Viacom May Be Required to Sell A Radio Station
By CLAUDIA PESCHIUTTA
Viacom Inc.'s purchase of KCAL-TV (Channel 9) may force its Infinity Broadcasting Corp. subsidiary to give up one of its seven valuable L.A. radio stations.
The acquisition has left the media giant with more properties in the local market than the Federal Communications Commission will allow. Obtaining an extension of a waiver to keep all the stations appears doubtful, leaving Viacom to consider which of the seven might be sold.
Infinity's L.A. cluster includes No. 1 rated KROQ-FM (106.7), smooth jazz outlet KTWV-FM (94.7) and oldies leader KRTH-FM (101.1). The group also has two news stations, KFWB-AM (980) and KNX-AM (1070), classic rock outlet KCBS-FM (93.1) and the market's second-highest rated talk station, KLSX-FM (97.1).
Infinity is the second-largest player in the L.A. radio market, behind only Clear Channel Communications Inc., which owns eight local stations.
Infinity executives declined to comment on potential sales and would not speculate on which station most likely to go. "Obviously, whatever the FCC says we have to do, we will do," said spokesman Dana McClintock.
Viacom's purchase of KCAL from Young Broadcasting Inc. for $650 million created a television station duopoly for Viacom because the New York-based media company already owned KCBS-TV (Channel 2).
FCC regulations restrict companies with a duopoly, or two television stations in one area, from owning more than six radio stations in that same market. Though many would like the rule to be changed, there's little reason to expect such a development anytime soon.
Infinity's FM stations could sell for up to $400 million, while the AM stations might fetch between $75 million and more than $300 million, said Mary Beth Garber, president of the Southern California Broadcasters Association.
Among the most vulnerable, according to industry sources, is KFWB, the cluster's lowest-rated station and also the one with the weakest signal. But KFWB will begin broadcasting Dodger games next year, and Garber said that "giving up the Dodgers doesn't make a whole lot of sense." Infinity owns the radio broadcasts rights of several sports teams and would best know how to make a profit off the deal, she said.
KROQ, KRTH and KTWV are all the top-rated stations in their respective formats and Infinity is unlikely to want to give any one of them up, industry sources said.
There is speculation that Infinity might consider switching alternative rock station KROQ to the dial position held by KCBS, a classic rock station that has lagged in the ratings but has one of the strongest signals in the market, and then sell off KROQ. But such a transition could confuse some listeners and likely hurt KROQ's ratings, at least in the short-term.
Some FCC regulations have been called into question by recent court rulings and many media executives are betting that the commission will soon make changes. However, the restriction on cross-ownership of radio and TV stations is not among those that have been challenged.
The rule could be included in the commission's biennial regulations review, due sometime this year, but any change may not come in time to save Infinity from selling a local radio station. The FCC has granted Viacom only six months to shed a station.
FCC Commissioner Michael Copps has made it clear he is unwilling to wait more than six months.
"I support this waiver regarding the license transfer of KCAL-TV in Los Angeles because it is limited to six months," he said in a statement attached to the waiver. "I expect the company's best efforts to result in a sale well within the time period allotted. I do not expect to see, nor do I expect to support, a request for an extension of the waiver."
But Copps, the only Democrat on the five-seat commission, won't have final say. Three seats are filled by Republicans, including Chairman Michael Powell, who has expressed support for relaxing some of the restrictions on cross-ownership. One seat is vacant due to the departure of Commissioner Gloria Tristani, a Democrat.
While the FCC has the power to create and enforce regulations, it's subject to congressional oversight. Depending on the outcome of the November election, Viacom may get some leeway from federal lawmakers or be forced to comply.
"You tell me who's going to win the election in November and I'll tell you whether the rules will change at all," said Vincent Pepper, an attorney at Womble Carlyle Sandridge & Rice in Washington. "If the Democrats get both houses, then I would suggest Viacom would be selling something."
Among the companies likely to be interested in strengthening their presence in L.A. are Radio One Inc., owner of KKBT-FM (100.3), and Emmis Communications Corp., which has two local stations, KPWR-FM (105.9) and KZLA-FM (93.9).
"They're all wonderful properties," said Nancy Leichter, vice president and general manager of KKBT, a hip-hop and rhythm and blues station. "(Radio One executives) do want to buy something here in L.A. I don't know if it would be this situation."
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