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News > Companies
Viacom, CBS eye approval
April 4, 2000: 7:25 p.m. ET

Redstone and Karmazin optimistic that regulators will OK mega-merger
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NEW YORK (CNNfn) - Viacom leader Sumner Redstone and CBS chief Mel Karmazin on Tuesday predicted that federal regulators would soon give their merger deal the thumbs up, and will also allow the combined company to keep both its CBS and UPN television networks.
    Speaking at the The Big Picture conference in New York, the two media mavericks expressed fatigue at the long wait while the U.S. Department of Justice and Federal Communications Commission study their deal, announced in September 1999 and currently estimated at roughly $50 billion. But they anticipate a positive outcome. graphic
    "We are ready to go forward and we are optimistic that the FCC and DOJ (endorsement) will come soon," Redstone, Viacom's chairman, said at the conference, which was sponsored by Variety magazine and investment house Schroders.
    
Viacom to own CBS, UPN

    A chief issue in the government's study of the merger, which will marry CBS's TV network, radio advertising and Internet properties with Viacom's brands, which include MTV and the Paramount film studio, are federal regulations meant to restrict how many stations companies can own in certain markets.
    While those rules were relaxed in 1999, the government could object to Viacom's ownership of broadcast network CBS and struggling newcomer UPN. Viacom on Monday completed its purchase of the 50-percent ownership interest in UPN that it did not own from BHC Communications, Inc., a subsidiary of Chris-Craft Industries Inc., for $5 million in cash. graphic
    In addition, the combined company will own stations with access to 41 percent of the national audience, well above the FCC's current 35 percent cap. Redstone and CBS President Mel Karmazin have talked 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.
    "We have a pretty clear signal that we will be able to keep UPN," Redstone said.
    
Who's in charge?

    During the rather jocular discussion, which was hosted by famed interviewer David Frost, Redstone, 76, and Karmazin, 56, shrugged off questions about who will run the company if and when the deal is completed. Critics question whether dynamic and aggressive leaders Redstone, who once owned a small collection of film houses, and Karmazin, a former radio-advertising salesman, can both sit at the head of the table.
    "Our agendas are exactly the same," said Karmazin, citing issues such as graphicthe health of the company's stock price and the happiness of its employees. "Assuming that something (disagreeable) happened between us, it would behoove us to work it out.
    "I cannot visualize any disagreement that cannot be resolved by us," Redstone said.
    Under the terms of the merger agreement, Redstone will head the new venture. Karmazin is to take over the entity when Redstone retires.
    But in an interview with CNNfn, Redstone said that both men would jointly run the company.
    "We are going to share power," he said on the program Market Coverage. "I consider that one of the great assets we got when we acquired CBS was Mel Karmazin. We are getting along fine. We will run it as partners."
    
'New' company to boast ad muscle

    The companies' long list of highly recognizable assets including Paramount, MTV, and Nickelodeon, with audiences that span traditional demographics, which gives it a powerful and in the advertising world. graphic
    While CBS's television network is known for its draw on the 50-plus crowd, Viacom's Nickelodeon network is a powerhouse with kids, and adolescents and young adults are the bread and butter for MTV, Viacom's popular cable music video network.
    "From the Internet to television to radio, Viacom is going to be there," Karmazin said. "It is the only company that can reach every demographic from (children's TV program) Blue's Clues to MTV to CBS." graphic
    Chris Dixon, media analyst with PaineWebber, told CNNfn's Market Coverage that the new company will have almost $11 billion of revenue coming from advertising, a veritable "one-stop shop" for anybody who needs to market products top any kind of audience. (118K WAV, 118K AIFF)
    Karmazin added that while there may be some job reduction once the deal is done, the company sees plenty of jobs created as the new Viacom grows.
    Redstone added that the company would eventually spin off its MTV Internet unit and Nickelodeon operations, despite a downturn in tech stocks and lackluster technology initial public offerings in recent weeks. (143K WAV, 143K AIFFBack to top

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