A sharply divided Federal Communications Commission relaxed or eliminated several key media ownership restrictions yesterday, arguing that the decades-old rules were out of date with a rapidly changing media landscape populated by hundreds of cable, satellite and Internet choices.
The changes permit a new wave of consolidation among newspaper, television and radio companies, which proponents say will increase competition and produce more and better news coverage. Opponents fear the new rules will place too much power over public opinion in the hands of a few giant media corporations.
By a 3 to 2 vote along party lines, the five-member commission largely lifted the 28-year-old ban that prohibited a newspaper from buying a television or radio station in the same city. The commission also allowed broadcast networks to buy more stations at the local and national levels.
At the same time, the commission upheld a rule prohibiting a major network (ABC, CBS, NBC, Fox) from buying another network and it tightened regulations over local radio ownership, seeking to stop the widespread consolidation that followed Congress's decision to lift national radio ownership limits in 1996.
Both sides claimed they were voting in the public interest and for free speech. The commission's three Republicans, led by Chairman Michael K. Powell, said the new rules were needed because federal courts have tossed out prior ownership restrictions, leaving no checks to consolidation.
But the two Democrats, led by Michael J. Copps, said the Republican solution will harm free speech as more and more local media operations are absorbed by large corporations, creating homogenized news and entertainment and pushing unpopular and minority viewpoints off the airwaves. The Republicans backed away from drafting rules that they feared would judge content, saying government should not attempt to manage the direction of public discourse.
In pushing his agenda, Powell summed up the new regulations as "modern rules that take proper account of the explosion of new media outlets for news, information and entertainment, rather than perpetuate the graying rules of a bygone black-and-white era."
Republicans and Democrats wrestled not only over what the rules would say, but how they would work. Democrats wanted rules that would evaluate mergers on a case-by-case basis. Republicans wanted to eliminate such discretion by establishing a "bright line" of regulations that would leave no doubt about what is and is not acceptable.
To that end, the FCC staff created a "diversity index" designed to weigh media properties differently in an effort to determine where best to draw those lines. For instance, a local newspaper was considered to have more weight, or impact, in the local community than an AM radio station.
FCC staff used these measurements to draft rules on the possible combinations that would be permitted in markets of different sizes. As a result, in mid-size cities that have four to eight television stations, one company can own (a) a daily newspaper, a television station and half the allowable limit of radio stations, (b) a newspaper and the allowable limit of radio stations but no TV stations, or (c) two TV stations and the allowable limit of radio stations but no newspaper.
Another party split: Democrats wanted an end to the "UHF discount," which says that UHF stations, such as Washington's WDCA-20, reach only half as many households as full-power VHF stations and do not count against national ownership limits. Now that UHF and VHF stations are widely carried by cable and satellite, Democrats felt that broadcasters get an unneeded break with the discount. Republicans voted to phase out the UHF discount as more stations convert to digital broadcasts.
Yesterday's vote was the culmination of months of intense corporate and public lobbying, as each side fought to either sweep away or tighten the ownership rules. Media companies such as News Corp. and Walt Disney Co. said their businesses were hamstrung by obsolete rules that prevented their broadcast networks and stations from competing effectively with the burgeoning cable industry.
In order to keep providing free, over-the-air programming, broadcasters claimed to need the additional revenue brought in by owning more television stations, which are among the most profitable of media properties, routinely reaping yearly profit margins of 20 to 50 percent. (The Washington Post Co. owns six television stations.)
On the other side, the FCC received more than 500,000 postcards and e-mails spurred by advocacy groups as disparate as Common Cause and the National Rifle Association opposing the changes, saying any further concentration of media ownership will keep their voices off the air. A focus of such consolidation fears is Rupert Murdoch, whose News Corp. owns cable's Fox News Channel and the Fox television network, as well as 35 television stations and the 20th Century Fox movie and television studio.
At a small protest outside the FCC's Southwest Washington headquarters before yesterday's vote, attended by the Rev. Jesse Jackson, one picketer held a sign calling the Australian-born media lord "Citizen Murdoch."
The vote ended nearly two years of study as the FCC carried out a congressionally mandated biennial review of its media ownership rules, designed to make sure the restrictions keep up with a rapidly changing media marketplace. The FCC said it also was responding to the U.S. Court of Appeals for the D.C. Circuit, which had thrown out several of the agency's ownership rules in recent years, saying they lacked sufficient legal justification.
Powell was joined by fellow Republicans Kathleen Q. Abernathy and Kevin J. Martin in voting for the changes; Democratic commissioner Jonathan S. Adelstein joined Copps in dissent, saying "a dark storm cloud is now looming over the future of American media."
The Republicans said the changes will benefit consumers.
"We have modified these restrictions because, not only do the former rules fail to promote competition, localism and diversity, but they may actually be harming these goals," Abernathy said. "For example, the record has demonstrated that combinations of two television stations actually produce more local news."
She dismissed Democratic "speculation about hypothetical media monopolies intent on exercising some kind of Vulcan mind control over the American people."
Martin, 36, noted that when he grew up in his parents' North Carolina home, his family received only five broadcast channels and some radio stations. Now, he said, his parents receive seven broadcast networks, hundreds of digital cable channels, more radio stations and the Internet. It makes no sense, he said, to maintain ownership rules designed for another era.
Though Adelstein acknowledged that a number of new media outlets exist today, he pointed out that many are owned by the same large companies, which he said can lead to a sameness of viewpoint. "A person can always add more electrical outlets throughout their home," he said, "but that doesn't mean they will get their electricity from new sources."
The vote was opposed by a variety of consumer organizations and advocacy groups, as well as the Network Affiliated Stations Alliance, a group of 600 television station owners that said allowing the networks to own more stations would cripple the ability of local stations to decide their own programming. (The Alliance is chaired by Alan Frank, chief executive of Post-Newsweek Stations Inc.)
On Capitol Hill, the vote was opposed by the Congressional Black, Hispanic and Asian Pacific American caucuses, which said more consolidation would shut minorities out of media ownership. Powell attempted to ameliorate this possibility. Under the new radio rules, some companies own more stations in certain cities than is now allowed. Stations over the limit have been grandfathered in, but if the companies choose to sell those stations in a block, they must sell to small businesses, "many of which are minority- or female-owned," the FCC order reads.
Other lawmakers opposing the proposal were presidential candidates Sen. John F. Kerry (D-Mass.) and Sen. Bob Graham (D-Fla.), House Democratic leader Nancy Pelosi (Calif.), Sen. Russell Feingold (D-Wis.) and Sen. Olympia J. Snowe (R-Maine), who said the rule changes "will undermine the basic tenets of democracy and objectivity in reporting and may have long-term consequences in terms of public access to information." Kerry said he will file a resolution of disapproval to overturn the new rules.
Hill support came from Rep. W.J. "Billy" Tauzin (R-La.), who said the FCC has "adopted new broadcast ownership rules that are enforceable, based on empirical evidence and reflective of today's 21st-century marketplace."
Powell said he was proud of the changes, saying they benefit the public interest in a number of ways. Most importantly, he said, they establish enforceable ownership limits to replace the ones thrown out by the federal appeals court.
For instance, the current rule on national ownership of television stations says that one network may not own a group of stations that reach more than 35 percent of the national audience. That limit was raised to 45 percent yesterday, but the 35 percent cap had been unenforceable since it was remanded by the court in 2001, Powell said. As a result, media giants Viacom Inc., which owns CBS, and News Corp., which owns the Fox network, both already exceed the 35 percent cap. If yesterday's rules had not been adopted, there would effectively be no national cap, Powell said.
"Starting today, the media marketplace goes back to being governed by a set of sustainable rules as opposed to what we've seen for a very long time," Powell said in an interview after the vote.