Rumble In The Media Jungle

Buffy the vampire slayer's latest moves have left her fans gasping for breath. In her five seasons on the WB network, the sultry agent of good has killed dozens of night stalkers and demons, and even managed to finish high school and matriculate at UC, Sunnydale. The show made Sarah Michelle Gellar a big star and gave the WB a hip edge over its archrival, UPN. So fans were stunned by last month's news that "Buffy" was decamping to UPN. Wailed Boyslayer, one groupie on the official "Buffy" Web site, "How could you WB guys let such a great show slip through your fingers and let it go to a loser network that only has sci-fi shows?" Here's the deal, Boyslayer. As part of an escalating rivalry, "the loser network" upped the ante for the hot series, offering "Buffy's" producer a whopping $2.3 million an episode, a cool half-million dollars more than WB's bid.

Just a typical day in TV land? In fact, the "Buffy" shenanigans are the latest round in a slugfest between two of the world's largest media superpowers--AOL Time Warner, the WB's parent, and Viacom CBS, UPN's owner. Both companies were formed in the past two years by blockbuster acquisitions. Steve Case's AOL acquired Time Warner for more than $100 billion, and Sumner Redstone's Viacom paid nearly $40 billion for CBS. Some of the jostling is unavoidable. Which movie do you plan to check out this weekend? Viacom's "Crocodile Dundee in Los Angeles" or AOL's "Driven"? For the latest headlines, do you tune in to AOL's CNN or Viacom's Dan Rather on CBS? But lately the sparring is escalating, with the two giants battling over top executives, programs and big advertisers. And, if the latest round of media speculation proves true, they someday could confront each other on the Internet, where AOL now reigns supreme.

The lucrative cable-TV business is the first major battleground. For weeks AOL has been quietly targeting MTV, Viacom's most prized business. AOL's powerful co-chief operating officer, Bob Pittman, in a previous incarnation helped create MTV, and he "would love to have a music channel," says a Pittman confidant. In recent days AOL has discussed investing up to $100 million in New Urban Entertainment, a start-up cable network aimed at African-Americans, according to published reports. NUE-TV, as it's known, would compete directly against Viacom's recently acquired Black Entertainment Television (BET), a major cable network built around hip-hop and R&B. AOL is exploring the idea of using NUE-TV as a launchpad into music television, an AOL executive told NEWSWEEK. AOL declined to comment, as did Viacom. On the broader topic of the competition in general, AOL dismissed it, on the ground that AOL is so big and diverse that no one else is in its league. Viacom preferred to focus on areas of cooperation.

Yet analysts speculate that AOL may have other big plans to challenge Viacom. With Viacom recently winning FCC approval to own two networks, CBS and UPN, media analysts immediately began betting that AOL would resume its quest to buy General Electric's NBC. (Before AOL acquired it, Time Warner had sought to buy the peacock network.) GE says it's not selling NBC, but entertainment executives say that a strategic partnership between the two companies would be a compelling arrangement.

One might wonder why the giants might move to get even bigger. Bulking up gives them an advantage in the developing race to offer huge package deals to advertisers. More than most media companies, AOL and Viacom have the ability to offer marketers the chance to blast their message across a dizzying array of outlets, all with a single "integrated" buy. Procter & Gamble is reportedly discussing a $300 million deal to advertise across the Viacom empire. AOL is also angling for P&G business.

At the moment, AOL's and Viacom's most frenzied combat is, appropriately enough, in the boxing arena. Viacom's Showtime and AOL's HBO are waging a heated bidding war for Hasim Rahman, an unknown fighter who last month knocked out reign- ing heavyweight champion Lennox Lewis. Rahman is the rarest of creatures, a heavyweight champ without a TV contract. Big-time fights are marquee events, used by both HBO and Showtime to lure new subscribers. Executives from both companies are furiously courting Rahman's promoter, dazzling him with dinners at New York's swank Palm restaurant and ever-escalating bids for his fighter. Sources say Showtime has offered Rahman a $5.3 million bonus, plus a $15 million to $20 million contract. HBO is said to have countered with a similar bid. "It's been a full-scale barrage from both companies, nonstop negotiations from the early morning to late-night dinners," says Cedric Kushner, Rahman's promoter.

The Battle over "Buffy" was even more expensive. After signing the contract, UPN executives welcomed the "Buffy" cast with $4,000 gift baskets containing Cartier watches, caviar and Cristal champagne. For its part, WB executives are distributing sour grapes, with one executive referring to UPN as a "used-parts salvager" that picks up fading shows from other networks. WB estimates that UPN will lose as much as $80 million a year on the "Buffy" deal. "The numbers work for us," counters UPN.

Things turned testy in a recent fight for a highly regarded executive. Several weeks ago, Richard Bressler, credited with improving Time Warner's once debt-laden finances, landed at Viacom as its top finance executive. According to Viacom sources, he had been close to accepting the job and duly notified his AOL superiors. But before he could quit, The Wall Street Journal reported that Case had fired him--an account Viacom sources contend was leaked by AOL to damage Bressler's image. None of the parties would discuss the matter. But one Viacom bigwig says of AOL, "They did a stinky thing."

And a bigger brawl could lie ahead. Entertainment executives and investment bankers expect Viacom to eventually challenge AOL's dominance of the Internet. Earlier this month Viacom added credence to the rumors that it is interested in acquiring Yahoo when its CEO, Mel Karmazin, told Electronic Media, a trade publication, that he "would not rule out an Internet situation... Yahoo is a great brand, and Terry Semel [Yahoo's new CEO] is a great quality executive.'' Karmazin went on to say that the deal made no financial sense for now, but some in the entertainment industry say the deal would benefit both companies. Now that's a fight you could sell tickets to--AOL vs. Viacom--the first superheavy weight bout in cyberspace.