Fox seeks divestiture delayAsks FCC for a year to sell off Chris-Craft acquisitions; wants to keep duopoly in New York 9/24/2000 08:00:00 PM Eastern
If FOX gets its way, it will be sometime in mid 2002 before it has to sell off TV stations to get back in compliance with the 35% ownership cap after buying Chris-Craft.
It also wants that long to spin off one of the two stations it will own in Salt Lake City. It's precluded from owning a duopoly there because both the FOX and Chris-Craft stations (KSTU and KTVX, respectively) are among the top four most-viewed stations, according to the most recent Nielsen rating period (July 2000).
And even though some Washington insiders don't think the FCC will agree (B & C, Aug. 21), FOX told the FCC its existing waiver to own both the New York Post and WNYW should still be valid after the Chris-Craft deal closes and it adds WWOR-TV to its holdings in the Big Apple.
FOX filed its FCC transfer-of-control application to acquire Chris-Craft on Sept. 18. The deal had been announced a month earlier.
In the filing, FOX asked for one year to sell or swap stations to put it in compliance with the national-ownership cap. That's one year from the close of the deal, which the parties said might take a year to complete. That would put the closing date sometime in summer 2001.
Not that it's a big surprise, but FOX stated for the record that it intends to run duopolies in New York, Los Angeles and Phoenix, where it is acquiring Chris-Craft stations. It also specifically stated in the filing that it will not seek a permanent waiver to create a duopoly in Salt Lake City. But it also wants a year from closing to divest one of the Salt Lake City stations and pledged to operate the two stations separately during the interim.
With the purchase of Chris-Craft, Fox's station coverage will rise to just under 41%. The FOX stations currently reach 35.352% of U.S. households; when the commission approved its latest transaction, in 1996, the number was 34.82%. FOX attributes the increased coverage to population shifts and an expansion of the Birmingham market by Nielsen; coverage gains from such events don't require divestiture.
On the newspaper crossownership issue in New York, FOX said that, if the FCC did not agree with its view that the existing waiver covers both TV stations, it should, at the very least, defer any ruling on the matter until after the outcome of what its filing described as "soon-to-be-initiated" rulemaking on crossownership issues. In the meantime, the company argued, it should be allowed to proceed with the New York duopoly.
When the waiver was issued in 1993, the FCC ruled that it would expire only if FOX sold WNYW or the Post. FOX is doing neither, the company said, explaining that the paper is still struggling financially and would be in danger of going out of business if FOX were forced to sell.
The paper is enduring "significant losses," FOX said. In 1999, when the five major daily newspapers in the market had a total of roughly $1.5 billion in revenue, the Post's take was about $58 million, or 5% of the market.
According to the terms of the transaction, Chris-Craft is prohibited from soliciting other offers. But the agreement acknowledges Chris-Craft's obligation to consider any unsolicited offers.
Either party can cancel the deal if it has not closed after 15 months or earlier, by mutual agreement.