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REWRITING THE RULES

FCC Relaxes Limits on Media Ownership

A party-line agency vote gives broadcasters more freedom to grow and to merge with newspapers. Critics fear fewer sources for news, entertainment.

June 03, 2003|Edmund Sanders and Jube Shiver Jr. | Times Staff Writers

WASHINGTON — The federal government's top media regulators on Monday loosened decades-old restraints on the broadcast industry, boosting the ability of companies to navigate rapidly changing markets but raising fears about their control of information and entertainment.

In a bitter split along party lines, the Republican majority of the Federal Communications Commission -- led by Chairman Michael K. Powell -- voted 3 to 2 to relax rules that prevented TV stations from merging with local newspapers and restricted how many stations one company could own, both nationally and locally.

The broad revision of ownership rules clears the way for further consolidation by the biggest media conglomerates, enhancing the economic prospects of companies such as News Corp., Viacom Inc. and Tribune Co., parent of the Los Angeles Times.

But the vote drew threats of congressional countermeasures and protests from critics as diverse as the conservative National Rifle Assn. and the liberal National Organization for Women. And the FCC's review of media ownership rules leading up to Monday's vote generated enough response last week to crash the agency's telephone network.

"If you listen to the spin, you'd believe there's going to be a massive buying opportunity," Powell said, in a Monday interview, about the fear of new mega-mergers. "I don't think it's going to be nearly the level that some people are expecting."

In the near term, media consumers are likely to experience few changes in the programs they watch and hear or the newspapers they read. In time, however, companies are likely to create combinations that might find a newspaper and a TV station sharing stories and resources. Or conglomerates may buy more local stations and fill their schedules with shows that have aired on the company's cable channels. Companies that own multiple TV stations in a single city also are likely to gain more leverage with advertisers, perhaps by offering ad packages on multiple outlets.

In Los Angeles, Tribune willbe permitted to continue its ownership of both the Los Angeles Times and KTLA Channel 5. Without Monday's action, the company would have been required to divest itself of one of those properties by 2006, when the station's broadcast license comes up for renewal.

The new rules will take effect early this summer.

Blair Levin, a former FCC chief of staff who is now a financial analyst for investment firm Legg Mason, predicted "an awful lot of station swaps and trades fairly immediately."

Some broadcasters had argued vigorously that a relaxed regulatory environment was needed to protect free television in an era of 500-channel cable and satellite TV outlets. A spokesman for Viacom, which had lobbied to lift all FCC media rules, called the vote a "first step" and said it would "help ensure that free, over-the-air broadcasting continues to be available across America."

Under the new rules, broadcasters are permitted to own stations reaching 45% of the nation's viewers, up from 35%, allowing TV networks to raise the number of wholly owned stations that carry their shows. Without the reforms, Viacom, which owns CBS, and News Corp., which owns Fox, would have been required to sell properties, because each owns stations covering nearly 40% of national viewers.

But the FCC retained a rule that prevents mergers among the four biggest TV networks -- ABC, CBS, Fox and NBC.

Some of the most significant changes apply to TV ownership in local markets. In the nation's nine largest cities, including Los Angeles, one person or company may now own three TV stations, up from two.

In all but the smallest markets, moreover, the new rules repeal a 28-year-old ban on cross-ownership of TV stations and newspapers. Such combinations are still forbidden in markets with fewer than four TV stations.

Rules restricting local mergers of radio and TV stations also were relaxed.

The FCC did not alter caps that bar companies from owning more than eight radio stations in markets where 45 or more exist. But the agency will include public radio stations in their market count and redraw local radio markets -- changes aimed at correcting anomalies that permitted radio behemoth Clear Channel Communications Inc. to own all the stations in one city.

The rules generally will not require any broadcaster to shed any holdings, however.

In theory -- though no such plan exists, and this combination would be unlikely -- the net effect of the changes would permit a single company to own the following media outlets in Los Angeles: the Los Angeles Times, KTLA, KCBS Channel 2, KCOP Channel 13, Time Warner Cable, KIIS-FM, KBIG-FM, KLOS-FM, KOST-FM, KROQ-FM, KNX-AM, KFWB-AM and KABC-AM.

The FCC acted under a federal law that requires it to review media ownership rules every two years. The agency also was under a mandate from the U.S. Court of Appeals to justify the need for some of its media ownership rules.

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