Putting deregulation on indefinite hold, Federal Communications Commission officials last week confirmed that the agency won’t decide whether to relax any of its broadcast ownership rules, including one barring newspapers from buying radio or TV stations in the same market, until the middle of next year at the earliest.
The fact that the FCC is reviewing its ownership rules is no surprise, because the court has ordered the agency to reconsider some of the regulations. The agency is also charged by the Telecommunications Act of 1996 to justify its media ownership regulations every two years.
But key industry sources said they believe the Bush administration’s agency should have already set the acquisition ground rules.
The agency’s announcement came as a particularly serious blow to Tribune Co. and other newspaper companies that are itching to expand their broadcast portfolios.
They’ve been urging the agency to address the newspaper-broadcast cross-ownership prohibition separately, on grounds that the FCC has already subjected the regulation to formal review proceedings. There’s no legal reason the agency couldn’t ax the rules now with a simple majority vote of the commissioners.
But at a press conference last week, Ken Ferree, chief of the FCC’s Media Bureau, said that in the interests of consistency, the agency had decided to include the newspaper regulation in its new review.
“All of these rules are kissing cousins,” Mr. Ferree said. “It just makes sense to do them all at once.”
Shaun Sheehan, Tribune VP, Washington, said his company was considering its legal options. “The marketplace is evolving rapidly, and the FCC through inaction leaves us standing in place,” he said.
Added John Sturm, president and CEO of the Newspaper Association of America, “For everybody else it’s a matter of how much. For newspapers it’s a matter of can we even get in?”
Among the other regulations being tied up in the review are the duopoly rules, which limit the ability of broadcasters to acquire a second TV station in many markets, and the national cap, which bars a single company from owning TV stations reaching more than 35 percent of the nation’s homes.
In addition, the review will consider a regulation prohibiting the four major TV networks from merging and regulations affecting radio ownership.
Mr. Ferree said the bureau hoped to be in a position to recommend action on the regulations next spring.
But he also said he couldn’t predict how soon the agency’s commissioners would vote to resolve the regulatory issues thereafter.
Industry sources have long speculated that the deregulatory-minded Mr. Powell might put off a decision on the ownership regulations until after the elections in hopes that the Republicans retake the Senate this November.
With the Democrats calling the shots in the Senate, Sen. Ernest Hollings, D-S.C., currently chairs key Senate committees with oversight over the FCC and its budget-and he is no friend of deregulation.
Mr. Powell has also made clear that he wants to conduct a thorough review to justify FCC action.
The Court of Appeals in Washington challenged key ownership rulings by the Clinton administration’s FCC, accusing the agency of sloppy lawyering. Mr. Powell previously served as a law clerk for the court. So according to sources, he has personal reason not to want to risk a similar record of reversals.
“With that abysmal record, Chairman Powell could not ignore that,” said a broadcast industry insider.
Said Dick Wiley, a former GOP FCC chairman, “They want to have a consistent analytical approach, and they believe the best way to do that is put them [all of the rules] in one pot.”
CBS declined comment on the delay. But a spokesman for News Corp. said the decision to lump all of the regulations together made sense. “You can’t deal with one part of it without affecting another part,” the spokesman said. “The quicker that we get these rules sorted out, the better it is for the industry and consumers.”
Added Preston Padden, The Walt Disney Co. executive VP, worldwide government relations, “It’s the same market analysis whether you are looking at the newspaper rule or the 35 percent rule.”
Mark Hyman, Sinclair Broadcast Group VP, corporate relations, said, “The industry should be disappointed with the uncertainty of how the FCC is going to comply with the court. However, it’s positive news that the FCC will take a look at all of these proceedings at once. That makes sense.”
Jeff Chester, executive director of the watchdog Center for Digital Democracy, said the decision to consolidate the reviews was a “victory for the consumer, public interest and the industry groups that have been fighting deregulation.”