Pressure Mounts for FCC to Rewrite Television Ownership Guidelines

The Federal Communications Commission, under new management in the Bush administration, is being pressed by a handful of giant media companies to undo decades of regulations aimed at promoting a diversity of voices in the media.

At a meeting today, the FCC is expected to take an initial step by modifying its “dual network” rule, which bars the four major TV networks from owning either of two smaller upstarts. The FCC’s action would allow Viacom Inc. to keep both CBS, which it purchased last year, and the UPN television network, which it launched in 1995.

That FCC action would come on the heels of recent moves by the federal courts to peel back rules that have kept media companies from becoming even more powerful.

The outcome of all this could reshape the ownership of broadcast television in America.

The media giants--among them the owners of the four major networks and Tribune Co., which owns newspapers and TV stations, including the Los Angeles Times and KTLA-TV--contend that the proliferation of Web pages, cable TV channels and other media outlets has made the patchwork of current rules obsolete.

Media watchdog groups and independent broadcasters, however, contend that without those restrictions, a handful of media companies will become as dominant in their field as their counterparts are in the heavily consolidated airline and banking industries.

Such consolidation, they say, threatens public discourse by narrowing the diversity of voices controlling the nation’s powerful mass media.

The number of television station owners already has dropped by half since 1995 because of deregulatory changes Congress approved in the Telecommunications Act of 1996. Just 370 entities owned one or more of the nation’s 1,348 commercial television stations at the end of 1999, down from 749 station owners in 1995, according to BIA Financial, a Chantilly, Va., research firm.

“Concentration of ownership is a bad thing,” said Wade Hargrove, a Raleigh, N.C., lawyer who represents affiliates of ABC. “There is the fear that [the networks] will buy up local stations and convert them into passive conduits for national programming” instead of serving local interests.

Added David E. Honig, executive director of the Minority Media Ownership and Employment Council in Washington: “Given the extent of the digital divide” between rich and poor, “it is really premature to think that the Internet or cable is going to be a meaningful replacement of diverse content for over-the-air TV.”

But opponents of current restrictions have made significant headway in recent months, thanks to a sympathetic federal bench and the free-market leanings of FCC Chairman Michael K. Powell.

Besides moving to allow one TV network to buy another, Powell has promised to launch a review next month of the current federal ban on newspaper and broadcasting cross-ownership.

The pledge comes only weeks after the U.S. Court of Appeals in Washington struck down rules that limited how large cable companies could become. At the same time, the court questioned the soundness of FCC regulations that limit the national reach of television broadcasters to 35% of TV households.

Large media companies have rejoiced. “We are for broad . . . deregulation of all the broadcast ownership rules [because] broadcasting today is just one piece of the growing TV landscape,” said Preston Padden, executive vice president of government relations for Disney Co., which owns ABC.

Cable News Network had a corner on 24-hour news a few years ago, Padden said, but now has been joined by Fox News and MSNBC. “Even if a television network owned all of its affiliates and had a blockbuster night, you’d still be talking about them reaching only about 10% of the potential TV audience,” he said.

NBC and CBS have brought suit in federal court to eliminate the 35% cap on the national audience reached by a single broadcast owner. Their efforts to expand their media holdings have deepened the traditional division between the networks and smaller station owners, which fear the networks will gobble up choice independent stations and use their programming clout to marginalize independents.

“If the ownership cap is released, consolidation would continue [and] reduce the amount of local weather, news and other programming. I can’t image that would benefit viewers,” said Andy Fisher, president of Cox Television, a unit of Cox Enterprises Inc., which owns 15 AM radio stations, 40 FM stations and 15 television stations.

Underscoring the concern, more than 600 local television stations in March petitioned the FCC to restrain the networks from controlling local programming. They called on the agency to adopt rules to prevent the networks from interfering with stations’ sales.

CBS and NBC responded by resigning from the National Assn. of Broadcasters to protest the trade group’s support for continued federal limits on broadcast station ownership. ABC remains a member. Fox resigned from the organization several years ago.

As their profits have thinned, the networks increasingly have relied on their affiliates for financial support and acquisition opportunities.

The affiliates, meanwhile, fear becoming intermediaries in a fast-changing media arena in which video content finds expanded outlets on the Internet, cable and satellite. As a result, many are pushing their own lists of ownership rule reforms.

Tribune--which last year acquired newspaper and TV stations that gave them one of each in New York and Hartford, Conn., as well as Los Angeles--has petitioned the FCC to waive or eliminate a rule that bars companies from owning a newspaper and television station in the same market.

“We have been the poster child for everyone on this issue,” said Shaun Sheehan, a Tribune vice president. “Our whole point is that in the modern age . . . with the huge growth in media outlets . . . the scarcity rationale underpinning the argument for newspaper-broadcast cross-ownership rules is now gone.”