Tisch Takes Blame for CBS’ Baseball Contract Losses
NEW YORK (AP) _ CBS Inc. Chairman Laurence A. Tisch took the blame Wednesday for a baseball deal that helped throw the broadcasting giant for a loss in late 1990.
″In the long run, maybe it was a mistake, but it wasn’t a disaster,″ Tisch, who is also the company’s president and chief executive officer, told stockholders at their annual meeting.
CBS agreed to pay $1.06 billion for the right to carry major league baseball’s World Series, league championships, All-Star Game and a limited number of regular season games for four years starting in 1990.
But losses on the baseball contract resulted in a decline in income from continuing operations for all of 1990 and a loss in the fourth quarter.
CBS reported income from continuing operations of $91.5 million, or $3.55 a share, in 1990 compared with $297.1 million, or $11.54 per share, in 1989, Tisch said.
″This decline in earnings was mainly the result of the company’s reported loss of $6.81 per share in 1990′s fourth quarter, which included an after-tax loss of $55 million (from) coverage of major league baseball,″ he said.
In addition, CBS provided for future losses of $115 million over the remaining term of the contract, he said.
″We entered the baseball contract on the premise that we would lose money,″ Tisch told the stockholders.
While the network lost close to $100 million in the first year of the baseball contract, its owned-and-operated stations reaped $20 million, putting the net loss to the parent company at $75 million to $80 million.
″Was it a mistake? Certainly. Would we do it again at this level? Absolutely not,″ Tisch said. Even so, he said, CBS needed something to help it break out of its third-place standing.
″I made that decision,″ Tisch said. ″This company will survive that decision - on a profitable basis.″
Baseball is part of a $3.5 billion sports package CBS launched in 1990, also paying $1.06 billion for four years of pro football coverage, including the 1992 Super Bowl, and $1 billion over seven years to cover the NCAA basketball tournament.
Tisch said the outlook for 1991 ″remains clouded and economic contractions continue to dampen the demand for network time.″
CBS expects to post a loss at its television network for 1991, and last month announced plans to cut costs by $100 million, mostly by eliminating 400 jobs among its 6,650 employees. It is the third big cut since Tisch became chief executive in 1986.