WASHINGTON -The deregulation derby began last week with Federal Communications Commission chairman Michael Powell pledging to launch a review in May of the newspaper/broadcaster common-ownership ban.
Should Republican Powell decide to remove or relax the ban-and judging from his public utterances, such a move appears more than likely-he would allow one company in the same market to own at least one newspaper and one TV station, and perhaps one radio station as well.
If the restriction goes away, a direct and large beneficiary would be the Tribune Co., the owner of TV stations and newspapers in New York, Los Angeles, and Hartford. Tribune's TV licenses in those cities won't be in jeopardy until they come up for renewal in 2006 and 2007.
Chicago-based Tribune, a broadcast group with 22 stations, ran into cross-ownership problems last year when it paid $8 billion to acquire newspaper giant Times Mirror Co. The company also has a cross-ownership problem in the Miami market, where it owns TV station WBZL and the Fort Lauderdale Sun-Sentinel.
"We were granted a waiver in the Chicago Tribune
case and when we did that, we said that we would initiate a proceeding. So I think we should make good on that promise," Powell said. "That's one that makes sense to look at."
Newspaper and TV-station interests have been pressing for removal of the ban for years, claiming the explosion in media voices and the presence of robust competition in the advertising market make the ban unnecessary.
"We are delighted with what the chairman said today and we have been anticipating that," said John Sturm, president and CEO of the Newspaper Association of America.
The National Association of Broadcasters also supports elimination of the ban, perhaps because many of its TV and radio station members are also owners of daily newspapers.
"We're pleased that the chairman is bringing about a prompt review of this antiquated rule. This is something the FCC promised last year and clearly, the justification for this has long since passed," said NAB spokesman Jeff Bobeck.
Adopted in 1975, the ban blocks the common ownership of a newspaper and a TV station and a newspaper and radio station in the same market. At the time, the FCC feared excessive media concentration that threatened "diversity of viewpoints and economic competition," as the FCC said in a report last year that rejected any change in the rule.
At the time of adoption, the FCC agreed to grandfather dozens of combinations that would have otherwise run afoul of the rule. Today, there remain grandfathered newspaper-broadcast combinations in about 40 markets, including Chicago, where Tribune Co. owns the leading newspaper, WGN-TV and WGN-AM radio.
"Guess what?" NAA's Sturm said. "The Republic still stands. There has not been any problem, there have not been any complaints, and there have not been any lawsuits, and no one has dominated the advertising markets in those cities."
Last year, the FCC reviewed the rule but decided to retain it to promote diversity and preserve competition. Then-agency chairman William Kennard promised to launch a rulemaking to see if relaxation in large markets was palatable, but Kennard failed to keep his word.
"We all knew [the Kennard FCC] was going to wait until after the election" said Shaun Sheehan, Tribune's Washington vice president.
Sheehan said he expects Powell will not limit the review just to TV station-newspaper combinations.
"I suspect that he is going to embrace radio as well," he said.
NAA's Strum said he supports complete elimination of the rule, not just relaxation in the biggest markets where mass-media outlets proliferate.
"I have no doubt that they are going to see that even in smaller markets there is a multiplicity of voices brought in by cable and satellite," Sturm said.
Powell announced his plans during his first appearance as chairman before the House Telecommunications Subcommittee, where he also outlined his program to reform and reorganize the FCC's 2,000-person bureaucracy.
Although several Republicans and Democrats on the panel warmly endorsed Powell's intended direction, Rep. Edward Markey (D-Mass.) urged Powell not to rush to deregulate.
"I think you should be very careful in this area because, without question, diversity is a proxy that ensures that there is competition in marketplaces that it took a long time for the Congress and the regulators to break down," Markey said.
Jeff Chester, executive director of the consumer-oriented Center for Media Education, said the broadcast-newspaper ban was vital to preserving diversity and should not be altered.
"This would be the wrong move and [a] signal [that] Powell doesn't really care about diversity and more robust debate. His legacy may end up being as someone who merely served as an apparatchik of the media industry's deregulatory regime," Chester said.
Andrew Jay Schwartzman, president of the Media Access Project, a public-interest law firm that fights media giants at the FCC, said he hoped Powell's team hadn't prejudged the outcome.
"Even though it sounds as if he's made up his mind, I know that chairman Powell is open-minded. I'm confident we can develop a record that justifies retaining the rules, and I'm sure he'll give us a fair shake when he reads it," Schwartzman said.
Appearing before the American Bar Association last week, Powell said ownership limits based on diversity unavoidably engage regulators in a guessing game about how many media voices in a market are sufficient.
"The biggest problem with diversity is that everybody likes the notion, but nobody knows how to define it," he said. "When is seven too many and six isn't? We don't know."
Powell added the FCC's definition of diversity is nothing more that what an FCC majority says it is.
"It's when three of five people finally vote. To be candid, that's it. People have just impulsive differences as to when that is too much, when 'Citizen Kane' has taken over the universe."
Under the Telecommunications Act of 1996, the FCC is required to review its mass-media ownership rules every two years in a formal process that begins with comments from interested parties and concludes with an FCC report of some kind.
After his congressional testimony, Powell told reporters he plans to overhaul the process, changing it from a biennial review to a continuous process within the agency.
"There are just too many rules to honestly sort of really evaluate in one year and say you're done," he said. "I am looking at maybe more aggressively kind of making that an almost an ongoing process. I haven't figured it out yet, but I think you'll see something like that maybe in the summer."
