FCC: Two nets for one

Powell FCC expected to rule that Viacom can keep CBS and UPN

Two of the country's largest media conglomerates are in line for big wins from the FCC at its April 19 public meeting. Chairman Michael Powell is pushing his colleagues to let the major networks buy UPN and The WB and asking them to reject calls for interactive carriage requirements on cable-TV operators.

The rulings would benefit mainly Viacom and AOL Time Warner, the largest and fourth-largest media companies in terms of annual revenue.

The commissioners are expected to rule that Time Warner isn't obligated to pass through to subscribers the electronic program guides transmitted by local broadcasters. Gemstar, an EPG designer, has signed up stations across the country to transmit its interactive channel-surfing service on a supplementary portion of broadcasters' analog signals known as the vertical blanking interval and complains that Time Warner is illegally stripping broadcasters guides from transmission in several markets.

The key question before the FCC is whether EPG's are "program-related" material and hold the same cable carriage rights as stations' primary programming. The cable industry says only closed-captioning and V-Chip functions required of broadcasters should be relayed. Gemstar claims that Time Warner simply wants to stifle a free service that competes with a subscription service the cable giant wants to sell to its subscribers.

Although the FCC decision means TV stations will have to pay Time Warner and other cable systems for EPG carriage on traditional analog signals, the fate of broadcast EPGs and other interactive services on the digital channels that eventually will be standard remains an open question. The FCC is studying development of interactive services in general and is examining the need for broader rules covering carriage of EPGs, interactive advertising and other two-way services possible on DTV.

Gemstar officials are encouraged that the commissioners will be taking up the issue at a public meeting rather than simply rubber-stamping in a behind-closed-doors vote the Cable Services Bureau's recommended rejection.

Relaxing restrictions on dual network ownership would let Viacom retain both CBS and UPN. Currently, CBS and the other Big Four networks are barred from buying any broadcast network operating as of 1996, which means any net but Pax TV. The FCC proposed to let the big nets buy UPN or The WB to shore up the newer nets' financial stability. Viacom is under orders to divest UPN by May 4 unless the change is approved.

Without the infusion of tens of millions annually from Viacom, the money-losing UPN likely would go out of business.

The dilemma prompted even civil-rights groups, which traditionally oppose big media deals, to back the rule change. The Minority Media Telecommunications Council told the FCC in September "a duopolized UPN is better than a dead UPN."