Dereg still on slow track

FCC delays cable-cap proposal; Senators back bill to limit commission's ability to loosen ownership rules

Big media companies are finding out that, even though Republicans control the White House, the House of Representatives and the FCC, getting rid of those pesky ownership regulations is going to be an uphill battle.

One sign of that was the FCC's decision to pull proposed changes to the cable-ownership caps from its Aug. 9 agenda.

And then there's that now Democratic-controlled Senate. Last week, Senate Commerce Committee Chairman Fritz Hollings (D-S.C.) and Sens. Bryon Dorgan (D-N.D.) and Daniel Inouye (D-Hawaii) introduced a bill that would limit the FCC's ability to scrap some media-ownership rules. The bill would require the FCC to look at any transactions in which crossownership rules are involved, which the commission doesn't necessarily have to do now.

For example, when Tribune bought Times Mirror last year, FCC rules did not require the commission to review the license transfers until they came up for renewal, which allowed Tribune to own TV stations and newspapers in the same markets without facing FCC review. Under Hollings' bill, the FCC would have to look at any transfers at the time of the acquisition, and those companies would have to come into compliance with the commission's rules within six months or when the broadcast licenses came up for renewal, whichever came first.

The bill would be a big step backward for newspaper companies, which have been working for years to rid themselves of the ban on crossownership of broadcast properties and newspapers. "Clearly, we vigorously oppose the bill. You want to talk about anachronistic, that's what that bill is," said Shaun Sheehan, lobbyist for Tribune.

"There is no reasoned basis for the government to make it harder for newspapers to compete against the plethora of media available in print, over the air and via the Internet in every city and town in the country," said Newspaper Association of America President John Sturm in a statement.

The bill also would require the FCC to report to the House and Senate Commerce Committees any possible changes the agency might make in media-ownership rules and explain the public-interest reason for making the change. Once the report was filed, the FCC wouldn't be able to make an official change for 18 months.

Broadcasters aren't alone in their opposition to the bill.

The day after the bill was introduced, FCC Chairman Michael Powell said he opposed making the agency wait that long—"That's an age in regulatory time," he said—though he said the agency would "abide" by Congress' wishes if such a law were passed.

Several powerful senators, including John McCain (R-Ariz.), John Breaux (D-La.), Peter Fitzgerald (R-Ill.), George Allen (R-Va.) and John Kerry (D-Mass.), also expressed their opposition to Hollings' bill at a hearing before the Senate Commerce Committee. Backing Hollings were Sens. Ron Wyden (D-Ore.) and Max Cleland (D-Ga.). Besides debating whether companies should be able to own broadcast properties and newspapers in the same market, the committee also looked at whether a cap should be lifted that now limits companies from owning more TV stations than cover more than 35% of U.S. households.

If the cap stays in place, the health of free, over-the-air broadcasting is threatened, Viacom President Mel Karmazin said.

"The only way these stations will be successful is to grow the business. The only way you can grow the business is bigger audiences and better programming," Karmazin said. Broadcast networks need to own more moneymaking TV stations to be able to sustain the rising cost of programming on money-losing networks, he continued.

Post-Newsweek Stations President Alan Frank countered that lifting the cap would threaten localism and diversity. Hollings and Dorgan agreed strongly with him, but Breaux said, "I think the argument on localism is a smoke screen. I think the real issue here is the buying power between the affiliates and the networks."

But concerns about media concentration weren't limited to the Senate.

Rep. David Obey (D-Wis.) last week decided against offering language that would have kept the FCC from changing any media-ownership rules this year. Instead, he engaged in an on-the-record discussion with Rep. John Dingell (D-Mich.), who agreed to work with him and other members of the House Appropriations Committee on media-ownership issues.

"I share the gentleman's concerns about excessive concentration in media at this time," Dingell said, promising to press House Energy and Commerce Committee Chairman Billy Tauzin (R-La.) to hold hearings on the issue. A spokesman last week said Obey may bring the bill up again.

Dingell opposed Obey's bill because he is concerned that, if a pending court ruling eviscerates the FCC's broadcast ownership cap, the FCC will not be able to respond, and the net result would be no ownership cap at all.

Lawmakers' concerns in part persuaded the FCC to delay issuing the notice of proposed changes to the cable-audience limit and elimination of the ban on cross-ownership at its Aug. 9 meeting. To put the proposals on the agenda, FCC Chairman Powell would have had to get drafts of the plans to the four other commissioners by July 19. Powell left on vacation late last week and thus was unable to make sure views expressed at last week's hearing were incorporated into the draft proposals.