Courts May Nix FCC Fix - Broadcasting & Cable

Courts May Nix FCC Fix

Either Powell miscalculated, or his opponents have
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FCC Chairman Michael Powell had a plan. A cadre of bright FCC lawyers and economists would study the media marketplace and then scientifically calculate relaxed media-ownership rules that would ensure that new ideas would flourish and the American Republic would thrive for years to come. Based on the indisputable logic of the staff findings, the new rules would withstand any court challenge.

It was a good plan. If the FCC existed in a galaxy far, far away that was free of human avarice, pettiness and power grabbing—that is, politics—it might have worked. As it is, here we sit on St. Patrick's Day, and the FCC ownership proceeding is headed for a good old-fashioned political fix on the eighth floor of the Portals. If it weren't, Disney's Preston Padden and Alex Wallau and Viacom's Leslie Moonves would not have been running around Washington last week putting the squeeze on some of the fixers.

This is not necessarily a bad thing. I've always seen the FCC's job as a kind of referee, weighing into the fray of warring industry sectors when necessary and ultimately leading them to a resolution.

The reality check came two weeks ago when FCC Media Bureau Chief Ken Feree acknowledged that the staff would make no recommendation to the five commissioners on the key 35% TV station cap. In other words, the staff would simply send to the eighth floor all the stuff it collected and leave it to the commissioners and their staffs to sort it out.

Oh, the agency staff is not done. After the commissioners cook up the new cap, they will send it back to the lawyers and economists for some reverse engineering. The staff will pick apart the cap and then start attaching words and numbers in a valiant attempt to justify them to the public and the courts. It's a tricky business and seldom works (see fin-syn, 1993).

For the scientific method to have had any chance, the five FCC commissioners would have to be philosophical clones. This is hardly the case.

The law requires two of the five commissioners to be of a party not in the White House. In years past, a Republican administration would find Democrats in name only. For whatever reason, the Bush Administration allowed unfriendly congressional Democrats to pick two of the five commissioners, Michael Copps and Ken Adelstein.

Copps, in particular, has been a real drag on Powell's effort to deregulate the media. He has been playing politics on the ownership proceeding from the start, rallying so-called public-interest advocates and doing whatever he can to slow the proceeding. He's not against loosening the caps, mind you; he just doesn't want to rush to judgment. Yeah, right. Fact is, he would impose a one-person, one-station rule if it could dictate the result.

Republican Kevin Martin, a vote Powell should be able to count on, is also complicating the picture by showing an independent streak. In a high-profile telephone proceeding, Martin sided with Adelstein and Copps and put Powell on the short end of a 3-2 vote. Now, Martin may simply be a courageous man who acts without any thought about his future in Washington, but rest assured he did not embarrass Powell without political cover, probably from the White House, where he used to work.

So what's going to happen next?

The lobbying at the FCC and on Capitol Hill will become increasingly intense. If Powell sticks to his June deadline for action, the commissioners and their personal staffs will begin working out a new set of ownership rules sometime in May. To relax one rule—newspaper/broadcast crossownership, say—Powell may have to agree to keep another in place—the 35% station cap, say. That fin-syn II rule also could creep into the dealmaking as a hedge against broadcast-network power.

So, in the end, the FCC stitches together a Frankenstein monster, gives it life during a meeting this spring and releases it upon an unsuspecting public. But, like a mob of villagers upset by what run-amok monsters might do to property values, three judges of the U.S. Court of Appeals in Washington will strike the monster dead and give the FCC no chance to revive it. Suddenly, the business is free of ownership restrictions.

Hey, maybe Powell does have a workable plan, just not the one we thought.

Jessell may be reached at hjessell@reedbusiness.com

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