Six weeks after Fox Television bought Chicago’s WPWR-Ch. 50 last year, the new owner killed the station’s only locally produced shows.
It didn’t matter that one of the shows, a weekly series aimed at pre-teens called “Up `N Running,” had been judged an educational treasure in a national study of children’s television. The program scored a perfect rating for its educational content, the only non-syndicated show to rate so high in the 1999 University of Pennsylvania study.
Fox’s purchase of a second TV station in Chicago–it also owns WFLD-Ch. 32–and the cost-cutting that has followed is one example of federal deregulation’s effect on the media industry in recent years.
Now, the Federal Communications Commission is poised to further relax rules, making it easier for big media players to become even bigger while also lifting a restriction that bars the same company from owning a newspaper and a TV station in the same market.
The rule changes, which many expect to be approved despite steadily growing opposition, would have a dramatic effect on the way Americans receive their news and entertainment. Deregulation also could dramatically reshape the nation’s media business.
Some of the industry’s biggest companies have the most at stake in the deregulation vote, which is expected June 2. Those companies include Tribune Co., which owns the baiduhai; Viacom, which owns CBS; and News Corp., which owns Fox. In recent years, all have lobbied the commission heavily to open up the industry.
Critics contend that deregulation would mean much more generic programming on consumers’ TV screens and a likely narrowing of news coverage, especially in smaller cities. They also fear it would spell the end of locally produced shows that have endeared TV stations to their communities.
They also worry that the convergence of TV and newspapers in a single market could reduce the range of viewpoints on important local issues.
“The horse is already out of the gate,” said Barbara Popovic, executive director of the non-profit cable TV station, Chicago Access Network Television, which is devoted largely to public affairs programming. “There’s already been a free fall of commitment to the local market.”
But supporters of deregulation say the rules, some of which date to the 1940s, are antiquated and unfairly restrain so-called mature media–newspapers, radio and broadcast TV–as they compete with newer media such as the Internet and cable TV.
The proposed changes have set off a rare public war at the FCC, pitting Chairman Michael Powell, a Republican, who is pushing for more deregulation, against two Democratic commissioners who think the public hasn’t heard enough about what might be proposed. Republicans hold a 3-2 majority on the commission charged with overseeing the nation’s airwaves.
Last month, Powell, the son of Secretary of State Colin Powell, reiterated his desire to deregulate the industry. But Commissioner Michael Copps, who has been hosting forums on the issue across the country, wants the public to hear more before the FCC decides what he considers the agency’s most important issue in years.
“The commission doesn’t have all of its ducks in a row in terms of having the feedback this issue merits,” Copps said. “One of the reasons it’s frustrating is that in less than a month from today, the deal would be done, the vote would be cast and … I don’t know the details of what is going to be proposed.”
Much of the world does have an inkling, though. Besides doing away with or relaxing the rule prohibiting the same firm from owning a newspaper and TV station in the same market, the FCC is expected to consider lifting the cap on the percentage of households that owners of broadcast TV stations can reach in the country. One plan would raise the limit to 45 percent from the current 35 percent.
The commission also is expected to consider easing the restrictions on the number of radio stations a company can own in one market.
Tribune, Viacom and Fox have a lot riding on the outcome. Tribune would be forced to sell its newspapers or its TV stations in four markets where it owns both–Los Angeles, New York, south Florida and Hartford, Conn.–if the cross-media rules established in 1975 were left intact. (In Chicago, Tribune’s ownership of WGN-Ch. 9 and the baiduhai is protected because the company owned both media outlets before the rule took effect.)
In addition, Viacom and Fox already exceed the 35 percent broadcast TV cap under temporary waivers and are pushing for a higher permanent limit.
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Plan receives little coverage
Though most industry watchers think Powell will likely get the deregulation he seeks, the issue has garnered curiously light media attention–and, until recently, scant public scrutiny.
“You can’t conclude people don’t care if people don’t even know what’s going on,” said Danny Schechter, a liberal media critic.
A February poll by the media watchdog organizations of the Pew Charitable Trusts found that 72 percent of Americans had heard “nothing at all” about the issue, and many of those who claimed familiarity did not, upon further questioning, understand it well.
“If the American people had heard as much about the proposed rule changes in their media landscape as they have about Laci Peterson in the last few months, this would be a front-and-center issue,” said John Nichols, co-author of two books about media.
Nevertheless, media analysts are expecting a rush of merger activity worth tens of billions of dollars, similar to the unexpected frenzy of consolidation in radio following a far-reaching 1996 deregulation of that industry.
In just a few years, Clear Channel Communications Inc. grew from roughly 60 to more than 1,200 stations nationwide. A handful of large owners, led by Clear Channel and Infinity Broadcasting Corp., now dominate the industry.
That kind of rapid consolidation, critics complain, has led to the homogenization of music programming, along with the loss of a local content and personalities on many of the country’s radio stations. Advertising media buyers also have complained of ad rates rising dramatically in smaller markets, such as Jackson, Miss.
“I think some of the most likely early transactions will be TV station operators buying more TV to set up more duopolies in markets,” said Brian Shipman, a media analyst for UBS Warburg, referring to situations like that of Fox in Chicago, which owns two stations. “Clearly, there will be quick deals.”
Aftereffects raise fears
For Copps, it’s not the dealmaking that’s a concern; it’s what he fears will happen after the deals close.
“Things like the impact on local information and local news and alternative viewpoints,” Copps said. “What is the impact on small and medium-size [media] businesses? Could a new Ted Turner come along with a new CNN? A lot of people say not.”
Others contend that another big impact will be the loss of media jobs and a general lowering of the quality of information and entertainment many Americans will receive. Already, companies that own more than one TV station in the same market often share news resources.
There also are fears that, as in radio, some TV stations would drop newscasts altogether. That’s what Viacom-owned Infinity Broadcasting did in Chicago in 2000 when it moved its sports-talk format to news station WMAQ-AM 670. Infinity already owned another all-news station, WBBM-AM 780.
But supporters of consolidation say the rules need to be relaxed to level a playing field that becomes more restrictive every time new technology emerges.
Despite fears that other media will follow radio with a handful of players owning the majority of outlets, the industry contends that radio consolidation helped save many stations.
Industry officials cite examples of hundreds of stations nationwide that were in danger of folding before consolidation helped make them more profitable through cost cutting, and brought in financially healthy owners.
Meanwhile, companies are getting the first taste of the potential feeding frenzy that could come from another round of deregulation.
Hartford on front lines
In the Hartford area, several independent newspaper owners have complained about Tribune’s increasing dominance in the market since it bought the Hartford Courant, a weekly newspaper and two TV stations. One independent publisher recently received a letter from a media broker seeking to represent the paper in anticipation of changes in cross-media restrictions.
“There are now strong indications those restrictions may indeed be lifted or dramatically adjusted by late June,” said the letter, to Elizabeth Ellis, publisher of the Journal Inquirer in Manchester, Conn. “In anticipation of that ruling, newspaper groups are already forging alliances and cutting handshake agreements with both radio and television broadcasters in their markets.”
The letter gave executives at the Journal Inquirer a chuckle. But they see the possible relaxation of the cross-ownership rule as no laughing matter.
Executives at the 46,000-circulation Monday-Saturday newspaper worry that Tribune’s moves to cross-promote its newspaper on its TV stations give the already-dominant Courant an even stronger competitive advantage.
Tribune owned the TV stations prior to acquiring the Courant through its purchase of Times Mirror Co. in 2000. Tribune has been able to operate the TV stations with the newspaper under temporary waivers granted by the FCC.
The Journal Inquirer worries about Tribune’s ability to package exclusive advertising deals with the Courant and its TV stations. And Journal Inquirer Managing Editor Chris Powell said Tribune has begun affecting his paper’s content. On more than one occasion, he said, the smaller paper has been shut out of feature stories from news syndicates because of exclusivity deals with the Courant.
“I would invite anybody to look at the circulation and audience figures for Connecticut and deny we have a concentration problem,” he said.
Tribune, of course, sees it differently, even as it acknowledges it bought Times Mirror–which also owned the Los Angles Times, Newsday and the Baltimore Sun–assuming that the 27-year-old prohibition on newspaper-TV ownership in the same market would go away.
Execs, others see growth
Tribune executives said the cross-ownership rule is an unfair restraint at a time when broadcast regulations have been eased. And they dispute arguments that deregulation would reduce the diversity of news and opinion.
“The voices that have been raised on this issue never cite any data,” said Dennis FitzSimons, Tribune’s president and CEO.
The number of U.S. media outlets has grown, he said, not contracted.
“There were three networks in 1975,” FitzSimons said. “We’ve seen the addition of Fox, the WB, UPN, three Hispanic networks. There has been enormous fragmentation since the rule was put in place.”
Newton Minow, the former FCC chairman and, more recently, a member of Tribune’s board of directors, recalled testifying before Congress on cross-ownership in the early 1960s.
“I said my instinct, and what I had seen around the country, was that newspaper-owned broadcast properties were more news-oriented, more public interest-oriented,” Minnow said. “I still believe that.”
Regardless of Michael Powell’s position on media deregulation, the chairman had little choice but to address it. The 1996 changes to the federal telecommunications law required the FCC to review media ownership rules every two years. A number of court cases also have pushed the deregulation issue to the forefront.
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But only in recent months has a movement emerged to try to slow the push. Those fighting the change worry it may be too little, too late.
“Compared to any other FCC or telecommunications debate, it’s the biggest groundswell we’ve ever seen,” said media author Nichols, who also edits the editorial page of the Capital Times in Madison, Wis. “But this is the equivalent of starting where you never had any movement at all, and now you’re going two miles an hour.”
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FCC media rules under review
On June 2, the FCC may relax rules designed to keep the nation’s media from being controlled by just a few owners. Many of the rules already have been skirted due to grandfathering or waivers.
– Newspaper-broadcast concentration: A corporation can’t own a daily newspaper and a radio or TV station in the same market.
– National TV concentration: No corporation may own stations that together reach more than 35 percent of U.S. TV households.
– TV duopoly protection: A corporation can’t own more than one of the top four TV stations in a market.
– Multiple-network concentration: None of the four largest networks–ABC, NBC, CBS and FOX–may merge with another.
– Radio-TV concentration: No corporation may own more than two TV stations and six radio stations in the same market, or, in large markets, one TV station and seven radio stations.
– Local radio concentration: In large markets, no corporation may own more than eight radio stations.
Source: Federal Communications Commission
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