NEW YORK -- After a year of bitter rivalry, the two cable television comedy channels agreed to merge yesterday, creating a new single channel with an all-comedy format to be jointly owned by Home Box Office and Viacom.
The new channel, to be called Comedy TV, will begin sometime this winter, probably on March 1. It will replace HBO's Comedy Channel and Viacom's HA! The TV Comedy Network.
The two channels, both basic cable channels supported by advertising, had different programming formats, with the Comedy Channel relying more on original programs and short comedy segments and HA! relying more on network reruns.
With only about 7 million subscribers each, neither has been able to grow substantially in the last year. According to executives from both companies, this is largely because cable system operators resisted taking sides in a battle between two industry giants.
The merger was announced at a joint news conference yesterday by Michael J. Fuchs, the chairman of HBO, and Frank J. Biondi, the president of Viacom Inc. No money changed hands, the executives said, and great pains were taken to divide all responsibility equally.
Even the information accompanying the announcement was divided equally, with Fuchs' picture appearing on top in half the information distributed to the press and Biondi's in the other half.
No executives who now run either channel will head the new one. Instead, a board of eight people -- four from HBO and four from Viacom -- will select a new president from outside the companies to decide on a format.
Larry Gerbrandt, the senior vice president of Paul Kagan Associates, a firm that analyzes the cable industry, said the merger was all but inevitable, given the reluctance of the cable operators to make a choice between two of their biggest program suppliers.
"It was getting to be a very expensive haul for both of them," Gerbrandt said. He estimated that the two companies had spent a combined $100 million on the two channels.
But Gerbrandt said the merged business was likely to be an enormous success.
"We have always believed a comedy channel was a slam-dunk idea," he said. "But the idea of two channels was probably a technical foul."
The merger brings together two companies with a history of intense hostility, highlighted by a $2.4 billion lawsuit filed in 1988 by Viacom against HBO's corporate parent, Time Warner. The suit, which has not yet been dropped, charged that HBO engaged in anti-competitive practices that damaged Viacom's Showtime, the direct competitor to HBO, the leading premium channel.
Premium channels have a monthly fee above the basic cable charge.
Executives from both HBO and Viacom said yesterday that changes in the marketplace, accommodations in personal differences between executives at the companies and "common sense" had led to the merger.
Other attempts to merge always broke down, Biondi said, on Viacom's insistence that it manage a merged channel and Time Warner's insistence that the deal be linked to a settlement of the lawsuit
"Both sides gave up on those demands," he said. "Finally it was just common sense."
The two sides finally came together, Fuchs said, after a meeting in November at which they agreed that the weakened television advertising climate had made it increasingly difficult for the two channels to thrive separately.
"We sat down and said, this is crazy," Fuchs said. "We were like two gunslingers who ran out of bullets."
Executives from both companies said the most sensitive part of the merger was finding a way to effect a rapprochement between Fuchs and Biondi. The two had been very close friends when they worked together at HBO through 1984. Then, Biondi, who had become chairman of HBO, was dismissed and Fuchs succeeded him.
But the executives said they hoped the joint interest in Comedy TV could lead to further agreement between the two companies.
"Things have changed dramatically in the past year," Fuchs said. "There are no plans that I know of to sit down and settle the lawsuit. But this isn't going to hurt. There are no strings attached, but we are glad to be in business together."