Nets’ cap study a preemptive move

Biz exex expected to wield report

WASHINGTON — In a tactical lobbying strike, the major networks released a study Tuesday that finds the FCC’s broadcast ownership caps don’t promote diversity or provide any other substantial benefit for the public.

The study was circulated in Washington just one day before a House Telecommunications subcommittee hearing on broadcast ownership regulation.

Among those testifying will be Fox topper Peter Chernin and the author of the study, Michael Katz, a UC Berkeley professor and a former chief economist for the Federal Communications Commission.

Chernin will likely refer to the Katz report while testifying in favor of eliminating the current ownership cap, which limits networks to stations that collectively cover 35% of the national audience. The networks would like to see the cap lifted to at least 50% of the national audience, if not eliminated entirely.

Minority ownership

In his study, Katz notes that the number of minority-owned stations has increased and decreased over the years despite the cap.

Affils argue that any increase in the cap will be exploited by the networks, who will use their new freedom to buy up more stations. The affils claim they will suffer because the networks, secure in the knowledge that they control a larger stake of their distribution system, will be in a stronger negotiating position when it comes to programming and compensation decisions.

PricewaterhouseCooper’s Steven Abraham, managing partner, media and entertainment, said Tuesday that it is inevitable the FCC will lift the ownership cap. “I think it’s a reflection of a somewhat anachronistic practice,” said Abraham. “Other forms of media don’t have these restrictions.”

Indeed, one major argument put forth by many in the industry is that with technological advancements and the growth of the multichannel universe on cable and satellite, the cap on station ownership places broadcast networks at a competitive disadvantage.

Momentum stalled

But even network lobbyists concede that any relaxation of ownership caps is not expected until President Clinton moves out of the White House. The Clinton administration threatened to veto the Telecommunications Act of 1996 when Republicans tried to increase the cap to 50% national coverage.

Any political momentum towards relaxation of the national cap was sapped last month when the FCC relaxed local caps — allowing broadcasters for the first time to own two stations in a market. FCC Chairman William Kennard has not explicitly ruled out any movement on the national cap, but has indicated that he has gone as far as he is willing to go when it comes to ownership deregulation.

Also testifying at today’s hearing will be the Assn. for Local Television Stations’ prexy Jim Hedlund, who will suggest that the FCC take steps to further free up ownership rules at the local level.

Among Hedlund’s proposals is that the FCC eliminate its requirement that at least eight independently owned television stations remain in a market. Hedlund would also like to see the FCC completely eliminate its rule limiting joint ownership of radio and television stations which are located in the same market.