TV Firms Appeal Limits on Ownership

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In a courtroom showdown that will affect television programming nationwide, lawyers for Viacom Inc. and other media giants today will ask a federal appeals court to overturn limits on the number of stations they can own.

The closely watched case stems from an earlier challenge by Fox and other networks to the Federal Communications Commission’s rule restricting ownership to a reach of 35% of the national audience. This comes as federal regulators grapple with a wave of consolidation that has slashed the number of television station owners by half since 1995.

For the record:

12:00 a.m. Sept. 27, 2001 FOR THE RECORD
Los Angeles Times Thursday September 27, 2001 Home Edition Part A Part A Page 2 A2 Desk 2 inches; 56 words Type of Material: Correction
Station ownership--A Sept. 7 article in the Business section about television ownership restrictions implied that Marquette University journalism professor Lawrence C. Soley favored more relaxed federal rules on TV station ownership. In fact, Soley believes the Federal Communications Commission should be more restrictive and not allow any broadcaster to own more than seven TV stations.

In the last decade, Congress and federal regulators have repeatedly relaxed TV-ownership restrictions.


But Viacom and all the television networks (except Walt Disney Co.’s ABC) say the government has not gone far enough. They want the U.S. Court of Appeals in Washington to throw out two remaining limits: a law that bars one company from owning stations that reach more than 35% of U.S. television households; and a measure that, in effect, prohibits companies from broadcasting TV shows in areas where they own cable TV systems.

At stake is how the federal government should regulate the powerful media companies that deliver news, information and entertainment to the nation.

“By preventing existing entities from expanding, the national ownership cap hinders competition and diversity to the detriment of the public at large and deprives certain localities of the kinds of superior programming that only a national broadcaster is able to provide,” Fox Television Inc. and the other networks said in their brief.

Representatives of Fox, the lead plaintiff among the networks, declined to comment, citing the pending litigation. In court filings, however, the networks say existing rules are arbitrary and violate their constitutional right to free speech.

An FCC spokesman said: “Our brief speaks for our point of view.”

Federal ownership limits have been raised from three stations a half-century ago to an unlimited number of stations in 1996, as long as the stations reach no more than 35% of the national TV audience. As a result, fewer than 370 entities own one or more of the nation’s 1,348 commercial television stations today, down from 749 station owners in 1995, according to research firm BIA Financial.

Experts predict that a repeal of either the 35% ownership cap or the cable-broadcast ownership restrictions would unleash a new round of consolidation that might reduce the number of television station owners to a few dozen.


They also say it is unlikely the three-judge appeals court panel will decide clearly in favor of either side.

“If this were being done entirely on the merits, the FCC should win. But neither side will get a clear-cut victory,” said Harold Feld, an attorney for Media Access Project, a Washington-based media watchdog group. Instead, Feld said, “the odds are very good that the court will send this back to the FCC for a rule-making decision rather than repeal the existing rules.”

The media giants and some experts have long contended that the decades-old restrictions on media ownership, designed to encourage diversity of programming, are outdated in an era of dozens or more cable channels and a virtually limitless Internet.

“Things have changed a lot,” said Lawrence W. Soley, a Marquette University journalism professor. “Once upon a time, we had media barons . . . who tried to shape public opinion,” Soley said. But today, “with so many media companies being public companies, they are much more interested in making money. News is just a commodity now. That makes it a little less exciting to tinker with.”

Still, media watchdog groups say that without federal restrictions, the marketplace of ideas will be controlled by a handful of powerful media companies.

“These rules served us well with old media; they are even more essential in this era of convergence,” said Jeff Chester, executive director of the Center for Media Education, a Washington media advocacy group.