Ruling on Empty

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Powerful forces are forming in the Senate, in a likely uphill campaign to nullify as much as possible new broadcast-ownership rules adopted last Monday by a politically divided Federal Communications Commission, under chairman Michael Powell.

Within hours of the 3-2 vote, key senators broke from their routines to denounce the FCC for dropping barriers to media consolidation that have withstood the test of time in ensuring that Citizen Kane
remained a cinematic fantasy, and not a marketplace nightmare.

"I think this is a horrible decision," said Sen. Byron Dorgan (D-N.D.), who took turns with Sen. Fritz Hollings (D-S.C.) and Sen. Trent Lott (R-Miss.) at blasting the FCC before studio cameras on Capitol Hill. Dorgan said the FCC plan, if not stopped, would produce "an orgy of mergers and acquisitions."

Hollings accused Powell of ignoring appropriate legal procedure and massive public outcry in order to rush a decision out the agency door, over the objections of the FCC's two Democrats, Michael Copps and Jonathan Adelstein.

'Force fed'

"I would really ask that you look at those minority opinions, because this isn't a commission decision. It's a 3-2 decision, and really force-fed, in a sense, by the chairman, Powell, himself," Hollings said.

Lott, addressing the decision to allow the major broadcast networks to buy more stations, said in less personal terms, "I think this is a mistake."

The FCC spent 20 months crafting the rules. Powell failed to gain any support from either Copps or Adelstein, both of whom became increasingly condemnatory in their rhetoric in the days leading up to the June 2 vote and later.

In general terms, the new FCC rules allow NBC, CBS, ABC and Fox to own more TV stations. They also permit one company to own two or three TV stations, one or more newspapers, and several radio stations in the same market, depending on the number of TV and radio stations that serve the particular locality.

For example, at their most flexible point, the rules authorize one company in a market with at least 18 TV stations and at least 45 radio stations to control three TV stations, one or more daily newspapers and eight radio stations.

Yet, in the 30 markets with three or fewer TV stations where the rules would remain tight, no TV-radio-newspaper cross-ownership would be allowed. In no market in the country may any of the four top-rated TV stations merge among themselves.

The rules are intended to guide the industry in crafting mergers that would not meet regulatory resistance from the FCC.

In theory, the local cable company could acquire a TV-newspaper-radio conglomerate in the same market. But such a deal would likely face much closer examination by the FCC, the Justice Department or the Federal Trade Commission.

The first test of Powell's rules comes June 19, when the Senate Commerce Committee is expected to vote on a bill (S. 1046) that would overturn the new rule that allows a single TV-station group to reach 45% of all U.S. TV households with its off-air signals, up from the current 35%.

"There is no reason why I shouldn't allow it to be marked up and voted up or down by the committee," McCain told reporters last Wednesday.

McCain's view

McCain, though, said he does not support the bill restoring the 35% cap — or any attempt aimed at reversing the FCC's ruling.

He would not predict whether the 35% bill, sponsored by Hollings and Sen. Ted Stevens (R-Alaska) would pass the committee.

"I haven't got the full count. But the sentiment of the committee is clearly of significant concern," he added.

The National Association of Broadcasters, a network-affiliate organization which strongly supports the 35% cap as a means to keep the major networks in check, is likely to decide whether to support the Hollings-Stevens bill at a broad meeting here on June 11 and June 12.

"Our position is that we support the 35% cap," said NAB spokesman Dennis Wharton.

In the House, Republican leaders voiced support for Powell, making it unlikely legislation overturing the FCC would reach President Bush's desk.

Both Rep. Billy Tauzin (R-La.), the House Energy and Commerce Committee chairman, and Rep. Fred Upton (R-Mich.) praised the FCC for completing the rulemaking and responding to court pressure that the old rules were contrary to law.

Tauzin noted that the 35% cap was struck down by the U.S. Court of Appeals for the D.C. Circuit last year.

Proponents of legislation to reimpose the 35% cap had better understand that the measure would likely lose again in court — and they'd end up with no cap at all, he said.

"They might get the worst of all worlds if [they] aren't careful," Tauzin told reporters last week on a conference call. A House bill (HR 2052) that would restore the 35% cap would have to clear Upton's and Tauzin's committee.

All five FCC members testified for nearly four hours before McCain's panel last Wednesday, giving Powell a chance to explain his decisions to many skeptical lawmakers who accused the commission of abandoning the public interest to serve corporate interests.

As he has before, Powell recounted that Congress in 1996 and the D.C. Circuit several times have required the FCC to modify or repeal every two years broadcast-ownership rules that are no longer necessary to promote competition.

After a string of court defeats in recent years, Powell said the agency has been left little choice but to relax the rules or face more judicial punishment.

"The [FCC] does not have the luxury of always doing what is popular. I believe we did our job, and I believe we did our job well," Powell told the committee.

In his opening comments, Hollings ridiculed the idea that courts insisted the FCC relax the 35% cap.

GOP dissent, too

"Absolutely false — and [Powell] knows that. He's a good lawyer," said Hollings, who believes the FCC should have gathered legally sustainable evidence to support a 35% limit.

Republicans did not flock to Powell's side.

Sen. Kay Bailey Hutchison (R-Texas) said she was troubled by existing newspaper-TV combinations in Atlanta by Cox Enterprises Inc. and in Dallas by Belo Corp.

"I don't want to see other cities get into that kind of concentration, and you have allowed that with your proposed ruling and it concerns me greatly," Hutchison said.

Sen. Olympia Snowe (R-Maine) complained about the whole package.

"Most assuredly, it is a victory for free enterprise, but it is not a victory for free speech," Snowe said. "In the meantime, I do think the Congress will have to intervene to review and reconsider."

In Powell's defense, Sen. John Breaux (D-La.) supported moving the cap to 45%. He agreed that if the FCC had preserved the status quo, the court would vacate the rules.

Sen. Peter Fitzgerald (R-Ill.) noted that in Chicago the Tribune Co. has owned the Chicago Tribune newspaper and a television station for many years, without any of the public interest harms cited by supporters of the newspaper-TV crossownership ban.

"On balance, I think you have done a pretty good job," Fitzgerald said.

To block the FCC, lawmakers are considering stand-alone legislation, or may attach to the FCC's next spending bill a provision that would deny the agency the power to use federal money to implement the new rules, effectively gutting them.

Dorgan: let's review

Dorgan said he was considering invoking the Congressional Review Act, a 1996 law that gives Congress an avenue to veto regulations promulgated by a federal agency. In early 2001, Congress used the law for the first and only time to kill workplace ergonomics rules that had been adoped by the Clinton Administration's Labor Department.

In a related media move, a broadcasting lobbyist said Dorgan was also considering an amendment to the Hollings-Stevens bill that would require cable companies that own programming networks to give nondiscriminatory treatment to unaffiliated networks — a proposal floated last month by Yankees Entertainment & Sports Network chairman and CEO Leo Hindery.

<p>CON</p><p>PRO</p>

Sen. Ted Stevens (R-Alaska)

Rep. Billy Tauzin (R-La.)

Sen. Fritz Hollings (D-S.C.)

Sen. John Breaux (D-La.)

Sen. Byron Dorgan (D-N.D.)

Sen. Peter Fitzgerald (R-Ill.)

Sen. Olympia Snowe (R-Maine)

Rep. Fred Upton (R-Mich.)

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