Revised Regulations Already the Status Quo

Critics of the Federal Communications Commission’s new rules on media ownership say the changes probably will have a negative effect on everything from the education of children to the welfare of our democracy.

But all the commission actually has done is allow the oligopoly of major companies that dominate the media landscape -- including News Corp., Viacom Inc. and Tribune Co., owner of the Los Angeles Times -- to keep what they have and grow a bit more.

Each of the three already is operating outside the existing guidelines: Tribune through its ownership of TV stations and newspapers in the same cities, such as KTLA-TV Channel 5 and The Times, and News Corp. and Viacom by exceeding the 35% cap on what percentage of the country a single company’s TV station group can reach.

By relaxing the newspaper-TV rule in major cities and lifting the overall station cap to 45%, the commission has both brought such companies into compliance with the new law and left them room for further expansion.

“There were no surprises,” said Michael R. Gardner, a Washington-based attorney representing independent TV producers seeking protection from networks owning the vast majority of programs they air.

“It was like the commission said, ‘We’ve got to take care of what we’ve already waived and then give them a little more growth room.’ ”

Although that may not lead to a huge surge of acquisitions by the biggest companies, the less restrictive rules do open the door for a flurry of deals that could further consolidate ownership -- but probably will not fundamentally change the industry dynamics that currently exist.

Indeed, the road map for revising the rules has been drawn for some time. FCC Chairman Michael K. Powell established what direction he was heading long ago, stating during an October 2001 speech that monopolies weren’t necessarily bad as long as viewers were well-served by them.

Powell said at the time that the commission had viewed the issue “only from the perspective of the eyes and ears of the consumer.”

Still, critics and public-interest groups clung to slim hopes that the commission could be swayed. They were especially heartened when Republican FCC member Kevin J. Martin broke ranks with Powell and derailed an effort to deregulate the local telephone market. But the public outcry they had hoped would find its way to the debate over media ownership rules didn’t materialize.

Critics say the public stayed mute largely because the very media outlets charged with informing it -- particularly in TV and radio -- ignored the issue until the die was cast.

The explosion of options available to consumers, with the average U.S. home receiving almost 100 channels, has hindered warnings about less diversity from taking root. Against that backdrop, arcane discussion about the one-sixth of U.S. homes that rely exclusively on broadcast television (granted, a constituency of more than 40 million people) or TV stations’ public-interest obligations proved to be a nonstarter.

Despite the split Monday, with Democratic Commissioners Michael J. Copps and Jonathan S. Adelstein opposing the changes in the 3-2 vote, it is misleading to cast the debate solely in partisan terms.

The seeds were planted by the 1996 Telecommunications Act, when the Clinton administration’s FCC dramatically unfettered radio and paved the way for a similar course in television.

To the extent critics influenced the rule-making, their efforts were visible less in what was agreed to Monday than the language used to justify it. Although various cross-ownership rules were relaxed -- such as those governing TV and newspapers -- the commission’s news release accentuated the limits being imposed to “protect diversity, localism and competition.”

The FCC also provided a small concession by saying that when a company owns multiple TV stations in one city, the stations must air different programs to fulfill the Children’s Television Act, a provision requiring them to schedule a few hours each week aimed at enriching kids. Dale Kunkel, a professor of communication at UC Santa Barbara, said that provision acknowledges the duty of broadcasters toward children but in the broader picture amounts to “a finger in the dike of a dam that’s being blown up.”

The commission’s biggest challenge has been justifying that its review is grounded in today’s reality. Not surprisingly, critics were unmoved by the elaborate formulas invoked, including the rule the FCC preserved that benefits major station owners by mathematically halving UHF stations (channels 14 and up) in terms of their contribution toward the ownership cap.

But since the vast majority of Americans subscribe to cable, critics say, there’s no longer any sense in giving UHF stations less value than their VHF counterparts (channels 2 through 13), because on cable there’s no distinction.

“There’s no logic at all for that discount,” said Jonathan Rintels, executive director of the Center for the Creative Community.

Even some network officials privately concede that it’s unclear how allowing stations to blanket 45% of the country is any less arbitrary than limiting them to 35%. Moreover, under the previous parameters, News Corp. and Tribune wield enormous influence over the TV syndication market by virtue of which reruns they buy for their stations in top cities. Letting them grow larger, critics say, only slightly exacerbates an already imbalanced situation.

Media conglomerates -- which had sought even greater freedoms -- were careful not to appear as if they were celebrating. A spokeswoman for News Corp. called the relaxed rules “an important step toward recognizing the realities of today’s broad and competitive media market.”

The question is: Who is competing with whom? As even media mogul Barry Diller has observed, the conglomerates forged since 1996 are so vast as to bar the entry of new players, affording those companies “such overwhelming power in the marketplace that, in fact, everyone has to do essentially what they say.”

Whether under the rules as they were or the rules as they have become, that seems unlikely to change.

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(BEGIN TEXT OF INFOBOX)

Changing landscape

How many properties a company can own in each city depends on the size of the market. Some examples:

Large market: Los Angeles

Company may own: Three TV stations, eight radio stations, a newspaper and cable systems.

Medium: Memphis, Tenn.

Company may own: One TV station, four radio stations, a newspaper and cable systems, or two TV stations, eight radio stations and cable systems but no newspaper.

Small: Juneau, Alaska

Company may own: Cable systems plus one of the following: one TV station, one newspaper or five radio stations.

Researched by Times staff writer

Edmund Sanders

Los Angeles Times

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Who’s getting a piece of the pie

Some win, others lose in a regulatory derby triggered by the Federal Communications Commission’s review of media ownership rules.

Winners:

Newspapers: Chains such as Tribune Co. and Belo Corp. have been lobbying for years to kill the ban on owning a newspaper and TV station in the same market. Expect swaps and some mergers between station groups and newspaper chains. Tribune gets to keep the Los Angeles Times and KTLA.

Major networks: New 45% limit on broadcast groups’ coverage of the national TV market, an increase from 35%, means Viacom, which owns CBS, and News Corp., which owns Fox, won’t have to divest some stations. NBC gets to keep its three Los Angeles TV stations -- KNBC and two Telemundo stations, KVEA and KWHY.

Michael K. Powell: On the heels of a messy telephone deregulation defeat, the FCC chairman proves he can push through his agenda.

Investment bankers: A wave of station-swapping and consolidation could keep Wall Street deal-makers busy.

Lawyers: Let the lawsuits begin. Court challenges are expected from many sides.

Losers:

Network affiliates: Large TV station chains, such as Hearst-Argyle Television, and National Assn. of Broadcasters fear major networks will buy more TV stations, giving the networks more control over what’s on TV.

Radio companies: No expansion of existing local ownership caps. Future growth by Clear Channel, Infinity and others could be in question as industry copes with new market definitions.

Hollywood producers/writers: Larger, more powerful entertainment conglomerates mean fewer places to pitch scripts and sell new shows.

Advertisers: MediaCom and other agencies say consolidation will drive up TV ad rates.

FCC staff: Unless Congress changes the law, busy staff will begin the next biennial review of media rules by year’s end.

Researched by the Federal Communications Commission and Times staff writer Edmund Sanders

Los Angeles Times