CBS-Viacom Merger Clears Key Hurdle With FCC Approval

Federal regulators approved the CBS-Viacom merger on Wednesday, paving the way for the two media companies to merge their extensive interests in television, movies, radio and outdoor advertising.

The action by the Federal Communications Commission gives the companies one year to shed some TV stations to comply with rules that limit the percentage of national audience one company may reach through its own stations.

The companies also would have a year to comply with another FCC rule that bans one entity from owning two networks. Under their deal, the companies would have CBS and the fledgling UPN network, which Viacom owns.

The companies would hold onto the UPN network during the one-year period.

The FCC also is reviewing the dual network ban, and it could be relaxed by the time the companies have to comply with the agency’s rule.

Last month, Viacom’s chairman said keeping UPN under Viacom-CBS control was essential.

“There is no public service argument that could be made that would warrant the death of UPN, which is just what would happen if we don’t get it,” Sumner Redstone said. He said he hopes and expects they will be able to keep UPN. “If we keep it, it will succeed.”

Regulators gave the merged company six months to abide by rules that limit how many television and radio stations one company can own in the same market.

The agency ruled that in five markets the combined company would exceed the caps.

Commission approval is the final step in the process. The Justice Department already determined that the deal did not raise any antitrust concerns.

The deal, originally valued at $36 billion when it was announced in September, combines the owner of hip properties like MTV and VH1 with the old-line broadcast network that has brought viewers “60 Minutes” and “Murder, She Wrote.”

CBS, which changed hands four years ago when it was bought by Westinghouse Electric Corp., will now become part of a radio, television and film powerhouse to rival conglomerates Time Warner Inc. and Walt Disney Co.

The deal gives CBS a television and film studio to provide shows for its network.

Viacom gains major advertising outlets to promote films and shows produced by Paramount and its Spelling Entertainment TV studio.

Separately, CBS announced that Martin Franks has been named executive vice president at CBS Television.

The announcement was made by Mel Karmazin, president and chief executive of CBS Corp., and Leslie Moonves, president and chief executive of CBS Television.

Karmazin also announced that upon closing of the CBS-Viacom merger, he will name Franks to the additional post of senior vice president of Viacom.

In the new posts, Franks will assist Moonves in the day-to-day operations of CBS while continuing to take on special projects at CBS and Viacom for Karmazin.