FCC gives final OK to Viacom-CBS merger

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The Federal Communications Commission gave final approval May 3 to Viacom's $36 billion merger deal for CBS, but for the moment at least is requiring Viacom to comply with current FCC rules barring ownership of two networks, limiting national audience reach and requiring selling off radio or TV stations. Those rules are under review, and the ban on one company owning two networks seems likely to change.

Viacom is expected to complete the deal by week's end and will then own both CBS and UPN, 35 TV stations and 162 radio stations. In six major markets--Philadelphia, Boston, Dallas, Detroit, Miami and Pittsburgh--Viacom will own two TV stations. Ownership of two TV stations in a market has only been possible since last August.

Viacom will have to sell off one network in a year if the FCC doesn't change its current dual network rule. Viacom, whose TV stations will reach 41% of the TV audience, will also have a year to sell off some stations to comply with the FCC limit of 35%. Finally, Viacom will have six months to meet current rules that limit owners in major markets from owning eight broadcast stations including up to two TV stations.

FCC Commissioner Gloria Tristani, who dissented, blasted the deal, saying the commission had failed to look at diversity issues and has applied definitions of markets in ways so that Viacom could keep additional stations. "The commission shows little sensitivity to the broader context in which these mergers are taking place and little stomach for limiting consolidation based on diversity concerns," she wrote. "The sound of a dog not barking is a clue. The sound of a watchdog not barking is a problem."

Copyright May 2000, Crain Communications Inc.

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