Divergent Views of Ownership Change

Dec 16, 2007  •  Post A Comment

As the FCC readies to vote tomorrow to alter its rule that has banned newspapers and broadcasters from buying each other in the same market, two very different views of what will follow are emerging.
Some newspaper and broadcast analysts and station execs predict the sound and fury about what could happen will be followed with a big thud when little if anything actually does happen.
They say newspaper companies, rather than buying broadcast properties, are selling or spinning them off. And despite heated rhetoric about potential economic efficiencies and editorial benefits or the dangers of losing diverse voices by combining broadcast and newspaper properties in the same town, the actual market for station sales is negligible and funding nonexistent, especially given the conditions the FCC is expected to place on combinations.
“It’s kind of moot,” said Marci Ryvicker, a broadcasting industry analyst for Wachovia Securities, who said any of the other potential rule changes the FCC could have made would have had far more impact. She said companies like Belo and the New York Times are selling or spinning off properties, having discovered that the benefits of cross-selling products aren’t as great as touted.
“The problem is when you start to cross-sell, advertisers expect discounts. So one plus one is one and a half,” she said, adding that credit markets are unlikely to fund purchases. She said almost any other change the FCC could have made would have made far more impact.
A broadcaster noted that the change proposed by FCC Chairman Kevin J. Martin only clearly eases mergers in the top 20 markets, and even then only of a newspaper with a station that isn’t among the top four. Mr. Martin last week said that broadcasters in smaller markets who can demonstrate sales will lead to additional news coverage can ask for waivers to allow deals.
“I don’t see that it’s going to lead to any major realignment in the holdings in the top 20 markets,” the broadcaster said.
“A lot of people have come to believe that co-ownership with a newspaper is not going to rescue an otherwise struggling newspaper or an otherwise struggling television station.”
He called Mr. Martin’s proposal at best “modest.”
Minority and consumer groups and some senators predict the exact opposite, and they’re worried.
Not only will deals be done, but changes are unlikely to be confined to the top 20 markets, they say. The result: fewer sources for local news and a possibility that the change kills any hope for increasing already too small minority media ownership.
“If you look at what happened after relaxation in 1996 [of radio rules], there was a huge wave of consolidation,” said James L. Winston, executive director of the National Association of Black-Owned Broadcasters. “We see no reason to see that same thing won’t happen in television and newspapers. There will be a lot of mergers.”
Mr. Winston said his group is concerned even if the changes happen only to the bigger markets, but predicted changes would prompt consolidation in far more markets.
“Anybody can come in and ask for a waiver. It creates an open door for the entire country. We need to see opportunities for minorities to own and grow stations. If you allow the largest companies to consolidate, we are further restricted.”
David L. Honig, executive director of the Minority Media and Telecommunications Council, said the FCC also is expected to consider a package of measures, some proposed by his group, to boost minority ownership, but the package could come too late and do more harm than good.
Mr. Honig said there were dangers the FCC would apply any program to “small businesses,” potentially making it harder for minority businesses to find new properties or grow existing businesses.
That same theme was sounded by Sen. John Kerry, D-Mass., after a Senate hearing last week.
“As markets become more concentrated, concentration has the effect of making it harder for smaller stations to compete,” said Mr. Kerry, who heads the Senate’s Small Business Committee.

One Comment

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