Decision could reshape landscape of newspapers, TV, radio

Monday, June 2, 2003

WASHINGTON -- Rules governing ownership of newspapers and television and radio stations are on the verge of changes that could significantly alter who controls what people see, hear and read.

In a vote set for Monday, the Republican majority on the five-member Federal Communications Commission was expected to allow companies to buy more television stations and, in some cases, own both a newspaper and a broadcast station in the same city.

"When we look back in three to five years, we will say that this is the moment when the media map was reinvented," said Blair Levin, a former FCC official who now is an analyst with the Legg Mason investment firm.

Diverse interests opposed to deregulation have protested the changes ahead of the anticipated 3-2 vote favoring new rules.

These opponents contend relaxed rules will kick off a merger frenzy as large companies gobble up media outlets, homogenizing viewpoints and diminishing the local emphasis in news and entertainment.

The government adopted the ownership rules between 1941 and 1975 to encourage competition and prevent monopoly control of the media.

FCC Chairman Michael Powell, his two fellow Republican commissioners and many media companies say the rules are outdated and have limited companies' growth and competitiveness in a world changed by cable television, satellite broadcasts and the Internet.

Powell said Sunday that some industry consolidation will follow eased rules, but he doesn't believe "there will be a massive wave of mergers."

"Just because somebody can buy something doesn't mean it makes strategic or financial sense to do so," Powell said on ABC's "This Week." "There will be rules and restrictions. Everything that a media company would like to do is not going to be permitted."

Powell said the current rules threaten the future of free television by putting an unfair burden on the major networks in their competition with pay television services for quality programming.

He said court challenges from media companies could sweep away all current rules if the FCC doesn't update them.

As the vote approached, opposition intensified. Critics bought television and newspaper ads, wrote letters and e-mails, and demonstrated outside television stations owned by major media companies.

Some ads have taken on Rupert Murdoch, whose News Corp. owns Fox News Channel, 20th Century Fox TV and film studios, the New York Post and other media properties. Murdoch told a Senate committee last month he has no plan for a media buying spree after the changes other than his proposed acquisition of DirecTV, the nation's largest satellite television provider.

The critics of eased rules include consumer advocates, civil rights and religious groups, small broadcasters, writers, musicians, academicians and the National Rifle Association. They say most people still get news mainly from television and newspapers, and combining the two is dangerous because those entities will not monitor each other and provide differing opinions.

Lawmakers have split mainly along party lines. Democrats are demanding more public scrutiny of the changes while Republicans are supporting Powell.

Sen. John McCain, R-Ariz. and chairman of the Senate Commerce, Science and Transportation Committee, said he opposes proposed legislation to counter eased regulations. He said the changes are more modest than critics contend.

"These rules can be justified, these relaxations of the rules," McCain said on "This Week." McCain's committee is to hear testimony Wednesday from the FCC commissioners.

A 1996 law requires the FCC to study ownership rules every two years and repeal or modify regulations determined to be no longer in the public interest. Many changes proposed since then have remained unfinished or were sent back to the FCC after court challenges.

The FCC is considering raising a limitation to let a company own television stations reaching 45 percent of U.S. households. The overhaul also may ease a restriction on local TV ownership by allowing one company to own two television stations in markets with at least six competitors and three stations in the largest cities such as New York and Los Angeles.

A further change would eliminate most restrictions on a single company owning combinations of newspapers and TV and radio stations in the same city, which large newspaper companies such as Tribune Co. and Gannett Inc. favor.

"Newspaper-owed television stations program more and better news and public affairs than any other stations," said John Sturm, president of the Newspaper Association of America.

News Corp. and Viacom Inc., which owns CBS and UPN, stand to benefit from a higher national TV ownership cap because mergers have left them above the current 35 percent limit. Those companies, along with NBC, persuaded an appeals court last year to reject the current cap and send it back to the FCC for revision.


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