REALITY IS THAT THERE'S MORE COMPETITION, POWELL AIDE SAYS

Rise of personal video recorders and video-on-demand could become challenge for Big Four networks as consumers brush aside idea of appointment viewing in favor of content on their own schedules, Eid said: “These are some of the things that the Commission is looking at… as we craft ownership rules that are grounded in the marketplace as it exists today.”

“Well, based on Susan’s comments, maybe I should just get up and leave now, run for the door,” quipped NAB Pres. Edward Fritts, who was on panel with Eid, along with NCTA Pres. Robert Sachs, Media Access Project (MAP) Pres. Andrew Schwartzman and attorney and former FCC Chmn. Richard Wiley. Fritts said Eid had just given “underlying premise for additional deregulation.” He credited 1996 Telecom Act with rejuvenating radio with influx of capital that brought on further consolidation. He said he hoped FCC would embrace NAB’s proposed 10/10 rule, which would allow TV duopolies in some small or rural markets. “This is not to concentrate power but it distributes the opportunity for stations to provide more and better local service,” Fritts said.

Sachs said he thought cable horizontal and vertical rules were “less likely to play a factor in mergers and acquisitions in our industry than other media ownership rules” in 2003 because FCC still was working on its set of proposed rules for cable and Comcast-AT&T Broadband merger closed last year. “No other merger of that size is likely this year, especially in light of current market conditions,” he said, “so there is perhaps less urgency from the industry standpoint with respect to the issues involved.” He said most important aspect of ownership rules dealt with attribution, which NCTA had pressed FCC to liberalize. “They cry out for revisions.”

Schwartzman said he didn’t disagree with conventional wisdom that FCC under Powell would leave many current media ownership rules in place, but “in a much more relaxed and in some ways ineffective manner.” But he took issue with what he called Eid’s misperception that “the broadcast industry is going to hell in a handbasket somehow, the networks in particular.” He said that he saw resurgence in localism as political force and that Powell would have to reckon with creative community’s and public’s desire for localism in changing any rules.

Wiley said media landscape had changed dramatically since his days at FCC. For example, he said newspaper- broadcast rule instituted in 1975 when he was chmn. had outlived it’s usefulness. Marketplace changes “have made my handiwork really outdated,” he said. Wiley said there were 50% more TV stations than in 1975, 70% more radio stations, that cable and satellite were in their infancy back then and that Internet had offered whole new medium for news, information and communication. “The number of choices available in the marketplace to the American viewing and listening consumer is simply staggering today,” he said. Wiley also advocated loosening duopoly rules, saying that would boost smaller market broadcasters. He said fin/syn rules were woefully outdated because program producers could shop their content around.

Eid said Commission “has a very high standard and a very high bar” in coming up with rules because of what courts have said and Congress’s decision that rules should be reviewed every 2 years and that they be stricken unless than could be shown to serve public interest. Powell has asked economists to come up with “Diversity HHI” formula to evaluate voices in market, she said. Schwartzman complained that FCC should have appealed to retain its current rules. Studies FCC produced “are not without their problems” and some, in fact, are biased and methodologically flawed, Schwartzman said.

Asked to predict what would happen in next 6 months, Fritts said newspaper-broadcast cross-ownership rule, which he called “a glacial remnant of the Ice Age” should disappear, radio-TV cross-ownership rules were likely to be repealed and duopoly rules should be loosened. Schwartzman said he thought FCC perhaps should break broadcast ownership proceeding into pieces if it wanted to meet Powell’s late spring deadline for completion. Wiley said he thought FCC might look at changing market definition of local radio.

Panel discussion came day after reply comments were due to FCC on broadcast ownership rules (CD Feb 4 p9). Almost 4,000 comments were listed on FCC’s Electronic Comment Filing System (ECFS) by Tues. afternoon. Among them was joint filing by NAB and Network Affiliated Stations Alliance (NASA) asking FCC to preserve 35% national TV ownership cap to maintain localism. “Localism is about operating local television stations in the service of community -- rather than national -- interests,” Fritts and NASA Chmn. Alan Frank wrote in letter to Powell. Networks, they said, have other priorities besides providing their owned and operated (O&O) stations with best possible service to local communities. Lifting cap, they said, would jeopardize localism.

Consumers Union (CU), Consumer Federation of America (CFA), Center for Digital Democracy (CDD) and Media Access Project (MAP) said data that media companies had given FCC supporting relaxing of rules “actually demonstrates the need for preserving them.” They said industry data showed that 70% of all markets had 4 or fewer sources of original TV news production. Caucus for Producers, Writers & Directors dissented from joint comments of Fox, NBC and Viacom that antitrust enforcement was adequate for protecting public interest. Deregulation already has “decimated” number of independent program suppliers, and consolidated media ownership is “a threat to the public welfare,” Caucus wrote.

Fox Entertainment, NBC, Telemundo and Viacom, in joint filing, said market was “exhibiting no signs of harmful concentration” and limits on common ownership “impair, rather than advance” Commission goals of competition, diversity and localism. They said 8 studies they commissioned showed that current rules unfairly and unnecessarily constrained only one player in “the vast media universe” -- broadcasters.

Disney said reimposition of fin/syn rules was “entirely without merit.” With hundreds of networks for programs, “it is simply ludicrous to suggest that there is any legal basis for the Commission to reregulate the programming business,” Disney said. And if FCC did want to reregulate programming, those regulations would be best directed toward satellite and cable “that have replaced the broadcast networks as today’s bottlenecks or funnels,” Disney said. Paxson wrote that Commission should immediately increase national ownership cap to 50% with presumption that cap would raised biennially by 2.5% until it reached60%, eliminate newspaper-broadcast cross-ownership rule and reform duopoly and radio/TV rules. Paxson also argued for Commission to retain UHF discount, of which Paxson is beneficiary. Schwartzman, on Precursor panel, called for FCC to eliminate that discount.

National Assn. of Black Owned Bcstrs. and Rainbow/PUSH Coalition said in their filing that number of minority owners of broadcast facilities had decreased 14% since 1996 Telecom Act and FCC must act to remedy situation.