Senate Panel Guts Broadcast Rules

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A Senate committee voted last Thursday to overturn new media-ownership rules as part of bipartisan legislation that would require Viacom Inc. and News Corp. to sell TV stations within one year, in the unlikely event the bill became law.

The move was a direct slap at Federal Communications Commission chairman Michael Powell, whose deregulatory agenda has frightened some on Capitol Hill.

"I would like the FCC to start over," said Sen. Kay Bailey Hutchison (R-Texas), calling commission-endorsed crossownership of mass media outlets in the same market "unhealthy."

The bill (S. 1046) passed less than three weeks after a politically divided FCC agreed to allow ABC, NBC, CBS and Fox to own more stations and allow for greater consolidation among TV stations, newspapers and radio stations within their local markets.

Although the bill passed by voice vote, the measure clearly had the backing of Republicans and Democrats on the Senate Commerce Committee under chairman Sen. John McCain (R-Ariz.).

It was not clear whether the bill would reach the Senate floor. Passage would have to overcome the opposition of the Big Four networks and the National Association of Broadcasters. The NAB supported the bill before the addition of amendments that knocked out deregulatory moves the trade group had supported.

Advancing the bill in the House looked even more problematic because Energy & Commerce Committee chairman Billy Tauzin (R-La.) supports the FCC's June 2 ruling.

"We have absolutely no intention of taking up that bill. Unfortunately, this has become a political soap opera and given a chance, chairman Tauzin intends to cancel its run."

Under the Senate bill, no TV station group could own stations whose signals reached more than 35% of TV households nationally. The FCC had raised the cap to 45%. Exempting any TV group currently over the 35% limit would be disallowed. Viacom is at 41% and News Corp. is at 39%.

"We continue to believe that the FCC decision was a step in the right direction," News Corp. spokesman Andrew Butcher said after Thursday's Senate vote.

"The vote was not unexpected," added Viacom spokeswoman Susan Duffy. "But we hope that when the FCC decision gets released, people will realize that the changes proposed were modest, and in the best interests of the future of broadcasting."

The Senate bill also eliminated the FCC's decision to relax cross-ownership rules, including one that would allow a TV station and a newspaper to merge in any market that has at least four TV stations. Since 1975, such combinations have been prohibited.

Sen. Byron Dorgan (D-N.D.) pressed to roll back the new crossownership rules. By doing so, Dorgan lost NAB's support. NAB favored lowering the 45% cap to 35% but supported the FCC's crossownership policies.

"The bill ... adopts provisions that reinstate the newspaper-broadcast cross-ownership ban and require radio companies to divest legally acquired stations. Consequently, NAB will strongly oppose this legislation," NAB president Edward Fritts said in a statement.

The FCC vote split along partisan lines, three Republicans overtaking two Democrats. The new rules have been adopted but not formally released. Normally, FCC rules take effect 30 days after publication in the Federal Register.

FCC Democratic member Michael Copps, in a statement last Thursday, called on Powell to stay the rules "in light of the very real possibility that Congress will reverse" the FCC's action.

Copps also urged media companies to postpone mergers given the McCain panel's vote.

The Senate bill, sponsored by Sen. Ted Stevens (R-Alaska) and Sen. Fritz Hollings (D-S.C.), united Democrats and Republicans who fear the FCC has gone too far and a wave of mergers reducing voices in a market was gathering strength.

"The deregulation express is leaving the station unless we take corrective action," said Sen. Olympia Snowe (R-Maine).

"We are the culprits [if we let] this 3-2 decision stand," Hollings added.

In at least one instance, the Senate bill went further than the FCC in favor of deregulation.

The committee adopted an amendment offered by Stevens that would accommodate mergers among newspapers, TV stations, and radio stations in the 60 smallest markets with the approval of a state public utility commission and the FCC.

By contrast, the FCC banned crossownership in any market with three or fewer TV stations.

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