Bringing Regulation Up to Speed

Shortly after his appointment last year as chairman of the Federal Communications Commission, Michael K. Powell surprised and delighted a cable trade show audience by performing a somersault on his way to the podium. The spontaneous stunt--a spoof of the acrobatic act that had preceded him onstage--was classic Powell, symbolizing the energy that industry leaders hoped the new FCC chief would bring to the stodgy but powerful agency.

At this year’s trade show, Powell avoided the circus acts. But he might as well have been walking a tightrope.

Seventeen months after Powell took the helm, his honeymoon is over. The chairman is facing bubbling frustra- tion over the pace of his agenda from some of the same industry leaders and conservative politicians who en- thusiastically heralded his appoint- ment.

Powell’s progress in relaxing long-standing federal media ownership rules is a particular sore spot. After being nominated to the FCC by President Clinton in 1997, Powell quickly became an outspoken advocate for scrapping or relaxing the controversial regulations that prevent television broadcasters from growing larger or merging with owners of newspapers or cable systems.

Powell, son of Secretary of State Colin L. Powell, was named FCC chairman by President Bush in January 2001. In his early months as chairman, Powell strongly hinted that media ownership rules would be phased out in short order. But today, most of the rules remain in place, with the exception of those that a federal court has thrown out.

“Powell’s rhetoric has really outrun the reality of what he has done,” said Randolph May, a senior fellow specializing in communications for the Progress & Freedom Foundation, a conservative think tank.

Last week, an impatient Rep. W.J. “Billy” Tauzin (R-La.), chairman of the House Commerce Committee and a longtime Powell supporter, nudged him to pick up the pace and wrap up a rule-making process to repeal a ban on cross-ownership of TV stations and newspapers in the same city.

Some broadcasters are threatening to go to court to force the FCC into action, something once unthinkable in a Powell administration. Broadcasters argue that they need new powers to compete against bigger rivals, such as cable companies, in local markets.

“Everyone is anxious to know what the rules are so we can plan for our business,” said Tony Vinciquerra, president of the Fox Television Network. Both Fox parent News Corp. and Viacom Inc., the owner of CBS, have overstepped rules through recent acquisitions that prevent one company from owning TV stations that reach more than 35% of the country’s viewers.

Tribune Co., owner of the Los Angeles Times, has been one of the staunchest critics of the newspaper-broadcast cross-ownership rule. As have several other media companies, Tribune has pursued acquisitions that risk violating FCC rules. Tribune owns The Times and KTLA Channel 5 in Los Angeles and was granted a temporary waiver of the rules in Orlando, Fla., where it owns a TV station as well as the Orlando Sentinel.

In an interview last week, Powell said no final action on most of the media rules was likely until early next year, as the commission gathers the data it will need to defend any new rules in court. No matter what the commission decides, legal challenges are likely.

“My timetable is not dictated by the industry preferences,” Powell said, noting that media companies complaining about his progress are those that stand to profit the most. “There are not children dying because these rules have not been passed within the first year that I’ve been chairman.... I don’t want to do this exercise four times. I want to do it right the first time.”

Speaking in his Washington office, Powell also expressed frustration with those who have cast him as pro-business and a knee-jerk deregulator.

“Sometimes it’s convenient to portray everything as an ideological agenda,” he said. “It really stinks to be a moderate. If you’re a moderate in your thinking, you really do have to wrestle....Yes, I have philosophical biases. But I am very much committed to getting a good, balanced regime out there.”

Powell’s political future, however, will hinge on his FCC record, which thus far has been thin on major accomplishments, critics say.

The 39-year-old attorney, who is sometimes mentioned as a possible congressional candidate, says he is open to running for elected office but is wary of the fund-raising demands and intrusions on privacy that accompany campaigning.

Powell defends his FCC record. His greatest accomplishment? “I’m still here,” he said with a laugh. Much of his work has been done behind the scenes, he said, to make the agency stronger and better managed. Employee attrition at the 2,000-person agency dropped to 40 last year, compared with an annual average of 140, he said.

Supporters praise Powell for his recent efforts to advance the roll-out of digital television, which has been stalled by cross-industry squabbling. And even critics cite his integrity, intellect and charisma.

Powell also notes that his plate is full with a wide range of issues, including freeing the communication spectrum, now held by broadcasters, for use by wireless companies; and propelling the media’s transition to digital technologies, including the build out of cable networks for high-speed Internet access.

“It’s a tough job,” said former FCC Commissioner Harold W. Furchtgott-Roth, a visiting fellow at the American Enterprise Institute, a Washington think tank. “In a lot of areas he’s headed in the right direction--very slowly,” Furchtgott-Roth said.

Powell said media ownership rules remain on the front burner, but he added that the issue is one of the most intractable and misunderstood faced by the commission. Past commissions have not had the courage, he said, to tackle the long-simmering dispute.

Many television executives chalk up the delay to politics and in particular to a power shift in the Senate in favor of the Democrats.

Powell, however, said the delay had been caused largely by a string of rulings from the U.S. Court of Appeals for the District of Columbia that have thrown virtually every TV ownership rule into question. In three rulings during the last 15 months, the court has suspended or questioned five key rules, including the 35% national broadcast cap, the 30% national cable ownership cap and the ban on cross-ownership of cable systems and broadcast stations in the same market.

“It would have been absolutely imprudent to move hastily without the completion of key court cases that were pending on these issues,” Powell said.

Courts traditionally have deferred to the FCC in formulating such rules, but the recent string of rulings signaled a seismic shift by the appeals court, which is demanding that the commission defend its policies with solid evidence about the risks of media consolidation and cross-ownership.

The rules were crafted during the last five decades to encourage a diversity of viewpoints and locally based programs on television and to prevent large media companies from dominating the airwaves.

But media companies say the rules have outlived their usefulness. As a commissioner, Powell agreed that new rival technologies, such as cable, satellite and the Internet, have dramatically increased the number of television channels and information outlets entering the home.

As long as competition exists, Powell and others advocate removing government rules and letting the free market determine what voices are heard on television.

“The rules cannot be justified,” said Barry Faber, general counsel of Sinclair Broadcast Group Inc., a Baltimore-based station owner that recently won a legal challenge of the FCC’s so-called duopoly rule. That rule bans companies from owning two television stations in the same market unless there are at least eight other stations in that market.

Sinclair’s suit originally was filed during the Clinton administration, but Faber said he had noticed little change in policy at the FCC under Powell. As a result, Sinclair has asked a federal court to suspend the rule pending the FCC’s review.

“We’re still concerned about how long the FCC will take to act,” Faber said.

Powell faces criticism from some key Democrats, such as Sen. Ernest F. Hollings of South Carolina, and from consumer groups that contend that the consolidation of media has reduced the number of independent voices on television.

“Powell is driven by his intellectual beliefs, but he’s short on the soul-searching required by his office,” said Jeff Chester, executive director of the Center for Digital Democracy, a media watchdog.

Earlier this year, Hollings blasted Powell for attempting to change the media ownership rules, saying Powell would be better suited to lead the Chamber of Commerce than a regulatory agency.

A comprehensive media ownership study is underway at the FCC. Powell created a media ownership task force and has ordered several studies to measure the effect of cross-ownership and consolidation.

“It takes time,” he said. “Every one of these rules is the cousin of the other. While industry can separate them if it’s in their interest to do so, I can’t.”

Some critics worry that Powell, a former antitrust lawyer at the Justice Department, is overly cautious and should worry more about the end game. He tends to avoid confrontation, analysts say, and building consensus takes longer.

Powell may be a victim of his past criticisms of media ownership rules, which created high expectations for quick action.

“In many ways, he’s trapped by his own rhetoric,” said former FCC Chairman Richard E. Wiley.