FCC to Rethink Media Rules

In the wake of a court ruling that undermined federal ownership restrictions in the cable and broadcast TV industry, the head of the Federal Communications Commission conceded Wednesday that it would be harder for the agency to justify its rules.

A federal appeals court in Washington on Tuesday ordered the FCC to reconsider restrictions that no single company can reach more than 35% of the national broadcast television audience. The court also swept aside a ban on a company owning a cable system and a TV station in the same market.

The court ruling “was a monumental case” that makes it harder for the FCC to keep its restriction, FCC Chairman Michael K. Powell said in a speech at Georgetown University.

The ruling essentially told the FCC “you have to go through some compelling analysis to keep [media rules], and if you don’t they go away,” Powell told reporters. “The commission has a very poor history of coming up with those persuasive justifications.”

Viacom Inc., owner of CBS, News Corp., which owns Fox, and General Electric Co., NBC’s owner, challenged the 35% ownership cap rule as obsolete.

The FCC, which over the last half century has tangled in federal court over such issues as cable TV access, cigarette ads and indecent speech, once again finds itself on the political hot seat. Analysts say the media industry is poised to undergo a new wave of consolidation after the court decision.

“The FCC has a peculiarly sensitive political role because they are dealing with what can go out over the airwaves,” said Ernest Gelhorn, a professor at George Mason University Law School in Fairfax, Va. “We are talking about an agency that affects entertainment, news and telecommunications--both wired and wireless. You cannot find more sensitive and important issues in American life.”

The appeals court requires the FCC to provide additional evidence that other media ownership rules are still needed. The agency is reviewing a ban on a company owning a newspaper and broadcast station in the same market. Several companies are already in violation of that rule, including Tribune Co., publisher of the Los Angeles Times, which owns newspapers and TV stations in several of the same markets.

Led by Powell, an ardent champion of free markets over regulated ones, the independent federal agency is now expected to reformulate its TV ownership rule in a way that will give media giants such as News Corp., AOL Time Warner Inc. and Viacom greater freedom to buy more TV stations.

Powell, the son of Secretary of State Colin L. Powell, already commands a political majority at the FCC, where three of the four commissioners are Republicans.

This month President Bush nominated Jonathan S. Adelstein, a Democrat, to fill the fifth slot on the FCC. But Adelstein, who has been a legislative aide to Sen. Tom Daschle (D-S.D.), will probably not be confirmed in time to participate in the FCC ownership debate.

Instead, the debate will be shaped by Powell and fellow Republican Commissioners Kathleen Q. Abernathy and Kevin J. Martin.

Abernathy, an energetic former lobbyist for the now-defunct telephone carriers US West and AirTouch Communications, has a reputation as a pro-business commissioner at the agency. But she also is a shrewd pragmatist who is sensitive to political winds.

Martin, 35, is the youngest member of the commission. Martin honed his political skills as deputy general counsel for the Bush campaign. At FCC meetings, he often hews closer to Republican free-market views than does Powell.

The one Democrat on the FCC, 61-year-old Michael J. Copps, will probably again find himself the lone dissenting voice when the media ownership limits are taken up.

Copps, who objected to News Corp.’s $4.4-billion acquisition of rival broadcaster Chris-Craft Industries, strongly defended media ownership limitations in a statement last fall after the agency agreed to review its newspaper broadcast cross-ownership rules.

“Broadcast stations and newspapers make up the center of the local marketplace of ideas, a function critical to a democratic society,” Copps said. “As competing purveyors of ideas, they have the potential to present diverse viewpoints on issues important to their communities.”

Powell has argued that FCC media ownership rules are outdated. However, confronting the 35% rule head-on, some experts say, may put him in conflict with his pro-competition sentiments.

“Michael Powell talked a good deregulatory game when he was in the minority at the FCC, but now that he is the chairman he has to tread a little more carefully,” said Eli M. Noam, an economics professor and telecommunications expert at Columbia University.

“The problem is that the de-regulatory approach” with media ownership “is not the pro-competition approach,” Noam said. “Dropping FCC regulations altogether will entrench the monopolists. So it is quite possible that Powell will end up making compromises.”

Some analysts say Powell may craft some rule that removes audience limits so long as there is no evidence of lessened competition.

Times wire services were used in compiling this report.

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FCC Membership

The Federal Communications Commission regulates the nation’s television, wire, radio, satellite and cable industries. The five commissioners are appointed by the president and confirmed by the Senate for five-year terms.

Michael K. Powell, 38, named FCC chairman by President Bush in January 2001. Powell joined the FCC in 1997 after being nominated by President Clinton. Previously, Powell served as the chief of staff of the Antitrust Division at the Justice Department. Powell graduated from Georgetown University Law Center. He is the son of Secretary of State Colin L. Powell.

Kathleen Q. Abernathy, 45, appointed to the FCC by Bush in 2001. Served as vice president of public policy at Broadband Office Communications Inc. and was vice president for regulatory affairs at US West Inc. She was an adjunct professor at Georgetown University Law Center.

Michael J. Copps, 61, appointed to the commission by Bush in 2001. Was assistant secretary of Commerce during the Clinton administration and served as chief of staff for Sen. Ernest F. Hollings (D-S.C.). Copps was a professor of history at Loyola University of the South.

Kevin J. Martin, 35, named to the FCC by Bush in 2001. Served as deputy general counsel for the Bush presidential campaign. Was an advisor to former FCC Commissioner Harold Furchtgott-Roth. Attended Harvard Law School.

The fifth commissioner post is vacant. This month, Bush nominated Jonathan S. Adelstein for the remainder of a five-year term expiring June 30, 2003. Adelstein has been a legislative assistant for Sen. Tom Daschle (D-S.D.).

Source: FCC