FCC Approves Sale of ABC to Capital Cities, Murdoch’s TV Deal

The Federal Communications Commission on Thursday approved two major, multibillion-dollar broadcast mergers, allowing Capital Cities Communications to acquire the ABC television network and permitting the transfer of a group of Metromedia TV stations to publisher and movie studio owner Rupert Murdoch.

Ruling unanimously in both transactions, the commission also granted waivers to Capital Cities and to Murdoch so they could proceed with the acquisitions while they divest certain properties as part of the purchase agreements.

The commission’s vote allows Capital Cities to absorb American Broadcasting Cos. in a friendly, $3.5-billion merger.

$2-Billion Metromedia Deal

And, in a separate, more controversial action, the FCC cleared the way for Murdoch’s company, News America Television, to acquire licenses of five unaffiliated television stations owned by Metromedia, a $2-billion transaction that could lead to the formation of a new television network. A number of public interest groups and lawmakers had challenged Murdoch’s financial qualifications as well as the public interest implications of the merger.

“We’re very, very pleased with the decision,” Leonard H. Goldenson, chairman of ABC, and Frederick S. Pierce, president of ABC, said in a statement. “We feel the combination of the management strengths and resources of both companies will lead to the emergence of the premier communications company in the United States and perhaps the world.”

The FCC also gave Capital Cities permission to keep its station WPVI-TV in Philadelphia and to own the ABC station WABC-TV in New York at the same time, even though their broadcast signals overlap in parts of New Jersey. FCC ownership rules normally limit one station to a geographical broadcast market.

18 Months to Sell Units

The commission noted that the benefits from Capital Cities’ plan to increase TV service to Delaware and southern New Jersey outweighed any problems caused by overlapping signals.

In its ruling, commissioners also gave Capital Cities 18 months to sell its interest in 55 cable-TV systems as well as radio stations KLAC-AM, KZLA-FM, KABC-AM and KLOS-FM in Los Angeles.

In addition to the TV stations in Philadelphia and New York, the new company will own TV stations KABC (Los Angeles), KGO (San Francisco), KFSN (Fresno), KTRK (Houston), WTVD (Durham, N.C.) and WLS (Chicago) and radio stations WMAL-AM and WRQX-FM (Washington), WJR-AM and WHYT-FM (Detroit), WPRO-AM-FM (Providence, R.I.), WBAP-AM and KSCS-FM (Fort Worth), WPLO-AM (Atlanta) and WKHX-FM (Marietta, Ga.).

In the Murdoch transaction, the Metromedia stations include KTTV Channel 11 in Los Angeles, WFLD in Chicago, KRLD in Dallas, KRIV in Houston, WNEW in New York and WTTG in Washington. A seventh Metromedia station, WCVB in Boston, will be sold to Hearst Corp. for $450 million.

“We are very gratified by the FCC approval and look forward to providing greater diversity in television broadcasting, as we have always done in the print media,” Murdoch said in a statement.

Murdoch’s plan must be approved by holders of $1.4 billion in Metromedia bonds.

The Australian-born Murdoch became an American citizen Sept. 4 to meet U.S. broadcast property ownership rules. He also recently bought out oil baron Marvin Davis to become sole owner of Los Angeles-based 20th Century Fox Film Corp.

As part of its ruling, the commission granted Murdoch’s request to have two years to sell his New York Post and Chicago Sun-Times newspapers because they are in cities where the Metromedia TV stations are located. FCC rules prohibit ownership of newspapers and TV stations in the same market.

Murdoch’s company argued that an immediate “distress” sale might force the papers’ sales at less than their real market value and could reduce diversity in the marketplace if Murdoch were forced to close the papers or sell them to competitors.

Several lawmakers this week sent Fowler a letter questioning the commission’s policy for granting waivers. But, in an unusually sharp response at Thursday’s meeting, Fowler defended the commission’s actions in both mergers as “consistent and logical.”

He termed the critics “disingenuous” for challenging News America’s acquisition because Murdoch is a “frank, outspoken entrepreneur with a well-known personal philosophy.”

“No matter how cleverly cloaked, a public official’s distaste for the content of an applicant’s speech must never be used to prevent the grant of a license if that applicant is qualified,” Fowler said. “It’s precisely that type of misuse of government processes that the First Amendment was intended to prevent.”