Posted on: Friday, April 20, 2001

FCC eases guideline on network mergers

Associated Press

WASHINGTON — The Federal Communications Commission relaxed its restriction against two networks belonging to a single company, a decision that most immediately impacts Viacom Inc.'s ownership of CBS and the fledgling UPN network.

Under the action, one of the four major television networks — ABC, CBS, NBC or Fox — can belong to the same company as a smaller, emerging network such as UPN or WB.

However, the commission kept in place a prohibition on two of the four major networks merging.

The action also marks the beginning of what observers expect to be a wave of decisions under the new GOP-led FCC to ease regulations on media businesses.

Such actions could ultimately allow companies to grow in size and scope and affect what Americans see, hear and read.

The modification adopted yesterday will enable Viacom Inc., which acquired CBS in a merger last year, to hold on to the UPN network as well.

Without the rule change, Viacom would have been forced to shed UPN — which has more than 200 affiliate broadcast stations — by May.

FCC Commissioner Susan Ness mentioned the benefits of keeping alive networks that serve niche and minority audiences and cited economic analysis "that this will help buttress the local stations that are affiliates of this network." But she warned future commissions against allowing the four major networks to combine.

Viacom said the agency's action recognizes the high level of competition already in the marketplace.

"We are encouraged by the FCC's willingness to revisit and amend its traditional positions in light of the realities of communications in the 21st century," the company said in a statement. Viacom is pushing for the commission to relax other broadcasting limits as well.

FCC Chairman Michael Powell has said media ownership rules must be justified in today's competitive market or done away with it.

That could signal the commission's approach to several key rules under review.

In May, the commission will begin evaluating whether to modify a rule that prohibits a company from owning a broadcast station and daily newspaper in the same locale.

A final decision could be months away, but any major easing of that restriction would be significant, experts say.

"It creates the potential for different kinds of companies than we have now," said Blair Levin, a former FCC official who now is a regulatory analyst with Legg Mason.