The Justice Dept., which is probing Disney’s $19 billion merger with Capital Cities/ABC, has subpoenaed confidential sales and advertising information from the seven Los Angeles VHF TV stations.
Investigators are looking into the antitrust implications of Disney’s request for a temporary 18-month waiver allowing it to keep its stand-alone indie KCAL, according to market sources.
FCC’s duopoly rules bar common ownership of VHF stations in the same market. CapCities and Disney have asked for the 18-month waiver of the rules while federal regulators review the proposed merger.
Some competitors privately are questioning whether the Federal Communications Commission should approve Walt Disney Co.’s temporary waiver request to keep both KCAL and Alphabet O& O KABC.
NBC-owned KNBC Los Angeles has asked the Federal Communications Commission to continue to require separate operations at KABC and Disney-owned KCAL if Disney gets temporary approval to own both stations in the same market.
If the temporary waiver is granted, it would provide the Mouse House with unprecedented control of two VHF stations in the nation’s second-largest market. The FCC has routinely granted temporary waivers to other media companies, such as Rupert Murdoch’s News Corp.
As part of its routine inquiry into the proposed merger, the Justice Department has also been seeking information about network license fees over the past five years.
Disney hopes that during the interim 18-month waiting period, telecommunications deregulation legislation pending in Congress will pass and abolish the duopoly rules. The current House version of the bill would allow an owner to have two stations, but there is uncertainty over what form the final legislation will take.
But there are many hurdles yet to clear, not the least of which is President Clinton’s opposition to the reform measures. Since it is highly unlikely Disney could get a permanent waiver if the bill fails, it then would have to sell KCAL.
Part of the studio’s waiver argument to the FCC is that KCAL is inefficient to run because it is not part of a major station group. Without sister stations in the top markets, KCAL has little clout in obtaining A-title off-net sitcoms and other fare from syndicators.
An advocacy group, which is seeking to have Disney provide a minimum number of educational kidvid hours each week on ABC, has emerged as the only major opponent of the merger.