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FCC Chief Defends Media Ownership Rules

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JOHN DUNBAR | December 25, 2007 09:55 AM EST | AP

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WASHINGTON — The Republican chairman of the Federal Communications Commission is disputing Democratic assertions that a new rule loosening restrictions on media ownership is full of loopholes and will lead to a wave of mergers and fewer choices for consumers.

Democratic Commissioner Michael Copps described the commission's decision approving the measure as "one that would make George Orwell proud," referring to the English author best known for his novels critiquing totalitarianism and for popularizing the phrase "Big Brother is watching you."

FCC Chairman Kevin Martin said the commission action was a "relatively minor loosening" of a single rule.

The conflicting impressions say a lot about the divisive nature of the media ownership debate. Too much media in the hands of too few companies raises fears of an emerging corporate big brother and fewer news and information sources.

The commission vote, along strict party lines, will allow a single company to own a television or radio station and a newspaper in the 20 largest metropolitan areas of the country.

"I think this was actually a very moderate attempt to adjust our rules to reflect some of the changes that are occurring in the marketplace," Martin told The Associated Press in a recent interview.

However, the two Democrats on the commission say the rule will open the door to a new wave of media consolidation. The chairman was also criticized for granting waivers to a number of existing cross-ownership arrangements.

Martin says the loopholes are actually exceptions that create a high hurdle for such combinations to be approved in markets that are not among the 20 largest in the nation.

Last week's decision was the latest action in a proceeding left over from 2003, when under similar circumstances, the commission voted to loosen several ownership rules. The 2003 vote sparked a bipartisan backlash on Capitol Hill and helped fuel a well-organized and energetic media reform movement. A year later, the commission decision was rejected by a federal appeals court and the rules were sent back to the FCC for review.

Last month, Martin outlined his plan in The New York Times and released the text of the rule to the public. The chairman argued that the newspaper industry was in financial trouble and the commission should provide relief by loosening the 32-year-old cross-ownership ban.

Under his proposal, for a merger to be approved it must occur in one of the 20 largest metropolitan areas and involve only one TV or radio station. Also, the TV station could not be among the top four in the market, and post-transaction, at least eight independent media voices would remain.

Martin's first draft of the proposal also included a confusing exception that would allow combinations outside the top 20 markets if they resulted in the creation of more local news or if the newspaper was in financial distress, among other factors.

Opponents of media consolidation read it as a giant loophole. At a Senate hearing, Martin pledged to work with opponents to tighten up the language, but instead, according to some, ended up making it more complicated.

The new rule change "keeps the old loopholes and includes two new pathways to cross ownership approval," wrote Copps. It also provided waivers to 42 newspaper-television station combinations, according to the other Democratic commissioner, Jonathan Adelstein.

Since then, questions over what the rule actually means have lingered. The rule itself _ despite a commission vote _ has yet to be released to the public.

Martin told the AP that his proposal creates two paths for cross-ownership approval _ one for larger markets with many voices and one for smaller markets.

In smaller markets, the presumption is that it is not in the public interest to allow these combinations. But there are two exceptions: If it creates more news or bails out a failing station.

For the news exception, the transaction must create at least seven hours of new local news programming per week on a station that has not aired local news.

For the failing station exception, the TV station must have a 4 percent or lower audience share and a negative cash flow for the previous three years, and the buyer must show the combination will benefit the public.

The rule also provides a path to approval for combinations that may not meet those factors but still may be in the public interest.

For approval, applicants must demonstrate by "clear and convincing evidence" that the combination will increase the diversity of independent news outlets and increase competition among independent news sources.

This would be demonstrated by a combination of factors, including consideration of the existing level of ownership concentration in the market; whether the combination will increase the amount of local news, and a promise that the owner will employ separate and independent editorial staffs. The commissioners would also consider the financial condition of the station or newspaper and look favorably on a commitment by the new owners to "invest significantly in newsroom operations."

Martin calls the test a "very high hurdle" and a "strict standard."

Martin was also criticized following the vote for a series of waivers granted to other station combinations.

The chairman says 36 of those are located in cities where the combination predates the 1975 ban. The cross-ownership permission in those markets doesn't transfer to a new owner.

In five other markets, the owners asked for waivers prior to 2000 in anticipation that that commission would relax the ban. They include Phoenix, where Gannett Co. Inc. owns the Arizona Republic and KPNX-TV, and several smaller cities with cross-owned properties owned by Media General Inc.

Martin said a public interest analysis was done in those markets.

"In anticipation of the commission changing its rules and they had already done a lot of integration of their newsroom operations and there had already been a lot of the synergies created," he said. "There was a determination made that it would actually be more harmful to the public interest to require those things to be pulled back apart."

The decision is likely to be challenged in court, and members of Congress are attempting to invalidate it with legislation, though the Bush administration has threatened to thwart those efforts.

That aside, the practical impact of the vote is in dispute, not surprisingly.

"I expect we'll see some activity" regarding new mergers, Copps said. "We just have to see how many deals are going to get done."

Martin said only a limited number of combinations are possible in the largest markets and that he doesn't think there will be "the wave of transactions people were afraid of or are talking about."