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New Rules May Not Stand

Lawmakers, lawsuits could stall FCC dereg order

WASHINGTON

Broadcasters and newspaper publishers looking to buy TV stations might want to wait before making a trip to the bank, as Congress takes a stab at the FCC's contentious June 2 order loosening restrictions on media ownership.

Watchdog groups have threatened lawsuits and a key Senate panel, in a show of bipartisan backlash, passed a measure reversing the FCC's nationwide TV ownership and newspaper -- broadcast cross -- ownership orders-even before the rules found their way into the Federal Register.

It's not clear that the measure, passed by the Senate Commerce Committee's voice vote, will enjoy the same success on the full Senate floor, not to mention in the House, where FCC Chairman Michael Powell enjoys the support of Commerce Committee Chairman Rep. Billy Tauzin

(R-La.). But dealmakers may be holding back.

"I don't think there's going to be a lot of deals based on [the new rules] because the expectation is these are marching right to court and you're not going to see these rules much longer," Precursor Group analyst Rudolfo Baca said at a Media Institute luncheon just prior to the Senate panel's action.

ROLLING IT BACK

Sponsored by Ted Stevens (R-Alaska), chairman of the Senate Appropriations Committee, and Fritz Hollings (D-S.C.), top Democrat on the Senate Commerce Committee, the measure would not change the new television duopoly rules. But the panel did adopt an amendment by Byron Dorgan (D-N.D.) that would roll back the new rights won by newspaper owners to buy broadcasters in their markets. The bill would also forbid the "grandfathering" of stations that exceed the 35 percent cap, meaning that Fox and Viacom would have to sell off stations.

Critics of the FCC action hailed the panel vote as vindication for their position. FCC Commissioner Michael Copps, who spearheaded opposition to the June 2 rulings, called on the commission to stay its decision.

Copps had warned the FCC of awakening a "sleeping giant-the American people," he reminded his colleagues.

"Now, just 17 days later, and even before the final Commission item is out the door, the people's representatives on the Senate Committee on Commerce, Science and Transportation have rolled back the Commission's 3-2 decision," he said in a statement. "This strong and bipartisan Committee action should flash the orange light of 'slow down and prepare to stop' for those media companies rushing to buy, sell or swap stations all across America."

His Democratic colleague Jonathan Adelstein echoed the call for a stay.

"This is what happens when an agency ignores an outcry from Congress and the public to slow down and tread cautiously," he said in a statement. "The FCC ran right through the warning lights and into a guardrail."

NAB opposed raising the cap but supported the loosening of cross-ownership restrictions, and it issued a statement opposing the measure.

Just two days earlier, ABC dropped its NAB membership over the trade group's opposition to raising the 35 percent cap on nationwide reach. In a letter to NAB President and CEO Eddie Fritts, Disney Corp. government relations chief Preston Padden blasted NAB's "jihad" against the networks.

"For two years, we have endured (and helped to pay for) a non-stop stream of network bashing letters, lobbying and legal filings," he wrote. "It exceeds even Washington's liberal allowance for cynicism for the owner of a group of 63 or 34 stations to claim that they are 'local' in each of their markets while ABC cannot be considered truly 'local' in the mere 10 markets where we operate stations!" Padden wrote.

But the effect may be more symbolic than anything else. NAB spokesman Dennis Wharton said ABC paid about $500,000 in annual dues-not much in a $50 million budget.