Opposition Could Derail Martin’s Plan

Nov 25, 2007  •  Post A Comment

Federal Communications Commission Chairman Kevin J. Martin may want to loosen some media-ownership rules before the year expires, but mounting opposition at the agency, at media companies, on Capitol Hill and among public-interest groups may upset his timetable—and potentially stymie him altogether.
Publishers are upset that Mr. Martin’s proposal to ease rules on cross-ownership of TV stations and newspapers didn’t go far enough. Broad­casters are ticked there was no easing of the rule that allows ownership of two stations only in larger markets. Consumer groups are worried that the changes will let media companies grow too big.
That opposition probably will lead to a fight at the FCC, in Congress and eventually in court.
For Mr. Martin, the scenario is unfolding while the clock ticks toward a November election next year that may oust his Republican Party from the White House. That would put him out of a job, and leave his media-ownership proposal on the same trash-heap that claimed his predecessor’s attempt to loosen the rules.
Blair Levin, a former FCC official who is now an analyst for Stifel, Nicolaus & Co., predicts the agency will approve easing media rules, but is uncertain when and exactly what will be approved. Despite congressional, consumer and industry opposition, he also is doubtful that Congress will reverse any FCC action.
“I think that something like Martin’s cross-ownership plan gets adopted, though there are significant doubts about the timing of the vote,” he said. “I am skeptical that Congress will overturn it.”
Mr. Martin declined to comment, an FCC spokesman said.
Opposition Mobilizing
The FCC votes on Mr. Martin’s proposal on Dec. 18. Already in Congress, where hearings on the issue are slated next month in both houses, senators and congressmen last week were promising to push forward to either force a delay in any FCC action or overturn any change.
Mr. Martin’s political capital is already at an ebb, partly due to another initiative he has pushed: greater regulation of the cable TV industry. A plan for the FCC to issue a video competition report saying cable now reaches 70% of households, giving it more authority to impose new limits on cable, drew a rebuke from a majority of Republicans on the House Energy & Commerce Committee.
The ownership proposal may face its most immediate trouble at the FCC, where two Democratic commissioners have voiced opposition. At the other end of the spectrum, Republican FCC commissioner Robert McDowell in a speech at the Media Institute last week questioned whether the proposal went far enough in easing ownership rules. He didn’t, however, say he would oppose Mr. Martin’s plan.
Mr. Martin on Nov. 13 unveiled his proposal, concluding the FCC’s 18-month-long re-examination of media ownership rules. He wants to alter a single rule—the ban on newspapers and broadcasters buying each other in a given market.
Mr. Martin suggested the FCC generally OK combinations in the top 20 markets in cases where a newspaper was joining with a single TV or radio station, as long as the station isn’t one of the four top-rated in the market.
In smaller markets, combinations generally would be disallowed. The FCC could make exceptions in either case.
Mr. Martin said the exceptions would be limited. Consumer groups, some congressmen and Democratic FCC Commissioners Michael J. Copps and Jonathan Adelstein warned that allowing any exceptions would put the FCC on track to regularly grant them, dramatically altering the local media landscape.
Mr. Martin’s plan could remove so-called cross-ownership limits affecting the purchase of Tribune Co. by investor Sam Zell and an employee stock ownership plan. For Tribune, it would resolve ownership problems in New York, Miami, Los Angeles and most problems in Chicago. That would leave the company in violation only in Hartford, Conn.
The Tribune hopes to close on the deal by the end of this year.
For Gannett, the proposal may spell trouble in Phoenix, where it owns a newspaper and a TV station. At News Corp., ownership of New York TV stations and the New York Post could spell trouble.
Consumer groups’ opposition to any easing of media ownership rules was no surprise, but opposition from media companies and associations will complicate the efforts of Mr. Martin, who has failed to enlist Capitol Hill allies.
Senate Majority Whip Dick Durbin, D-Ill., a backer of the Tribune purchase, rejected the media-ownership proposal and called on Mr. Martin to use waivers to let the deal proceed.
On Capitol Hill, the list of those questioning the deal is starting to resemble a Who’s Who list, including both the majority whip and the minority whip in the Senate and a number of members of the Senate Commerce Committee. In the House, the chairman of the Energy & Commerce Committee, John Dingell, D-Mich., has voiced opposition. On the House Telecom Committee, panel chairman Ed Markey, D-Mass. and others have objected.
The Newspaper Association of America and the National Association of Broadcasters both say Mr. Martin’s proposal doesn’t go far enough. That chorus has been joined by TV station owners including Media General.
“We are trying to inject reason and logic into a debate that has been hijacked by those who claim the FCC proceeding is a ‘rush to judgment,’” said Dennis Wharton, an NAB spokesman. “Any reasoned review of the record would warrant elimination of the broadcast/newspaper cross-ownership rule, along with modest reform of the television duopoly rule to strengthen the viability of free, local TV broadcasting in smaller and medium-sized markets.”

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