Hoping to win friends in high places, Time Warner chairman Gerald Levin and Turner Broadcasting chairman Ted Turner paid a visit to the FCC last week in a bid to gain clearance for their proposed $7.3 billion mega-media merger.
Sources said Levin and Turner met with four of the five Federal Communications Commission members on Oct. 2. Commissioner Rachelle Chong is out of the country.
The companies expect to submit an application to the FCC in the coming weeks that spells out terms of the merger; the trek to the FCC was intended to grease the wheels for FCC approval.
Levin and Turner may pay a return visit to D.C. as soon as it’s decided which agency – the Federal Trade Commission or the Dept. of Justice – will be reviewing the antitrust implications of the deal.
Key to winning D.C.’s blessing hinges on bureaucrats accepting the claim that Tele-Communications Inc. will be no more than a passive investor in Time/Turner.
TCI, the nation’s largest cable multisystem operator, owns a minority stake in Turner and will hold an 8% share in the combined company.
Should antitrust officials decide TCI should be blocked from having a stake in Time Warner, it’s likely the deal will be scuttled.
The FCC has a number of rules that could pose problems for the merger, though the agency is not expected to block the deal out-right. Conventional wisdom in Washington holds that a challenge to the deal would most likely come from the Justice Dept. or the FTC, and not the FCC.
The two companies’ Atlanta holdings violate an FCC law barring one company from owning a cable system and broadcast property in the same market. Time Warner/Turner lawyers are expected to seek a temporary waiver of that ban, in hopes that Congress may change the law as part of a sweeping overhaul of the 1934 Communications Act.
FCC regs also bar vertically integrated cable operators from filling their systems with more than 40% of channels in which they own a stake.