45% Ownership Cap Seen

Apr 28, 2003  •  Post A Comment

Despite the vehement opposition of key affiliates, a Federal Communications Commission majority is expected to substantially relax the regulatory cap on how many TV stations a single company may own, sources said last week.

As it stands, the rule bars broadcasters from owning TV stations reaching more than 35 percent of the nation’s TV homes. The affiliates and the National Association of Broadcasters have been lobbying to keep the cap in place in the interests of limiting network power.

But industry and FCC sources said top GOP agency officials have been signaling that they want to raise the cap to 45 percent on June 2, when the agency is tentatively slated to vote on new media ownership restrictions.

In a major break for the networks on the issue, Belo Corp. recently broke ranks with its fellow affiliates and officially endorsed a 45 percent cap as part of an unusually blunt political compromise.

Under the proposal, which was officially filed at the FCC April 17, Belo Chairman and CEO Robert Decherd said he expects the agency in turn to affirm the right of affiliates to pre-empt network programming.

In addition, Mr. Decherd made clear that he wants the FCC to substantially relax existing rules that limit the ability of broadcasters to buy second TV stations in their markets and bar a town’s newspaper and broadcast stations from merging.

“All parties need to make reasonable concessions in support of your effort to complete the rule-making,” Mr. Decherd said.

Despite Belo’s druthers, Alan Frank, president and CEO of Post-Newsweek Stations and chairman of the Network Affiliated Stations Alliance, said the affiliate associations continue to support the 35 percent cap.

“There’s no deal as far as we’re concerned,” Mr. Frank said. “This is totally Belo operating on their own.”

In an April 24 letter to the FCC, Jim Goodman, president and CEO of Capitol Broadcasting, said, “This debate should not take place with deal-making and concessions between a few major media companies and a government agency with appointed, not elected, officials.”

Industry scuttlebutt had it that the quid pro quo deal was spurred by FCC Chairman Michael Powell, as a way to defuse some industry opposition to his deregulatory ambitions.

An FCC spokesman declined comment.

But Guy Kerr, Belo senior VP and general counsel, said the company acted on its own. “Chairman Powell’s office did not ask us to write this letter,” Mr. Kerr said.

Also on the ownership front last week:

Under a barrage of criticism, the FCC, according to sources, has been backpedaling from an effort to replace its local media ownership regulations with a mathematical formula that would spell out how many media properties a single company could own, sources said last week.

Earlier this year the FCC staff was trying to develop a so-called “diversity index” that would allow media industry executives to plug values into a formula to determine how many daily newspapers and radio and TV stations they could buy in a particular market.

But as of late last week FCC sources said the agency staff was focusing instead on using the formula-based on agency data about how consumers use media today-solely to justify a series of “simple” new regulations setting ownership limits.

The concept of replacing existing rules with a diversity index was originally promoted at the agency by Ken Ferree, chief of the FCC’s Media Bureau. “The idea is to make this as usable as possible,” Mr. Ferree said in an interview reported in the March 3 issue of TelevisionWeek.

But the idea never appeared to attract the support of a majority of the agency’s commissioners. Republican FCC Commissioner Kevin Martin publicly questioned the wisdom of the concept.

“We need to have a clear, simple rule,” Mr. Martin said in an interview last week.

The concept also was attacked by industry leaders who were concerned that it could put more restrictions on companies’ ability to buy media properties than individual regulations would.

“We’re concerned that applying such an index will be difficult, if not impossible, to administer,” said Eddie Fritts, president and CEO of the National Association of Broadcasters, in a speech at a luncheon sponsored by the Media Institute.

At least some at the agency were said to be concerned that agency critics were using the potential creation of a new kind of index as a rationale for why the agency should be compelled to put out the specifics for a new round of public comment, something that could put resolution of the ownership proceeding on indefinite hold.

One FCC staff source said the concept of using a diversity index to clear potential transactions on a case-by-case basis never gained momentum at the agency.

Said Andrew Schwartzman, president of the activist Media Access Project, “They’ve had a hard time coming up with an index that works.”

Also last week, FCC Chairman Michael Powell’s announced intent to vote on new media ownership rules by June 2 drew the support of Secretary of Commerce Donald Evans.

“On behalf of the Bush administration, I urge the commission to adhere to the schedule you have outlined,” Mr. Evans said in an April 23 letter to Mr. Powell.