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EYE IS THE PRIZE Imagine Diagnosis Murder‘s Dick Van Dyke hosting the MTV Movie Awards, or Tom Green having his soul saved on Touched by an Angel. Don’t laugh, the possibility isn’t so ludicrous now that CBS and MTV’s parent company, Viacom, have joined forces in the biggest showbiz merger in history … this week anyway.

For a new combined value of $80 billion, Viacom — whose holdings include half of UPN (with Chris-Craft Industries), Paramount Pictures, Spelling Entertainment (producers of 7th Heaven), Blockbuster Video, book publisher Simon & Schuster, Showtime, and Nickelodeon — now gets to add CBS holdings such as King World (syndicators of Oprah), Infinity Broadcasting (Howard Stern), and the Nashville Network to its stable. ”We don’t think there is a company today that is competitive with us,” boasts Mel Karmazin, who gives up his CBS CEO title to become president of Viacom, reporting directly to CEO Sumner Redstone.

Karmazin may be right, but this deal will no doubt have competitors Disney, NBC, Time Warner, and News Corp. wondering if they need to get bigger to compete against this new giant.

One dilemma posed by the merger: What will happen with UPN? FCC rules prohibit one company from owning two broadcast networks (even if one of them is mired in last place). Karmazin contends that rule is outdated, and he may have a point, considering there’s currently no limit to the number of cable nets one company can own. That said, Viacom-CBS will either (a) persuade the government to change the rules, (b) lower their 50 percent stake to a point where they’re only a passive investor in UPN, or (c) bail out completely. Chris-Craft isn’t talking, but Redstone and Karmazin indicate a desire to stick with UPN. ”It’s very important UPN survive and be financially healthy,” says Karmazin, noting that it gives the company a wider demographic reach and is one of the few outlets catering to minority viewers.

The merger does clear up one long-burning mystery: Redstone’s heir apparent is now clearly Karmazin. But don’t hold your breath for the torch to be passed. Says the 76-year-old Redstone, ”I’m still feeling pretty good.”