MERGERS
New Cable-Ownership Restrictions Could Complicate AT&T's Plans (WSJ)
In CBS Merger With Viacom, A Wild Card Comes Into Play (WSJ)
NBC Nears Deal to Acquire 32% Of Paxson Communications (WSJ)
DIGITAL DIVIDE
Bridging The Digital Divide: Long Branch Community Builds Technology Center
(WP)
MERGERS
NEW CABLE-OWNERSHIP RESTRICTIONS COULD COMPLICATE AT&T'S PLANS
Issue: Ownership/Merger
The Federal Communications Commission is considering restrictions on
cable-television ownership that could complicate AT&T's agreement to buy the
cable company, MediaOne. The restrictions would leave in place an existing
cap that prohibits any cable company from owning systems that could reach
more than 30% of cable households nationwide but provide for other changes.
Even though the proposal would increase the number of cable households --
currently nearly 70 million -- to include 10.8 million satellite and
wireless TV subscribers, which would help AT&T -- the proposal would expand
the types of ownership stakes counted toward the 30% cap. AT&T argues that
investments such as MediaOne's 25.5% stake in Time Warner Entertainment, a
cable operation of Time Warner, shouldn't count towards the cap. All this
could prove a headache for AT&T if the FCC, as expected, approves the rule
changes by October. James Cicconi, AT&T's general counsel and executive vice
president, said the company is still hopeful that the FCC will provide some
sort of regulatory relief. "We still feel that the odds are decent here," he
said. Cicconi and other lobbyists have made a number of visits to the FCC
commissioners and staff to discuss the proposal -- and it has paid off in
that the FCC, which had considered voting on the proposal next week, agreed
to delay the vote. If the FCC doesn't change the restrictions, AT&T has
several other options. One is the outcome of a court case in which Time
Warner and Daniels Cablevision have challenged the FCC's existing
cable-ownership regulations and the U.S. Court of Appeals is expected to
hear that case in December. AT&T could also argue that its plan to offer
telephone and Internet services via cable will give local phone companies
more competition -- a goal the FCC shares -- so they may still get the
merger approved.
[SOURCE: Wall Street Journal, AUTHOR: Kathy Chen]
(http://interactive.wsj.com/articles/SB936822483277419740.htm)
IN CBS MERGER WITH VIACOM, A WILD CARD COMES INTO PLAY
Issue: Merger/Regulations
Since the Federal Communications Commission has said that Viacom may have to
unload its interest in UPN to get approval for the CBS merger because of
rules barring one company from owning two networks, there may be some
difficulty ahead for the divestiture. A forced exit could be difficult and
costly as the Viacom/ Chris-Craft partnership in UPN contains an agreement
with provisions to protect one partner if the other exits the venture.
Someone familiar with the partnership estimated that Viacom might have to
pay as much as $500 million to get out of the venture. To try to avoid the
mess, Viacom and CBS are exploring whether the merged company can stay in
UPN with a reduced stake of 32% by either Chris-Craft's buying more stock in
UPN from Viacom or allow a third partner to buy some stock from Viacom. FCC
station-ownership rules have been changed recently to recognize that
companies with less than one-third of a station's equity aren't owners as
long as another entity owns more than 50% of the rest of the stock -- so
that could work. In meetings yesterday with FCC officials, the broadcasters
argued that forcing Viacom to sell its stake in the UPN network might
extinguish a new programming voice that has built a niche serving the
minority community. Viacom and CBS executives expressed hope that an
existing FCC effort to change its rules might be completed in time to allow
the deal to go forward.
[SOURCE: Wall Street Journal, AUTHOR: Dow Jones Newswires]
(http://interactive.wsj.com/articles/SB936840866199346079.htm)
NBC NEARS DEAL TO ACQUIRE 32% OF PAXSON COMMUNICATIONS
Issue: Ownership/Merger
NBC is close to an agreement to buy a 32% stake in Paxson Communications in
a deal valued at about $400 million. NBC hopes to announce the deal next
week, before an exclusive negotiating period between the two companies
expires. NBC officials declined to comment, and Paxson couldn't be reached.
By taking a stake in Paxson, NBC would get an expanded cable presence,
because cable operators are required to carry Paxson's 73 stations, reaching
76% of the country. In a worst-case scenario, NBC could use the Paxson
stations as leverage in negotiations with its local affiliates, threatening
to convert to cable from broadcast if a new financing arrangement with its
affiliates isn't reached. NBC is close to the 35% cap on the number of
stations a single company can own -- so the network can't buy Paxson
outright.
[SOURCE: Wall Street Journal, AUTHOR: Staff Reporter]
(http://interactive.wsj.com/articles/SB936840572191875997.htm)
DIGITAL DIVIDE
BRIDGING THE DIGITAL DIVIDE: LONG BRANCH COMMUNITY CENTER BUILDS TECHNOLOGY
CENTER
Issue: Digital Divide
Prompted by community testimony, last spring the Maryland State Assembly
allotted $100,000 in matching funds for the construction of a technology
center at the Long Branch Community Center. The Long Branch Community is a
lower-income, ethnically diverse neighborhood in Silver Spring, Maryland.
The technology center will be a resource for job training, literacy classes
and adult English for Speakers of Other Languages (ESOL) courses. Long
Branch is seen by its residents as a community of information "have-nots."
Census statistics from 1994 recorded the community's PC penetration at only
half of Montgomery County's overall penetration rate. "It's a real digital
divide. We are a county of haves and a community of have-nots," said Jim
Johnson, president of the board of the Silver Spring Team for Children and
Families, an nonprofit organization working with the community center staff.
A recreation room is being cleared for the new computers. The new technology
center's appeal is meant to be broader than just the school age children and
seniors who regularly use the community center's facilities. Courses and
computers also will be available for the use of the neighborhood business
owners. No other community center in Montgomery County has a computer
component. A search for a Director of the new technology center is currently
in progress. Classes begin in January.
[SOURCE: Washington Post, p. M01, AUTHOR: Barbara Ruben]
(http://search.washingtonpost.com/wp-srv/WPlate/1999-09/09/059l-090999-idx.h
tml)
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