Kidding Aside, FCC Oks Eye Deal

The FCC voted 5-0 last week to approve Westinghouse’s buyout of CBS, thus ushering in a new era for a broadcast network that has gone from Tiffany to tarnished faster than you can say Larry Tisch.

The FCC sign-off came Nov. 22 against the backdrop of continued internal wrangling among commissioners over Westinghouse’s pledge to increase kids’ educational TV programming on the Eye web. FCC chairman Reed Hundt insisted the deal was approved because of the Westinghouse commitment; Commissioner James Quello dismissed Hundt’s claim as “wishful thinking.”

o Westinghouse said the $5.4 billion deal will result in “a broadcasting empire of unparalleled creativity, growth and excellence.” The Westinghouse/CBS combination now includes 16 TV stations reaching 32% of the nation, and 39 radio stations.

Under terms of the deal, Westinghouse will pay $81, plus interest now valued at $1.07 a share, for each share of CBS stock. With the FCC’s blessing in hand, the deal was scheduled for closing on Friday, Nov. 24, and Westinghouse is expected to unveil its new CBS management lineup on Tuesday, Nov. 28. Included are CBS/Broadcast Group Chairman Peter Lund and Westinghouse Broadcasting chairman-CEO Bill Korn, along with CBS Entertainment prexy Leslie Moonves, all of whom will get new titles or responsibilities.

The FCC granted Westinghouse both temporary and permanent waivers of current local and national ownership rules that limit a broadcaster’s reach to 40 radio stations, 12 TV stations, and a 25% national TV station audience reach.

Westinghouse is banking on passage of a sweeping telecom dereg bill that’s pending in Congress to make many of the temporary ownership waivers moot. Hence, if the legislation passes and is signed into law, the company will likely be permitted to keep virtually all of the CBS radio and TV stations.

FCC approval of the deal had never been in doubt, with the only drama surrounding wording in the order that involved

Westinghouse’s pledge to beef up kids’ educational programming on CBS from one hour to three hours per week.

The pledge came after Hundt had embarked on a high-profile campaign in support of a three-hour-a-week kidvid requirement for all commercial broadcasters. Industry insiders believed Westinghouse made the commitment only to speed the deal through Washington’s regulatory process.

In recent weeks, completion of the deal had been delayed by two factors: the temporary government shutdown, coupled with bickering among FCC commissioners on how the approval would be worded.

Sources said aides to Quello and commissioners Rachelle Chong and Andrew Barrett stripped the order of any lingo that could have been interpreted as a sign the deal was being approved because of the kidvid commitment.

Despite apparently being thwarted by the Quello-Chong- Barrett trio, Hundt adamantly insisted the deal wouldn’t have been approved without the kids’ TV pledge. He and Quello held back-to-back dueling press conferences to state their respective cases.

“The proof of the pudding is what you can watch on TV,” said Hundt. “You’ll see three hours (of kidvid) on CBS. I think this is a precedent for the commission.”

Quello disagreed, saying Hundt “has the right to say whatever he wants” but that it’s “wishful thinking” to declare the FCC decision was conditioned on children’s TV.

Siding with Quello was Roy Stewart, the head of the FCC’s mass media bureau, who said “there is no conditional grant.” The kidvid commitment “did not drive the commission’s decision,” Stewart said.

Both Hundt and commissioner Susan Ness disputed the notion that the FCC moved slowly in approving the merger. “There was no delay. This was not stalled,” said Ness, who claimed other deals less complex than the Westinghouse/CBS deal took longer to gain regulatory clearance.

Temporary 12-month waivers of FCC ownership rules were granted to allow Westinghouse to have common ownership of radio stations in Chicago and Houston, and to hold TV-radio combos in New York, Los Angeles, Chicago, Philadelphia, San Francisco and Detroit. w

The FCC granted only a six-month waiver to allow Westinghouse to continue owning separate TV stations in the overlapping Providence and Boston markets. Industry sources have speculated that CBS will spin off the Providence station.

Michael Jordan, Westinghouse’s chairman and CEO, said in a statement, “we applaud the FCC’s fast action in approving” the deal, less than four months from its Aug. 1 announcement. CBS shareholders approved the sale on Nov. 16.

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