The Federal Communications Commission has some potentially precedent-setting broadcast decisions to make in coming weeks that could have profound effects on the diversity of mass-media ownership.
On Thursday, the FCC is to decide whether to approve media baron Rupert Murdoch's acquisition of Metromedia Inc. and its chain of television stations for more than $1.5 billion. As part of that issue, the FCC has to decide whether to let Murdoch keep two newspapers, the New York Post and the Chicago Sun-Times, for two years instead of 18 months to give him time to find acceptable buyers for the publications. This idea has met with stiff congressional opposition and charges of marketplace protectionism.
According to FCC rules, Murdoch must divest himself of the two papers if he wants to keep all the TV stations he is acquiring. To encourage a diversity of voices, FCC rules prohibit a single party from owning more than one newspaper, television station or radio station in a single market. Murdoch has said he needs extra time to avoid closing the papers or selling them at distress prices.
The FCC also will decide whether to approve a friendly $3.5 billion merger of Capital Cities Communications Inc. and American Broadcasting Cos. Inc. The question is whether Capital Cities may keep both WABC-TV in New York and WPVI-TV in Philadelphia. Because the television signals from the two stations overlap, the FCC normally would require one station to be sold. Some observers say that approval could open the floodgates for other broadcasters to try the same thing in merger deals, "gutting" diversity of ownership in the same market.
Also, the FCC has to decide whether to allow GenCorp's subsidiary, RKO General Inc., to spin off its Los Angeles television station, KHJ-TV, to Westinghouse Broadcasting and Cable Inc. for $313 million. RKO has been involved in FCC litigation with Fidelity Television Inc. over the Los Angeles license for 20 years, with Fidelity maintaining that, for a variety of reasons, RKO is unfit to continue holding it. Under the pending Westinghouse proposal, RKO would no longer contest the license issue. The license would be awarded to Fidelity, which then would transfer it to Westinghouse in return for $95 million from the $313 million paid to RKO.
Some observers charge that any action allowing the deal to go through would weaken provisions allowing minorities to compete for licenses and could ultimately threaten minority ownership of stations.
The FCC is expected to approve the first two mergers next week. Sources say requests to bend ownership rules in the mergers will be granted.
One FCC source said there was little chance the commission would disapprove of a two-year waiver for Murdoch's divestiture of the two newspapers and predicted that questions about his financial fitness would not interfere with a decision. The source also said it would be "reasonable" to allow Capital Cities to keep the New York and Philadelphia television stations. And the source saw no "public harm" in approving the GenCorp deal with Westinghouse.
Commissioner James H. Quello said a two-year waiver to divest properties in Murdoch's case was no problem. "I don't take the viewpoint . . . that all broadcasters are doing is trying to circumvent the rules," he said. Murdoch's financial qualifications are under review, he said.
Concerning Capital Cities' New York and Philadelphia television stations, Quello said, "My feeling . . . is that they are two separate markets, and I don't think they would be hurt by a waiver."
Andrew Schwartzman, executive director of the Media Access Project, said approval of the Murdoch and Capital Cities cases would "go a long way toward decreasing the number of independent sources for news and information in the American marketplace.
"The result will be profoundly anticompetitive and make the democratic process a little less democratic," he added. The relaxation of cross-ownership rules and waiver rules would send a signal to broadcasters that the rules might be eliminated, he said.
Likewise, Schwartzman said, a favorable decision on RKO could encourage "the filing of wanton frivolous competing applications." It also could encourage broadcasters to buy out minorities who may be competing for a contested license, he said.