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Feds roll up the reg carpet

Split FCC loosens media ownership rules

WASHINGTON — The FCC dramatically relaxed decades-old rules governing media ownership on Monday, making it easier for the big four nets and powerful congloms to expand their entertainment and information empires.

Amid a chorus of protest over the issue, the GOP-controlled FCC voted 3-2 on straight party lines to allow a newspaper to own a TV station in the same market and broadcast nets to buy more stations nationwide.

As the commissioners announced their votes, a small group of women protesters jumped to their feet and began chanting, “Mass deregulation of the mass communication is the end of democracy.” Armed police escorted them out of the room.

Among the changes: The commission abolished the ban on a company owning a TV station and a newspaper in most markets, raised the national audience cap from 35% to 45% and made it possible for companies to own two TV stations in most midsize markets and, in some circumstances, three TV stations in large markets.

The FCC did not touch the ban on mergers among the four major TV nets.

By most accounts, the decision is unlikely to create dramatic mergers but it could lead specific players to strengthen their hand on a market-by-market basis.

Congloms hail move

Execs at News Corp., Disney and Viacom welcomed the move, noting that it is a step toward recognizing the changes in the current media landscape with cable, satellite and the Internet.

Viacom president Mel Karmazin told investors at a Deutsche Bank media conference that relaxed cross-ownership rules may give the company an opportunity to expand in radio or TV stations in markets it already operates.

The Big Four nets stand to gain the most from Tuesday’s vote, with NBC, News Corp. and Viacom leading the lobbying charge.

Nets said they needed the relaxed caps if they are to compete with cable and satcasting.

“While today’s decision by the FCC to update its media ownership rules is a first step in the right direction, we have much further to go before there is a level playing field between free TV and pay TV,” NBC said in a statement.

On the opposite side, the issue has galvanized groups stretching from Hollywood to Washington to Gotham.

Consumer orgs critical

As details of the plans started leaking out of the FCC three weeks ago, watchdog and consumer groups seized on the issue and began to drum up opposition among their members.

At last count, the FCC had received 750,000 pieces of mail — the most related to any one issue in the history of the FCC — from critics of the changes who fear that further consolidation will drown out minority viewpoints and destroy competition.

The controversial vote will play a large role in defining Powell’s tenure at the FCC. He stubbornly resisted calls to postpone FCC action for a month or disclose details of his proposal to lawmakers and the public before it became law.

‘100% sure’

“Doing the right thing is not the same as doing the popular thing,” he said in an interview Monday after the vote. “I am 100% convinced that I am doing the right thing.”

During the proceeding, Powell reiterated his argument that the Internet and the proliferation of cable have radically transformed the country’s media landscape, making it necessary to update what he called “the graying rules of a black-and-white bygone era.”

He also argued that the FCC was forced to act by a U.S. Court of Appeals in Washington that called on the agency to justify rules to reflect the new media environment.

Democratic commissioner Michael Copps, Powell’s most vocal critic, rejected such claims in a passionate dissent.

“The more you dig into this order, the worse things get,” he said, arguing that the court simply asked the FCC to justify the rules — not throw them out.

Too much power

The decision, Copps said, gives a media elite “unacceptable levels of influence.”

Fellow Democratic commissioner Jonathan Adelstein dubbed Powell’s rewrite “an outcome-driven political document” and predicted that it would go a long way toward turning the FCC into a “toothless tiger.”

Just weeks ago, Powell said he and Adelstein were working well together and hinted that Adelstein could be brought on board for at least a portion of the rewrite.

After the vote, Adelstein acknowledged that at times during the process he too had high hopes that they could find areas of common ground. But he said talks eventually broke down when his ideas were dismissed.

The Rev. Jesse Jackson and members of the Rainbow Coalition and the National Organization for Women marched alongside Rep. Jan Schakowsky (D-Ill.) with a group of some 30 protesters outside the FCC’s doors before and during the proceeding.

Jackson said he showed up out of concern for the dwindling number of TV and cable stations with minority or women owners and argued that the rules rewrite would only accelerate that trend.

“Too few people control too much media, and that’s unhealthy for democracy,” Jackson said, adding that he plans to sue the FCC over the rule changes.

FCC

Change in duopoly rules
The new rule states:

  • In markets with five or more TV stations, a company may own two stations, but only one of these stations may be among the top four in ratings.

  • In markets with 18 or more TV stations, a company may own three TV stations, but only one of these stations may be among the top four in ratings.

  • In deciding how many stations are in the market, both commercial and non-commercial TV stations are counted.

  • The FCC adopted a waiver process for markets with 11 or fewer TV stations in which two top-four stations seek to merge. The FCC will evaluate on a case-by-case basis whether such stations would better serve their local communities together rather than separately.

Change in National Ownership caps
The FCC incrementally increased the 35% limit to a 45% limit on national ownership.

  • A company may own TV stations reaching no more than a 45% share of U.S. TV households.

  • The share of U.S. TV households is calculated by adding the number of TV households in each market that the company owns a station. Regardless of the station’s ratings, it is counted for all of the potential viewers in the market. Therefore, a 45% share of U.S. TV households is not equal to a 45% share of TV stations in the U.S.

  • On March 31, 2003, there were 1,340 commercial TV stations in the U.S. Of these 1,340 stations, Viacom owns 39 TV stations (2.9%), Fox owns 37 (2.8%), NBC owns 29 (2.2%) and ABC owns 10 (0.8%).

Cross-Media Limits:
This replaces the broadcast-newspaper and the radio-television cross-ownership rules. The new rule states:

  • In markets with three or fewer TV stations, no cross-ownership is permitted among TV, radio and newspapers. A company may obtain a waiver of that ban if it can show that the television station does not serve the area served by the cross-owned property (i.e. the radio station or the newspaper).

  • In markets with between four and eight TV stations, combinations are limited to one of the following:
    (A) A daily newspaper; one TV station; and up to half of the radio station limit for that market (i.e. if the radio limit in the market is six, the company can only own three) OR
    (B) A daily newspaper; and up to the radio station limit for that market; (i.e. no TV stations) OR
    (C) Two TV stations (if permissible under local TV ownership rule); up to the radio station limit for that market (i.e. no daily newspapers).

  • In markets with nine or more TV stations, the FCC eliminated the newspaper-b’cast cross owner

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