Ownership Cap Deal Angers Some Lawmakers

Dec 1, 2003  •  Post A Comment

Key Democratic lawmakers were furious last week after GOP lawmakers and the White House announced that they had cut a deal to permanently set the TV station ownership cap at 39 percent of the nation’s TV homes, without consulting their colleagues on the other side of the political aisle.
“This is absurd,” said Sen. Byron Dorgan, D-N.D., alleging that the deal was primarily intended to prevent Fox and CBS from having to divest stations.
“The Republicans’ decision to make the broadcast ownership cap 39 percent was no compromise at all,” added Sen. Ernest Hollings, D-S.C.
As of last week, it was unclear what Democrats-who lack majorities in both houses of Congress-could do about the measure, which has been included in an appropriations bill.
But one well-placed source warned that the lawmakers might still attempt to torpedo the overall bill by publicizing embarrassing “pork barrel” projects that are found to be included.
In a statement, Sen. Dorgan said he was particularly upset because the House and Senate had already officially approved language that would have rolled back the cap to 35 percent-albeit for only a year. “I fully expect that [35 percent] to be the result,” said Sen. Dorgan. “If it isn’t, I intend to continue the fight to overturn that FCC rule any way that I can.”
In a political irony, sources identified the other major loser in the deal as Federal Communications Commission Chairman Michael Powel. In a controversial June 2 decision, Mr. Powell and his GOP colleagues voted to raise the cap from 35 percent to 45 percent of TV homes, a decision that was backed vehemently by major TV networks. Under the new GOP deal, not only did Mr. Powell lose on where the cap should be set, but he also lost forever the right for the agency to tinker with the cap-all with the blessing of the White House, which had previously been threatening a veto in his defense. It was such a humiliation for Mr. Powell that some broadcasters were concerned he might now spend the rest of his agency tenure retaliating against the interests of affiliates-the industry representatives that stirred up much of the fuss about the cap increase.
“This is a significant rebuke for Michael Powell’s FCC,” said Chris Murray, legislative counsel for Consumers Union.
Sources said primary credit for the deal goes to Sen. Ted Stevens, R-Alaska, who is said to have cut the agreement personally with White House Chief of Staff Andrew Card.
At a briefing last week, Sen. Stevens made clear that he preferred to stick to the 35 percent cap. But he said the compromise with the White House not only resulted in permanent law but also would ensure that the cap would be harder to challenge in the courts. “The litigators are going to be attacking an act of Congress now and not just an FCC rule,” Sen. Stevens said. “It’s a different standard, really.”
Though the National Association of Broadcasters and the affiliates have been lobbying furiously to keep the cap at 35 percent, representatives of the NAB and affiliates endorsed 39 percent, with the caveat that it is enacted into law permanently.
As an additional benefit for broadcasters, the compromise takes the cap issue out of the litigation against the FCC’s ownership deregulation in the U.S. Court of Appeals in Philadelphia.
“We’re glad the fight is over,” added Alan Frank, chairman of the Network Affiliated Stations Alliance and president of Post-Newsweek Stations. “This gives some important stability to our relationship with the networks and will allow us to continue serving our local communities.”
The new cap represents a compromise in that it essentially splits the difference between the extremes advocated by the affiliates and their networks.
Sources said the 39 percent number was settled on to avoid requiring CBS, which currently owns stations reaching 38.8 percent of homes, and Fox, which is at 37.8 percent, from having to divest any stations. But at the same time, setting the cap at 39 percent was perceived as more fair than grandfathering the CBS and Fox ownership portfolios and then barring everyone else from owning stations reaching more than 35 percent.
Representatives of CBS and NBC had no comment on the issue last week. But News Corp. chief Rupert Murdoch said, “On the face of it, it suits us just fine.”
Added Preston Padden, executive VP, worldwide government relations, The Walt Disney Co., “We’re pleased that it treats all networks equally and leaves ABC substantial room to acquire additional stations.”