In a surprise move -- and after losing an estimated $50
million or more on the start-up -- CBS Corp. has opted to sell all of CBS Eye on
People to Discovery Communications Inc., and not just the 50 percent stake that was
announced last summer.
Last week, officials at DCI and CBS wouldn't disclose the
price that DCI is paying for the 11 million-subscriber network, but they did say that it
was a cash deal. DCI will be moving the network -- which will renamed Discovery
People, and which will get a new logo, effective Jan. 11 -- to Bethesda, Md., from its
current headquarters in Stamford, Conn.
CBS' decision to completely bail out of Eye on People and
"realize a financial gain" in the process is the latest chapter in its history
of failing to launch a national cable network from scratch.
While all of the other "Big Four" broadcasters
have made major and successful expansions into cable, including rolling out new networks,
CBS has stumbled badly. Its small stable mainly includes its acquisitions -- The
Nashville Network and Country Music Television -- and several regional-sports
In November, CBS sold 70 percent of its Spanish-language
CBS TeleNoticias to Grupo Medcom SA.
This past July, CBS announced that it would sell only 50
percent of Eye on People to DCI, which would then manage the network. But in a press
release last Tuesday, officials from both companies said that during the past five months
of negotiations, DCI's strategic objectives warranted sole ownership.
"We've decided to sell our entire stake in the channel
and realize a financial gain," said CBS Cable president Don Mitzner in a prepared
statement. "We believe that this provides us with a good reward for starting the
channel, as well as giving Eye on People the focus and resources of a single owner."
In his prepared statement, Johnathan Rodgers, president of
Discovery Networks U.S., added, "Given the realities of the dynamic, ever-evolving
cable-programming marketplace, we did not think that it made sense to co-manage a
Neither Mitzner nor Rodgers was available for comment last
week. But a CBS spokeswoman said the company is still interested in future cable joint
ventures or acquisitions.
Eye on People faced an uphill battle trying to get
distribution, and analysts have estimated that CBS poured $50 million or more into it
since its debut. Wall Street last year was predicting that CBS would pull the plug on the
network after Mel Karmazin, with his eye focused on the bottom line, rose to power at the
CBS Eye on People's president, Geoffrey Darby, isn't
staying with the network under DCI's ownership, but he will remain with CBS Cable, the CBS
spokeswoman said, adding that this was Darby's decision. Darby -- who has been with
Eye on People since it launched on March 31, 1997, -- couldn't be reached for comment.
DCI did say that Discovery People will continue its focus
on reality-based programming about people and personalities produced by CBS News, DCI and
DCI has named a transition team for Eye on People, headed
by Jay Feldman, general manager of Travel Channel, and Jo Ann Burton, senior vice
president of operations and administration for Discovery Networks U.S. Eye on People only
had eight employees, and they are not expected to move with the network.
DCI said it expects Eye on People's distribution in the
future to be a hybrid of analog and digital carriage. The network claims to have about 11
million subscribers, including cable and satellite.