Viacom on a TV technicality

Co. seeks to vacate old ban on Eye exex

NEW YORK — When Viacom and CBS reunited under one corporate roof in 2000, no one bothered to vacate a federal court decree actually preventing officers, directors or major shareholders of the Eye from sitting on Viacom’s board or serving as conglom execs.

Technically speaking, CBS prexy-CEO Leslie Moonves’ seat on the Viacom board of directors would appear to go against the 1973 court agreement. Moonves replaced Viacom prexy-chief operating officer Mel Karmazin as Eye topper when the Viacom/CBS merger closed.

Now, Viacom is asking a U.S. District Court judge in Los Angeles to void the 1973 consent decree.

The Justice Dept. has readily agreed that it should be vacated, considering that the ownership rule underlying the prohibition was struck down by the Federal Communications Commission in the mid-1990s.

Must take out ad

Antitrust attorneys at DOJ have one condition, though–Viacom has agreed to take out an ad in a top national newspaper and a broadcasting trade pub informing of the court action and giving the public 60 days to respond. The conglom also published a notice in the Federal Register in late August.

The consent decree is the last vestige of the financial-syndication rules (fin-syn), drawn up in 1970 to block the then all-powerful networks from having a financial stake in the programs they aired or in the domestic syndication biz.

Corresponding court decrees against ABC, CBS and NBC were all vacated when the FCC struck down the rule. Regulators said there was no longer any reason for fin-syn, considering the emergence of cable and new networks such as Fox. The Viacom decree seemed to have fallen through the cracks.

Resparking debate?

Even if the subject at issue is just a technicality, Viacom’s current court action could well spark a spirited debate over the massive media consolidation that resulted from repeal of fin-syn.

Opponents such as the Caucus for TV Producers, Writers & Directors are likely to weigh in with the court during the comment period. The caucus, repping more than 200 TV producers, writers and program directors, says the nets — now owned by powerful empire — are once again stifling independent programming.

Not long after the FCC drew up fin-syn in 1970, Viacom was spun off from CBS in 1971 to handle the syndication market. Antitrust toppers in Washington were alarmed that CBS might try to control Viacom, hence the decree barring Viacom from having a board member who controls more than 1% of the stock of a broadcast net or is a top exec from a broadcast net.

A Viacom spokesman said the present legal action was undertaken for procedural reasons and that neither the FCC nor the Securities & Exchange Commission took up the issue when the merger was cleared by Washington.

“The premise underlying the prohibitions of the Viacom consent judgment — namely, that the three broadcast networks possess sufficient market power to justify building a wall of separation between the network and the syndication business has — has entirely disappeared,” Viacom said in its court filing.

DOJ support

In its filings, the DOJ used even stronger language than Viacom in urging the court to void the decree.

“Where the United States has offered a reasoned and reasonable explanation of why the termination vindicates the public interest in free and unfettered competition, and there is no showing of abuse of discretion or corruption affecting the government’s recommendation, the court should accept the United States’ conclusion concerning the appropriateness of termination,” the Justice Dept. wrote.

U.S. District Court Judge Robert Kelleher in Los Angeles is handling the case. His chambers could not be reached for comment over the holiday. Viacom first filed its request in late July.

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