Capital Watch

Sixty-four of the largest U.S. companies, including NBC parent General Electric, and nearly 20 other media companies urged the U.S. Supreme Court to uphold the University of Michigan's affirmative-action policy last week. In friend-of-the-court briefs, the companies argued that racial and ethnic admission policies ensure diversity of an educated work force. Employee diversity is particularly important for media, wrote 18 companies, including LIN Television, Hispanic Broadcasting, Emmis Communications, Radio One, and Yankees Entertainment and Sports Network because a diverse employee pool enriches debate on public issues.

Besides affecting affirmative action, the court's ruling is expected to influence possible legal challenges to the FCC's new equal-employment rules for broadcasters and cable companies and a proposed tax credit for sales of media properties to minorities, women and small businesses. The Supreme Court is expected to hear oral arguments April 1 over a university point system that bolsters minorities' admission chances. The Bush administration opposes the school's policy.

The president's proposed spectrum tax on TV stations is "dead on arrival," said Rep. Fred Upton (R-Mich.), chairman of the Telecommunications and Internet subcommittee. "I don't see that happening." As part of the fiscal-2004 budget submitted last month, President Bush proposed that TV stations pay a tax totaling $500 million annually on their analog spectrum beginning in 2007, one year after the government target date for completing the switch to all-digital TV and reclaiming spectrum now used for analog.

Rep. Cliff Stearns (R-Fla.) Wednesday introduced legislation that would lift the broadcast-TV reach cap to 45% TV households and remove restrictions limiting crossownership of TV stations and local newspapers. The bill would be an end run around the FCC's current review of media-ownership limits but is not expected to receive serious consideration. Stearns is the No. 2 Republican on the House Telecommunications Subcommittee. His bill also would preserve the "UHF discount," which, for purposes of the household reach cap, tallies UHF stations at 50% of a market's households. The bill also would bar the FCC from reinstating a ban on crossownership of a broadcast station and a local cable system. Federal judges struck down the ban a year ago. The FCC officially eliminated the ban last week.

Broadband anti-discrimination rules proposed by Amazon.com, Disney and Microsoft came under attack from NCTA chief Robert Sachs. "Microsoft and others want to use the government to leverage negotiations with network providers and others to get better business deals," he told state utility regulators. Some restrictions on consumer usage, particularly higher fees for large users of capacity, will be necessary, he said, because a few "bandwidth hogs" can bog down an entire local network. The FCC is putting the finishing touches on permanent rules for cable broadband service.

Rep. John Dingell (D-Mich.) praised the 35% cap on TV-household reach for preserving local programming but warned broadcasters that they must do more to convince others in Washington. The ranking member of the House Commerce Committee told the NAB state leadership conference that affiliates and independents should "raise the bar" by producing more local programming to differentiate themselves from increasingly "homogenized" networks. "Eternal vigilance here in Washington and careful service to the communities you serve will be two important instruments in maintaining your place."