Station-Cap Roulette Now Lands on 39% - Broadcasting & Cable

Station-Cap Roulette Now Lands on 39%

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Like comedian Jack Benny, who never admitted to turning 40, the national cap on TV ownership could be perpetually stuck at 39. At 39% of TV homes, that is.

Last week, the Bush White House brokered a surprise compromise over media de-regulation by agreeing to permanently set the national TV-station-ownership cap at 39% of U.S. television households.

That percentage conveniently allows Fox and Viacom to retain all their stations.

Wielding a threat to veto a catch-all spending bill over a provision that would roll the limit back to 35%, aides to President Bush persuaded Senate Appropriations Committee Chairman Ted Stevens (R-Alaska) to back down from the tighter limit. Stevens's action came less than a week after he had persuaded reluctant House leadership to go along with the old level.

The compromise splits the difference between the 45% limit set by the FCC in June and the previous 35% level that rank-and-file lawmakers on both sides of Capitol Hill had been pushing to reinstate. The agreement is part of a gigantic spending bill that funds the FCC and many other agencies in fiscal 2004.

If the bill passes Congress—by no means a certainty—it would eliminate the immediate threat that CBS and Fox would face from resurrection of the 35% cap. Both companies are hovering around the 39% level, and each would be forced to sell one or two stations to get under the old cap.

The House is scheduled to vote on the measure when it returns for one day of votes Dec. 8. Stevens said that the Senate's timetable will be decided at that time. If the bill can't be passed quickly, he warned, the Senate might have to reopen talks on the entire package—a process that could drag on through January.

Big selling job

Stevens acknowledges that strong opposition was ignited by the compromise and he faces a big selling job to build support for what is basically a rewrite of the agreement that House and Senate negotiators reached the week before. In a press conference last Tuesday, he pleaded with angry lawmakers not to oppose the omnibus spending bill, a melding of seven formerly separate measures, because of the FCC passage. "Do we allow seven bills to go down because of objections to one provision in one bill?" he asked.

The big broadcast networks are likely to see the agreement as a defeat because the new 39% would be made permanent and subject to change only by Congress. The agreement would eliminate the FCC's obligation to review the cap every two years and raise or eliminate it if it's found to be unnecessary.

Victory for FCC

That elimination in itself is a victory for the FCC, but the agreement does the agency another favor by extending the time between FCC reviews of other broadcast-ownership limits, such as restrictions on local TV duopolies, broadcast/newspaper crossownership and local radio caps. Reviews would instead be conducted every four years instead of on the two-year cycle imposed by Congress in 1996. FCC officials would not comment on the agreement, but all five agency commissioners previously have told lawmakers that biennial reviews are too frequent.

The broadcast industry, already split over the national TV cap, reacted unenthusiastically to the compromise. "So much for broad deregulation," said one network source. Besides fighting at the FCC, the networks have gone to court to eliminate the cap as well, as have activists and broadcasters on all sides of the media-concentration debate.

The legal gambits will be much more difficult to win if Congress enshrines the 39% level, Stevens predicted. "Litigants will be attacking a statute of Congress instead of an FCC rule," he said. "It's a different standard" of review. The federal appeals court in Philadelphia is scheduled to hear oral argument in the case Feb. 11.

The National Association of Broadcasters, which represents network affiliates and independent stations, went along with Stevens's deal because it makes permanent the 39% limit. "While a 35% cap would have been preferable, we recognize the political realities surrounding this issue," said President Eddie Fritts in a statement.

Tradeoff

Some major network affiliates that have fought furiously to retain the 35% level voiced stronger disappointment but were similarly willing to trade for the security of knowing the FCC won't consider hiking the cap every two years. "It's a tough compromise for us," said Alan Frank, president of Post-Newsweek Stations and chairman of the Network Affiliated Stations Alliance. But, if the agreement holds, "we will reluctantly support it." Affiliates say a higher cap gives the networks too much leverage over affiliation contracts.

The last-minute deal with the White House infuriated Sens. Ernest Hollings (D-S.C.) and Byron Dorgan (D-N.D.), who led the fight to reinstate the 35% cap. Dorgan noted that House and Senate negotiators agreed to include the 35% rollback in the package as they were negotiating the spending bill and charged that the White House-brokered deal will "undermine" lawmakers' authority to craft legislation. "It will provoke a major battle, at least here in the United States Senate," he wrote in a letter to Stevens and House Appropriations Committee Chairman Bill Young (R-Fla.), lead negotiators with the White House over the bill.

"The Republicans went into a closet, met with themselves, and announced a 'compromise,'" added Hollings. "It reminds me of Plato's famous couplet: The politician makes his own little laws and sits attentive to his own applause."

Even if the legislation passes, the debate over media concentration won't end. Besides the court case, Dorgan and Senate Commerce Committee Chairman John McCain (R-Ariz.) have vowed to pursue their separate versions in next year's session.

The Senate has passed a "legislative veto" of the FCC's June 2 broadcast-ownership deregulation, and Rep. Maurice Hinchey (D-N.Y.) has vowed to pursue his version in the House. He has requested that House Speaker Dennis Hastert (R-Ill.) allow a vote on the resolution. If Hastert says no, Hinchey will try to raise the 218 votes necessary to bring the matter to the floor over the Speaker's objections next year.

Executives at the affected networks were largely silent on the deal. Rupert Murdoch, chairman of Fox parent News Corp., told shareholders he wasn't up on all the details but, "on the face of it, it suits us just fine." CBS officials had no comment.

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