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FCC's Media Chief Inclined to Lift Curbs

Ferree leans toward a mathematical formula instead of blanket caps on cross-ownership.

March 06, 2003|Edmund Sanders | Times Staff Writer

WASHINGTON — The federal official charged with rewriting media ownership rules said Wednesday that he was leaning toward lifting bans that prevent TV broadcasters from also owning newspapers or more than a handful of radio stations in a single market.

In his most detailed public comments to date about the agency's continuing review, Federal Communications Commission Media Bureau Chief W. Kenneth Ferree said he would like to replace those regulations with a new "diversity rule." Such an approach might rely on a mathematical formula to measure the diversity of media voices in a local market rather than setting blanket prohibitions.

"It's clean and easy to explain to a court. That's the way I'd like to see it work," Ferree said in an interview with The Times.

The regulatory staff member stressed that he had not made formal recommendations. His views still may evolve, he said, as he consults with FCC Chairman Michael K. Powell and the four other commissioners, who will make the final decision.

"When I go upstairs, I may get blown away," Ferree said.

The commissioners, who have been receiving biweekly briefings about the media ownership proceedings, are expected to vote on recommendations by Ferree's staff by June.

During the interview, Ferree also raised doubts about the future of the FCC's so-called dual-network rule, which prevents mergers among ABC, CBS, NBC and Fox. He said there was an "extremely thin record" to support retaining the rule.

In addition, Ferree predicted a "close fight" over the agency's national TV station ownership cap, which prevents a single company from owning TV stations that reach more than 35% of the nation.

"You can make the case either way," he said. As a result, Ferree said, his staff probably will refrain from making a formal recommendation on the controversial cap; instead, they will wait for the five FCC commissioners to signal their preference and then write a rule to support the majority's decision.

Some broadcasters were encouraged that Ferree appears to support their view that several FCC rules are outdated. But they also expressed anxiety about the proposed diversity rule, which would subject them to a new and untested standard.

"I worry that we're just replacing one rule with another," one media lobbyist said.

If adopted, the diversity rule probably would replace two regulations, which cover broadcast-newspaper cross-ownership and TV-radio cross-ownership. (Tribune Co., parent of The Times and KTLA-TV Channel 5, has lobbied to kill the broadcast-newspaper rule.) A third cross-ownership rule, the broadcast-cable restriction, was overturned by a federal court last year.

"I would like to have more targeted rules," Ferree said. "Right now, it's sometimes hard to know what the purpose of a rule is. Is it diversity? Is it competition? They all get a little jumbled."

The new rule would be based on an empirical formula being developed by FCC economists. When faced with a proposed merger, agency officials would input variables into the formula -- such as the number, type and ownership of media outlets in a market -- and calculate whether there is enough diversity.

The hard part would be deciding which factors should be included and defending those choices in court.

Ferree said he was "guardedly optimistic" that the agency would be able to develop a formula that works, though he declined to discuss specifics, saying the actual calculation is "not ready for prime time." FCC economists are testing a draft version on a variety of media markets nationwide, he said.

Critics and some fellow commissioners have questioned whether media diversity can be measured by a formula.

"Let's not pretend this is science," FCC Commissioner Jonathan Adelstein, part of the Democratic minority, said last week.

Ferree said adoption of a diversity rule could allow the FCC to simplify its other local ownership regulations, including one that prevents the same company from owning more than two TV stations in the same market and another that limits radio broadcasters to eight stations in a market.

If diversity issues were handled under the new rule, the local station caps could be retooled to focus solely on ensuring that proposed mergers don't violate antitrust laws.

One option under consideration would replace the current local station caps with the Herfindahl-Hirschman index, a formula that has long been used in antitrust reviews by the Justice Department, he said.

On the national TV cap, Ferree said the agency has gathered evidence that supports both keeping and nixing the rule.

He noted that one FCC study suggested that the rule was hurting the public interest by restricting the growth of major networks because they tended to offer more local news on TV stations they owned.

On the other hand, he pointed out, the Project for Excellence in Journalism, a research group, recently concluded that larger station groups generally produce lower-quality new shows.

"There's conflicting evidence," Ferree said. "This one is close."

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