Federal Communications Commission Chairman Mark S. Fowler responded to a barrage of tough questions yesterday on Capitol Hill about the effect of agency policies and hostile media takeovers on the quality and diversity of public television programming.
Fowler also was pressed on the agency's rules or lack of them for acting on several pending applications for control of broadcast licenses, including one filed by Turner Broadcasting System Inc., which has made a hostile takeover bid for CBS Inc. The FCC has launched a public inquiry into rules it should develop to deal with hostile takeovers and proxy fights.
Rep. Timothy Wirth (D-Colo.), chairman of the House subcommittee on telecommunications, consumer protection and finance, said he wants the agency to ensure that cross-ownership rules -- which prevent the holding of more than one media property in the same market -- be strictly adhered to when applications are processed.
Various applicants, including Capital Cities Communications Inc., Australian media baron Rupert Murdoch and the Tribune Co., have asked for waivers of cross-ownership rules to allow them to keep properties for up to two years after completing mergers or acquisitions, essentially to avoid "distress sales."
Wirth repeatedly asked why the FCC does not require applicants to certify they do not have a buyer waiting in the wings. Otherwise, an applicant could retain a property to enhance its value or hold the property hoping that rules might be dissolved in the interim. Without standards, "you are being used as a shield for them and not allowing the market to buy," he said.
Whether the FCC policy of allowing ownership of more media properties by the same entity will contribute to programming diversity or the establishment of alternative television networks, and what effect over-leveraged buyouts could have on the finances and, therefore, programming of a broadcast company, also were at the top of Congress' checklist yesterday. "Does the public have more choices or fewer choices? It would be my hope the FCC would and should look at that," Wirth said.
Last year, the FCC relaxed ownership rules to allow broadcasters to own 12 FM, 12 AM and 12 TV stations -- up from seven of each. The 12 television stations may not reach more than 25 percent of the public, however. The relaxation has helped fuel a spate of media takeovers and mergers.
Fowler said FCC policies are fostering the concept of alternative networks, including a "fourth network" that might compete with the three major networks -- NBC, ABC and CBS.
"We already see some people thinking about a fourth network -- like Rupert Murdoch," Fowler said. Murdoch has announced he will acquire independent television company Metromedia Inc., pending FCC approval. Murdoch also co-owns the Hollywood film production company Twentieth Century-Fox Film Corp. with Denver oilman Marvin Davis.
"Murdoch seems to be indicating he would at least partly begin to develop programming in conjunction with 20th Century-Fox and might also make that programming available to other stations," Fowler said. "The relaxation of the rule may only encourage and foster the alternatives and choices in prime-time programming," he said.
The subcommittee also voiced concern that broadcasters seeking to complete hostile takeovers should have adequate financing so that programming does not suffer. If broadcasters find themselves in buyout situations that are too heavily financed by debt, for example, "they might play commercials 25 minutes out of every hour to meet their debt," Wirth said.