FCC relaxes media-ownership rules

By The Associated Press

04.20.01

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WASHINGTON — The government gave the major TV networks permission yesterday to combine with upstarts WB or UPN, the first in what is expected to be a series of actions to ease media consolidation.

Such decisions could ultimately affect the breadth of information that Americans read, watch or hear. More immediately, the decision by the Federal Communications Commission means that Viacom Inc., which merged with CBS last year, won't have to sell UPN.

The FCC voted 3-1 to modify its restriction against one company's owning two networks. Specifically, the decision means that one of the four major television networks — ABC, CBS, NBC or Fox — could scoop up either of the two smaller networks, UPN or WB.

FCC officials noted that UPN, which has some of the top-rated shows among black audiences, serves minority viewers and letting it fail would actually reduce diversity on the airwaves.

With more than 200 affiliates, UPN is home to programs such as "The Hughleys," "Moesha," "World Wrestling Federation Smackdown!" and "Star Trek: Voyager."

Commissioner Gloria Tristani, the sole dissenting vote, said the action would "only further erode the already tenuous level of diversity on the airwaves."

The commission kept in place a ban on any two of the four major networks' merging. Prior regulations make it possible for the big four to acquire fledgling networks created after 1996.

Although limited in scope, yesterday's ruling could be a portent of what's to come, observers say.

This commission "is likely to be very receptive to lifting or eliminating many of the media-ownership rules that have protected free speech and democracy for 60 years," said Andrew Jay Schwartzman of the public-interest firm Media Access Project, which opposes the commission's decision.

FCC Chairman Michael Powell has indicated his preference for easing regulations to let the marketplace work. That view is in line with a number of other Bush administration initiatives.

"Diversity is an important communications ideal," Powell said yesterday, but he said policy-makers should recognize that sometimes financial interest — and not just government regulations — can drive corporations to promote diversity.

For example, television providers who rely on advertising revenue have an incentive to offer programming that consumers want, he said.

Next month, the commission will begin evaluating whether to modify a rule that prohibits a company from owning a broadcast station and daily newspaper in the same locale. A final decision could be months away, but any major easing of that restriction would be significant, experts say.

"It creates the potential for different kinds of companies than we have now," said Blair Levin, a former FCC official who now is a regulatory analyst with Legg Mason.

The commission also will look at a rule that forbids one company from reaching more than 35% of U.S. TV households through the stations it owns.

Network owners, including Viacom, vigorously oppose the cap and have a legal challenge pending in court. Viacom has a direct interest in the outcome, because it now has a national audience reach of 41% as a result of its merger with CBS.

The FCC had ordered the company to get rid of some stations by May, but that requirement was suspended by an appeals court earlier this month.

"We are encouraged by the FCC's willingness to revisit and amend its traditional positions in light of the realities of communications in the 21st century," Viacom said of yesterday's action. The company expressed hope the commission would look at other broadcast regulations in the same light.

Some experts believe the networks' battle to undo the ownership limit may have been given a boost by an appeals court decision in March throwing out similar restrictions on cable TV companies. The court determined that rules limiting the number of subscribers one cable company could reach infringed too heavily on free speech.

The FCC will have a chance to rewrite those cable limits, too, likely making them more lenient than the previous caps.

Related

Federal appeals panel urged to throw out media-ownership rules
Networks argue FCC regulation violates First Amendment by preventing them from reaching unlimited audience.  09.10.01

FCC ordered to rewrite media-ownership rule
Federal appeals panel says commission must reconsider restrictions on companies that want to own two TV stations in the same market.  04.03.02