F.C.C. Prepares to Loosen Rules on Media Ownership

[Dave Farber <dave () farber net>]

F.C.C. Prepares to Loosen Rules on Media Ownership

May 13, 2003
By STEPHEN LABATON 




 

WASHINGTON, May 12 - The government proposed the most
significant overhaul of its media ownership rules in a
generation today, including a change that would allow
television networks to own enough local stations to reach
90 percent of the nation's viewers.

That change - a result of increasing the cap on ownership
and simultaneously preserving a 1980's formula that
discounts the reach of UHF stations - is part of the
package of proposals that officials said appeared to have
the support of the Republican majority of the Federal
Communications Commission.

The commission staff sent the detailed plan early this
evening to the five commissioners ahead of a final vote in
three weeks. The commission has not formally made the plan
public, though major portions were disclosed today and in
previous days by officials and industry experts.

The proposed changes represent the most important rewriting
of the ownership rules in decades, permitting the largest
media conglomerates to expand into new markets and own more
properties in a single city. Analysts expect companies,
including Viacom and the News Corporation, to seek to
expand their media holdings substantially.

Others, like the Tribune Company and the Gannett Company,
might seek to acquire broadcasters or newspapers in cities
where they already have a presence. Media brokers and Wall
Street bankers have begun advising clients on what is
expected to be a scramble of mergers that would reshape the
media landscape in many communities across the country.

In a recent interview and in other comments, the agency's
chairman, Michael K. Powell, said that revisions in the
media ownership rules would be more modest than critics had
maintained and that changes in technology and viewing
habits, combined with court decisions and a Congressional
directive, necessitated that the current regulations be
reconsidered. 

But the agency's two Democrats have expressed concerns
about many aspects of the proposal. In interviews today
before receiving the detailed plan, the two commissioners,
Michael J. Copps and Jonathan S. Adelstein, said that they
were troubled by reports that the commission's staff, after
extensive consultations with Mr. Powell, would recommend
raising the ownership cap while retaining the formula that
discounts the audience size of UHF stations.

"I'm afraid we may be moving in a more dramatic fashion
that could permanently alter the media for generations to
come," Mr. Adelstein said.

Mr. Copps said that the changes, including the sharp
increase in the television ownership cap, "would be a green
light to considerable and significant consolidation in the
future." 

"It's hard to imagine how the proposals foster the goals of
the rules, which are diversity of voices, localism and
competition," he said.

One change will permit a company to own both a broadcast
station and a newspaper in all but the smallest markets. A
second would permit a television company to own three
stations in the largest markets; the current limit is two.

The most fiercely lobbied proposal would loosen the
national television ownership cap, which had been set at 35
percent of the nation's viewers before a federal appeals
court ordered the commission last year to reconsider it
after a challenge by the networks.

Local affiliates and small broadcasting stations fear that
any further growth in the networks would be detrimental to
viewers in a variety of ways. They say it would homogenize
entertainment, discourage local news coverage in favor of
national broadcasts and reduce the commercial leverage of
the local stations to offer independent programming.

Mr. Powell and other supporters of the proposal say that
the rules need to reflect the changing marketplace and to
help preserve free over-the-air television. In a world
where consumers can receive their news and information from
hundreds of channels in addition to the Internet, it makes
little sense to preserve rules of a bygone era, they say.

Officials said that the commission was expected to increase
the national television ownership cap to 45 percent of the
nation's viewers and also retain the rule that considers
two viewers as one viewer of a UHF station - the band that
over the air has generally been Channel 14 and above.

The provision, known as the UHF discount, came about in a
different regulatory and technological era, when a vast
majority of viewers received television signals free over
the airwaves and had to use special equipment like antennas
that resembled rabbit ears to pick up UHF stations. Today,
about 85 percent of viewers use paid services from cable
and satellite providers, rendering the distinction between
VHF and UHF largely a relic.

Officials close to Mr. Powell said today that the agency
had decided to retain the discount because under the
agency's interpretation of the law, it was not clear it had
the authority to alter it in the current proceedings. They
said that there was nothing in the public record to justify
changing the way the commission counted UHF viewers and
that Mr. Powell had attributed the growth of new networks
in recent years to the UHF discount, including UPN, Pax, WB
and Fox. 

Others outside the agency noted, however, that most of
those networks are hardly independent - UPN is owned by
Viacom, WB is owned by AOL Time Warner, and Paxson is 32
percent owned by NBC. Critics of the plan have focused on
the UHF provision as emblematic of the selective way that
the agency has approached deregulation.

"It's total hypocrisy," said Gene Kimmelman, a director at
Consumers Union who has testified in Congress against
loosening the rules. "If the theory behind changing the
rules is that the F.C.C. needs to keep up with market
conditions, to preserve a significant discount for UHF
stations is simply a fraud on the regulatory process."

Andrew Jay Schwartzman, president of the Media Access
Project, which advocates diversity of the airwaves, said
that the UHF discount "eviscerates the cap."

"The 45 percent number that has been floated is a fake
number," he said referring to the concentration of the
nation's viewers by one company. "It will realistically be
much much higher." 

http://www.nytimes.com/2003/05/13/business/media/13FCC.html?ex=1053811090&ei
=1&en=ae75562a484cd5c0



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