FCC Chairman Michael Powell wasted no time implementing his deregulatory agenda.
In the agency's first major merger approval under the commission's new lineup, granted Wednesday, Powell and his two fellow Republicans clearly indicated they won't follow the longstanding FCC practice of imposing conditions on industry acquisitions based on the broad authority to act in the "public interest" that has been granted by Congress. Powell's determination to take the FCC in a new direction was made clear in his statements supporting the agency's approval of Fox Television's $5.4 billion purchase of Chris-Craft's 10 television stations.
In approving the deal, Powell said Fox was under no additional obligation to show the purchase was in the public interest, beyond complying with FCC limits on national and local ownership. "A transaction that complies with structural rules designed to advance the public interest should not be subject to further ad hoc review," he said. "Otherwise the exalted benefits of such rules would be eviscerated."
The new take on the FCC's merger review obligation enraged the commission's two Democrats and public advocacy groups. "Today's decision effectively eliminates the requirement that merger applicants demonstrate that their license transfer would serve the public interest," said Commissioner Gloria Tristani, who along with Commissioner Michael Copps voted against approval. Media Access Project President Andrew Schwartzman said his group may challenge the FCC's decision in court. The two Democrats also charged that the FCC effectively waived Fox's obligation to comply with ownership limits by granting deadlines as long as two years.
The FCC is expected to decide whether to retain restrictions on TV household reach and newspaper/TV cross-ownership in the next year. Both rules factored heavily in the Fox deal. "These are long-term waivers that appear to be based on the anticipation that prior to the termination, the rules may relaxed such that compliance need never occur," Copps said.
Angered by assertions that the Republican FCC is greasing the tracks for mergers, Powell said "the sweeping assertion is not only offensive, but absurd." If he intended to ignore ownership restrictions, Powell said he would have fought for permanent waivers to the rules. Specifically the FCC ordered Fox within six months to shed one of the two stations it now owns in Salt Lake City. The Justice Department had already issued a similar order.
Fox must also sell either the New York Post or one of its two New York area TV stations within two years to comply with the ban on same-market TV/newspaper cross-ownership. Finally Fox will have 12 months to sell enough stations to comply with the 35% cap on one company's TV household reach. The countdown for coming in line with the cap begins only when, and if, a federal appeals court upholds the cap in a pending court challenge.
Finally, the Republican majority said the purchase didn't violate foreign ownership restrictions, even though Fox is owned by Australia-based News Corp. That's because News Corp. is controlled by U.S. citizen Rupert Murdoch. Democrats, however, countered that the Murdoch's control over the complex ownership structure can only be surmised through strained leaps of logic. Fox's financial structure grows "murkier and more Byzantine with each new iteration," Copps said. - Bill McConnell