CBS v. Belo v. Katrina
No, you didn't miss the news that Belo Corp., the owner of The Dallas Morning News and WFAA-Channel 8, is involved in what looks like a nasty lawsuit with the mighty New York City-based CBS Corporation. That's because Belo's media outlets (and CBS', for that matter) have failed to report on the suit, filed in the Supreme Court of New York in January, over Belo's plan to purchase for $14.5 million a New Orleans TV station Belo now deems worthless in the wake of Hurricane Katrina. To date, Belo chairman Robert Decherd has refused to comment on the suit, except in a February earnings conference call with stock analysts, during which he said only, "We believe our position in the lawsuit is sound, and we intend to defend vigorously against the allegation." CBS execs have said even less.
Quite simply, the allegation is this: Belo agreed last July to buy television station WUPL, a UPN affiliate, from CBS-owned Infinity Radio Inc. but reneged after Katrina. CBS still wants its $14.5 mil, claiming WUPL remains a viable property, but Belo refuses to pay--not only because Katrina rendered the investment almost worthless but also because WUPL won't even be a UPN affiliate after September, when a new network called the CW takes its place. In fact, Belo claims it didn't even know CBS chief executive officer Les Moonves had been talking to Warner Bros. Entertainment about merging its WB network with UPN to create the joint venture CW, which Moonves announced on January 24. As far as Belo's concerned, that alone was enough to kill the deal.
Belo already has one station in the New Orleans market, the top-rated CBS affiliate WWL, but wanted to acquire another, Infinity insists in its legal documents, to "achieve considerable efficiencies by operating two stations in the same market." According to Infinity, Belo planned to buy WUPL and then fire most of its staff, with WWL's employees taking over their duties--a charge Belo denies in its legal filings.
The deal was signed July 8, and a week later the Times-Picayune reported that WWL was planning to build a new studio, newsroom and office complex in an old parking lot, which meant the closing of "its longtime French Quarter home." WUPL was to be part of the complex.
And all was going according to plan, until August 29, when Katrina laid waste to most of New Orleans, reducing its population from some 460,000 people to about 144,000, according to recent estimates. Belo does claim in its court documents, filed February 21, that it did talk to Infinity about buying WUPL at a lower price--not because it felt any contractual obligation but as "a compromise." Yet after months of delay, Belo decided to back out of the deal, figuring there was no one left in New Orleans to watch their new station or buy its advertisers' products. Infinity ain't about to let it walk away so easily.
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