By: Debra Gersh Hernandez
Subcommittee hears testimony from the chiefs of Bell Atlantic, Viacom and Paramount sp.
MEDIA MEGA-MERGERS ARE big news right now, and they may be too big for congressional lawmakers.
“I do not believe that a deal is necessarily good or bad because it is big,” said Sen. Howard Metzenbaum (D-Ohio), chairman of the Senate Judiciary Committee’s Subcommittee on Antitrust, Monopolies and Business Rights.
His concerns, he explained, “are based on my reasoned judgment that consumers can be exploited by conglomerates that wield too much market power.”
At a recent hearing about the spate of mergers in the telecommunications industry, Metzenbaum said he is most worried about the proposed merger of Bell Atlantic Corp. and Telecommunications Inc.
He also expressed concern about a proposed deal between QVC and the Home Shopping Network, AT&T’s acquisition of McCaw Cellular Communications, and bidding between QVC and Viacom International Inc. for Paramount Communications.
The hearing ? Metzenbaum indicated that there would be more ? included testimony from the chiefs of Bell Atlantic, Viacom and Paramount.
Bell Atlantic chairman and CEO Raymond Smith emphasized the “choice, control and convenience” that would be created in the marketplace by a merger of his company with TCI and Liberty Media.
In addition, Smith said Bell Atlantic will spend more than $15 billion during the next five years to “create a national network of distribution systems.”
He argued that the “notion . . . that Bell Atlantic by sheer size alone will dominate the marketplace for interactive, multimedia services is without foundation ? there are many capable competitors.”
Sumner Redstone, chairman of Viacom, had a less charitable view of such mergers. Viacom was in the midst of a hostile bidding war with TCI-owned QVC for Paramount when Redstone testified.
“TCI has systematically attempted to exert monopoly control over almost every aspect of the cable industry,” Redstone said, adding, “Together with its partners and would-be partners in QVC ? Comcast, Cox Enterprises and Newhouse ? TCI controls access to one in every three American cable households.”
He noted, “The power TCI would have to control programming and cable distribution is dangerous enough by itself, but when coupled with the publishing, television and motion picture production and other interests of Paramount, the danger to fundamental First Amendment principles designed to further a diversity of voices, a multiplicity of viewpoints and freedom of access to the marketplace of ideas is sobering.
“This is especially significant in light of the threatened combination of two of the largest publishers in the world, Paramount and Newhouse. This combination would create the single largest and most powerful publisher, presenting, in and of itself, substantial antitrust questions,” Redstone added.
“If TCI’s plans are fulfilled, it will be TCI that determines which voices, viewpoints and ideas are carried on the nation’s superhighways. Indeed, TCI could end up controlling the news we receive and the content of our children’s schoolbooks,” he cautioned.
Not surprisingly, the testimony of Paramount’s chairman and CEO Martin Davis reflected Redstone’s. Paramount and Viacom had a friendly merger planned until QVC’s hostile bid.
Davis said, “A QVC-Paramount board consisting of TCI Liberty Media-, Comcast-, Newhouse- and Cox-nominated directors would exert enormous leverage over the marketplace, not only in cable but in publishing since Newhouse’s Random House competes head to head with [Paramount’s] Simon & Schuster. Surely this aggregation of media power in so few hands must somehow be brought under control . . . .The new media gateway, I submit, whether it is called the communications superhighway to whatever label one chooses to affix, must be open to all programmers on a fair and equitable basis.”