When Mark S. Fowler was sworn in as chairman of the Federal Communications Commission in 1981, the one-time disc jockey-turned-lawyer noted that television "is just another appliance -- it's a toaster with pictures."
He urged his new agency to "stop playing God" with all its regulations and let viewers decide what they want to watch. "Those that don't like it can pull the plug," he said.
In the four years since then, Fowler and his four fellow commissioners have achieved much of his vision through a sweeping series of moves that essentially deregulated broadcast ownership.
Now, in the wake of a series of hostile bids to take over major television stations, the commission must decide whether mergers in the broadcast industry should be treated in a different manner from mergers in any other industry.
The steady deregulation of the television industry has been based on the publicly stated belief that TV stations should be treated in the same way as newspapers and should be accorded the same First Amendment rights of free speech.
What has followed is the pulling of the plug on dozens of rules or regulations the FCC believes are best left to the supervision of other agencies or to "marketplace regulation."
For example, the commission has reduced the renewal of a broadcast license to a postcard procedure and is currently chopping away at "underbrush" regulations such as rules on fraudulent billing for television ads and non-entertainment programming guidelines.
The FCC has also unsuccessfully asked Congress to repeal the Fairness Doctrine and the equal time provision, which require that broadcasters air both sides of a controversial issue and that politicians from opposing camps be given equal access to the airwaves. A majority of the commissioners argue these rules violate the First Amendment right of free speech.
Even more far-reaching deregulation has increased the number of stations one owner can hold from 7 television, 7 FM-radio and 7 AM-radio stations to 12 of each. Television restrictions require that no single owner can reach more than 25 percent of the American public. Fowler's proposal to lift all limits on the number of stations owned was reined back to 12 stations by Congress.
But the partial relaxation of ownership limits, coupled with increasing recognition of the true value of broadcast stocks in the marketplace, has led to a spate of unfriendly takeover attempts such as Ted Turner's bid for CBS Inc. and Washington Redskins owner Jack Kent Cooke's bid for Multimedia Inc. The FCC action has also led to friendly mergers such as Capital Cities Communications Inc.'s alliance with American Broadcasting Cos. Inc. and Australian publisher Rupert Murdoch's offer for independent broadcasting company Metromedia Inc.
But it is the hostile takeover efforts that have suddenly put pressure on the FCC to come up with a regulatory mechanism that will let takeovers proceed while ensuring the public interest is served.
The FCC argues it should not be used "as either a sword or a shield" in hostile corporate takeovers. According to commission members, corporate democracy means shareholders should determine what is good for the broadcast company.
To back up that philosophy, the FCC is crafting a novel takeover technique that allows a hostile bidder to proceed with a takeover effort without waiting for the time-consuming public comment period needed before final FCC approval can be granted. The commission will now allow a trustee to hold tendered stock while the bid proceeds.
If in the end the FCC does not approve the final transfer of control, the trustee must sell the tendered stock of the targeted broadcasting company to another FCC-approved buyer.
Washington Redskins owner Jack Kent Cooke was recently authorized to proceed with a bid for Multimedia Inc., a South Carolina communications company, using the trustee device. The trustee was never used, however. Cooke reached a settlement with Multimedia Friday and will not proceed with the bid.
But the trustee concept already has come under attack from some industry advocates. The FCC action does not allow the public to comment before a commission action is taken and does not uphold corporate democracy because it "wrests control permanently from the old owners," said Andrew Schwartzman, director of the Media Access Project, a consumer advocacy group. "I think that is wrong," he said.
"I think it's terrible," said Henry Geller, director of the Washington Center for Public Policy Research. "It's no longer possible for the commission to say 'no' [to a raider] after they've done that."
Congress itself has asked how the FCC intends to resolve the dilemma of denying transfer of control after shares are tendered. The FCC is currently conducting a public inquiry on the subject.
"What will you do about unscrambling the egg that is rapidly being burnt to an omelette?" Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee, asked Fowler during recent hearings on media takeovers.
Critics have also argued the FCC may be losing sight of the public trust conferred on broadcast station ownership if a rash of risky financial takeovers leaves the industry unable to pay off debts and forced to slash news and programming budgets.
"I am not talking about going back to the glory days of regulation, but there should be a public interest standard that means something," said one Senate committee staffer who asked not to be named. "If you're always driving toward the bottom line that may cause other things to fall by the wayside."
Congress may consider asking the FCC to reimplement annual financial filings by broadcast companies so risks in takeovers may be better assessed, said another congressional source who asked not to be identified. "The commission can be responsive by thinking through the procedural questions. We will begin to ask for legitimate evaluation of the impact on TV viewers," the source said.
Supporters and the commissioners themselves argue that shareholders are smart enough to weigh the attractiveness of the financial offer and that broadcasters will be loath to slash the programming that draws viewers and hence bigger advertising dollars.
"Nobody will finance unless they are convinced that a business is viable," said Fowler. "Wall Street analysts and financial investment companies will not agree to buy bonds or finance debt instruments for a network takeover if they are not satisfied the business will succeed -- and that includes the assurance that the network will provide good programming."
The struggle to deregulate broadcasting in the best interests of the public has been viewed five different ways by the commissioners themselves, all of whom are described as dedicated and hardworking individuals who believe in a free-market philosophy and in the broadcast deregulation begun by previous commissions.
"In these particular situations, we've had five different points of view," said Commissioner Mimi Weyforth Dawson. "I don't think the Communications Act intended for the commmission to act as an impediment to shareholders making choices.
"The regulation of broadcasting is clearly based on a foundation of scarcity that may have been relevant in the early days of broadcasting but . . . it is not very relevant in the 1980s," she said. The marketplace is ready for deregulation because a diversity of viewpoints and media to convey them now exist, she said.
But the agency intends to continue scrutinizing the financial, technical and character qualifications of a potential broadcast licensee very carefully, said Fowler.
"The question is not substantive changes or deregulation of what it is we look at in determining whether somebody is qualified but how do we devise procedures that are prompt, fair and comply with the Communications Act's requirements," he said.
"I think there is a growing bipartisan consensus that broadcasters should be treated as freely as newspapers and other mass media and we have seen no significant downsides at all," Fowler said.
Nevertheless, some of the commissioners feel the public interest balance would be better struck by allowing full public comment before taking actions on control of broadcast corporations.
"The commission cannot completely abdicate to Wall Street so we have to come up with a methodology that lets the public participate where appropriate," said Commissioner Henry M. Rivera, who dissented on the handling of a Storer Communications Inc. proxy fight in which the FCC transferred control to dissident shareholders wishing to liquidate the company.
"We can't say every transfer is insubstantial just to eliminate public participation, just to process applications," he said.
Put more bluntly, "I don't think I was nominated by the president and ordained by Congress to accommodate fast buck artists taking over broadcast stations," said Commissioner James H. Quello. "Broadcasting needs stability and long-range planning to maximize service," said Quello, who strongly opposed the transfer of control of Multimedia to a trustee appointed by raider Jack Kent Cooke. Quello, who believes "broadcasters should have the same freedoms as the press," nevertheless thinks the commission "has to be careful about deregulation for deregulation's sake."
Commissioner Dennis R. Patrick declined to be interviewed by the Washington Post while he is up for reappointment. Patrick was confirmed by the Senate Friday.
FCC staff officials describe the commissioners as generally pro free market philosophy.
"Three of them [Fowler, Dawson and Patrick] would favor that concept," said one FCC official who spoke only on the condition he not be identified. "One [Rivera] would be hanging on a fence, and one [Quello] would disagree."
And a serious split in the communications community is widening over the commission's responsibilities and the public interest aspect associated with broadcast stations.
"This is a commission which is so result-oriented [in its zeal to deregulate] that it has certainly all of the communications attorneys whom I know, including many who are in philosophical agreement with Fowler, appalled," said Media Access Project's Schwartzman.
"The goal was never deregulation for deregulation's sake," said one lawyer who has represented major broadcasting companies over the years. "Today the goal definitely is to get rid of deregulation. Fowler would really shut down the building, close the door, and lock it up but I don't think that's what Congress intended."
But there is undoubtedly new thinking on the block. "Things have changed, not just the Fowler commission, but the [Charles D.] Ferris commission started a deregulatory move, and as that occurs the whole industry has in a sense exploded," said another media attorney, Michael R. Gardner, who represents such clients as Rupert Murdoch.
It is not a station's ownership that makes a difference, but it is the "bedrock" principles, such as Fairness Doctrine and equal time, that Congress is sure to keep in force, said another well-known communications lawyer. "I personally don't think it makes a huge difference to society whether Jack Kent Cooke or the families end up owning Multimedia -- as long as there are some constraints on broadcasters from a social point of view it doesn't matter," he said.
"You don't have the political community buying off on Mark Fowler's view that these things should be freed from any restrictions just like newspapers are under the First Amendment -- that is because of the political, social and cultural power of television.
"One way to think about it is all politicians really know their local broadcasters -- and they don't trust them," he said.