FCC: Vote Is On

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Despite intense pressure from an array of opponents, Federal Communications Commission chairman Michael Powell is moving forward with his plan to overhaul the broadcast-ownership rules at a special June 2 meeting.

"It's going to happen, unless lightning strikes over the weekend," a Powell aide said last Thursday.

The GOP chairman is planning the most extensive renovation of broadcast rules in decades.

After details of the plan leaked out, the number of its opponents began to mount, producing a coalition that included such strange bedfellows as Common Cause and the National Organization for Women on the left of the political spectrum and the National Rifle Association and the Parents Television Council on the right.

"I think the external noise has been unlike anything we have ever experienced," the Powell aide acknowledged.

The chairman's plan calls for allowing the four major networks to own more local TV stations, allowing TV stations to combine with other TV stations in the same market, and permitting newspaper publishers to own TV and radio stations in the same market.

Although Powell views the changes as practical adjustments to current market conditions and decisions by a federal appeals court, his critics insist he has surrendered to big corporations at the expense of the public interest.

In recent days and weeks, two Democratic presidential candidates, two of the FCC's Democratic members and various special-interest groups have beseeched Powell to postpone the June 3 vote and give the public additional time to review the proposed rules.

But Powell refused, backed by fellow FCC Republicans Kevin Martin and Kathleen Abernathy. He said the record was complete and delay would serve no purpose but to string out a rulemaking that should have been concluded more than five months ago.

"Powell has alienated so many people, it's going to come back and haunt [President] Bush," said Jeff Chester, executive director of the Center for Digital Democracy, a group that lobbied for the retention of current FCC rules.

Started in congress

The GOP-controlled FCC arrived at this point as a result of changes in federal law and subsequent court decisions.

In 1996, Congress ordered the agency to review its broadcast-ownership rules every two years and modify or repeal regulations that no longer served the public interest because markets had become competitive.

In later litigation, the U.S. Court of Appeals for the D.C. Circuit sided with such media giants as Viacom Inc. and News Corp., holding that the FCC had failed to meet its legal burden by retaining many of the key rules largely intact.

Battle lines set

Powell, who faulted the FCC's biennial review as a commissioner and felt the court rulings vindicated his position, decided to put all of the broadcast-ownership rules under exacting scrutiny. It became clear in recent months that Powell — supported by Martin and Abernathy, but not Copps and Adelstein — favored relaxing key rules, as opposed to waging a more vigorous effort at defending the current regime.

As Powell has repeatedly observed, many of the rules that came under review were established decades ago, well before cable and satellite television became media powers and well before anyone had even heard of the Internet.

At the meeting, the FCC is expected to raise the number of U.S. TV households a single station group may reach to 45%, up from 35%. Viacom and News Corp. pushed for a higher cap because both are slightly above the 35% limit today.

For the first time, the FCC will also permit one company to own three TV stations in markets with at least 18 stations (roughly the top five markets) and allow same-market common ownership of two stations in markets that have at least five stations (roughly the top 100 markets). Under the new rule, none of the top four stations in a market could combine among themselves.

The other big change is substantial repeal of the ban on the common ownership of a newspaper and a television or radio station in the same market. The rule, adopted in 1975, would remain in effect in markets that had fewer than four TV stations.

As a result of these changes, one company could own two or three TV stations, newspapers and several radio stations in the same market — no questions asked by the FCC. What would happen if the local cable company tried to merge with that broadcasting-newspaper publisher?

"These are broadcast rules," the Powell aide said. "When you have an overlay of cable or [direct-broadcast satellite], those will be on a case-by-case basis."

The Justice Department and the Federal Trade Commission also could step in to block a merger they considered a violation of anti-trust law.

One big winner will be Tribune Co., the Chicago-based media firm which has been fighting to repeal the newspaper-broadcast ban since 1996.

Since its acquisition of Times Mirror in 2000, Tribune has been in technical violation of the rule in three markets —New York, Los Angeles and Hartford, Conn.

Under the current rule, Tribune is allowed to own a newspaper and a TV station in same market for no longer than 12 months after the TV station's license comes up for FCC renewal (which happens every eight years). Under the expected new rules, Tribune's cross-ownership problems would vanish.

"I've got an $8 billion cloud over my head. I don't feel like a winner. I just feel like a guy who is going to sleep a little better," said Shaun Sheehan, vice president of Tribune.

Powell's critics alleged that newspaper-broadcast combinations were dangerous because of potential bottleneck control on the news flow at the local level.

Gene Kimmelman of Consumers Union complained that a local newspaper wouldn't have the necessary independence to probe potential wrongdoing by the corporate parent.

Undemocratic?

John Sturm, president and CEO of the Newspaper Association of America, countered that newspaper-broadcast combinations should be allowed because the public would benefit from quality improvements in the production of news.

"It has been proven in study after study that newspaper-owned television stations do more and better public affairs than anyone else. That's the primary benefit of getting rid of the cross-ownership ban," Sturm said. "When you don't have the facts, you say things like, 'It's going to be bad for democracy,' which I think is nonsense."

Market reaction to the rule changes has been decidedly mixed. Copps and Adelstein have predicted that a merger blitz will follow the FCC vote, which is expected to run along partisan lines.

Tribune's Sheehan said he didn't agree that a buying binge was around the corner.

"I can speculate on one thing: The hue and cry that deals are going to emerge all over the place my people rather think that is not true," he said. "I think most television companies quite frankly are not interested in newspapers. The only people interested in newspapers are newspaper companies that happen to own TV stations."

Many of the groups protesting the new rules arrived on the scene only recently, including the NRA.

Chester said the late surge was attributable to the "gung ho" TV coverage of the recent war in Iraq, which infuriated the conflict's liberal opponents.

Turner riposte

"The war and the narrowness of the coverage … really woke up a lot of liberal groups. For the first time in decades, there is now a connection made between what you see on TV and who owns it," Chester said.

Ted Turner, founder of Cable News Network and a director of AOL Time Warner Inc., in a Washington Post
editorial on Friday blasted the FCC's new rules as excessive grants to big business at the expense of innovation by small business, where he got his start.

"Congress has the power to amend the rule changes. Members from both parties oppose the new rules. This isn't over," Turner wrote.

In 1970, the FCC adopted a rule effectively banning the common ownership of a TV station and cable system in the same market. The D.C. Circuit vacated the rule in February 2002. Turner's AOL Time Warner led the legal challenge against the rule.

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