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  Viacom-CBS Heads Defend Merger

By Janelle Carter
Associated Press Writer
Thursday, Oct. 28, 1999; 7:12 p.m. EDT

WASHINGTON –– Top executives from CBS and Viacom tried Thursday to quell opposition on Capitol Hill to their pending $36 billion merger, promising that the combined media powerhouse only would enhance consumers' options.

"Viacom's merger with CBS would allow us to serve the full array of today's fragmented audiences even better," Viacom Chairman Sumner Redstone said at a Senate Judiciary subcommittee hearing. "We see the combined assets as highly complementary. All of this, I assure you, will be to the consumers benefit."

Some lawmakers were unswayed.

"A proliferation of new media outlets does not guarantee any greater diversity of viewpoint," said Sen. Paul Wellstone, D-Minn. "After all, one corporate conglomerate can still exercise control over the content of media that reaches citizens through many different outlets. The safest and best way to ensure diversity of viewpoint is through diversity of ownership."

GOP Sen. Mike DeWine of Ohio, chairman of the Judiciary subcommittee on antitrust, business rights and competition, also said he had "some concerns" about the proposed deal.

Viacom and CBS announced Sept. 7 that they wanted to merge their extensive interests in television, movies, radio and outdoor advertising. Federal regulators must approve the deal.

By adding CBS to its studios and cable TV networks, which include Paramount, MTV and Nickelodeon, the new Viacom would rival Time Warner Inc. and the Walt Disney Co.

Nonetheless, CBS President Mel Karmazin told lawmakers, "I think there is plenty of competition for this new company."

"Today our competition is all of the cable channels. Our competition is Yahoo! Our competition is AOL (American Online)," Karmazin said.

The merger faces some regulatory hurdles, some of which Redstone and Karmazin criticized.

Federal Communications Commission regulations prevent one broadcaster from operating television stations that reach more than 35 percent of the nation's homes. CBS comes close to this limit now, and company officials have said the deal would give the new Viacom about 41 percent of the national audience.

The rules also prohibit companies from owning two or more networks in certain combinations, a regulation that would hit the new Viacom, with its half-interest in the UPN television network.

The companies may have to shed some of their stations to comply with the regulations.

In prepared testimony, the two company leaders said while they will "come into compliance as quickly as possible with whatever rules are in place at the time of their closing, the two companies firmly believe that the 35 percent national TV ownership limit and the dual-network rules no longer serve the public interest of viewers and those rules should be relaxed."

They were particularly concerned with the fate of UPN.

"No party is lining up to assume responsibility for a network that is still losing hundreds of millions of dollars each year," the statement said. "The only other option therefore might be to shut down UPN altogether."

"Closing it would not serve the public good," the two said, pointing out that the network is off to a good start this year. They noted that UPN serves minority viewers particularly well. The network had a 5.8 rating among black households and airs 10 of the top 50 rated television programs among blacks.

© Copyright 1999 The Associated Press

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