FCC Chairman circulates plan to allow more media consolidation

by STEPHEN LABATON, New York Times

The head of the Federal Communications Commission has circulated an ambitious plan to relax the decades-old media ownership rules, including repealing a rule that forbids a company to own both a newspaper and a television or radio station in the same city.

Kevin J. Martin, chairman of the commission, wants to repeal the rule in the next two months — a plan that, if successful, would be a big victory for some executives of media conglomerates.

Among them are Samuel Zell, the Chicago investor who is seeking to complete a buyout of the Tribune Company, and Rupert Murdoch, who has lobbied against the rule for years so that he can continue controlling both The New York Post and a Fox television station in New York.

The proposal appears to have the support of a majority of the five commission members, agency officials said, although it is not clear that Mr. Martin would proceed with a sweeping deregulatory approach on a vote of 3 to 2 — something his predecessor tried without success. In interviews on Wednesday, the agency’s two Democratic members raised questions about Mr. Martin’s approach.

Mr. Martin said he was striving to reach a consensus with his fellow commissioners, both on the schedule and on the underlying rule changes, although he would not say whether he would move the measures forward if he were able to muster only three votes.

“We’ve had six hearings around the country already; we’ve done numerous studies; we’ve been collecting data for the last 18 months; and the issues have been pending for years,” Mr. Martin said in an interview. “I think it is an appropriate time to begin a discussion to complete this rule-making and complete these media ownership issues.”

Officials said the commission would consider loosening the restrictions on the number of radio and television stations a company could own in the same city.

Currently, a company can own two television stations in the larger markets only if at least one is not among the four largest stations and if there are at least eight local stations. The rules also limit the number of radio stations that a company can own to no more than eight in each of the largest markets.

The deregulatory proposal is likely to put the agency once again at the center of a debate between the media companies, which view the restrictions as anachronistic, and civil rights, labor, religious and other groups that maintain the government has let media conglomerates grow too large.

As advertising increasingly migrates from newspapers to the Internet, the newspaper industry has undergone a wave of upheaval and consolidation. That has put new pressure on regulators to loosen ownership rules. But deregulation in the media is difficult politically, because many Republican and Democratic lawmakers are concerned about news outlets in their districts being too tightly controlled by too few companies.

In recent months, industry executives had all but abandoned the hope that regulators would try to modify the ownership rules in the waning days of the Bush administration.

“This is a big deal because we have way too much concentration of media ownership in the United States,” Senator Byron L. Dorgan, Democrat of North Dakota, said at a hearing on Wednesday called to examine the digital transition of the television industry.

“If the chairman intends to do something by the end of the year,” Mr. Dorgan added, his voice rising, “then there will be a firestorm of protest and I’m going to be carrying the wood.”

Supporters of the changes say that the rules are outdated and that there is ample empirical evidence to support their repeal. A small number of media companies, including The New York Times Company, are able to own both a newspaper and a radio station in the same city because the cross-ownership restrictions, which went into effect in 1974, were not applied retroactively.

Mr. Martin faces obstacles within the agency to overhauling the rules. One Democrat on the commission, Michael J. Copps, is adamantly opposed to loosening the rules. The other, Jonathan S. Adelstein, has said that the agency first needs to address other media issues, including encouraging improved coverage of local events and greater ownership of stations by companies controlled by women and minorities.

Advisers to Mr. Martin said he hoped to gain the support of at least one of the Democrats, probably Mr. Adelstein, but Mr. Adelstein said in an interview on Wednesday that Mr. Martin’s proposed timetable was “awfully aggressive.”

Three years ago, the commission lost a major court challenge to its last effort, led by Michael K. Powell, its chairman at the time, to relax the media ownership rules. The United States Court of Appeals for the Third Circuit, in Philadelphia, concluded that the commission had failed to adequately justify the new rules. Mr. Martin’s proposal would presumably include new evidence aimed at fending off similar legal challenges.

Mr. Powell’s effort, which had been supported by lobbyists for broadcasters, newspapers and major media conglomerates, provoked a wave of criticism from a broad coalition of opponents. Among them were the National Organization for Women, the National Rifle Association, the Parents Television Council and the United States Conference of Catholic Bishops.

The agency was flooded with nearly three million comments against changing the rules, the most it has ever received in a rule-making process.

Since the appeals court struck down the deregulatory changes, the commission has continued to study the issues at a leisurely pace, and it held a series of hearings around the nation. It had not made any new proposals, and industry executives had not expected the agency to move again so soon.

But in recent days, Mr. Martin has proposed to expedite the rule-making and hold a final vote in December. In part, he has told commission officials, he was reacting to criticism by Mr. Copps about temporary waivers that have allowed companies to own newspapers and stations in the same market.

Mr. Zell has said he wants to complete his $8.2 billion buyout of Tribune Company by the end of the year. Tribune had been granted what were supposed to be temporary waivers to the rule to allow it to control newspapers and television stations in five cities: New York, Chicago, Los Angeles, Hartford and the Miami-Fort Lauderdale area.

Mr. Copps, who for years has waged a campaign against media consolidation, said that it would be hard for the commission to proceed during an election year because media consolidation has provoked deep public skepticism in the past.

He said Mr. Martin’s proposal to complete a relaxation of the rules in December would require procedural shortcuts, giving the public too little time to comment on the proposals and industry experts too little time to weigh their impact on news operations.

“We shouldn’t be doing anything without having a credible process and nothing should be done to get in the way of Congressional oversight and more importantly, public oversight,” Mr. Copps said in a telephone interview from London. “We’ve got to have that public scrutiny. That was one of the big mistakes that Mr. Powell made, and he was taken to the woodshed by the Third Circuit. I fear it is déjà vu all over again.”

article originally published at http://www.nytimes.com/2007/10/18/business/media/18broadcast.html?hp.

The media's job is to interest the public in the public interest. -John Dewey