"Comedy Central Won't Sit at 'Kiddie Table' Anymore"
Hollywood Reporter
April 22, 2003
by Andrew Wallenstein and Georg Szalai


NEW YORK (Hollywood Reporter) - A few years back, when Comedy Central was run by Doug Herzog, he had a saying about the cable channel's limited resources: "We make our own gravy."

Now that the network has been fully acquired by Viacom, Comedy Central president and CEO Larry Divney sees things differently.

"Now we're not at the kiddie table," Divney said. "We can sit with the rest of the family."

With the announcement Tuesday morning that Viacom has snapped up AOL Time Warner's half of Comedy Central for $1.23 billion in cash, the cable network is looking to feast on corporate synergies essential for survival in a consolidation-crazed industry.

In a conference call with investors Tuesday, Viacom chairman and CEO Sumner Redstone said the Comedy Central takeover will bolster its networks business. "In cable television, we're clearly the leaders," he said. "And we clearly intend to stay there."

Viacom plans to leave Comedy Central's basic organizational setup intact, albeit now under the exclusive purview of Tom Freston, president and CEO of MTV Networks. Previously, Freston had been a member of an eight-person board, split evenly between AOL Time Warner and Viacom executives, who oversaw the joint venture. Divney will remain at the helm, and the network will continue to be based in both New York and Los Angeles.

Comedy Central stands to thrive through the resources Viacom can make available -- from savings incurred eliminating redundancies like affiliate sales to Viacom's cross-promotional reach across other TV brands to radio and outdoor.

"There will clearly be opportunity for more cross-selling," said Mel Karmazin, Viacom's president and chief operating officer, explaining that the Viacom Plus cross-media sales unit had often not included Comedy Central in its deals to date.

With the network intent on grooming a new generation of hits to follow such successes as "South Park" and "The Daily Show With Jon Stewart," Divney is eyeing doubling his development slate, though no new budgets have been approved. He believes that being inside the always prolific MTV camp will have its fringe benefits.

If Herb (Scannell, president of Nickelodeon, TV Land and Spike TV) is developing a show that isn't quite right for Spike TV, maybe it's good for us," Divney said.

Comedy Central has been the subject of takeover rumors from the time it first began in December 1990, when Time Warner merged its struggling Comedy Channel with Viacom's Ha!: The TV Comedy Network. The joint ownership model was never seen as ideal for the channel, according to Adi Kishore, a cable industry analyst with the Yankee Group, who believes that Comedy Central will be better situated alongside such other irreverent, young-skewing networks as VH1 and Nickelodeon.

"I think it's a great fit," he said. "It blends very well with the overall programming asset mix. I think they will be able to leverage it extremely well."

Kishore sees Viacom's growing roster as a necessary side effect to the consolidation of companies like Comcast and AT&T Broadband.

"As you see consolidation on the distribution side with cable operators coming together, you need to have a similar consolidation on the content side, particularly in the case of Viacom, which doesn't have distribution assets," he said.

Speculation is still swirling that Comedy Central will be the first of several acquisitions Viacom makes, with other cable properties like Sci Fi Channel and Court TV remaining possibilities. MTV Networks' Freston affirmed that Viacom is hunting -- but not for the sake of sheer size.

"We're on the lookout, beating the bushes looking for networks for sale," he said. "That's not to say we want to get big for bigness' sake."


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