FCC CRITICS CLAIM SYMBOLIC VICTORY WITH CONGRESSIONAL ACTION

Meantime, the rules still are subject to a stay by the 3rd U.S. Appeals Court, Philadelphia, which will hear challenges to their validity in mid-Feb. The court could take a year or more to decide whether the FCC’s June 2 decision to raise its 35% cap to 45% was legally justified, so the rules remain in legal limbo, where they have been since the U.S. Appeals Court, D.C., in 2002 remanded the 35% cap to the FCC, saying the agency had failed to justify the old rule.

An FCC spokesman said the agency would have no comment on the congressional action, but Comr. Adelstein, who voted against the ownership rules, called it “a bipartisan vindication of the overwhelming opposition of the American people against further media concentration.” Comr. Copps, who also has been a critic of the rules, was traveling in Africa with the U.S. Agency for International Development and was unavailable for comment.

House and Senate appropriations negotiators agreed late Wed. to retain the 35% broadcast ownership cap that was part of both House and Senate Commerce-Justice-State appropriations bills. Sources said there was little discussion or opposition to the amendment, which was adopted in a conference meeting. The White House repeatedly has threatened a veto if the bill contains the ownership cap amendment, but several sources said President Bush wasn’t likely to veto an omnibus spending package over the ownership cap.

A broadcast source said that since negotiations on the spending bill hadn’t ended, the Administration still had time to convince appropriators of the need to remove the provision. However, the hopes of removal were “dimming,” the source said. The White House has issued several “statements of Administration policy” that said if the 35% cap were part of a spending bill, advisers to the President would recommend a veto. Some have called that an “adviser’s veto,” which appeared to be a lesser veto threat.

At our deadline, further negotiations on the omnibus bill hadn’t been scheduled. Once a conference report on the omnibus is released, it will go first to the House and then to the Senate. The bill can’t be amended on the floor. Sen. Dorgan (D-N.D.), a conferee on the spending bill, agreed not to push an amendment that would have prevented the FCC from implementing looser cross-ownership rules, his spokesman said. However, the spokesman said Dorgan would continue to push the issue next year.

The NAB, which has challenged the cap in court and before Congress, wasn’t counting its chickens. “We're pleased that the 35% rollback is apparently still in the omnibus legislation, but until it’s signed into law, this is not a done deal,” an NAB spokesman said. A Network Affiliated Stations Alliance spokesman declined to comment.

Media Access Project (MAP), which is leading the consumer charge against the FCC’s rules, called the rider “a stinging rebuke of Michael Powell.” MAP Pres. Andrew Schwartzman acknowledged that the rider, assuming it passed, would have little practical effect but said he believed Bush and congressional leaders had underestimated the “the depth and breadth of the opposition” to the new rules. Schwartzman said that as far as the majority of Congress and the public was concerned, “the FCC has been discredited and [FCC Chmn.] Michael Powell is damaged goods.” Asked whether the rider might have some bearing on the court case, Schwartzman said it would become part of the “post-enactment legislative history,” which might affect the judges’ thinking but probably wouldn’t carry the weight of the legislative history of the 1996 Telecom Act itself.

Broadcast industry sources said News Corp. and Viacom, the companies currently over the 35% cap, also probably wouldn’t feel the effects of the rider, if passed. That’s because neither had TV stations up for license renewal this year, so the FCC would not get a chance to look at a Fox or CBS station renewal in the context of the ownership rules anytime soon. NBC and News Corp. declined to comment. Viacom hadn’t decided whether to issue a statement by our deadline.

Financial analysts said the legislation would have no effect on the recommendations they were making to investors, and TV station brokers said the measure would have little or no affect on transactions. “We still have a ‘buy’ recommendation in place for Viacom,” said Standard & Poor’s analyst Tuna Amobi. “This didn’t come as any surprise. It’s more or less a confirmation of the fact that the House voted overwhelmingly to block the rule. And even though it would be a pretty tall order for the President to veto the entire spending bill to keep the rules in place, its still tied up in the courts, so this is going to be a pretty long fight.” Amobi said S&P’s recommendation to investors was to “simply remain cautious and stick with companies that have proven business models. While there is some regulatory risk, we're not reading too much into it. I can’t see the networks ever being required to divest any of their stations.”

Richard Blackburn of Blackburn & Co. said the measure would have implications only for the network O&Os and a couple of smaller stations. He said he hadn’t heard any talk of networks considering selling off stations to get below the 35% mark and he doubted those over the cap ever would have to divest stations: “They're going to do everything they can to avoid having to sell their stations, and I think they'll be successful.” -- Brigitte Greenberg, Terry Lane, J.L. Laws