Hinchey Could Hinder Comcast-Disney

4/04/2004 8:00 PM Eastern

Attention Brian Roberts and Steve Burke: A member of Congress is messing with your plan to buy The Walt Disney Co.

Rep. Maurice Hinchey (D-N.Y.) last Tuesday introduced legislation that would, among other things, reinstate the ban on the common ownership of a TV station and a cable system within the same market.

The bill would also overturn new Federal Communications Commission media-ownership rules, which critics have said are far too generous to corporate interests while shortchanging the public interest.

In theory, Hinchey’s bill would be a problem because Comcast’s $66 billion bid for Disney included the purchase of 10 ABC stations. In Chicago, Philadelphia and San Francisco, Comcast would potentially own the local ABC affiliate while serving, respectively, 84%, 79% and 96% of the markets’ cable subscribers, according to Sanford C. Bernstein research.

Comcast spokesman Michael Weiss declined to comment on Hinchey’s legislation.

The Comcast bid for Disney, while technically still on the table, has not progressed since February. That’s when the Disney board rejected it as too low and Comcast refused to raise its offer in the absence of competing bidders.

Hinchey’s bill is unlikely to advance quickly because House Republican leaders — particularly Majority Leader Tom DeLay (R-Texas) — and the White House were hostile to similar legislation that surfaced last year.

In September, DeLay blocked a House vote on a Senate resolution that would have voided the FCC’s media-ownership rules, which allowed a single company to own three TV stations, a daily newspaper, eight radio stations and a cable system in the largest markets. A few weeks prior to the Senate vote, a federal court in Philadelphia froze the rules while considering challenges to them.

Hinchey’s bill could get a boost from the new climate on Capitol Hill. More lawmakers are debating whether concentrated media ownership leads to higher levels of indecent TV programming, as symbolized by Janet Jackson’s breast exposure during the Super Bowl halftime show, before a live national audience.

Viacom Inc.’s CBS aired the show, produced by subsidiary MTV: Music Television.

By addressing the cable-TV crossownership issue, Hinchey’s 19-page bill goes beyond the rule changes adopted by the FCC last June.

The FCC imposed the ban on common ownership of TV stations and cable systems in 1970, to protect a nascent cable industry from domination by broadcasters. The agency continued to retain the rule until February 2002, when a panel of the U.S. Court of Appeals for the D.C. Circuit ordered the agency to abolish it, saying the justifications for retention were unsustainable.

The FCC did not appeal the ruling, and later eliminated the rule.

Comcast’s hostile offer for Disney was the first attempt by a cable company to acquire local TV stations in the same market since the court decision.

Hinchey’s bill contained other surprises for cable.

In one provision, a cable network that is owned by a “large cable operator” and reaches less than 16 million cable households would have to set aside 35% of its primetime hours, measured monthly, for independently produced programming. All other eligible cable networks would have to allocate 25%.

The bill’s definition of primetime programming exempted “newscasts, sports programs or telecasts of feature films.”

A large cable operator was defined as one with 3 million or more subscribers: a level which roughly excludes every cable company except Comcast, Time Warner Cable, Charter Communications Inc., Cox Communications Inc. and Adelphia Communications Corp.

Rep. Maurice Hinchey
Born: Oct. 27, 1938
Elected to Congress: November 1992
District: New York’s 22nd, Running from Newburgh in Orange County to Ithaca in Tompkins County
Committees: Appropriations

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