FCC May Loosen Ownership Rules

Television and radio station prices may rise as a result of a government proposal Thursday that would allow broadcasters to own two TV stations or a TV and radio station in some markets.

The Federal Communications Commission’s proposals, which the industry had expected for months, would relax some restrictions and scrap others. Companies could broaden their reach in certain markets, for instance, by owning a UHF and a VHF station in a market. That likely would boost the value of UHF stations, which have weaker signals and reach fewer homes.

“Prices would go up,” said Howard Stark, president of Howard Stark Media Brokers in New York. “The big guys would get bigger, the small guys would get smaller and go out of business.”

However, he said, this wouldn’t happen at the rate the radio industry saw in recent years after ownership rules were loosened “and prices went crazy.” With fewer “small guys” in the TV business, Stark said, there are only so many possible sellers. Many UHF stations already are owned by larger companies, he said.

And while the FCC’s proposals would be significant for certain markets, they’re “not that dramatic” overall, said Phillip Spector, communications lawyer and partner in the Washington law firm of Paul, Weiss, Rifkind, Wharton & Garrison. That’s because this year’s massive telecommunications law rewrite already eased restrictions on broadcast ownership and required the FCC to write new rules.

“The intention is to liberalize broadcast ownership rules, while making the rules that remain more effective and enforceable,” said Andrew Schwartzman, executive director of the Media Access Project, a public interest law firm.

Representatives of large-group station owners Walt Disney Co.’s ABC, Westinghouse Electric Corp.’s CBS and General Electric Co.’s NBC weren’t immediately available to comment.

The National Assn. of Broadcasters, an industry group, said it was studying the proposal.

One potential flash point is proposed changes in how to calculate how many stations a company can own. Companies have used flexibility in the existing rules to maintain ownership stakes in properties they’re otherwise prevented from owning.

The telecom law, passed in February, increased the proportion of American households a broadcaster’s stations can reach.

The law also removed a national cap on the number of radio stations one company can own; and increased to eight the number of radio stations one company can own in a market. The law didn’t change the per-market limits on TV station ownership, and the FCC’s looking for industry guidance on that too.