FCC Takes Up Media Ownership -- Again

The Federal Communications Commission on Wednesday restarted its controversial effort to draft new media-ownership rules -- and critics assailed the complicated process as soon as it began.

High on the list of complaints is that the public can suggest revisions to current rules but won’t be allowed to comment on any specific changes proposed by the regulatory agency.

Among other things, the new rules would determine how many television stations a company could own and would deal with a long-standing prohibition against owning newspapers and TV stations in the same market. Closely watched by media companies and consumer advocates, the rules have floundered for years as Congress and the courts found fault with previous FCC efforts and ordered the agency to try again.

Few expect the current process to be much smoother.

“This innocuous-looking document initiates the single most important public policy debate that the FCC will tackle this year,” said Commissioner Michael J. Copps, one of two Democrats on the five-member commission. “It means deciding whether or not to accelerate media concentration, step up the loss of local news and change forever the critical role independent newspapers perform for our country.”

Gene Kimmelman, a vice president at Consumers Union, publisher of Consumer Reports magazine, lamented the “widespread public concern about concentration and bias in the media. We need to remind the commission how important a variety of independent and locally owned sources of news and information are to our democracy.”

The public-interest Benton Foundation, a member of the FCC’s consumer advisory committee, lauded the commission’s effort. But its president, Gloria Tristani, a former FCC member, said the agency should “heed the lesson” of its previous miscues and “adopt a more open, more inclusive process as it considers any changes to its rules.”

FCC Chairman Kevin J. Martin attempted to alleviate concerns about how the rules would be drafted by promising to hold six hearings nationwide and commission studies over four months to plumb public opinion.

“We begin this dialogue in a neutral and even-handed fashion,” said Martin, a Republican.

Three years ago, the agency voted 3 to 2 along party lines to raise the limits on local TV ownership and to relax the ban on cross-media ownership.

The action helped companies such as Tribune Co. and Media General Inc. that wanted to end the ban on cross-ownership of newspapers and broadcast stations. Chicago-based Tribune, for instance, owns both the Los Angeles Times and the city’s KTLA-TV Channel 5 and has similar arrangements in Chicago and New York.

But the U.S. 3rd Circuit Court of Appeals blocked most of the changes and sent the case back to the FCC for revisions. Congress, meantime, enacted legislation that reduced to 39% the number of households nationwide that could be covered by any one media company. The FCC had ordered a 45% limit to replace the previous cap of 35%.

Tribune lobbyist Shaun Sheehan said the company “will push hard” for looser cross-ownership rules, saying company management believes “very strongly that relief will come our way.”

Television station owners such as Sinclair Broadcast Group Inc. and Hearst-Argyle Television Inc. probably will push to lift the current two-station limit in a market, said Stanford Washington Research Group analyst Paul Gallant.

Clear Channel Communications Inc., the largest U.S. radio company, also will push for higher caps, Executive Vice President Andrew Levin said. Satellite radio companies such as Sirius Satellite Radio Inc. can operate more than 100 stations in every market, Levin said, whereas traditional broadcasters such as Clear Channel are limited to eight in a large city.

“That’s just not fair competition,” he said.

How much the FCC will be able to do is unclear. Industry analyst Blair Levin in Washington noted that Congress, as part of reform legislation, may restrict the agency’s ability to relax the rules.

And some argue that nothing should be done.

A consolidation of newspapers, television and radio in a single market “would operate at the expense of free expression, diversity, democracy and culture,” said Jonathan Rintels, executive director of the Center for Creative Voices in Media, a group that represents the interests of writers, directors and other artists.

Separately Wednesday, the FCC voted to tax Internet telephone users and increase the tax on wireless customers for the federal universal service fund.

That may not be enough, though, to cover an anticipated $350-million shortfall in the program, which defrays the high cost of serving rural America and subsidizes poorer citizens.

Martin said the tax was intended to be an interim measure while the FCC tackled thornier issues of reconstructing a broken universal service system that relies on outdated ways that phone companies reimburse each other to complete calls.

Internet phone companies have said they should pay into the fund, but they don’t like the FCC formula that makes nearly two-thirds of their revenue subject to the tax. Wireless customers will pay a tax that is based on 37.1% of their bills, up from 28.5%.

For Internet phone leader Vonage Holdings Corp., the new tax will add about 95 cents to the typical $25 bill, spokeswoman Brooke Schulz said. The payment is eased by the recent elimination of the 3% federal excise tax on phone bills, she said.

Bloomberg News was used in compiling this report.