Entertainment Merger Mania : REGULATION : Station Ownership Limit May Be Lifted : Broadcasting: Combined, Westinghouse, CBS own more outlets than allowed. Congress, FCC may come to rescue.

The merger of Westinghouse Electric Corp. and CBS Inc. would result in an entity with more television stations than current law allows, but deregulation efforts by both Congress and the Federal Communications Commission could solve the problem by the time any such combination takes place.

The ownership question “would obviously be a major issue,” an FCC official said Tuesday as the agency joined Wall Street and consumers in grappling with the second giant broadcasting merger in two days.

Current rules limit television ownership to 12 stations, or a maximum of 25% of the national audience, for any single company. The new Westinghouse-CBS entity would have 15 stations, whose signals reach just under a third of the potential viewers.

Under current rules, three of the stations would have to be sold--and they would have to be large stations to bring the company’s coverage below the 25% threshold.

But Congress and the FCC are racing to the rescue. The Senate has passed a telecommunications bill scrapping the 12-station limit and raising the permissible audience share to 35%.

A companion bill being considered in the House would liberalize ownership even more, increasing the audience limit to 50%. The FCC, meanwhile, has asked for public comment on a proposal to raise the ceiling by 5% a year no matter what Congress does. Thus there appears to be a good chance that the merged company would be able to keep its television empire largely intact.

The merger partners would also have a radio empire of 39 stations--including the Westinghouse AM station in Pittsburgh, KDKA, which went on the air in 1920 as the first commercial radio station--that could run afoul of the FCC rules.

The regulations limit a company to ownership of 20 AM and 20 FM stations. But CBS has 13 FM stations, while Westinghouse’s Group W runs eight FM outlets, putting the partners one over the legal line.

For individual markets, the FCC says a single owner is limited to two AM or two FM stations. This would be a problem for the merger partners in Houston and Chicago--in each of those cities, Group W has two AM radio stations and CBS has an AM outlet.

The FCC had no official comment on the Westinghouse-CBS deal, which had been under discussion for some time. After the application is filed with the agency, a 30-day period will be allowed for public comments.

FCC approval would be needed for the transfer of all the CBS broadcast licenses to Westinghouse as the new owner, but this would probably be a formality. The more important issue would be the decision by the legislators and regulators to lift the ownership limits.

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Times researcher Jennifer Oldham contributed to this report.