Reg Review Finally Revs Up

But no changes in FCC ownership rules are likely before ’07
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New FCC Commissioner Robert McDowell opened his first public meeting last week by pointing out that it was being held on the summer solstice, “the longest day of the year ... at least so far,” he said.

The laughter that greeted that remark was in recognition of the launch of a contentious process signaled by the FCC’s vote to finally start reviewing rule changes that would allow ownership of newspapers and TV stations in the same market.

With a Republican majority, FCC Chairman Kevin Martin will now likely have the votes to give media companies the freedom to own more stations or newspapers and stations in a market, though not before months of public comment and market studies. The FCC must still convince a federal court that this is the right way to go and could even then face more court challenges.

The rules were adopted by a party-line vote in 2003 but were stayed three years ago and remanded for changes two years ago by a federal appeals court in Philadelphia.

The FCC agenda last week did not include a vote on granting broadcasters cable carriage of their digital multicast signals. In a surprise move, Martin pulled the item on the night of June 18 after failing to muster his newly minted Republican majority.

The move to table multicast must-carry was a big victory for cable, which opposes it, and a setback for broadcasters, who see that carriage as critical to their success—if not their survival—in a multichannel world.

But the absence of multicast left more room for speeches on ownership. The Democrats’ same impassioned rhetoric that accompanied the first rules’ passage in 2003 was in evidence last week.

Democratic Commissioners Michael Copps and Jonathan Adelstein voted with the majority to launch the review but registered their dissent as well, saying that, as proposed, the rule review fails to address key issues of localism and diversity.

Adelstein likened Martin’s take on the rule review to turning in a high school paper for a Ph.D. thesis.

His and Copps’ major problems with Martin’s review plan were threefold: The FCC has yet to finish a proceeding, launched in 2003, on the effects of consolidation on localism; the review does not ensure that the public will be able to comment on the issues “reshaping the media before forcing a vote,” as Copps put it; and it does not take into account how one rule change might affect the advisability of another—for example, the result of allowing newspapers and TV-station ownership in a market and allowing more stations to be owned by one owner in that same market.

For his part, Martin countered that his colleagues were prejudging the item based on past commissions and chairmen. Borrowing Adelstein’s schoolroom analogy, he said it was like giving him an F on the first day of school before he had turned in any work.

Martin pledged an open, neutral process, saying the FCC will hold at least a half dozen public hearings and fund studies of the effects of consolidation on kids programming, family-friendly programming, news, localism, independent programming and more, budget willing. As to the unfinished localism proceeding, Martin said the FCC would incorporate an interim status report on it in the rule review, calling it an important element.

The FCC will also hold an extended, 120-day comment period to provide the public ample opportunity to weigh in, said Martin.

The FCC approved its 2003 deregulatory rule rewrite on a straight 3-2 party-line vote, with Martin voting for it while still a commissioner under Chairman Michael Powell, and Copps and Adelstein voting against.

Among other changes, those rules would have replaced the newspaper/broadcast crossownership ban and radio/TV crossownership rules with a “single set of media limits.”

The FCC must now look at the remand of those specific rules as well as all its rules according to a congressionally mandated quadrennial review. It was that review, biennial at the time, that prompted the first rule rewrite.

Broadcasters shouldn’t look for any new rules as a Christmas present, although there will be pressure from some media companies to move on newspaper/broadcast crossownership. Tribune, for example, has been pushing hard for lifting the ban.

Early 2007 appears to be the earliest date for a change in the status quo. Even then, there is no guarantee the Philadelphia court will accept the likely deregulatory changes and lift the stay.

Even if it does, the rules could wind up back before the same court, which maintains jurisdiction. “We think the case for maintaining broadcast-ownership rules has gotten stronger over the last few years,” says Andrew Schwartzman, of Media Access Project, which helped get the initial rules stayed and remanded, “so any move in the other direction is something we would certainly challenge in court.”

PUBCASTERS SEEK DIGITAL DOUGH

Public broadcasters may have a system-wide multicast DTV-carriage deal with cable and now with Verizon, but they’re trying to hold on to as many over-the-air customers as they can.

The National Association of Broadcasters and the Association of Public Television Stations (APTS) have had talks about teaming up to get as much government money as possible for a DTV public-awareness campaign, according to an executive familiar with the matter. The money will go, partly, to keep over-the-air viewers from becoming cable and satellite subscribers.

According to APTS President John Lawson, the association has “begun a dialogue” with its commercial counterparts at NAB about getting the $5 million earmarked by Congress for consumer education to help teach their viewers about the switch to digital, currently targeted for February 2009.

APTS wants to keep the 20% of viewers that rely on over-the-air broadcasting from migrating to cable or satellite. That strategy comes despite the deal the cable industry struck with APTS last year to carry digital multicast channels, an agreement cable has not struck with commercial stations. The National Cable & Telecommunications Association had no comment on APTS’ DTV consumer-awareness strategy.

RETAIN OVER-THE-AIR VIEWERS

“Public-television stations will be ready [for the transition],” Lawson says, but, he adds, “we have to maintain that 20% of households that rely exclusively on over-the-air television. These are our people. If there’s confusion about the hard date, if they don’t understand that they can upgrade their analog sets, then they will go to cable and satellite.” NCTA declined to comment.

“I’m pretty sure the current leadership at NAB understands this dynamic both for political reasons and for reasons of valuation by Wall Street,” Lawson says. “So we have $5 million in the DTV bill that we’re building a coalition to make sure comes our way.

“It’s trivial in terms of advertising,” he continues, “but in terms of outreach, it would fund the largest outreach campaign in public-television history, and we plan to use that to keep our over-the-air base and perhaps even expand it.”

NAB, APTS and 15 other groups sent a letter to the National Telecommunications & Information Association last month. NTIA is coordinating the DTV-converter-box voucher program and the $5 million consumer-education campaign. APTS and company called for a coordinated approach and said they were ready to work with NTIA on the planning and implementation.

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