Ownership Rules Coming Into Focus
May 15, 2003
The hubbub over the expected liberalization of the nation's media ownership rules is rising, with Congress adding to the noise and the FCC's two democrats calling for a public airing of the new rules and a delay in the commission's June 2 vote.
But all indications are that FCC Chairman Michael Powell will stick to the schedule, as bits and pieces of the nation's new media ownership map trickled from the commission.
May 14, Commissioner Kathleen Abernathy confirmed reports that rules governing local ownership-such as the newspaper-broadcast cross-ownership restriction and the limits on television duopolies-would likely by loosened, with a "diversity index" used to help the commission determine if a particular merger would be allowed.
On duopolies, she said that she would not be opposed to even "triopolies," or a single entity owning three television stations in very large markets, as long as a single owner did not own more than one of the market's top four stations.
But, reporters asked Abernathy, what if a powerful owner gains control of a market's top station, along with two minor players, and then invests heavily in the two under-performers, driving up their numbers until three stations have taken spots in the top four?
Abernathy said her business instincts tell her that wouldn't happen; second-tier stations are often niche operations, and broadcasters don't want to cannibalize their top stations' market by raising the weaker station up to that level
"[Even in the] worst-case scenario, I generally support the rules," she said. She added that the commission was supposed to review the rules every two years to correct exactly that type of unintended consequence, although it took the FCC six years to produce the first biennial review.
Meanwhile, bipartisan groups of lawmakers sponsored identical bills in the House and Senate that would freeze the nationwide ownership cap at 35 percent, obviating the FCC's review of that rule. And the Senate Commerce Committee had it out with proponents and opponents of relaxing the rules at a hearing May 13 and demonstrated further that the media ownership debate does not line up neatly along partisan lines.
Sen. Conrad Burns (R-Mont.) said he and other representatives of livestock-producing states could understand concern of anticompetitive practices.
"We have suffered in our states from concentration and we understand what it does and what it's going to do the industry that's number one in each one of our states," he said. "We're seeing three packers kill 85 percent of the fat cattle in this country."
A few senators on the panel, notably Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine) warned of stark consequences should the rules be relaxed. Chairman John McCain said the committee would hold another hearing on the issue before June 2.
Jim Goodmon, president and CEO of digital pioneer Capiol Broadcasting Co. in Raleigh, N.C., pleaded for retention of the 35 percent nationwide ownership cap, saying that O&Os never pre-empt network programming for local coverage as affiliates do.
Viacom CEO Mel Karmazin, whose company has bumped against the 35 percent nationwide ownership cap, told the panel that the quality of free network program was in jeopardy without increased caps. And he spoke against delaying the FCC decision.
"I have a great deal of respect for all five members of the FCC," said Karmazin, whose company posted net earnings of $726 million on revenues of $24.6 billion in FY 2002. "If they believe they needed more time, they would have taken more time. But if they believe they have exhausted the study, and that they have a conclusion, then I say this body should let them do their work and let them come out with their report and order."
Two of those five members, democrats Michael Copps and Jonathan Adelstein, have asked Powell to delay the June 2 vote and release the proposed rules beforehand. May 14, 92 democrats and one independent from the House joined in with a request of their own for a delay.
"The notion that a handful of corporations and their executives could wind up controlling much of the information, news and cultural options available to Americans should be a chilling concept to most people," they wrote Powell.