FCC Staff Said to Back Easing of Media Caps

The Federal Communications Commission is preparing to relax its rules to let a single company own up to three television stations and one newspaper in large markets such as Los Angeles and New York, according to sources familiar with agency plans.

Current regulations limit companies to two TV stations in a market and prevent a company with TV stations from owning a newspaper in the same market.

In an FCC staff report to be delivered to commissioners Monday, officials also will recommend allowing TV broadcasters to reach up to 45% of U.S. households rather than the current 35%, sources said.

An FCC spokeswoman declined to comment.

The staff recommendation is subject to change until a final vote, scheduled for June 2, by the agency’s five commissioners.

In a victory for FCC Chairman Michael K. Powell, however, the Republican majority appears ready to support it.

“This was a big test of his leadership, and so far he’s done a remarkable job,” an FCC official said.

The rules review promises to reshape the U.S. media market, spurring further consolidation and affecting how Americans are entertained and informed.

The staff report will recommend allowing TV station mergers, called duopolies, in small and mid-size markets, using a tiered system that permits consolidation in markets with at least six TV stations, sources said.

In smaller markets, duopolies and TV-newspaper cross-ownership still will be disallowed to preserve diversity.

Although current FCC rules ban TV-newspaper combinations, a few exist through exemptions. Mergers between two local TV stations are permitted only in markets where there are at least eight remaining stations.

Critics say relaxing the rules will give media giants greater power over information and entertainment.

For example, the proposed rule changes would permit companies such as News Corp. -- which owns two TV stations and a newspaper in New York -- to keep its media properties. Tribune Co. -- which owns The Times and KTLA-TV Channel 5 pending the station’s license renewal -- could expand further in Los Angeles.

On Friday, Reps. Richard M. Burr (R-N.C.) and John D. Dingell (D-Mich.) introduced a bill to keep the national TV cap at 35%.

Proponents of relaxation, including Tribune, say the reforms are needed to reflect the rise of cable television and the Internet and to ensure the survival of free over-the-air TV.

Amid opposition inside and outside the agency, FCC Media Bureau Chief W. Kenneth Ferree, charged with drafting the report, has backed away from a plan to use a mathematical-based “diversity” formula to determine how many media outlets a company can own in the same market. The index will be used solely as evidence to support other rules, sources said.

The staff report also will recommend leaving the FCC’s local radio station caps unchanged and keeping the “dual-network” rule, which bans mergers among any of the top four networks: ABC, CBS, Fox and NBC.

The staff report also recommends against altering the so-called “UHF discount,” which is used in the national TV cap and counts the audience of UHF stations at only 50%. It was imposed because UHF stations typically have weaker signals. But cable and satellite now carry VHF and UHF stations to millions of viewers, making the rule less relevant.

Eliminating the discount would push several broadcasters over the cap, however. For example, Paxson Communications Corp., which currently is judged to reach about 30% of the TV audience, would jump to 60%.