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CBS, Viacom inch closer
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December 29, 1999: 4:03 p.m. ET
CBS shareholders overwhelmingly approve merger; FCC decision looms
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NEW YORK (CNNfn) - CBS Corp. and Viacom Inc. cleared the second major hurdle Wednesday in their bid to create a massive media and entertainment conglomerate -- but the largest obstacle to the proposed deal still looms in the distance.
CBS shareholders overwhelmingly approved the merger, currently valued at roughly $47 billion, which already had won the support of Viacom shareholders. Combined, the two companies would comprise the nation’s second-biggest media concern, encompassing entertainment venues ranging from the MTV network to the Howard Stern radio show.
But while CBS shareholders lined up to support the deal Wednesday, the companies face a much bigger selling job in Washington, where they still need to convince the Federal Communications Commission and the Department of Justice to give their stamp of approval.
Sources with knowledge of the negotiations with federal officials said Wednesday they remain confident the deal will gain both approvals by the early part of the 2000 second quarter.
"It’s going very smoothly,” one source said. "Nobody’s really worried about it.”
CBS President Mel Karmazin told a group of shareholders Wednesday that the two companies recently received a second request for
information on the merger from the Justice Department, but doubted it would stall the approval process.
Planning to clear up questions
"After the holidays, we hope to sit down and clear up any questions they may have," he said. "We don't see any major issues. They are very big in cable. We're not very big. We don't expect any problems on the radio end. We don't think there's anything material that the Justice Department will object to."
But even if federal officials ultimately sign off on the deal, there is still some uncertainty as to what contingencies might be attached to the final approval.
Federal officials loosened duopoly rules meant to restrict how many stations companies can own in certain markets earlier this year, but not nearly enough for CBS’ and Viacom’s purposes.
Following the completion of their merger, the combined CBS-Viacom will own stations with access to 41 percent of the national audience, well above the FCC’s current 35 percent cap.
Viacom Chairman Sumner Redstone and Karmazin have huddled with regulators several times urging them to expand or eliminate the cap, which television executives argue is no longer relevant given the growing popularity of the Internet and cable.
Still, both also have said publicly they will comply with whatever the FCC decides to mandate. They have, however, asked for two years to get under the cap, which essentially would require them to sell 16 stations.
The FCC also prohibits any of the four major networks -- ABC, NBC, CBS or Fox -- from merging with any emerging network, which could
force Viacom to sell its 50 percent stake in the UPN network.
The FCC has thus far made no commitment to rule on possible duopoly changes prior its decision on the CBS-Viacom merger. 
-- from staff and wire reports
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