Eye, Fox, Peacock want 35% cap eliminated

LAS VEGAS — FCC chairman Michael Powell didn’t have the best news for broadcasters during his guest appearance at the National Assn. of Broadcasters’ annual meeting.

Powell conceded for the first time that a federal appeals court in Washington is likely to soon overturn an ownership cap preventing a broadcast network from reaching more than 35% of the national audience.

CBS, Fox and NBC want the cap overturned, leading to bitter splits with affils. The trio have resigned from NAB over the issue, giving the trade org an unexpected facelift.

Upon dogged questioning by moderator and ABC anchor Sam Donaldson, Powell also confirmed that he believes the broadcasting industry could become endangered if it ignores the fact that 84% of the viewing public now pay for cable or direct satellite broadcasting.

“I personally don’t think free over-the-air TV broadcasting will ever be dead,” Powell said during the traditional FCC chairman’s breakfast. “But I do think it’s sort of naive … not to think hard and long about what this means.”

‘Consumer welfare’

During the one-on-one session, Donaldson also repeatedly asked Powell whether he was disturbed as a regulator by cable rates.

Powell said he wasn’t, citing his thesis that there is “consumer welfare.”

Donaldson immediately followed up by saying that Powell’s staunch support of deregulation is anti-consumer.

“Does your heart bleed?” the populist ABC anchor asked.

Powell, backing off just slightly, said of course he’s concerned about cable rates, but that the average cable bill doesn’t come close to comparing with a phone or utility bill. He said the situation can’t be that dire, since television is such a staple of modern life.

“It’s a known fact that there are more TV sets than indoor plumbing,” Powell said.

Since taking office in late January, Powell has made several barbs that some consumer advocates say were insensitive. At his first public FCC meeting, Powell said there was no such thing as the digital divide, just like there’s no such thing as the Mercedes divide.

Difficult to justify

Turning to the 35% broadcasting cap during his interview with Donaldson, Powell said ownership caps are difficult to justify.

“They are almost always poorly construed. Yet you have this absolute rule,” Powell said. “Caps tangle with the First Amendment.”

Powell said it was significant that the court recently stayed an FCC order requiring Viacom to divest of certain broadcast properties in order to come under the 35% mark. Court issued the stay in advance of ruling on the cap itself.

“A part of any stay is the likelihood of overall victory,” Powell said. The court “already has made some sort of judgment.”

Earlier this spring the same court struck down a similar ownership cap prohibiting a cabler from reaching more than 30% of the national audience.

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