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Congress to watch FCC program
Opponents of new rules hope Capitol Hill will slow move to consolidate ownership of TV stations.
June 2, 2003: 3:16 PM EDT
By Chris Isidore, CNN/Money Senior Writer

NEW YORK (CNN/Money) - Now that the FCC has given a green light to new mergers among media companies, opponents of the new rules the agency approved Monday are looking to Congress to put up at least a yellow light for such deals.

The five voting members of the Federal Communications Commission are to appear Wednesday before a Senate panel chaired by Sen. John McCain, the Arizona Republican who is an outspoken critic of the new rules.

The rule changes, approved 3-2 by the Republican-controlled commission, allow broadcast television networks to own more of their own affiliates and two television stations or a television station and a newspaper in many more markets than before.

"I continue to be disturbed by the statistic frequently cited in these hearings that five companies control 85 percent of our media sources," McCain said in a recent statement.

Critics of the more lax rules on media ownership say they also will meet this week to discuss what legislation they can get behind to try to block, or at least dilute, the new rules.

"We have a group as eclectic as any coalition anyone has ever seen," said Matt Keller, legislative director for Common Cause, a liberal public interest group, who counts groups from the National Rifle Association to the National Organization for Women as his allies on this topic. "The top half of the first inning has just ended. This is where the game starts."

But even Keller admitted it will be an uphill fight for his group. Even if legislative efforts move quickly, that probably won't be fast enough to block some companies from completing deals they quietly negotiated while awaiting the looser rules.

"I don't see how Congress at this point can stop everything that was set in motion seven years ago," Keller said. "Legislation is a long process."

Deals under radar

The first deals could be small to mid-size broadcasters buying or selling network affiliates around the country. For example, Sinclair Broadcast Group (SBGI: Research, Estimates) and Young Broadcasting Inc. (YBTVA: Research, Estimates) are expected to buy new stations where they already own affiliates, or sell stations to newspapers or others willing to pay top dollar.

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Gene Kimmelman, senior director with the Consumers Union, talks about what the FCC ruling means for the consumers.

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But a purchase of an entire mid-sized broadcaster is unlikely, according to industry analysts.

Newspaper publishers also may seek to buy stations in cities where they already operate papers. For example Media General Inc. (MEG: Research, Estimates), which owns television and newspapers in a half-dozen markets, likely will be looking for a station in Richmond, Va., where its second-largest paper, the Richmond Times-Leader, and the company itself are based.

The networks might be somewhat slower buyers of stations, despite their push for the freedom to do so. While Viacom (VIA.B: Research, Estimates), owner of CBS and UPS, has said it wants to buy additional affiliates, a News Corp. (NWS: Research, Estimates) spokesman said his company's immediate focus is closing on its proposed purchase of satellite television operator Hughes Electronics (GMH: Research, Estimates) rather than buying more stations.

Walt Disney Co. (DIS: Research, Estimates), owner of ABC, has yet to reach the lower limit under the old rules on affiliate ownership. NBC is expected to concentrate on buying Spanish-language affiliates to its recently acquired Telemundo network, rather than purchasing traditional English-language NBC affiliates.

Democrats get media dollars

The media industry has a somewhat Democratic cast in its contributions. The Center for Responsive Politics found the nation's 25 largest media companies in the last two election cycles have given political candidates $26.7 million in contributions, with 59 percent of them going to Democrats.

But the two major associations concerned with this issue -- the National Association of Broadcasters and the National Cable and Telecommunications Association -- both gave more than 56 percent of their most recent contributions to Republicans.

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In addition to direct political giving, the top 25 companies have spent $45.7 million on lobbying in the last two years, with the five companies that own broadcast networks -- AOL Time Warner Inc. (AOL: Research, Estimates), Viacom Inc., Walt Disney Co., News Corp. and General Electric Co. (GE: Research, Estimates) unit NBC, spending $24.6 million of that.

"The contributions haven't gone to members of the FCC, but you can be sure they are trying to make sure Congress doesn't reverse its vote," said Steven Weiss, communications director for the Center for Responsive Politics. "It's evidence of an industry that knows how to play the game and spend its dollars wisely to get the best return for its money."

Weiss and Keller said that in addition to the growing public criticism of the new rules, critics hope to exploit the rising cost of advertising time lawmakers must buy when running for re-election. If there is greater consolidation in station ownership, rates for ads on some key programs could increase for all advertisers, including political candidates.

"In the Senate, 60 percent of campaign expenditure is spent on television broadcasting," Keller said. "I've been told by both Republicans and Democrats that they are outraged the broadcasters get a publicly granted license without having to make time available for candidates."

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But Weiss said efforts to require broadcasters to provide lower-cost ad time to candidates has won votes in Congress in the past but haven't made it out of the back-room negotiations when final legislation is crafted.  Top of page




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