Court whammies TV cross-owner caps

Court whammies
TV cross-owner caps

Major win for media congloms. Let buying begin.

   In a ruling widely hailed by the nation's largest media conglomerates, a federal appeals court yesterday struck down a Federal Communications Commission rule prohibiting cable companies from owning TV stations.
    The ruling by The U. S. Court of Appeals for the District of Columbia also ordered the agency to reconsider a longstanding rule prohibiting a television network from owning or controlling TV stations dominating more than 35 percent of the national TV market, with the likely outcome being that the rule will be eased considerably or tossed out.
    Both rules have been under increasing challenges with the rising consolidation among the nation's media conglomerates, such as Viacom and AOL Time Warner, and within regulatory circles as well.
    The court's long-awaited decision is expected to set off yet another round of media consolidation, easing the way for cable giants such as AOL Time Warner to buy up broadcast stations in markets where they are major cable providers and for broadcast networks to expand their holdings of owned-and-operated stations.
    The ruling comes as a bitter defeat for consumer groups, who believe that such restrictions must be preserved to ensure a diversity of news content and opinion on the part of the nation's media interests.
    The court's ruling is also a defeat for the National Association of Broadcasters and independently owned TV stations, which opposed the increasing pressure by networks to further their control over affiliates.
Even in this sour ad economy, local stations tend to be profitable entities, making them especially attractive to networks.
   Fox, NBC and Viacom had challenged the rule.
   Both Viacom and Fox already exceed the 35 percent cap, with Viacom at 41 percent of the national TV market through its acquisition of CBS last year and Fox at more than 40 percent following its pending acquisition of stations owned by Chris Craft.
   Yesterday's ruling will also be viewed as a defeat for media buyers, who tend to view with suspicion all media consolidation. In their eyes, having fewer sellers reduces their leverage at the bargaining table.
    While the court yesterday did not entirely toss out the 35 percent cap, its ruling all but ensures its demise. In remanding the matter back to the FCC, the written decision termed a 1998 decision by the agency to retain the cap as "arbitrary and capricious."
    FCC chairman Michael Powell, a vocal opponent of the cap, is expected to join with the two other Republican commissioners in either lifting the cap substantially or eliminating it all together.
    Powell has become a leading advocate of the argument that the restrictions against media cross-ownership are outdated in light of the vastly expanded choices available to consumers of entertainment and news, from cable and broadcast to newspapers and, increasingly, the internet.
    The rules were created in an era when concentration was a very real concern, before the advent of cable and the internet and when there were only three broadcast networks in the country, ABC, NBC and CBS.
    Late yesterday, officials of the FCC and the NAB were considering whether to challenge the court's decision before the U.S. Supreme Court. But early readings of the decision suggest such a challenge would be a difficult one to win.
    A related restriction, dating back to 1975, restricts newspapers from owning broadcast outlets within their markets. That restriction is now also under challenge, its survival doubtful.

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