FCC bends on print combos

But Kennard won't budge on 35% network cap; 'See you in court,' says Fox

FCC Chairman William Kennard last week gave a clear indication of where he's willing to budge and where he'll stand his ground when it comes to further broadcast industry deregulation.

Taking the lead in an agency report to Congress, Kennard said the commission will consider loosening restrictions on newspaper-broadcast crossownership and is amenable to letting the Big Four nets buy junior competitors WB or UPN.

But he refuses to consider any increase in the agency's 35% cap on a broadcast company's nationwide household reach, an issue that has split the industry.

Kennard, however, may not get a chance to carry out his game plan, as the FCC takes up the last portion of a sweeping review of broadcast ownership rules ordered by Congress as part of the 1996 Telecommunications Act. The 2000 election could radically alter the makeup of the FCC and could even lead to Kennard's departure before the latest round of changes is completed.

The tenures of other commissioners, including Democrat Susan Ness and Republican Harold Furchtgott-Roth, are also unclear because of expiring terms.

"The timetable for deciding this issue will clearly be pushed past the election, and the makeup of the commission is likely to change," said Richard Cotton, general counsel for NBC, which is fighting to raise the broadcast ownership cap.

So important is an increase in the cap to NBC that the network dropped out of the National Association of Broadcasters in February because the trade group opposes any change.

Cotton, whose company reaches 26% of the country with its 13 O & Os, said the cap is "indefensible" after the FCC gave cable companies more leeway to buy new systems by changing the way it measures their market reach. In October, the FCC said a cable company's national reach would be measured by its share of U.S. multichannel subscribers rather than by the more limited share of cable homes passed as before.

"The FCC is using a ludicrous yardstick by looking at potential viewers instead of actual viewership," Cotton said. NBC is mulling whether to simply fight for a change of heart at the FCC or to take the agency to court.

FOX Television has already decided to take the litigious route and said it will ask a federal court to strike down the cap. "In an era in which scores of nationwide programming networks are available to viewers from cable and DBS providers, it makes no sense to artificially limit the number of markets in which broadcasters can compete," said FOX Television Chairman Chase Carey.

FOX could be hit with a double-whammy if the FCC makes good on another pledge: to consider eliminating the "UHF discount" when the transition to all-digital signals is complete.

The discount allows station groups to own more stations than would otherwise be possible, because the audience reach of UHF stations is tabulated at 50% of their actual reach. FOX has an unusually large percentage of UHF O & Os, and its audience reach would rise from 35% to 41% if the discount were eliminated.

Viacom Inc. may be forced to divest stations, thanks to its recent merger with CBS. But relaxing the dual-network rule might blunt some of the sting by letting the media giant keep its stake in UPN.

Congress, for now, appears to be a dead end for the networks because of the opposition of the affiliates and the NAB. Most large station groups oppose an increase because they don't want to lose leverage in negotiating affiliation contracts. "The networks and the affiliates need to work out a compromise first," said a spokesman for House Telecommunications Subcommittee Chairman Billy Tauzin (R-La.). "Once they come up with a resolution, then Billy will be committed to helping them get it through Congress."

The FCC said it would consider allowing some same-market newspaper crossownership if market size, local competition and type of newspaper were considered. "A combination of a single radio station in a large market and a small suburban newspaper might raise fewer concerns than other potential combinations," Kennard said.

The NAB praised the direction of both proposals. "We're pleased the FCC said it would keep the 35% cap intact," said spokesman Dennis Wharton. "We think they should go much further on newspaper crossownership; it's a relic of a bygone era."

But Ness, who prodded Kennard to drop his opposition to any modification, said newspapers already are the most prolific sources of public-affairs information in most communities and repealing the rule entirely would reduce "viewpoint diversity."


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*Combined CBS, Paramount station groups exceed limit; FCC requiring divestiture to get to 35%.

Source: Broadcasting & Cable research