Groups Demand That Nets Divest

Aug 18, 2003  •  Post A Comment

Watchdog group representatives last week said they will urge lawmakers to make sure that legislation to roll back the national TV ownership cap requires CBS and Fox, which are over the cap, to divest stations to comply with the limitation.
As it stands, Viacom’s CBS owns stations reaching 39 percent of the nation’s TV homes, while News Corp.’s Fox holds stations reaching 37.8 percent.
Federal Communications Commission waivers allow both companies to hold the stations that are in excess of the cap, pending resolution of ongoing challenges to the regulations.
Top CBS executives have predicted their company will be permitted to keep its excess stations, even if legislation to roll back the cap to 35 percent is adopted-the prospects for which network critics see steadily improving.
Andrew Butcher, a News Corp. spokesman, declined comment on his company’s prospects for dodging divestiture requirements.
But some industry and watchdog group representatives are challenging the propriety of a special carve-out that would allow two companies to exceed the cap permanently, giving them an advantage over other TV companies in the marketplace.
“Right after Congress acts, [News Corp. chief] Rupert [Murdoch] and [Viacom President and Chief Operating Officer] Mel [Karmazin] are going to have to start selling,” said Jeff Chester, executive director of the watchdog Center for Digital Democracy. “They’re going to have to go on a starvation station diet.”
According to industry sources, the legislation to roll back the cap, which was approved in a 400-21 vote by the House of Representatives as a rider to an appropriations bill last month, would not appear to require the companies to divest.
But cap legislation approved by the Senate Commerce Committee would appear to require divestitures.
It will be up to congressional leaders to decide whether to force divestitures, probably ultimately in a conference that lawmakers will use to iron out differences between Senate and House versions of rollback bills later in the fall.
But according to at least some industry insiders, lawmakers have traditionally been reluctant to force companies to sell properties, no matter how they got them.
“We believe [the excess stations] will be grandfathered,” said one network source.
However, Mark Cooper, research director of the Consumer Federation of America, said, “If Congress passes a law and the president signs it, they’re going to have to obey it and divest the stations.”
The Network Affiliated Stations Alliance, the group that has been leading the charge for the 35 percent cap rollback, has taken no position on the divestiture issue.
But Alan Frank, NASA chairman and president of Post-Newsweek Stations, said divestiture would be a subject of discussion at some point..
Mr. Frank said it was unclear why the government should give companies that run afoul of its rules special waivers to continue doing so.
“It’s a very good question,” Mr. Frank said. “Why are bad actors being rewarded?”