06-30-03 | Printable Version

Repeal of Newspaper-Broadcast Ownership Ban?

by Thomas J. Buono, BIA Financial Netword

On June 2, 2003, some 30 years after adopting the ban on local newspaper-broadcast ownership, and nearly seven years after Tribune petitioned the Federal Commu-nications Commission to reconsider that ban, the FCC has decided to relax that regulation.

The much-anticipated vote was supposed to clarify that antiquated rule, along with a host of other media ownership issues. Unfortunately, the result has been continued uncertainty and confusion, as Congress threatens to get into the act and special interests voice concerns about the potential for concentration of too many news and entertainment outlets under common ownership.

This much is certain. Under the new FCC rules, assuming they stand, the following newspaper-broadcast ownership scenarios would be allowed:

--In markets with nine or more television stations, 72 of the largest markets in the country, a media company can own the maximum number of television, radio and newspapers any one company can own. This means one daily newspaper, two television stations and between six and eight radio stations.

--In markets with four to eight television stations, representing 107 television markets, a newspaper-television combination can own up to half the radio station limit under the local radio ownership rule, or a newspaper-radio combination can own the full limit of radio stations.

In markets with three or fewer television stations, 31 of the smaller television markets, there can be no television-newspaper or radio-newspaper combinations absent a waiver.

This opens up many markets where newspaper-television and/or newspaper-radio combinations will be allowed. In fact, 159 television markets have sufficient number of television stations to permit such combinations.

While there is always a possibility of Congressional action preventing these new rules from taking effect, that strong a reaction happens infrequently. Therefore, we expect that the new rules involving newspaper cross-ownership will ultimately be enacted and translate into significant opportunities for newspaper companies to expand their service to local communities.

Our expectation is that the current objections will extend the period of uncertainty for a few months, but ultimately the improved news service to local communities will outweigh the concentrated voice concerns. We expect a favorable resolution by the end of the summer.

According to the FCC, the world has changed and there is no longer a need for preventing these local combinations. Local audiences, through their cable and satellite subscriptions and their Internet services, have access to an almost unlimited number of sources for news, entertainment, and information.

Many voicing opposition to the proposed rule change say the new FCC rules will allow the larger media companies to control more of what the public hears -- and that is not a good thing. The concern is that these companies already wield too much power, and the public will be negatively impacted without more independent voice choices.

In establishing the new rules, however, the FCC did not throw out the old rules entirely. They recognized the concern about concentration of voices and set up a sliding scale of ownership potential based on the competitive mix of the market.

The FCC also changed the television ownership rules related to owning more than one television station in a market. It will allow common ownership of up to three TV stations in those markets with at least 18 TV stations (six of the largest markets), provided no more than one of the three stations are among the market’s top four in ratings.

The ability to have common ownership of two TV stations was granted for situations in which there are at least five TV stations in the market, as long as it does not involve two of the top four rated stations in the market. We envision these rules increasing competition to buy, and the pricing of, poorer performing stations in many markets.

Much of the FCC rule change objection backlash is due to concerns about abuses exhibited by major radio groups or the TV networks. Given newspapers’ commitment to local news, it is hard to argue that the public will be negatively impacted by the acquisition of a television or radio property by the local newspaper company.

This is especially the case when news budgets have been slashed at many smaller and medium-market television stations in response to a tough advertising market and the looming threat of lost network compensation.