House Panel Probes Media Mergers : FCC Criticized for Lack of Rules to Evaluate Takeovers

Members of a congressional panel registered dissatisfaction Wednesday with Federal Communications Commission Chairman Mark S. Fowler’s performance in the increasingly heated contest to acquire media and entertainment companies.

In a morning of pointed questions aimed at Fowler by members of the House Energy and Commerce subcommittee on telecommunications and finance, representatives often characterized the FCC procedures as too slow to deal with the current lightning pace of corporate mergers in the broadcast industry. The FCC now has no formal guidelines for weighing the merits of hostile takeovers.

The FCC’s pace, said committee Chairman John D. Dingell (D-Mich.), promises to result in “an autopsy rather than a set of rules” governing transfers of control of some of the nation’s largest media corporations.

“The commission will be compelled to unscramble the egg,” Dingell said, if the current wave of financial activity continues without a formal set of commission guidelines for dealing with such hostile takeover attempts as those of CBS, Storer Communications and Multimedia.

On Tuesday, the commission took the first step toward adopting a set of procedures for evaluating the public-interest impact of corporate takeovers, but, according to Fowler, the new process is unlikely to go into effect before the end of the year.

Wave of Takeovers

According to current law, all applications to transfer ownership of TV and radio stations must be approved by the FCC. Until the recent wave of unfriendly takeovers in the communications business, transfers seldom posed a problem for the FCC--sellers usually sold out to friendly buyers. As a result, the commission never established guidelines for dealing with forced mergers, proxy fights or others takeover tactics employed in the business world today.

What sparked the concern of the House members on Wednesday, however, was last week’s $955-million offer by CBS to counter a hostile takeover by Atlanta entrepreneur Ted Turner. CBS announced that it would buy back more than 20% of its outstanding shares before July 31. Unlike Turner’s $5.4-billion bid for the network, the CBS plan is not subject to FCC approval.

Fowler, who repeatedly declined to comment on the specifics of the CBS-Turner controversy, said that the commission intends to rule on Turner’s application “in an expeditious manner” but acknowledged that final approval or disapproval was not likely before September--well after the CBS offer is scheduled to close and months before the FCC’s new procedures will take effect.