CBS Merger’s Downside

The proposed Viacom Inc. buyout of CBS Corp. might be a marriage made in strategic heaven for the companies involved, but it will bring yet another TV network under control of a major studio, which is bad news for TV viewers and Hollywood’s independent producers.

The Federal Communications Commission has opened the door for such deals by phasing out its ban on tie-ups between networks and studios and allowing greater concentration of TV station ownership. It must yield no further to industry pressure to ease restrictions against one TV network owning another or controlling too great a share of the market. The antitrust authorities should take a close look at what media concentration on this scale means to diversity, creativity, news gathering and station ownership.

Worth nearly $37 billion, this richest of the rich media mergers in the 1990s will bring under one roof a major TV broadcast network owning 15 stations, a smaller TV network (UPN), the nation’s largest group of radio stations, some of the most profitable cable channels (including MTV, Nickelodeon and VH1), Paramount film studios and a video rental chain.

CBS, like ABC four years ago when it was acquired by Walt Disney Co., will cease to be an independent TV network and will fall under the control of a content producer.

Media analysts predict the buyout will pass FCC scrutiny if Viacom agrees to shed its 50% ownership of the TV network UPN and the companies sell some TV stations, allowing them to duck under the 35% viewership ceiling.

Federal antitrust authorities also should look at the market share the Viacom/CBS union will control and the effect such an enormous concentration of electronic media will have on programming, station ownership, distribution of news and the freedom of newcomers to enter the market.

Unlike in cases examining the concentration of economic power in, say, the steel industry, media concentration affects constitutional rights to free expression and, through the dissemination of information, political views and news, the very foundation of representative democracy.

The marketplace the Viacom/CBS merger would affect is not only that of advertising, which it would dominate, and media creativity, which it would stifle, but that of ideas. The government should look at the broadest implications in vetting the merger.