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National ownership caps don’t make sense

National ownership caps don't make sense

IN THE PAST MONTH and even the past week, it has become much tougher to defend the logic behind the national cap on the number of stations a broadcaster may own.

The networks make a pretty rational argument that the national ownership regulations don’t make any sense now that the local ownership caps have been relaxed.

When the FCC approved the relaxation of the local ownership rules, agency chairman Bill Kennard said local deregulation was reasonable but that now is not the time for full-scale deregulation. Kennard did not explain how to justify local deregulation but still keep the current 35% national cap on the books.

Testifying in front of a House subcommittee last week, News Corp. president and chief operating officer Peter Chernin put it this way: “Fox, today, could buy a second station in Atlanta, where we already own a station, but would be prohibited by the national ownership cap from buying a single station in San Francisco, where we don’t own any stations.”

CHERNIN IS RIGHT. It doesn’t make sense.

The traditional argument is that the national cap encourages competition and strengthens democracy by ensuring that there is a healthy supply of independent voices in the marketplace. Those are the same arguments used to defend the local caps.

Even so, preserving an ongoing public debate via TV is an achievable goal if you believe that television is dominated by independently owned-and-operated stations across the country. But it has been a long time since running a television station was a mom-and-pop operation.

Television, from local news to syndicated programming, is a generic product.

Consolidation during the past 10 years, including the past week, has put the vast majority of stations in the hands of group owners. About 80% of television stations are now owned by groups. In 1997, only 251 stations out of nearly 1,500 were owned on a stand-alone basis.

Station groups own 90% of network affils. What difference does it make to the viewer if it’s a network or a large station group that owns his local station?

FOR THE LAST 10 YEARS, the big station groups pushed the FCC to loosen the local ownership rules, and they finally got what they asked for. But at the same time, they have fought against relaxation of the national cap.

They argue that limiting the networks’ national ownership promotes “localism” in broadcasting. It’s a specious argument since most stations in the country are operated by absentee landlords. Sinclair owns 56 stations, Paxson 49 and Hearst-Argyle 32.

The station groups’ real concern is that relaxation of the national cap will give the networks more power. If major webs are allowed to buy more stations, it will make it much tougher for affiliates to negotiate compensation packages and programming issues.

“It’s all about protecting one set of powerful and profitable broadcasters,” Chernin correctly testified last week.

And a study released by the major networks accurately points out that protecting the financial interests of large station groups does nothing to protect the public interest. It’s hard to argue, when investment companies such as Hicks, Muse, Tate & Furst are among the nation’s largest group owners, that it’s in the public interest to give them regulatory protection.

It certainly hasn’t helped the FCC in its goal of increasing minority ownership. Minorities now own just 18 TV stations. According to a network study, the number has risen and fallen under the current cap, and there is no reason to expect that keeping it in place will lead to more minority owners.

The networks are right when they argue that programming and compensation issues should be the subject of marketplace forces, not government regulations.

Last week’s deal between Paxson and NBC assumes that the regulations will fall. For now, NBC will take a 32% stake in the company, but come 2002, it has an option to buy the rest of the station group. It looks like a safe bet. The flimsy foundation that the current national cap rests on can’t last that long.