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Broadcasters Disagree At Fcc Ownership Hearing

Television Digest with Consumer Electronics, Feb 15, 1999

FCC commissioners generally kept their views to themselves Feb. 12 in en banc hearing on broadcast ownership issues in which major TV groups took opposite positions on public interest value of local marketing agreements (LMAs). Most of questioning was by Chmn. Kennard and Comr. Ness, who wanted to know how such agreements and consolidations of ownership serve localism.

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Hearing was held in aftermath of Feb. 10 letter to FCC by congressional leaders on both sides telling agency to do nothing on ownership issues that would hurt local stations and stating that LMAs were grandfathered by Telecom Act. Position was cited by Comr. Furchtgott-Roth, leading Kennard to respond that as gen. counsel and now as chmn., he reads all congressional correspondence and has found no "unanimity" on positions "and this issue isn't any different." Letter was signed by Senate Commerce Committee Chmn. McCain (R-Ariz.), House Commerce Committee Chmn. Bliley (R-Va.), Senate Communications Subcommittee Chmn. Burns (R-Mont.), House Telecom Subcommittee Chmn. Tauzin (R-La.), senior House Commerce Committee Democrat Dingell (Mich.). They said Commission should provide "significant, meaningful, prospective relief to local radio and television broadcasters" on ownership questions and shouldn't "wait until free, over-the-air broadcasting is overwhelmed by multichannel competition before taking action." Lawmakers said that requiring station owners to sell stations as result of changes in ownership rules can't be justified: "Nothing is gained by having 'independent owners' if they cannot compete in the marketplace." Requiring sell-off of stations through changes in ownership would be contrary to FCC policy and would create uncertainty in broadcast industry, they said. In addition, same policies support grandfathering all existing one-to-market and TV waivers, they said. Reiterating Clinton Administration's contention that FCC shouldn't relax ownership rules, NTIA Dir. Larry Irving sent Kennard 14-page letter Feb. 12 to discuss "several critical broadcast ownership issues." Citing what he said was "unprecedented level of media concentration in today's media marketplace," Irving urged Commission to "act decisively to preserve the core principles of viewpoint diversity... as well as the fundamental values of localism and competition." Newspaper Assn. of America expressed "disappointment" that broadcast- newspaper cross-ownership ban wasn't included among issues at Fri. hearing, but said it was "encouraged" by bill recently introduced by Rep Oxley (R-O.) to repeal ban. In opening statement, Comr. Tristani said she hoped panelists would address such issues as: "Is broadcasting just another business like making widgets and toasters" or is it deserving of special treatment? "What is it about free broadcasting that we should preserve?" What is impact of ownership consolidations, which she said "I'm afraid" aren't over. Tristani had to leave before questioning of last of 2 panels and didn't give her reaction to testimony. Favoring LMAs were big groups Chancellor, Belo, ABRY. They were supported by Victor Miller of investment firm Bear, Stearns, and economist Kent Mikkelsen of Economists Inc. On opposite side were Post Newsweek Stations, former commercial broadcasters William Baker and Lawrence Grossman, Media Access Project (MAP), entertainer-station owner Stevie Wonder. Political scientist Dean Alger, discussing his book Megamedia, concluded that there are "troubling dimensions to the impact of big chain and conglomerate control of the media." Gregory Sidak of American Enterprise Institute said ownership regulation should be left to antitrust laws: "I believe that a regime of antitrust enforcement is more conducive than the Commission's rules to subtle and unbiased judgments." He said: "Neither public interest, nor consumer welfare, nor the freedom of speech guaranteed by the First Amendment can be advanced by the continued existence of the broadcast ownership rules." Chancellor CEO Jeffrey Marcus (testifying as NAB witness), Michael McCarthy of Belo and Royce Yudkoff of ARBY (appearing for ALTV) stressed LMAs' benefits to public. Yudkoff said ARBY's LMAs in Erie, Pa., and Billings, Mont., couldn't operate as standalone stations because of economic factors. "The record before you demonstrates the benefits of LMAs in markets of all sizes," he said. "These combinations should not be terminated." McCarthy said Belo's 4 LMAs "don't just repurpose our programming... We believe we add considerable public interest and editorial diversity in the markets where these LMAs operate." Citing growth of competition, he said those competitors have "business alliance opportunities unavailable to local TV stations [which] have to exist under a regime of scarcity-based ownership regulation... We need the same liberal regulatory considerations afforded cable television and telephone companies." He suggested FCC start by loosening duopoly/LMA rules for trial period in large markets. Marcus, who moved last year from cable to broadcasting, said: "There can be no better informed witness on this subject than someone who has helped build the most successful and relentless competitor the broadcast industry has ever faced, one who has completely transformed the competitive media landscape." He said duopoly and one-to-a-market rules are "glacial remnants of a regulatory Ice Age... They are the product of regulatory fears that have no place in today's market." He said FCC's Office of Plans & Policy (OPP) predicted 8 years ago "a reduction in the quantity and quality of broadcast service" if rules weren't rescinded. Commissioners should "heed the advice of OPP... and get rid of rules that reflect only a bygone era of media competition... I don't understand why the FCC should restrict free broadcasters' ability to compete." Alan Frank, pres.-gen mgr. of Post Newsweek's WDIV Detroit, made impassioned plea for retaining restrictions: "Proposals to water down the duopoly rule and to permit LMAs indiscriminantly run counter to the localism principle." Localism, he said, requires "a meaningful duopoly rule so as to assure a diverse and competitive local marketplace... It leads to economic, programming and viewpoint competition and diversity." Most LMAs, Frank said, "are simply a way of evading the duopoly rule." Grossman, former pres. of NBC News and of PBS, said easing ownership restrictions would "only serve to weaken local TV service" and "risk reshaping the entire television industry for the worse." He said today's TV suffers from "an excess of sameness despite your rules designed to promote diversity." Baker, pres. of public WNET-TV N.Y. and former pres. of Westinghouse TV, expressed fear that FCC is "about to let private interests tip the scales too far" in favor of commercial TV. "All around us we see evidence that when corporate balance sheets come to dominate a media concern, the shareholders garner profits at the expense of viewers looking for substance," he said. As for LMAs, he said, "2 apparently competing news programs emanating from a single newsroom... do not reflect the vigorous marketplace of ideas from the diverse and antagonistic sources the Supreme Court deemed essential to the public welfare... Can we seriously suggest that Fox Broadcasting's service is not influenced by the views of Rupert Murdoch?" Increased competition, Baker said, "does not justify every scheme for reducing competition within the medium." MAP's Andrew Schwartzman said broadcasters have "leveraged their local monopoly power at the expense of real localism. For more and more broadcasters, localism is a marketing device, not a commitment to local public service." Historically, he said, biggest threat faced by broadcasters isn't new competition but "the debt service they voluntarily incur." Schwartzman urged Commission to retain "firm limits" on station ownership and to condition waivers on "receipt of specific, enforceable and concrete commitments to provide service and diversity which remediates at least part of the harm caused" by ownership concentration. Wonder said he bought KJLH(FM) L.A. in 1979 to serve as "eyes and ears of a people that live in the shadow of big brother and big business." Now, he said, because of ownership consolidation, "KJLH is an endangered species... The big owners want more... Is 400 not enough? Are 900 stations sufficient?" Waivers, he said, make it impossible to protect public interest. In question period, Kennard said Commission must come up with "framework" to determine whether ownership consolidation will help or hinder program diversity. He questioned testimony of Miller about challenges facing broadcasting. Miller responded that many markets can't support local station without LMAs "to help these smaller stations along." He cited LIN TV's successful LMAs as example. Ness asked him whether any LMAs resulted in more public service programming, to which Miller cited expansion of local news. Ness countered that such programming is "extremely profitable." Grossman said that in every case of consolidation, news budgets have been cut. Kennard said he was "having a little difficulty" embracing argument that antitrust regulation should replace FCC's and asked how "antitrust laws could be the panacea" as advocated by Miller. Grossman said relying on antitrust laws wouldn't work as long as frequencies are handed out free by govt. He said TV spectrum should be auctioned and "let the commercial stations do as they will." Comr. Powell said he was troubled that FCC often shifts directions in its regulations "when it's convenient... Rules have a way of lasting for a long time."

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Broadcasters Disagree At Fcc Ownership Hearing

Television Digest with Consumer Electronics, Feb 15, 1999

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