WASHINGTON — The FCC mixed good news with bad for two of the country’s top media companies, who are anxious for the new Republican administration to sweep away critical ownership caps blocking them from further growth.
In the bad news category, agency refused late Friday to suspend a May 4 deadline requiring Viacom to sell off valuable stations as part of its merger with CBS. Due to the May 2000 merger, Viacom has gone over an FCC cap prohibiting one broadcaster from reaching more than 35% of the national audience.
FCC said it had no other choice but to say no, since the 35% cap is still the unchallenged rule on the books. Viacom, which to some extent anticipated the ruling, will now take it to the courts, asking for a suspension of the May 4 cutoff.
As for the good news, the FCC said it will go ahead and suspend a May 19 deadline for AT&T to shed its stake in Time Warner Entertainment, since a federal appeals court has struck down as unconstitutional the cable ownership cap requiring the TWE sale.
In exchange for approving AT&T’s merger with MediaOne, FCC required it to sell off TWE, which includes cable systems and Warner Bros. Otherwise, AT&T goes over the 30% cable cap.
Friday’s move by new FCC chair Michael Powell represents one of the first critical actions of his reign–particularly considering there is a 2-2 split on the commission, pending President George W. Bush’s appointment of a Republican to the vacant fifth seat.
Powell was able to convince Democratic commissioner Susan Ness to support the suspension of the TWE sale deadline. The other Democratic commish, Gloria Tristani, was a no vote.
FCC to study ruling
Stay will allow the FCC to study the federal appeals ruling regarding the 30% cap. In striking down the rule, court said the FCC had offered no compelling evidence for the ceiling.
Powell, while a champion of deregulation, cautioned that the suspension shouldn’t be interpreted to mean that AT&T has won the final battle. Rather, he wants to exercise prudence and study what impact the court ruling has on the condition that AT&T shed its 25% stake in TWE.
“Our action should not be read as eliminating the condition, but only as suspending the established benchmarks for compliance pending further consideration,” Powell said.
Tristani said the suspension “eviscerates” the public interest and that the order forcing AT&T to sell off cable interests remains sound.
The stay sends a signal that the FCC “cares more about the interests of large corporations than it does about maintaining a vibrant and diverse marketplace of ideas,” Tristani said.
AT&T general counsel Jim Cicconi said the FCC action was reasonable and measured in light of the cap being overturned. “We will work with the FCC as it continues to deal with the court ruling and its implications,” he said.
Viacom execs could not be reached for comment Friday evening regarding the FCC’s decision not to suspend the fast-approaching deadline by which the conglom must sell off certain stations.
B’cast cap overturn ahead?
Viacom contends there is good reason to believe the broadcast cap will also be overturned, since the court that struck down the cable cap is the same court considering repeal of the 35% broadcast cap.
Until the issue is resolved by the federal appeals court, it would be unfair to enforce the May 4 deadline, Viacom says.
According to FCC calculations, Viacom now reaches 41% of the national audience. Conglom must come into compliance by May 4, one year after the FCC gave the go-ahead to buy CBS.