The Federal Communications Commission has agreed to a compromise with congressional leaders that would substantially ease federal restrictions on the number of television stations any one media group can own, according to congressional and agency sources.
The plan, which is expected to be formally adopted by the agency next Wednesday, would allow a host of independent media groups to dramatically increase their station holdings and become potential competitors to the three dominant networks as outlets for television programming.
The compromise plan would strike down the existing seven-station limit on group ownership and replace it with a new formula that permits media groups to own up to 12 television stations so long as those stations do not reach more than 25 percent of the national viewing audience, congressional sources said.
The three networks -- ABC, CBS, and NBC -- currently own stations that reach about 20 percent of the viewing audience and, as a practical matter, would only be able to buy two and possibly three more stations under the plan.
But other big group owners, such as Storer Communications, Westinghouse Broadcasting, Gannett Corp., Cox Broadcasting, and the Washington Post Co., would be the big winners because they would be able to buy as many as seven or eight new stations, congressional and industry sources said yesterday. The new rule should eventually allow some of these groups to rival network-owned stations in market reach and give them greater resources to develop alternative programming to the networks, these sources said.
Sen. Pete Wilson (R-Calif.), who hammered out the plan with FCC Commissioner Mark Fowler at a meeting this week, called it a "reasonable compromise" between agency officials who favored complete deregulation and key senators and congressmen who were worried about giving too much power to the networks.
"In 10 years, you'll have maybe six media groups that enjoy the same market share as the network-owned and operated stations," Wilson said yesterday. "The creative community in Hollywood will have a much greater marketplace to market their products."
The plan won praise from group television owners who said it could have a direct and immediate impact on the market for television stations when it takes effect next April.
"I certainly know of a lot of discussion among group owners about going out and buying more television stations," said William Baker, president of Westinghouse Broadcasting's TV group, which currently owns five VHF TV stations. "We'd like to try to grow if we can. . . . At the right price and right opportunity, we'd like to get as many as we can."
But Baker and others cautioned that the new policy could also result in an industry bidding war that would drive up the price of television stations so high that many groups would not be able to afford them. Stations in major markets currently sell for as much as $300 million apiece. "More people are going to want to buy more stations and that would increase the price," said Baker.
The FCC under Fowler has been pushing for more than a year to ease the seven-station policy on the grounds that it is no longer needed to promote its original goals of more competition and diversity in television ownership. Since the limit was first put into place in 1953, there has been an explosive growth in the number of television stations -- from 199 to 1,169 -- while alternative media outlets, such as cable and direct-broadcast satellites, have sprung up to pose alternatives to the networks, Fowler argued.
But the FCC's plan to raise the limit from seven to 12 stations this year and abolish all restrictions by 1990 provoked a firestorm of criticism when it was adopted by the agency last July. Critics, led by Jack Valenti, president of the Motion Picture Association of America, charged that it would allow the networks to gobble up independent stations and increase their stranglehold over the television industry.
Faced with the prospect of congressional action, the FCC backed down a few weeks later and put off any further action on television-station ownership until April. At the same time, the agency left in place its plan to increase the number of AM and FM radio stations a group can own from seven to 12 of each type.
Since then, Wilson and others have sought to fashion a compromise with the FCC commissioners that would avoid the need for congressional action. Valenti said yesterday he was "delighted" with the new compromise and a CBS official said that it was acceptable to the networks.
Under the plan currently being discussed, group owners who buy a less lucrative UHF, as opposed to a VHF station, will receive a 50 percent discount in computing their overall market reach. For example, a group that buys a UHF station in Los Angeles, which reaches 5.2 percent of the national audience, would have only 2.6 percent counted against the 25 percent cap on national market reach.
In addition, media groups that buy a station in conjunction with minority groups would have only 25 percent of that station's market reach counted against its overall limit. Congressional sources said this provision was included to encourage more minority ownership of television stations.