FCC vote caps saga over media ownership

A divided Federal Communications Commission approved what could be the biggest change in the country's media-ownership rules in more than a decade, allowing newspapers and broadcasters in a market to buy each other.

On a 3-2, party-line vote, the FCC approved Chairman Kevin J. Martin's plan to eliminate its more than 30-year-old ban on cross-ownership. Instead, newspapers in the top 20 markets will be able to buy any station that isn't among the top four in its market. In smaller markets, such a purchase could be approved if the buyer promises to add at least seven hours of news a week to the bought stations.

In a last-minute change, the FCC gave permanent waivers to newspapers and TV stations in 42 markets that already have cross-ownership, some of which are in violation of the new rule. The permanent waivers will allow Gannett to keep the Arizona Republic and a Phoenix TV station; Shamrock Communications to keep a broadcast property and newspaper in Scranton, Pa.; and Media General to keep four stations and newspapers in Florida and elsewhere.

Media General owns The News Virginian and community and metropolitan newspapers throughout the South.

The FCC also added an exception that will let TV stations and newspapers buy "failing" rivals, despite the new requirement, and could let News Corp. keep two TV stations in New York as well as the New York Post.

The vote was a rejection of pleas for delays from senators and consumer groups, who warned the FCC shouldn't yet be voting because it hadn't sufficiently studied the potential impact that consolidation would have on local programming and on reducing opportunities for minority- and female-owned businesses to buy broadcast properties. They also said the agency had not provided enough time for the public to comment on its final proposal.

Despite the vote, the fight is far from over. Some of the legislators promised to try to overturn the FCC vote in Congress.

In addition, Andrew Jay Schwartzman, president-CEO of the Media Access Project, promised to take the FCC action back to the appellate court that rejected the last FCC attempt to rewrite ownership rules.

Mr. Schwartzman called the FCC action "an extreme and unjustified change" and said he would return to the court to challenge the latest FCC action. Media Access Project is the public-interest law firm that last time won the appellate court case.

"Unless Congress intercedes, we're going to have to go back to court to make sure the public isn't harmed by this ill-advised action," Mr. Schwartzman said.

The cross-ownership proposal was offered by Mr. Martin and supported by Republican FCC commissioners Deborah Taylor Tate and Robert McDowell. It was angrily opposed by Democratic FCC members Michael J. Copps and Jonathan Adelstein.

"It's a terrible decision," said Mr. Copps. "In the final analysis, the real winners ... are businesses that are in many cases quite healthy, and the real losers are going to be all of us who depend on the news media to learn what's happening in our communities and to keep an eye on local government."

Both he and Mr. Adelstein charged that the last-minute changes were offered in the dead of night with no public input, and represent a major cave-in to broadcasters.

Mr. Martin, Ms. Tate and Mr. McDowell all argued that the rules changes were "modest." Mr. Martin rejected the suggestion that there was any rush to judgment.

"I reject the claim that the process has been unfair or too rushed," he said. "For a year and a half I have attempted to respond to legitimate concerns. At each step, as I was crossing the goal line, the goal line was moved. I've finally reached a view that it is impossible to achieve consensus."

The vote was among a series of major steps the FCC took recently.

In the other votes, the FCC:
- Approved a series of proposals in a bid to help minorities to acquire broadcast stations. Minority groups criticized the proposal, saying the proposals mostly benefit small businesses rather than minority-owned companies and could hurt minority companies.
- Revisited and reiterated its rule barring any single cable company from serving more than 30 percent of the nation's cable subscribers. An appellate court has sent the rule back to the FCC for review.

A third proposal - to launch a rule-making proceeding to examine whether new regulation of product placement and integration of products into TV shows is warranted - was delayed.

The vote caps a saga that began in 2004 when an FCC attempt to ease media-ownership rules under former Chairman Michael Powell was rejected by an appellate court and sent back to the FCC. Mr. Powell had proposed far broader changes that would have allowed one company to own three TV stations, eight radio stations, the local cable system and the local newspaper in big markets.

Mr. Martin offered a more limited proposal that would still be the biggest change in FCC rules since Congress passed a revision of communications rules in 1996.

Ira Teinowitz is the bureau chief and politics and regulation reporter for the Washington bureau of Advertising Age magazine.