When Laurence A. Tisch announced the sale of CBS Inc. to the Westinghouse Electric Corporation yesterday, he was beaming. Nine years after taking the job of chief executive at the network, the billionaire Mr. Tisch had orchestrated a $5.4 billion deal that made the Loews Corporation, his family-controlled company, $1 billion richer.
But Mr. Tisch may very well have been smiling as much from relief as from joy. His venture into the media world ended up tarnishing, not burnishing, his reputation. And that, according to many of Mr. Tisch's friends, is a bitter pill for a man who gives away millions of dollars in philanthropy and who took the top job at CBS to enhance his power and broaden his legacy.
Even these friends wonder why Mr. Tisch, in the face of venomous criticism, allowed CBS to fade into a pale shadow of the institution it was a decade ago. Shorn of its interests in records and publishing by Mr. Tisch, who wanted to focus solely on broadcasting, CBS nonetheless ranks last of the Big Three networks in viewer ratings. In the 18-to-49 age group crucial to advertisers, CBS even trails Rupert Murdoch's upstart Fox network. And CBS's audience reach in key markets like Detroit and Milwaukee has shriveled, thanks to Mr. Tisch's penny-pinching refusal to purchase strong local stations and to keep the network's affiliates happy.
Most devastating, CBS News -- the company's crown jewel -- no longer rules the news airwaves. Its smaller, demoralized staff often scrambles to compete with ABC and NBC news crews that are two and three times bigger.
Mr. Tisch, who could not be reached for an interview, has often defended his tenure by citing the return he has given to shareholders. CBS stock has risen about 13.5 percent a year since mid-1986, slightly outperforming the market. And by declining to give Westinghouse a lockup agreement, he left the door open for other bidders to emerge.
But many executives in the business community, who sympathize with Mr. Tisch's desire to control costs, question his overall record. "CBS is a disaster," said Gerard R. Roche, an executive recruiter who often found top managers for the company when its late founder, William S. Paley, was in charge. "Paley would kill him. Is that a legacy that he wants to leave, that he made a lot of money?"
The media world is more scathing. "He took an institution that was important in this country, and he strangled it," said Alex S. Jones, the host of "On the Media," a public radio program. Inside CBS, Mr. Tisch is berated as having turned what was called the Tiffany Network into the Woolworth Network.
And even some people on Wall Street, where Mr. Tisch is known as a legendary investor, wonder about his ways at CBS. While both he and shareholders made money, they might have made far more had the company been managed for growth, said one big money manager who owns CBS shares.
One imperfect measure of that came by coincidence on Monday, when the Walt Disney Company agreed to pay $19 billion for CBS's much larger rival, Capital Cities/ ABC. That is about three and a half times the CBS price tag, although a direct comparison is impossible because Capital Cities/ABC has grown to be much more diversified.
Back in 1985, before the networks' paths diverged, Capital Cities Communications, whose market value was about $2.4 billion, paid $3.5 billion for ABC. Together, they were valued at $5.9 billion.
CBS's stock jumped on news of that deal, to a market value of about $2.8 billion. No bid materialized, but an actual offer probably would have pushed the price higher.
Even so, while CBS has doubled its value in the decade, Capital Cities/ ABC has more than tripled its worth. Instead of investing money to expand the company, Mr. Tisch enriched CBS shareholders by paying more generous dividends than ABC and by spending $3.1 billion to buy back stock. Loews's share of the buybacks topped $800 million.
But Mr. Tisch, according to friends, does not even understand the criticism. "I'm convinced he doesn't think he wrecked CBS," said one friend, Howard J. Rubenstein, the chairman of Rubenstein & Associates, a large public relations firm. "He thinks he tightened it up, and added great value to it."
For Mr. Tisch to adopt a different mindset, some friends said, and run CBS differently would have required a complete transformation of the man, who is now 72.
Always a contrarian investor, the Brooklyn-born Mr. Tisch made his fortune by limiting his potential to lose money, not by risking huge amounts on the future. And he and his younger brother Preston Robert Tisch usually managed Loews's tobacco, hotel and insurance businesses defensively, not offensively. Their businesses are well-run, but they tend to follow, not lead, their rivals.
Over the years, the Tisch brothers profited famously from those methods. Starting by buying just one hotel, they are now easily worth more than $1 billion each. Laurence Tisch is on the boards of the New York Public Library and the Metropolitan Museum of Art and is chairman of New York University's trustees. The Tisch Foundation has donated millions and watched its name writ large on N.Y.U.'s hospital and its School of the Arts.
Energetic and inquisitive, Mr. Tisch was ready for a new challenge by the mid-1980's. He found the idea of running a network seductive. "It gave him access to power," a longtime friend said. "He liked being an opinion maker." Initially, he liked the spotlight that came from hobnobbing with national figures.
But he apparently was not ready for prime time. Running CBS is different from peddling cigarettes and selling insurance. "It had to be difficult for Larry," said his friend, Arthur L. Liman, a partner at Paul, Weiss, Rifkind, Wharton & Garrison. "Here is a person who has a great sense of value. All of a sudden, you have demands that are not rooted in economics."
When he took the CBS job, Mr. Tisch talked about paring back the excesses at the company. But he also promised to preserve its glory and said he would keep CBS intact. To Mr. Tisch, such talk forms the foundation of tough negotiating, not duplicity. When he later sold CBS Records and its publishing interests, however, he set off alarms.
His cost-cutting measures provoked more anger, and inflicted the most damage, in the news department. Reporters and producers say the tradition of CBS News is all but gone. One measure: CBS News's budget falls short of ABC's by more than $100 million a year.
Mr. Tisch never grasped the importance of preserving CBS's distribution system, according to several CBS executives. Early on, he alienated affiliates by trying to get them to pay to broadcast CBS programs, instead of the other way around. Incensed, many stations pre-empted CBS shows for local or syndicated fare -- reducing the rates that it could charge advertisers.
Despite advice from top executives, Mr. Tisch balked at buying several local stations that were up for grabs a few years ago. Later, those stations were bought by Ronald O. Perelman's New World Communications, and Mr. Tisch proceeded to set off their defection in May 1994 to the Fox network.
The problems began on March 8, 1993, at what should have been a ceremonial luncheon to welcome Mr. Perelman's stations to CBS. But the celebratory mood evaporated when the talk turned to how much network programming the stations would carry. According to two people present, Anthony C. Malara, president of CBS affiliate relations, was prompted by Mr. Tisch to raise the issue, and soon Mr. Malara was arguing with William Bevins, an associate of Mr. Perelman.
"The meeting should have been head of state to head of state," said one person present, "and it turned into an argument over every nickel and dime." The exit of the New World stations has hurt CBS News because some of the replacement stations have no news departments.
Mr. Tisch's tenure has included triumphs, including the network's remarkable rise to the top of the rankings in 1993. By this year, however, CBS had plunged to third place. Critics attribute the decline to shortsighted program selection, based on a miscalculation of the appeal its shows held for the demographic groups sought by advertisers. The CBS audience is simply too old.
There is, of course, no showman in Mr. Tisch, who is more interested in profits than programming. CBS has been for sale since at least 1991, investment bankers said. He sealed a deal now because he got his price.
Mr. Tisch's close friend, John H. Gutfreund, the former chairman of Salomon Inc., contrasts him with Mr. Paley, also a friend. "Bill had a vision for the industry," Mr. Gutfreund said. "For Larry it is a business."
Mr. Gutfreund also said "the amount of criticism he has gone through is just murder." A few of Mr. Tisch's friends suggested that this added to his willingness to get out.
But running CBS did not change Mr. Tisch; he managed it on his terms. And those terms, expressed in accounting numbers, did not allow for intangibles like power and prestige or for CBS's reputation in news.
"He cares what kind of legacy he's leaving in the country and in New York," Mr. Rubenstein said. "He must care, but he doesn't let on to it. But his motivation is not 'Will I be praised or not?' For all of these people, it's money that is the score card."
Mr. Tisch's record at CBS is all the more disappointing because he could have been a giant, other executives say. He could have been, if not in the same league as Mr. Paley, at least the equal of other company builders like Michael D. Eisner at Walt Disney and John F. Welch Jr. at the General Electric Company.
Instead, Mr. Tisch has proved only that he is still a sterling deal maker.