9 FCC Red No. 7 Federal Communications Commission Record FCC 94-54 action, as well as further comments, and Viacom responded Before the only to the QVC comments. Shortly after more than 50.1 Federal Communications Commission percent of Paramount shareholders tendered their stock to Washington, D.C. 20554 Viacom on February 14, 1993, QVC terminated its tender offer, requested that the Commission dismiss its pending long-form applications, and indicated that it would not In re Applications of pursue its opposition to Viacom©s application.3 VIACOM INC. File Nos. BTCCT-930921KG BACKGROUND through KM 2. Revised several times since the Commission granted an STA to trustee Robinson, Viacom©s tender offer for For Commission Consent to purchase of 50.1 percent of Paramount common stock at the Transfer of Control of $107 per share constitutes the first step in a two-tiered Paramount Communications Inc. process for acquiring the entire common stock interest in Paramount. The "second step merger" involves the conver sion of the remaining 49.9 percent of Paramount common MEMORANDUM OPINION AND ORDER stock issued and outstanding into the right to receive a package of Viacom securities.4 Upon completion of the Adopted: March 8, 1994; Released: March 8, 1994 merger, National Amusements, Inc. (NAI), which currently is the single majority shareholder of Viacom, will hold 62 By the Commission: percent of the merged entity©s voting stock.5 NAI, in turn, is, and will continue to be, controlled by Sumner M. 1. On November 23, 1993, the Commission granted a Redstone, in his capacity as trustee of the Sumner M. special temporary authorization (STA) to Glen O. Robin Redstone Trust. son as trustee on behalf of Viacom Inc. (Viacom), which has since prevailed in a tender offer contest for control of Paramount Communications Inc. (Paramount). See Viacom MULTIPLE OWNERSHIP/ Inc., 8 F.C.C. Red 8439 (1993).) 1 Now before the Commis CROSS-INTEREST MATTERS sion are long-form applications, FCC Form 315, seeking a 3. Background. The merger of Viacom and Paramount transfer of control of Paramount from trustee Robinson to will result in the common ownership of Paramount©s seven Viacom. Because Viacom holds, either directly or through UHF television stations6 and Viacom©s five television7 and wholly owned subsidiaries, the licenses of radio stations 14 radio stations.8 Also attributable to the merged entity located in the same markets as two of the Paramount will be three television stations licensed to Combined television stations, it also seeks unopposed waivers of the Broadcasting, Inc. (Combined), in which Paramount holds one-to-a-market rule, Section 73.3555(c). 2 QVC Network, a 6.4565 percent interest, obtained in a bankruptcy pro Inc. (QVC) filed a petition to deny or defer Commission ceeding.9 See Paramount Communications, Inc., 1 F.C.C. 1 G. William Miller, the trustee-designate of QVC Network, its separate merger with Blockbuster Entertainment Corpora Inc., the competing bidder for Paramount, was also granted a tion, with which it entered a definitive merger agreement on STA on November 23, 1993. QVC Network. Inc., X F.C.C. Red January 7, 1994. 8485 (1993), reconsideration dismissed as moot, by staff letter of 6 Paramount, through its seven wholly owned subsidiaries, March 2, 1994. holds Commission licenses for: WKBD, Channel 50 (Fox), De 2 The one-to-a-market rule generally proscribes common own troit, Michigan; KTXH, Channel 20 (Ind.), Houston, Texas; ership of a television station and a radio station in the same KRRT, Channel 35 (Fox), Kerrville, Texas: WDCA, Channel 20 market. (Ind.), Washington, D.C; KTXA, Channel 21 (Ind.), Arlington, 3 Once a petition to deny is filed, we are obligated to consider Texas; WTXF, Channel 29 (Fox), Philadelphia, Pennsylvania; its merits, regardless of the fact that it is subsequently dis and WLFL, Channel 22 (Fox), Raleigh, North Carolina. missed. Booth American Company, 58 F.C.C. 2d 553, 554 (1976). 7 The Viacom-controlled television stations are: WHEC-TV, We have reviewed QVC©s allegations and find that they do not Channel 10 (NBC), Rochester, New York; KSLA-TV, Channel raise a substantial and material question as to Viacom©s quali 12 (CBS), Shreveport, Louisiana; KMOV-TV, Channel 4 (CBS), fications. St. Louis, Missouri: WNYT-TV, Channel 13 (NBC), Albany, 4 According to Amendment No. 35 to Viacom©s Schedule New York; and WVIT, Channel 30 (NBC), New Britain. Con 14D-1 tender offer statement, submitted under Securities and necticut. Exchange Commission rules, each remaining share of Para 8 The Viacom-controlled radio stations are: KXEZ(FM), Los mount stock will be converted into: 0.93065 shares of Viacom Angeles, California; WLTI(FM), Detroit, Michigan; WLIT(FM), Class B, non-voting common stock; $17.50 in principal amount Chicago, Illinois; KBSG(AM), Auburn, Washington; KBSG-FM, of Viacom eight-percent, exchangeable subordinated debentures; Tacoma, Washington; WMZO(AM), Arlington, Virginia; 0.93065 of Viacom contingent value right; 0.5 of a three-year WMZQ-FM. Washington, D.C.; WCPT(AM), Alexandria, Vir warrant to purchase an additional share of Viacom Class B ginia; WCXR-FM, Woodbridge, Virginia; WLTW(AM), New common stock at $60 per share; and 0.3 of a five-year warrant York, New York; KYSR(FM), Los Angeles, California; to purchase an additional share of Class B common stock at $70 KNDD(FM), Seattle, Washington; KSRY(FM), San Francisco, per share. California; KSRI(FM), Santa Cruz, California. * NAI, according to Viacom©s February 10, 1994 application 9 Through its wholly owned Paramount Pictures Corporation, amendment, will continue to be the single majority shareholder, Paramount holds the attributable interest in Combined, which with 62 percent of the voting stock, even after consummation of 1577 FCC 94-54 Federal Communications Commission Record 9 FCC Red No. 7 Red 1390 (1992). Because holding attributable interests in 6. In support of its permanent waiver request for the more than twelve television stations is generally prohibited Detroit market, where Paramount©s WKBD(TV) and by the Commission©s national multiple ownership rule, Viacom©s WLTI(FM) will be commonly owned, Viacom Sections 73.3555(e)(l) and (2), 10 Viacom has pledged that states, based upon the 1992-93 Arbitron Television Markets in the event the three Combined stations have not been and Ranking Guide, as reported in Television & Cable divested prior to completion of the Paramount-Viacom Factbook 1993, that Detroit, with its nine television stations merger, it will either sell the Paramount interest in Com and 48 AM and FM radio stations, is the ninth largest bined to a third party or place the entire interest into an television market. Of these 57 broadcast stations, Viacom irrevocable voting trust, insulated in accordance with Com notes, at least 44 will remain separately owned, operated mission rules and policies. Either one of these actions and controlled after the Paramount-Viacom merger. Ac would eliminate all attributable interest in the Combined cordingly, Viacom contends, the proposed television-radio stations, rendering Paramount in compliance with the combination in Detroit falls within the presumptive waiver twelve-station rule. Because neither has been implemented, standard established in the Second Report and Order for however, we shall condition any grant of these applications "top 25 markets/30 voices" cases. We have reviewed the upon Paramount©s divestiture or appropriate insulation of showing submitted by Viacom and. based upon the in its interest in Combined. We reiterate that, until one of formation before us, find that permanent waiver of the these measures is effectuated, control of Paramount©s li one-to-a-market rule in the Detroit market is in the public censed facilities rests with, and must be exercised solely by, interest. See, e.g., Malrite Communications Group, Inc., 8 Viacom trustee Robinson, who alone is authorized to vote, F.C.C. Red 4212, 4213 (1993): Susquehanna Radio Corp., 6 subject to certain restrictions, the shares obtained via the F.C.C. Red 6547(1991). tender offer. 7. As for the Washington, D.C. television market, since 4. The Paramount-Viacom merger will create, in con the November 1, 1993 consummation of a purchase agree travention of the Commission©s "one-to-a-market" rule," ment for WCPT(AM), Alexandria, Virginia, and WCXR- Section 73.3555(c), a radio-television combination in De FM, Woodbridge, Virginia, 13 Viacom has held the licenses troit and a TV/2 AM/2 FM combination in Washington, of four radio stations, including its WMZO(AM), Arling D.C. Accordingly, Viacom requests permanent waivers for ton, Virginia, and WMZO-FM, Washington. D.C. Common its TV/AM/FM combination in the Detroit market and for ownership of two AM stations and two FM stations, as what will ultimately be a TV/AM/FM combination in the Viacom asserts, is permissible in markets with more than Washington, D.C. market, as well as a temporary waiver to 15 commercial radio stations, provided that the proposed allow orderly divestiture of an AM and FM in the Wash radio combination has a combined audience share of 25 ington, D.C. market. 12 percent or less. See 47 C.F.R. §73.3555(a)(l)(ii); Revision of 5. One-to-a-market waiver requests. In Second Report and Radio Rules and Policies, 1 F.C.C. Red 2755, recon. granted Order in MM Docket No. 87-7, 4 F.C.C. Red 1741, 1751 in part and denied in part, 7 F.C.C. Red 6387 (1992). Those reconsidered in part, 4 F.C.C. Red 6489 (1989). the Com criteria, as Viacom demonstrated in its recent applications mission concluded that it will "look favorably" upon waiv to acquire the two Washington.