FCC chief expects court action on ownership

Wednesday, April 25, 2001 | 10:57 a.m.

SUN STAFF AND WIRE REPORTS

Viacom Inc., News Corp., AT&T Corp. and other large companies that want to abolish limits on media ownership will get relief in court rather than at the Federal Communications Commission, Chairman Michael Powell said Tuesday.

Recent and pending court decisions on broadcast and cable ownership restrictions will determine what the FCC can do in revising the rules, Powell told separate conferences of the National Association of Broadcasters and A.G. Edwards Inc. in Las Vegas.

The FCC's 35 percent limit on U.S. households a company can reach with its TV stations has split the group, with Viacom's CBS resigning to protest NAB's support of the rule. Large companies say the limit is unnecessary since cable and the Internet provide competing programming. Smaller station groups and consumer advocates say consolidation will hurt program diversity.

"That rule's gravest threat is not in my hands," Powell said at an A.G. Edwards Inc. conference, noting federal courts' "increasing impatience with the tired justification of the rules."

The U.S. Court of Appeals for the District of Columbia last month threw out a separate 30 percent limit on cable ownership. The Justice Department and FCC both decided against an appeal, he told reporters after speaking to the broadcasters group.

"It's a case you can't win in the Supreme Court," he said.

The same appeals court is weighing a lawsuit by Viacom and News Corp. challenging the 35 percent broadcast limit, and earlier this month gave Viacom more time to divest stations to comply with the rule, a sign Viacom is likely to prevail.

"Many people see that as a grave sign for the life of the rule," Powell said. "The cap says you can't talk to more than 35 percent of the national audience ... There is something offensive to First Amendment values (in that)."

In addition to Viacom, General Electric Co.'s NBC and News Corp.'s Fox networks quit the NAB to protest the group's support of the ownership rules.

Hearst-Argyle Television Inc. Chief Executive David Barrett urged Powell to maintain the 35 percent ceiling on TV ownership, saying it ensures diverse news coverage and shows.

"We're quite concerned about an expansion of the cap," Barrett said at the A.G. Edward conference, pointing to the May execution of Oklahoma bomber Timothy McVeigh. "Our TV station in Oklahoma City will tell that story in a different way" than a station owned by a network.

Lowell "Bud" Paxson, chairman of Paxson Communications Corp., disagreed, saying the limit should be eliminated to let NBC increase its 32.5 percent stake in Paxson.

The FCC is examining several ownership rules in its biennial regulatory review. "I'm skeptical generally, including of this rule, of these strict prophylactic prohibitions on ownership," Powell said at the NAB conference.

Other rules being reviewed include limits on a company owning two TV stations in a single market, and a ban on owning a TV station and a newspaper or cable system in the same market.

The FCC next month will offer proposed rule changes for newspaper-broadcast cross-ownership, and in the coming several months will begin reviewing all other ownership issues, Powell told the A.G. Edwards conference.

LIN Television Corp. Chairman Gary Chapman urged Powell to eliminate restrictions on a company owning two stations in the same market, called a duopoly.

Under Powell, TV ownership rules are likely to change more than in the past two decades, Chapman said. "We are optimistically looking forward to changes with regard to ownership and duopoly specifically."

The two U.S. representatives overseeing the FCC last week wrote Powell asking the FCC to immediately start a rulemaking on the 35 percent ownership limit, or at least speed up the biennial review of all ownership rules.

"The commission's rules must reflect today's world, not that of fifty years ago," wrote House Energy and Commerce Committee Chairman Billy Tauzin, a Louisiana Republican, and telecommunications subcommittee Chairman Fred Upton, a Michigan Republican.

Separately at the NAB, FCC commissioner Harold Furchtgott-Roth on Tuesday was asked to respond to claims that he is soft on "indecency" issues regarding the media's ability to "invade a household."

"That's the power and ubi- quity of the media," Furchtgott-Roth said, noting that it's not the government's job to step in and impose moral standards.

"I get a little nervous taking my children to the checkout stand at the grocery store. You see all the magazines laid out there, and we're not talking about the kind that are called 'soft pornography' ... some of the titles are stronger than what you would find on local broadcasts," Furchtgott-Roth said.

"My question is, 'Why should broadcasters be treated differently?' " he said.

Bloomberg News and the Sun's Kevin Ferguson

contributed to this report.