KICKED WHILE IT'S DOWN

By Richard Zoglin

At least one person at CBS has been having a good time lately. He's David Letterman, the late-night host who came to the network in August 1993 with only one regret: in leaving his past employer, No. 3-rated NBC, he was giving up the best butt of a joke a comedian could ask for. So as CBS's fortunes have fallen precipitously in recent months, Letterman's wisecracks have grown sharper. Last Thursday he talked about the woman in France who celebrated her 120th birthday. She's so old, Letterman cracked, "she can remember when CBS was No. 1."

But the biggest piece of network news last week hit Letterman a little closer to home. CBS Broadcast Group president Howard Stringer, who personally led the campaign to lure Letterman away from NBC, announced his resignation to head up a media venture by three telephone companies-NYNEX, Bell Atlantic and Pacific Telesis. The companies plan to offer an array of programming and interactive-video services to be fed into homes via telephone lines. "The opportunity was more exciting than anything else I was likely to be offered at the ripe old age of 53," said Stringer. Letterman, for his part, confessed befuddlement at the new venture-"You pick up your phone, you get a movie and a pizza"-but offered a heartfelt tribute to Stringer: "He made coming to CBS seem like a really classy move."

Over the past year, CBS has suffered perhaps the worst run of bad fortune in any network's history. First, the Fox network outbid CBS for the rights to N.F.L. broadcasts, removing pro football from CBS's Sunday schedule for the first time since the 1950s. CBS also bore the brunt of Rupert Murdoch's raid on affiliates last May, when 12 major-market stations (eight of them aligned with CBS) switched their affiliations to Fox. As hits like Murder, She Wrote and Murphy Brown have grown older and no new ones have emerged to take their place, CBS's prime-time ratings have plummeted; after three straight years as No. 1, the network has dropped to third place so far this season and in the important 18-to-49 age group could even wind up fourth (behind Fox). Furthermore, a malaise seems to have settled over the network, amid widespread expectation that chairman Laurence Tisch is getting ready to sell it.

Stringer, a personable, Oxford-educated Welshman who moved up through the ranks at CBS News before landing the top corporate job in 1988, insists that his departure was not sparked by CBS's recent troubles or by any antagonism between him and his boss. "Larry Tisch has been very good to me, on a personal and a professional level," Stringer told Time. But he acknowledged that the collapse of mogul Barry Diller's attempt to take over CBS last summer-a bid that Stringer, by all accounts, strongly supported-"gave a sense of uncertainty to my future."

Those close to Stringer say he felt increasingly underappreciated by Tisch. Under Stringer's energetic leadership, CBS rebounded from third to first in the prime-time ratings; revitalized its nearly moribund sports division (with high-rated Olympics coverage and its aggressive-if expensive-acquisition of major league baseball coverage); and scored a major coup in corralling Letterman. "I don't think he felt he got the recognition-or the compensation associated with recognition-he deserved," says a former CBS executive. Another source close to Stringer describes his relationship with Tisch as "amicable but not especially productive" and says Stringer was frustrated by Tisch's cautious, tightfisted ways. CBS, for instance, has been the only broadcast network not to invest in cable or other new media.

Now most observers on Wall Street expect that Tisch will soon get out of the broadcasting business. Among the potential buyers of CBS: Viacom, the media conglomerate that acquired Paramount; the Walt Disney Co.; Diller, who could re-emerge with new backers; and Atlanta cable baron Ted Turner. A Turner bid appeared to grow more likely last week, as Time Warner neared completion of a deal to sell its 19.4% stake in Turner Broadcasting. Opposition from Time Warner (and potential regulatory problems posed by the company's other media holdings) has been a stumbling block to Turner's all-out pursuit of a network.

Stringer is being replaced by Peter Lund, 54, formerly head of the CBS stations division and currently Stringer's second in command. Lund insists that uncertainty over Tisch's plans will not affect CBS's ability to right itself. "We have never had any shortage of financial support for the core business of broadcasting," he says. But some Wall Street analysts feel that Stringer's departure could hurt the value of Tisch's enterprise. "Stringer is really a big loss for them," says Jessica Reif of Merrill Lynch. "I think it's another blow."

It's a blow to all of broadcasting. Over the years, Stringer has been an articulate defender of traditional mass-audience broadcasting vs. cable and other new-media rivals. "I absolutely still believe that broadcasting is the foundation of all programming," says Stringer. "I'm not going to be putting down broadcasting." He will, however, be putting his considerable skills and charm to work for the competition.

--With reporting by Adam Cohen/New York

With reporting by Adam Cohen/New York