Time to re-evaluate media rules, FCC chief says

By The Associated Press

04.25.01

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LAS VEGAS, Nev. — The nation's top broadcast regulator told broadcasters yesterday that some media restrictions may no longer have a place in today's competitive market.

Citing the federal restriction that prevents a single company from owning TV stations that reach more than 35% of U.S. households, Michael Powell, the new GOP chairman of the Federal Communications Commission, said the rule doesn't limit how many stations one company can own, but how many people one company can talk to.

"There is something offensive to First Amendment values about that limitation," Powell told members of the National Association of Broadcasters yesterday.

Later in the day, Powell said his agency's policy up until now had been one of avoidance rather than taking a serious look at whether the rules still make sense.

"The vast majority of the rules have been around for decades," Powell said at a conference held by the A.G. Edwards and Sons investment firm. Competition and even social judgments about what's desirable in media have changed dramatically, he noted.

Powell appears to be bringing a more hands-off approach to his oversight of the industry. His remarks come as the FCC is set to review a series of federal restrictions that limit the growth of media businesses.

The 35% broadcast limit, in particular, is a hot topic at the broadcasters' convention here. Locally owned stations and smaller station groups oppose easing that restriction for fear it could put them at a disadvantage, particularly when they are bargaining with networks to get programming.

"There needs to be an equilibrium in this business," said David J. Barrett, president and chief executive officer of Hearst-Argyle Television Inc., which owns 28 stations. Stations run by a variety of owners also will bring viewers a greater diversity of coverage on big news stories like the presidential elections, Barrett said.

The networks and big station groups want the cap gone, saying it makes no sense in today's competitive media environment.

"The cap has got to go away in its entirety," said Bud Paxson, chairman of Paxson Communications Corp., which is just under the limit now. Paxson said antitrust authorities can handle any concerns that might arise from acquisitions.

Three of the four major networks — Fox, CBS and NBC — have dropped out of the broadcast association because of the dispute.

The FCC plans to review the rule this year but is awaiting the outcome of a court challenge to the limit, which is now before the U.S. Court of Appeals for the District of Columbia. Earlier this month the court suspended the date by which Viacom Inc., parent of CBS, had to divest stations to comply with the cap.

The court said Viacom had met the stringent standards for a stay while the limit itself was under consideration. Part of that standard is based on the likelihood the company will prevail on the merits of its case, Powell noted yesterday.

"Many people see that as a grave sign for the life of the rule," he said.

With hearings scheduled for the fall, a court decision could come before year's end.

Earlier this year the D.C. appeals court threw out similar restrictions on cable TV companies — a move many believe gave new vigor to the networks' battle against the broadcast limit.

Powell said the process of crafting new cable limits, as required by Congress, must fall within the limit of the court's decision. That makes it likely the new limits will be more lenient.

Next month, the commission will begin evaluating whether to modify a rule that prohibits a company from owning a broadcast station and a daily newspaper in the same locale.

Consumer advocate Gene Kimmelman warns that relaxing media rules "could lead to further consolidation of broadcast, cable and newspaper in the hands of a few entrepreneurs."

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