Score One For Regulators

Cable World, July 28, 2003

Byline: ALICIA MUNDY

President George Bush once vetoed a telecom law, and it came back to bite him. That was 1992, the Cable Regulation Bill, and it was a different Bush. It was his only veto ever overridden, weakening him for the election. That specter is in the mind of the current President Bush and his adviser Karl Rove, as they war-game what to do with the revolt, led by Republicans, against the looser media ownership rules voted in by the Federal Communications Commission on June 2.

Meanwhile, everyone in Washington is playing the blame game, asking how the FCC, the GOP and White House miscalculated the public and political backlash to those rules. That backlash resulted in a 400-21 vote in the House last week to roll back the network cap from 44% to 35% - a bad omen.

What happened? First, Hollywood's Coalition for Program Diversity played a bigger role than many in Congress and at the FCC want to admit. Mickey Gardner, its Washington lawyer, says members from the Directors Guild and Screen Actors Guild, along with Sony, came in with hard data and a low-key, non-Hollywood approach. (They also brought money.) "They gave the FCC and Congress real facts about the lack of independent programming on prime-time television in recent years," says Gardner. From there it was a no-brainer to link big media with 24/7 smut shows, gathering support from the Christian Coalition and the Left.

Their biggest coup was getting Jon Mandel, CEO of MediaCom, to testify about the threat of monopolistic media mergers to advertising rates. During his July 8 appearance before the Senate Commerce Committee, Mandel played up the connection between commercial ad costs and political ad costs, which gave election reformer Sen. John McCain (R-Ariz.) more ammo against big media.

One of the loudest opponents of the higher cap was veteran GOP Rep. Frank Wolf from Virginia. This quiet moderate, according to GOP staff, turned ballistic, decrying salacious TV shows and the lack of coverage of African famine by the networks. "Wolf came from nowhere and just picked up steam," says one lobbyist who has Wolf's footprints on his back.

Despite the humorous cracks about FCC Commissioner Michael Copps's magical mystery tour of media merger hearings around the nation, he had made this sleeper issue resonate with the masses. Says one broadcast lobbyist, "Copps made it play in Peoria." Another lobbyist said his own mother called to tell him not to let media consolidation happen - proof that Copps's campaign had reached the hinterlands.

Billy Tauzin (R-La.), chairman of the House Commerce Committee, who vowed to block attempts to roll back the FCC rules, was rolled himself - by members of his own party. They took up the issue in the Appropriations Committee, where he has no sway, and moved it to the floor. Clear Channel was a huge help - inadvertently - in getting the rider passed by becoming the poster child for Big Media Gone Bad. Almost every member of Congress cited Clear Channel as the bete noir that spurred their vote.

If the White House vetoes a bill lowering the network cap, say several GOP lobbyists, "It will be the biggest present George Bush could give the Democrats." Some Dems actually hope Bush vetoes the bill, which would give them a rallying point in the next presidential election. Bush may be stuck whatever he does. If the Appropriations rider succeeds, it will have to come around again next year as part of the FY 05 budget bill, due Sept. 30, 2004, at the height of the election campaign. Republicans won't want to vote against it then, Dems will use it as a war cry and Bush will have to weigh the pressure of big media contributors against voters 60 days before the election.

What does it mean for cable? Back in January, FCC staff hinted the commission would soon be voting to raise the cable ownership cap (probably from 30% to 40%). But it's not likely the FCC will touch it anytime soon. As one GOP Hill staffer explained, if you think Americans don't want broadcast TV to get too big, "wait till you hear what they think about their cable companies."

THE NEXT QUESTION:

*Will Sen. Byron Dorgan's resolution of disapproval reversing the FCC rules gain or lose support before September?