Media Blockbusters

The media landscape is changing.

On the same day UPN and The WB announced a merger to create a new network, The CW, The Walt Disney Co. announced a full-stock purchase of animation partner Pixar.

Disney's Deal

Disney said Tuesday it is buying longtime partner Pixar Animation Studios Inc. for $7.4 billion in a deal that could restore Disney's clout in animation while vaulting Pixar CEO Steve Jobs into a powerful role at the media conglomerate.

Disney will buy the maker of the blockbuster films "Toy Story and "Finding Nemo" in an all-stock transaction that makes Jobs Disney's largest shareholder. Jobs, who controls more than half of Pixar's stock and also heads Apple Computer Inc., will also join Disney's board.

Disney has co-financed and distributed Pixar's animated films for the past 12 years, splitting the profits. But that deal expires in June after Pixar delivers "Cars."

Disney and Pixar have been talking for months about a new relationship.

CBS News technology analyst Larry Magid said it's not just Pixar's stylish characters and high-tech animation that will make this deal a success for Disney.

"Pixar CEO Steve Jobs who is also CEO of Apple is a major asset of this deal. He's the one who made the iPod an enormous hit. He certainly understands entertainment and what young people want," Magid said. "He's also a man of impeccable taste."

New Network Born

Two small, long-struggling television networks — UPN and The WB — will shut down this fall and programming from both will be used to launch a new network aimed mainly at young and minority viewers.

The new network will be called The CW — "C" for CBS Corp. and "W" for Warner Bros. — each of which will own half of the new entity and contribute programs, assets and executives to the venture.

Tribune Co., a Chicago-based media company, will relinquish its 22.5 percent stake in The WB in exchange for a 10-year affiliation deal to carry the new network on 16 of its stations. The rest of The WB was owned by Time Warner Inc., parent of Warner Bros.

The CW will also be carried on the 12 stations owned by UPN, a unit of CBS Corp., guaranteeing the network carriage in 48 percent of the country and 20 of the top 25 TV markets in the country. Network executives said they hoped to have agreements in place to cover most of the rest of the country by the time it launches in the fall.

UPN and The WB had both struggled to compete against larger rivals in the broadcast TV business, including Walt Disney Co.'s ABC, General Electric Co.'s NBC, CBS Corp.'s CBS and News Corp.'s Fox.

Both place consistently behind their larger rivals in the Nielsen ratings race and have been financial burdens on their parent companies.

Barry Meyer, the head of Warner Bros., said at a news conference his company had anticipated a "challenged" environment ahead for smaller networks, and said the new venture had a "good chance" of being profitable as soon as it launches.

"Looking down the road, this was much better than keeping UPN alive," Leslie Moonves, the chief executive of CBS, said. CBS became a separate company from Viacom Inc., the owner of MTV and VH1, at the beginning of the year.

However, it's not yet clear that the combination of two struggling networks will result in a strong one, or even one that is a money-winner. Hal Vogel, a longtime media analyst and author of a book on entertainment industry economics, called the combination "inevitable," saying "these companies were not making money for anybody."

"Chances are, in five years they may not exist at all, or it may be something else, but right now it's better than going alone," Vogel said. "This makes sense — it's not a slam-dunk proposition, but it makes sense. Six networks was too many."

The new network will draw on programming from both UPN, whose shows include "Everbody Hates Chris" and "Veronica Mars," as well as from the slate of The WB, which includes "Supernatural," "Smallville" and "Everwood."

The combination will trigger a shake-up of network affiliations in a number of cities. In the seven cities that have a Tribune-owned station and also one UPN-owned station, the companies have already divvied up which ones will carry the new network — Tribune stations in four markets, and CBS-owned ones in the other three.

In other cities that have both WB affiliates and UPN affiliates that are not owned by either CBS or Tribune, it's not yet clear what will happen or what financial arrangements will be made. Meyer said the network would be looking at each market individually.

Among the Tribune stations that will join the new network are its flagship WGN in Chicago as well as WPIX in New York, and KTLA in Los Angeles.

The CW will air 30 hours of programming, seven days a week, following the model of The WB. Six nights of prime time shows will air Monday through Friday 8-10pm and Sundays 7-10pm. There will also be shows on weekday and Sunday afternoons, and five hours of children's programs on Saturday morning.

The new network will based in a new, yet-to-be determined location, network executives said. Both networks are based in Southern California, The WB in Burbank and UPN in Brentwood.

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