Short strokes for CBS-Viacom
Justice gives its OK; FCC approval could come as early as this week
By Bill McConnell -- Broadcasting & Cable, 4/30/2000 8:00:00 PM
Viacom and CBS officials are weighing which TV and radio stations to divest as government approval for the companies' merger grows tantalizingly close.
The Justice Department gave its consent for the deal last week, but the companies will have to wait at least until this Wednesday (May 3) to win final government approval for their $36 billion merger.
It will bring together CBS, the once-dubbed Tiffany Network, and its venerable but old-skewing programs like 60 Minutes, with the far-flung Viacom empire, whose irreverent MTV defined one generation and whose Nickelodeon is baby-sitter for yet another.
The last hang-up: a vote from FCC Commissioner Gloria Tristani. It does not matter whether she votes yes or no, just that she casts her ballot. The other four FCC commissioners had voted in favor of the deal by late last week. But official FCC approval can't come until the vacationing Tristani weighs in.
Tristani could have ordered staffers in Washington to relay her vote to the FCC, but agency and industry sources say she decided not to interrupt her time off in order to make a decision on the deal.
The Justice Department imposed no conditions on the merger, but the FCC will order the joined company to divest as many as 10 TV stations and four radio stations in order to comply with federal broadcast ownership limits.
Viacom would be given a 12-month deadline to sell enough TV stations to get below the government's 35% cap on national audience reach, a much tighter time frame than the two years company officials requested. FCC officials said the commissioners were reluctant to go beyond traditional divestiture grace periods given that the long-standing prohibitions on TV duopolies were approved last year.
Combined, the companies have 35 stations and 41% coverage of U.S. TV households. By selling stations in the smallest markets, the company would have to get rid of 10 TV stations, but company officials said they might decide to divest a smaller number of TV outlets in larger markets.
The fate of the UPN network is still somewhat unclear, although Viacom most likely will be able to keep the financially shaky operation in its stable. Under current rules, the company would be forced to sell UPN because the Big Four networks are prohibited from owning each other, UPN or WB. A sale of the network appears unlikely, though: By the end of May, the FCC is expected to propose relaxing dual network restrictions enough to let the major networks buy the two netlets. Should the FCC reject proposals to loosen the rules, Viacom would have a year to sell UPN.
A tighter timetable would apply to divestiture of radio stations in Los Angeles, Chicago and Dallas. The radio sales are required because of restrictions on same-market radio and TV crossownership. FCC rules limit owners of single TV stations to control of only seven radio stations in the same market, forcing Viacom to dump one radio outlet in Los Angeles and Chicago. In Dallas, where Viacom would own two TV stations, two of eight radio stations must go on the block.
The Justice Department's easy-going attitude toward the deal is a relief for Viacom officials, given that the antitrust regulators raised questions about the merged company's power in syndication.
When CBS and Viacom are joined, the combined reach in TV syndication will be daunting. CBS' reach includes newly acquired syndication giant King World with its Oprah Winfrey Show, Wheel of Fortune and Jeopardy. CBS' own syndication division produces a number of first-run series and sells CBS' series such as Everybody Loves Raymond to local stations. And under the Viacom arm, Paramount Domestic Television alone is one of the top syndication studios in the industry.
Other syndicators now under its wing include Worldvision and Spelling. Paramount's stable includes everything from Judge Judy to off-network sales of series like Frasier.
Something's gotta give
| CBS merger conditions | |
|---|---|
|
FCC-ordered sales |
Deadline* |
|
TV stations reaching 6% of U.S. homes |
12 mos. |
|
4 radio stations in Los Angeles, Chicago, Dallas |
6 mos. |
|
UPN network (if required) |
12 mos. |
|
*after deal closes |
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