TV to untighten

FCC likely to allow duopolies in larger markets

WASHINGTON — In the first significant relaxation of local TV station rules in 50 years, the Federal Communications Commission is expected to vote today to allow broadcasters in the top 20 — or so — markets buy a second station in the same market.

Final details are being ironed out, but sources expect the FCC will allow TV combinations in markets with at least 10 stations and possibly as few as eight. In smaller markets, broadcasters will be allowed to buy a second station, but will be required to prove that the combo will serve the public interest by keeping a failing station alive or possibly reviving a dormant outlet.

The FCC also is expected to ban local management agreements in which one station manages the assets of another in the same market. The agency will give broadcasters five years to buy the station under its new duopoly rules or end its contractual relationship.

It will be difficult to assess the ultimate impact of the rule change on the broadcasting industry until the FCC issues the final written details of its decision. That final report may not be issued for a week or more.

A changed environment

Broadcasters have been asking the FCC to relax the local ownership rules for several years. They argued that restricting them to one station per market makes no sense in a business environment where they are competing with multichannel cable and satellite offerings.

The FCC has resisted, saying broadcasting is a unique mass medium that has much more power in local markets than any single cable channel. In addition, FCC chairman Bill Kennard has been particularly wary of any change in ownership rules that would concentrate the number of broadcast outlets in fewer hands.

Kennard is particularly concerned about the representation of minorities among the ranks of broadcasting’s owners. Less than 3% of all TV stations are owned by minorities.

Overcoming barriers

In an effort to overcome the chairman’s resistance to changing ownership rules, broadcasters have been spearheading an effort to come up with a large trust fund to finance minority ownership. The effort is headed by Clear Channel’s Lowrey Mays and CBS’ Mel Karmazin. The fund has aimed at making more than $200 million available to minorities.

In addition, broadcasters worked on a proposal that would give companies a tax break for the sale of stations to minorities. However, that effort was usurped by Senate Commerce Committee chairman and presidential candidate John McCain (R-Ariz.), who introduced his own proposal for a tax certificate last week.

Several broadcasters acknowledged to Daily Variety that they felt the creation of the tax certificate program and a large minority trust fund would help them win Kennard’s good will regarding a change in ownership rules.

Horse trading?

But not a single lobbyist would suggest on the record that there is a relationship between the trust fund, tax certificate and today’s vote to relax the rules.

“There appears to be some kind of trade deal going on here,” is all one broadcaster said with the promise that he would be quoted anonymously.

An FCC spokesman adamantly denied there is any connection between industry efforts to support minority broadcasters and the proposed changes to the ownership rules.

“I’m offended,” said FCC spokesman David Fiske, who added that the accusation is ludicrous, and pointed out that McCain, who authored the tax certificate bill, is a frequent and vocal critic of Kennard’s regulatory style.

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