Chairman urges ownership rules changes

Taking his deregulatory show on the road, FCC chairman Michael Powell warned Wednesday that rules on media ownership will be struck down by the courts altogether, if they aren’t modified to account for sweeping changes in the media landscape over the past 30 years.

“Those rules, if I do nothing, will be dead soon. They will not survive the judicial process,” Powell told several hundred investors at the Goldman Sachs media conference in New York.

Powell’s comments came less than 24 hours after the FCC released a barrage of studies suggesting that many ownership rules are outdated. The studies mark the foundation of the FCC’s unprecedented review of key rules, many of which are expected to be substantially relaxed, if not abandoned.

Trying to preempt critics, Powell said his FCC in no way favors consolidation and big corporations at the expense of diversity, and that the fate of the rules hasn’t been decided.

“I’m not arguing that any one of them should definitely go. But I’m arguing for intellectual honesty,” he said, noting that many regs predate the invention of cable.

Market has changed

“Most of the media ownership rules are old, and most of media market has changes dramatically. Maybe nobody cares. Why risk tinkering with them? Why risk tinkering with democracy? Because the courts say so — The courts demand that a regulatory agency justify its rules,” he said.

With Washington still digesting the media ownership studies, consumer groups questioned their objectivity. “I realize that we need the equivalent of the U.N.’s Iraqi weapons inspectors for media ownership,” Center for Digital Democracy topper Jeffrey Chester said.

In the coming weeks, the center will join other consumer groups in asking Capitol Hill to put pressure on the FCC to make the review a “truly honest” process, Chester said.

Powell told the Gotham crowd that the FCC does not have the luxury of waiting to act, whether it’s the meltdown of the telecom biz or the media ownership review.

Getting it right

“Winston Churchill once remarked, ‘Americans always get it right, but only after exhausting the alternatives.’ We have tried the alternatives; it is time to get it right,” Powell said. “There is little prospect Congress will act soon, so the task falls to us-and we welcome it.”

Earlier this year, a federal appeals court found serious problems with the FCC’s national broadcast cap, which bars one company from reaching more than 35% of the national aud. The FCC studies released this week indicated that there may be little need for the cap, considering the rise of other outlets, whether cable or satcasting.

(The same court essentially gutted another national cap barring a cabler from reaching more than 30% of the national aud.)

Other rules in the offing include a duopoly reg blocking one company from owning multiple media outlets in one market, and a ban on owning a TV station and newspaper in the same major market, as well as.

“Many things have changed since the 1970s when newspaper cross (ownership) was passed,” he said. The reg, which forbids ownership of a newspaper and broadcast station in the same market, is considered likely to be one of the first to go.

The Telecommunications Act of 1996, the last time Congress weighed in on a wide array of media regs, provided for a review every two years.

Problem needs study

“Let’s go into the marketplace, study the problem in an objective vigorous way,” Powell said, adding, “Congress said, ‘You will review them every two years, and if you can’t justify them, get rid of them.’ “

Speaking mainly of the tarnished and debt-ridden telecom industry, Powell said government regs are pointless if companies can’t afford to develop projects and investors won’t put up funds. “Government policy needs to follow the rule of capital and investment, not always the other way around,” he said.

Follow @Variety on Twitter for breaking news, reviews and more