Viacom Inc., which owns MTV and Paramount Pictures, has offered to buy CBSCorp., one of the Big Three US television broadcasters, for $37 billion instock, the largest media transaction ever. The new company, which willstill be called Viacom, will be led by Sumner Redstone who will remainViacom's chairman and chief executive. CBS President and Chief ExecutiveMel Karmazin will be president and chief operating officer. The deal ispart of what is expected to be a wave of consolidation in the TV industryafter last month's approval by the Federal Communications Commission of newrules allowing companies to own two TV stations in the same market.Viacom's massive holdings, which include Nickelodeon, theme parks, amajority stake in video-rental chain Blockbuster Inc., cable televisionnetwork Showtime, and 50 percent of the UPN broadcast network, will becombined with CBS' television station network, as well as its hugecollection of US radio stations and outdoor advertising properties tocreate an entertainment giant that will rival Walt Disney Co. and TimeWarner Inc. The price tag of $37 billion is nearly twice the $19 billionthat Disney paid for the Capital Cities/ABC network in 1995, the currentrecord for a media deal. Viacom was created during the 1970s when the USJustice Dept. forced CBS to divest itself of some of its programmingproperties. The deal puts the Democrat Clinton Justice Dept. in theposition of approving the recombination of properties that were foreced toseparate by the Republican Nixon administration. It is possible that theJustice Dept., which must review the proposed merger, will object to theheavy concentration of programming properties. Karmazin said that thecombined CBS and Viacom TV station group will cover 40% of the U.S., abovethe FCC's 35% limit. Karmazin said that Viacom and CBS will attempt tochange that limit, but they will divest or swap some stations if necessaryto close the deal. The deal will also give the combined companies a duopolyposition, that is, two TV stations, in six markets, but Karmazin said lastmonth's ruling by the FCC to allow duopolies makes it likely the pairingswill stand. The FCC will also have to decide whether to let the new Viacomretain its 50% interest in TV network UPN alongside CBS. Current rulesforbid the Big Four networks (CBS, NBC, ABC and Fox) from owning a secondnational network.