Media-Ownership Cap Debated

Author:
Updated:
Original:

Sen. Fritz Hollings (D-S.C.) said Tuesday that he plans to intrude
legislation that would force the Federal Communications Commission to notify
Congress of any rule change to relax media-ownership limits.

The bill would also delay the implementation of an ownership-cap change for
18 months.

Hollings discussed the idea as he grilled Viacom Inc. president Mel Karmazin
and other media executives at a Senate Commerce Committee hearing on media
consolidation.

Karmazin argued during his testimony that an FCC rule that limits his CBS and
other broadcasters from owning stations that reach more than 35 percent of U.S.
homes should be repealed.

The proposed Comcast Corp.-AT&T Broadband merger and a possible News
Corp. acquisition of DirecTV Inc. were among the factors Karmazin cited for
justifying that the ownership cap be lifted.

'In order for us to compete against them, we need to have a stronger free,
over-the-air broadcasting system, and I believe we need to see changes that have
to be made in order to have a fair seat at the table with these companies that
consolidate,' he added.

Networks like CBS, Fox and ABC want the ownership cap
lifted, and three of the 'Big Four' broadcast networks bolted the National Association of
Broadcasters after the lobbying group wouldn't support its stance. ABC
is still a member. The companies argued that with declining profit margins in
the network business, they need more owned-and-operated stations, which are more
profitable.

Most smaller station-group owners are opposed to lifting the cap.

Echoing the sentiment of Hollings and some other members of the Commerce
Committee, Post-Newsweek Stations Inc. president Alan Frank testified Tuesday
that localism and diversity would be threatened if the cap were lifted.

'When NBC told its affiliates last fall to air game one of the American
League Playoffs instead of the first presidential debate, it was the affiliates
that complained, and ultimately, the network relented and allowed the affiliates
to pre-empt the baseball game for the debate. Allowing the network to own more
stations means that next time, there will be no local pressure to correct the
network's bad judgment,' Frank said.

Tribune Co. president Jack Fuller asked the committee to lift the
newspaper-broadcast cross-ownership rule, noting that the rule makes it more
difficult for companies like Tribune to compete with Internet news sites, cable
channels and other new media.

Sen. John McCain (R-Ariz.) supported lifting the station-ownership cap,
pointing out that the networks' primetime audience share has declined from 71
percent in 1996 to 58 percent last year.

Sen. John Breaux (D-La.) called the diversity and localism argument 'a
smokescreen,' insisting that both network- and affiliate-owned stations realize
the importance of covering local news. 'It's good business. People buy ads when
they see local news being covered and community affairs being covered,' he
said.

Sen. Ron Wyden (D-Ore.) sounded an alarm on the entire
cap issue, painting a scenario in which AOL Time Warner Inc. could buy AT&T
Broadband, which, in turn, could snatch up NBC along with radio and TV stations.
'You could have a single massive media company in the country,' he said.

Related