Chairman's cross-ownership proposal passes 3-2

Despite warnings from Congress and media watchdog orgs, the FCC voted 3-2 on Tuesday to approve chairman Kevin J. Martin’s landmark proposal loosening the ban on newspaper-broadcaster cross-ownership and allowing companies to own both a newspaper and TV station in the nation’s top 20 markets.

The vote, which went along straight party lines as expected, provoked bitter reaction from the FCC’s two Democratic members and prompted at least one advocacy org to vow a legal challenge if Capitol Hill does not fulfill a promise to intervene to stop the measure. Martin’s proposal even raised the ire of conservative groups that generally support his initiatives.

Ironically, the Dems later provided the only supporting votes on another measure of Martin’s — capping horizontal cable ownership at 30%. Martin’s GOP colleagues opposed such a cap, and a federal court blocked it when the FCC made a similar attempt in 2001.

Throughout the proceeding, Martin and fellow Republican commissioners Deborah Taylor Tate and Robert McDowell repeatedly described the proposal to relax the cross-ownership ban as “modest” and “minor,” noting that it would apply only to the top 20 markets in the country and would exclude cross-ownership of the top four broadcast stations in any one market.

Martin’s main justification for easing the ban has been that newspapers need relief from shrinking ad revenues and declining readership.

“Allowing cross-ownership may help to forestall the erosion in local news coverage by enabling companies to share these local newsgathering costs across multiple media platforms,” Martin said.

Cross-ownership could also be allowed in markets below the top 20 if the companies involved meet certain conditions. Critics of that part of the proposal have said the conditions were vague and weak, opening a door to consolidation in just about any market, they allege.

Martin responded Monday, the day before the vote, by clarifying and tightening conditions. For instance, to qualify for cross-ownership in a small market by pleading financial distress, a newspaper would have to demonstrate three straight years of losses. Democratic commissioner Michael Copps was not impressed, saying the new criteria “have all the firmness of a bowl of Jell-O.”

A longtime foe of media consolidation, Copps described the situation leading up to the vote as “Orwellian.”

“We claim to be giving the news industry a shot in the arm — but the real effect is to reduce total newsgathering,” he said. “We shed crocodile tears for the financial plight of newspapers — yet the truth is that newspaper profits are about double the S&P 500 average.”

In recent weeks, congressional Republicans joined a majority of Democrats who urged and cautioned Martin not to hold a vote on easing the ban, saying the issue needed more study and review, particularly with regard to the low level of minority or female ownership of broadcast outlets.

Sen. Byron Dorgan (D-N.D.), co-author of a bill aimed at slowing the FCC media ownership review down, promised to pursue his legislation as well as to take steps to nullify Tuesday’s vote. Sen. John Kerry (D-Mass.) vowed to make good his promise to block congressional funding needed to implement the revised cross-ownership rule.

Rep. John Dingell (D-Mich.), chairman of the House committee that oversees the FCC, said in a statement:

“I am greatly displeased that the chairman chose to vote on this important issue a mere week after hundreds of pages of comment were submitted on his proposed rule.” Even the Parents Television Council — usually Martin’s ally –condemned the vote. Consolidation, the org has argued, contributes to the amount of indecent content on the airwaves.

Andrew Jay Schwartzman, president of watchdog group Media Access Project, said the proposal as voted on “is far more radical, and much more outrageous, than what chairman Martin proposed just a few weeks ago.” Media Access Project successfully took the FCC to court over its previous attempt to ease ownership rules in 2003, and Schwartzman promised another challenge if Congress does not intervene.

However, MAP as well as Democrats in general supported Martin on his proposal to cap horizontal cable ownership at 30%. “There is solid legal and factual support for the 30% cap the FCC adopted today,” Schwartzman said.

This time the Republicans dissented, as commissioner McDowell predicted, “This order will be overturned by the D.C. Circuit.”

Copps and commissioner Jonathan S. Adelstein voted with Martin to adopt the cap.

The National Cable & Telecommunications Assn. released a statement promising more legal action.

“In 2001, the U.S. Court of Appeals soundly rejected on First Amendment grounds the precise cable ownership cap that the commission adopted again today,” said NCTA prexy Kyle McSlarrow. “The Court of Appeals found such a cap to be unjustified and out of touch with the competitive marketplace as it existed six years ago. We are confident that a court will again reject conclusions driven by a political agenda.”The FCC also voted to adopt measures intended to increase diversity and competition in broadcasting.

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