Reg rollback rolls

House vote raises affiliates' hope of 'clean' 35% law

Why This Matters

Fox, Viacom Worry About House Vote

Fox, Viacom Worry About House Vote

For reasons that are fairly clear, both Fox and Viacom/CBS are perhaps the two groups most disappointed by last week's move by the House of Representatives to roll back the FCC's expansion of the national TV-station ownership cap from 45% to the previous 35%.

Viacom and Fox own the two biggest station groups in the country. At 39% and 38% coverage, respectively, of U.S. TV households (including the FCC's 50% discount for UHF stations), Viacom and Fox also happen to be the only two groups that exceed the 35% threshold that the House voted to roll the cap back to.

Both companies stress that the cap fight is far from over and they intend to do all in their power to get regulators to retain the 45% limit.

"We are troubled by it," said Viacom President and COO Mel Karmazin about the rollback momentum. "It's political and not based in fact, and we will continue to monitor it and influence it to the best of our ability." He stopped short of saying Viacom would sue if need be to retain the 45% cap, but that was the strong hint: "We still have the court option to look at as time goes on."

A spokesman for Fox parent News Corp. said the company was "very disappointed" by the House's action last week. "We run extremely good local stations that are integral parts of their local communities."

The Fox spokesman said the company would try to persuade lawmakers not to rescind the new limits. What the company's strategy would be, failing that, is premature to talk about, he said. "There's a long way to go on this."

Both companies have stated repeatedly during the cap battle that they'll abide by whatever rules are adopted.

But last week, Karmazin made a point of noting that, "under the current language [of the House bill], there is no talk of us having to roll back" from 39% to 35%. Asked specifically whether Viacom would have to divest of stations, he replied, "There is nothing in any language that is saying that."—Steve McClellan


Fox, Viacom Worry About House Vote

The House of Representatives last week stunned the White House, GOP leaders and the broadcast networks by voting to reinstate the 35% audience-reach cap on TV-station ownership. And, even though the Senate is expected to follow the House lead in September, the shell-shocked proponents of the 45% cap set by the FCC on June 2 are not giving up the fight.

The 45-percenters are now focusing on the backroom negotiations that will ensue when lawmakers from both sides of Capitol Hill meet to resolve differences between the two bills and then send the package back to members for a final vote.

Supporters of the FCC action are using the threat of a veto to convince congressional negotiators that all broadcast-ownership reregulation should be struck from the underlying bill, a $38 billion appropriation that will fund the FCC as well as the Commerce, Justice and State Departments.

Presidential aides, House Speaker Tom Delay (R-Texas) and House Commerce Committee Chairman Billy Tauzin will be working phones during summer recess bargaining for lawmakers' commitments to sustain a threatened veto. Lawmakers can also count on hearing from hometown broadcasters.

Following the lead of its House counterparts, the Senate Appropriations Committee is expected to approve reinstating the 35% cap as part of an FCC-funding bill. The Senate panel might go further. Many following the debate expect close votes on additional riders that would revive the ban on local broadcast/newspaper crossownership or other restrictions.

At the same time, efforts are under way by the White House and House Republican leaders to win commitments from lawmakers to sustain the veto threatened by the Bush administration. A letter circulating on both sides of Capitol Hill had few signers late last week, but more will be pressed to sign on during their break in the home districts.

The debate has divided broadcasters. Networks are pushing to retain the new 45% cap approved by the FCC on June 2. Affiliates want to return to 35% to prevent the nets from gaining more leverage over affiliation contracts. But even they are divided, by political strategy. The National Association of Broadcasters opposes any legislation now, fearing that it would be loaded up with the other provisions they hate. The Network Affiliated Stations Alliance wants to forge ahead, confident that a "clean" 35% bill can win. "So far, we've been right," said NASA Chairman and Post-Newsweek Stations chief Alan Frank.

Last week's rhetoric was fiery. For example, Rep. Ed Markey (D-Mass.) said the FCC's June 2 vote was "the worst decision made by the Federal Communications Commission ever!"

But Tauzin accused reregulation supporters of "backward thinking" and warned Republicans that the deregulation they have fought for so long "would stop in its tracks" if they joined the anti-FCC bandwagon.

Even FCC Chairman Michael Powell, who rarely comments on congressional debate, chimed in with a statement penned (or least approved) from his undisclosed vacation site. "Our democracy is not threatened," he said, by a measure that would do little more than let Fox and CBS increase their current national audience reach by half a percent.

He said the FCC toiled to create legally enforceable rules "that reflect the realities of today's media marketplace." That's important because the FCC rules are guaranteed to face lawsuits and federal judges ordered the commission to rewrite the old rules.

Although both the Appropriations Committee and the full Senate are expected, at a minimum, to approve a rollback from the FCC's new 45% cap, the White House and House leaders are counting on winning enough commitments to sustain a veto.

Supporters of the 35% predict that Bush will chicken out, if a sustained veto can't be assured. "A veto will only help Democrats looking for presidential-campaign issues," said one congressional staffer, whose boss backs the reregulation effort. "What happens in Appropriations, the Senate floor, the conference and the veto at each stage is a game of chicken."

How long President Bush is willing to aim for the oncoming headlights is the big question. Last week, White House Budget Director Joshua Bolten wrote Tauzin, pledging that "senior advisers" would "recommend" a veto if the appropriations bill landed on the president's desk containing any rewrite of the FCC's media-ownership rules.

That pledge gives Bush a lot of room to wiggle out. He can always reject his advisers' recommendations.

Despite a victory last week for supporters of tighter ownership rules, the final outcome is wildly unpredictable. Although many in the press made hay of the 400-12 margin of victory, the bill also contained key measures on anti-terrorism and free trade as well as funds for critical agencies.

The battle over deregulation won't be limited to appropriations. The Senate Commerce Committee is slated to vote on a "legislative veto" sponsored by Sens. Byron Dorgan (D-N.D.), Russ Feingold (D-Wis.) and Trent Lott (R-Miss.). Also in the wings are Senate Commerce Committee bills that would ban newspaper crossownership and force divestiture of some radio stations. In the House, Reps. Richard Burr (R-N.C.) and John Dingell (D-Mich.) have more than 170 members signed on to a bill to reinstate the 35% cap, and Rep. Maurice Hinchey (D-N.Y.) has legislation introduced that would ban crossownership.