in cash flow by 1996 downright Pollyannaish.
Still, Perelman's choice of William Bevins to run SCI earns rave reviews. For the past five years, Bevins worked wonders at Marvel Entertainment, the comicbook publisher Perelman owns. Before that, he was Ted Turner's deal architect, helping Turner shape perhaps the craftiest entertainment deal of the '80s, the acquisition of MGM/UA. But Bevins, too, shared his old boss, gift for grandstanding, concocting an all-junk-bond bid for CBS in the mid-'80s that Wall Street considered laughable. It will take more than grandiose and hollow gestures for Perelman to make SCI a worthwhile investment, let alone fulfill his visions of empire.
Copyright Adweek L.P. (1993)