Wednesday, June 21, 2006

FCC to kick off review of media ownership rules

By Jeremy Pelofsky
Wed Jun 21, 2006 4:04am ET

WASHINGTON (Reuters) - The U.S. Federal Communications Commission on Wednesday will embark on a new attempt to revamp media ownership restrictions and the battle lines over whether to allow more consolidation are already being drawn.

FCC Chairman Kevin Martin has long advocated lifting a 1975 restriction preventing a company from owning a newspaper as well as a radio or television station that serves the same market, arguing there was robust media competition.

Several companies, including Tribune Co. and Media General Inc., have pressed the agency to lift the ban, citing cost efficiencies, among other reasons.

"A change in the FCC cross-ownership rule would be a strong positive for our company," Marshall Morton, chief executive officer of Media General, told investors on Tuesday at an industry conference. "We'd like to be able to do it in every format we need ... we need convergence."

While Tribune wants the ban lifted, the company is facing pressure from its No. 2 shareholder to separate the company's television and publishing businesses.

Consumer advocates and political groups are already forming alliances to fight against easing the rules, arguing that consolidation would squeeze out independent voices and significantly reduce local content.

"There is enormous public concern about bias in media, about lack of diversity in the media, and about unfair presentation of all kinds of information that communities care about," said Gene Kimmelman, vice president for federal and international policy at Consumers Union.

In 2003 the FCC tried to lift the cross-ownership ban in all but the smallest markets as well as ease other ownership rules. The effort was halted by a U.S. appeals court that said the agency failed to justify the limits it set.

The FCC on Wednesday is expected to ask for public comment on what the five commissioners should do with the restrictions. Current rules also limit a company from owning more than one television station in most markets and limit the number of radio stations that a company can own in an area.

The FCC is not expected to reach any conclusions on Wednesday about the direction the restrictions could go, according to a source close to the matter. The agency likely will first hold several public hearings and conduct economic studies, the source said.

Almost a year ago Martin tried to start the rule-making process. But he had to postpone it because he did not have a Republican majority at the FCC and could not reach an agreement with the two Democrat commissioners.

A third Republican commissioner was sworn in this month, enabling Martin to launch the review without support from the Democrats. Setting new rules could take a year or more.
Martin could try to ease the cross-ownership ban separately from other restrictions, but that could spark a major fight.

The agency was barraged in 2003 with hundreds of thousands of comments and lawmakers engaged in heated lobbying on both sides. Conservative and liberal interest groups like the National Rifle Association and National Organization for Women banded together against easing restrictions and already another coalition has formed to lobby again.

Consumers Union this week unveiled a coalition that also includes the Parents Television Council, a conservative group that wants television and radio to stop airing material it believes is indecent.

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