Major Media Ruling Looms for FCC

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Las Vegas— Media moguls, mark your calendars: D-Day (Deregulation Day) is June 2.

After years of foot-tapping, stinging court defeats, and mind-numbing debate, federal officials are weeks away from announcing new ownership rules governing television broadcasters.

"There will be no delay. June 2 is the date," said Kenneth Ferree, chief of the Federal Communications Commission's Media Bureau.

Just about every badge-holder at last week's National Association of Broadcasters convention here was on edge as the tension kept building over whether FCC chairman Michael Powell and his Republican majority are about to move in a radical direction, or instead engage in modest liberalization not too unrecognizable from the status quo.

Powell would not say what nearly all felt in their guts: The rules are largely going to evaporate.

"You should not look to the total elimination of all the rules. We have never said that we are out to eliminate all the rules, and I think to do so would probably be irresponsible," Powell told an NAB audience last week, under prodding from veteran ABC journalist Sam Donaldson.

Powell's comments left the impression that nothing major is about to happen. Yet if his words were taken literally, the FCC can wipe out most of the rules without engaging in total elimination.

Judging from the remarks of other FCC members and their aides, majorities have already formed and the fog engulfing the whole matter is beginning to lift.

For example, three FCC members — a majority — are now on record as in favor of allowing the joint ownership of a newspaper and a TV or a radio station in the same market, combinations that the FCC has barred since the 1970s.

Last Tuesday, Republican commissioners Kathleen Abernathy and Kevin Martin said here that they supported at least a relaxation of the rule. In a speech in Washington, D.C., last month, Powell said he wanted to remove the common ownership ban, but kept open the question of whether to lift it on a national basis or just in big markets.

Addressing the NAB convention, Abernathy said newspaper-broadcast combinations that were allowed to remain in effect after adoption of the ban in the 1970s are providing high-quality local news and improving the news product of their competition.

In remarks to the same audience, Martin said the media landscape had changed so dramatically over the last 30 years that the ban is no longer necessary.

Abernathy and Martin appeared on the same panel with FCC Democrats Jonathan Adelstein and Michael Copps, a vocal critic of media deregulation.

Copps said the newspaper-broadcast "ban" was really a misnomer, because the FCC allows proposed newspaper-broadcast combinations to seek agency waivers. However, the FCC has routinely rejected waivers when they arose, typically in the context of broadcast mergers that require agency approval.

Court considerations

Prominent media outlets, feeding on critical comments made by Copps, have described Powell as hell-bent on removing all of the media-ownership barriers within his realm. But the chairman's defenders say the FCC is responding to demands by Congress and to the U.S. Court of Appeals for the D.C. Circuit, which has repeatedly rejected agency justifications for maintaining decades-old broadcast ownership rules.

In 1996, Congress instructed the FCC to modify or repeal every two years broadcast-ownership rules no longer necessary in the public interest as a result of competition.

The D.C. Circuit has scolded the agency for failing to meet its burden of proof that the rules are "necessary" and sent them back for reconsideration.

"The FCC hasn't done a good job, frankly, on that in the past," said Ferree.

The court dropped strong hints that if the agency's legal inadequacy continued, the court would eliminate the rules.

Capped out?

The biggest fight concerns the rule that caps ABC, CBS, NBC and Fox from owning TV stations that reach more than 35 percent of U.S. TV households.

Because of eroding primetime viewership due to competition from cable operators and direct-broadcast satellite carriers, the four networks say they no longer possess the kind of market power held in the 1970s, when their collective primetime shares hovered in the 90 percent range.

But NAB wants the 35 percent cap to remain. Local stations argue that an expansion in network ownership would destroy broadcasting's traditional link to local communities and turn local stations into mere feeder links for national programming.

"If we nationalize the nation's terrestrial broadcast service, then the very essence of the American broadcast system will have been lost for all time," said Wade Hargrove, a Raleigh, N.C., attorney who represents network affiliates fighting to keep the 35 percent cap.

"I share the concerns of NAB," said Rep. Elliot Engel (D-N.Y.). "If the FCC were to raise it significantly higher than 50 percent, I think there would be legislation."

Some within the FCC want to eliminate the cap because little evidence exists for keeping it and doing so would avoid another setback in the D.C. Circuit. FCC sources said the record shows that network-owned stations provide as much, if not more, local news than affiliates they don't own.

But other agency and industry sources see the cap rising to 45 percent. "That what I've been hearing," said a network lobbyist.

"They will grandfather Viacom and Fox and move it 45 percent. It's all going to work out," said Jerald Fritts, senior vice president for legal and strategic affairs, for Allbritton Communications Co.

Viacom, owner of CBS, currently reaches about 39 percent of TV households, while News Corp, owner of Fox, touches 41 percent. Both the FCC allowed the two to exceed temporarily the 35 percent limit in the wake of the D.C. Circuit's rulings.

Opposition to raising the 35 percent was also voiced by media mogul Barry Diller, a Democrat who has lobbied the FCC for broadcast and cable deregulation when it suited his business interests.

Diller declarations

Diller, chairman of Internet company USA Interactive, said in a speech last Monday that the climate is ripe for more regulation not just of the broadcasting "oligopoly," but also of the cable and DBS industries.

Although he was less than precise, Diller said, "Having tight program-ownership and financial-interest rules for the already completely concentrated cable and satellite business is mandatory."

The FCC had rules that restrict the number of channels a cable operator may fill with affiliated programming. But those rules were struck down and remanded by the D.C. Circuit in March 2, 2001.

Diller gave implicit support for requiring the networks to turn over primetime hours to outside creators. "Ten years ago, independents produced 16 new series. Last year, they produced just one," Diller lamented.

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