CBS Is on the Ropes, But Analysts Are Optimistic

CBS recently won the dubious distinction of becoming the first of the old "Big Three" networks to come No. 4 in the weekly ratings behind the new guy on the block, FOX. While CBS execs quickly point out that their network produces 22 hours of programming weekly, compared with FOX's 15, it shows just how much trouble faces the once-dominant network.

Its prime-time schedule has dropped from a powerful No. 1 two years ago to a struggling No. 3. The defection of several affiliates in major markets to FOX last year added to its woes. Last quarter its profits dropped 43 percent, the result of a weak prime-time schedule and higher payments to keep its affiliates happy.

Despite its troubles, most analysts are bullish on CBS. One of the networks has always been No. 3, and it has always rebounded.

"It's a cyclical business," says Steve McClellan of Broadcasting & Cable magazine. One or two hits could revive CBS.

To ensure that this happens, CBS hired Leslie Moonves, the programming whiz from Warner Bros. TV. While he arrived too late to resuscitate CBS's fall lineup, analysts and competing network executives say he can turn the network around.

"It's going to cost an awful lot of money," says Melissa Cook of Prudential Securities, noting that Westinghouse, which has bid to buy CBS for $5 billion, will strengthen its affiliate base.

But the challenge will still be daunting because of the increasing competition from cable and the new networks.

"It is going to be probably tougher than at any time to turn around a network," Mr. Moonves says. "But we still believe quality will win out, and we will be competitive."