CONGRESS MOVES TO TAKE COURTS OUT OF MEDIA OWNERSHIP CAP FIGHT

Senate Appropriations Committee Chmn. Stevens (R-Alaska) said he was pleased with the compromise. Democrats, however, said they were angry about being left out of the negotiations but it was unclear whether they planned a serious challenge to the bill because of the ownership issues. At our deadline, it also was unclear when the bill would be considered by Congress, since the House already had passed a continuing resolution that funded the govt. through Jan. 31.

Congressional and industry sources laid out the details of the compromise, which was negotiated late Mon. and introduced Tues.: A 39% ownership limit would sweep News Corp. and Viacom, the 2 only networks above 35%, under the cap. The FCC couldn’t change the ownership limit or grant waivers, and any company that exceeded the cap would be forced to divest, sources said. Stevens said the FCC still would conduct a review of ownership, but what once was known as the “biennial review” now would be conducted every 4 years. An industry source said the amendment to the omnibus appropriations bill borrowed heavily from the original version of Steven’s S-1046 that passed the Senate Commerce Committee after being amended.

The conference report on the omnibus appropriations bill was filed in the House Tues. afternoon. House Appropriations ranking Democrat Obey (Wis.) was quick to criticize the deal, which he said disregarded both houses in favor of the 35% cap. “No votes were taken, this is an arbitrary judgment,” Obey told the House. “The White House said: ‘If you don’t do it our way, we'll hold our breath and turn blue.'”

But industry and Congressional sources said the White House had emphasized to members that its threat to veto the 35% ownership limit was serious, which brought members back to the negotiating table, sources said. In a letter to Stevens and Senate Appropriations ranking Democrat Byrd (W.Va.), Sen. Dorgan (D-N.D.) said: “If the President’s veto threat persuades some in Congress to negotiate a deal with the White House in contravention of the final agreement reached by the Conference Committee on this provision, then that will undermine the entire process of Appropriations conferences.” Dorgan often said he doubted Bush would veto the omnibus bill over ownership issues.

FCC Chmn. Powell’s office wouldn’t comment on the measure, and other commissioners and their staff were unavailable for comment at our deadline. An FCC official said the agency would have no official comment, but privately agreed that the measure, if passed, would render moot the 45% portion of the Philadelphia court case. The official said that if the measure passed, the new cap would take the form of the self-executing rule and that the FCC would simply issue a public notice that it would be implementing the change.

The Media Access Project (MAP), which has led the consumer charge against the FCC’s 45% cap, said the congressional language, if it stood, would represent a “huge victory for consumers” and a “stinging rebuke for Chairman Powell.” MAP Pres. Andrew Schwartzman, said it was likely to be Jan. or Feb. before Congress would get a chance to solidify the statutory limit, and he hoped it could withstand any challenges meanwhile. “That leaves an awful lot of time for mischief,” he said. Schwartzman said that even if it did become law, the major networks that disliked the cap -- NBC, Fox and CBS -- could challenge the cap on constitutional grounds.

The networks remained largely quiet on the issue Tues. NBC and Viacom, the parent company of CBS, declined to comment on whether they planned to challenge a statutory cap on constitutional grounds. News Corp. CEO Rupert Murdoch addressed the measure at a shareholder meeting in N.Y. Tues. Although he didn’t know all the details, he said: “On the face of it, it suits us just fine.”

The Network Affiliated Stations Alliance (NASA) said broadcasters could live with the what they called a “tough compromise.” Post-Newsweek Stations Pres. and NASA Chmn. Alan Frank said: “Thirty-five is the number we want, but if making it 39 is permanent -- meaning we don’t have to revisit this every 2, 4 or 6 years -- then we would support it, reluctantly.” Another broadcast source agreed accepting a higher cap was tough, but any future FCC chairman would have to be crazy to raise the issue again later, considering the criticism Powell has faced. Like Schwartzman, however, broadcasters remained cautiously optimistic. “We're not breathing any easier until it’s signed into law,” another broadcaster said.

After several days of wrangling, Stevens said the omnibus bill was officially closed, for now: “39 percent is a lot better than 45 percent.” The bill would put more control of the issue back in the hands of Congress, he said. It also would stymie the challenge in the 3rd U.S. Appeals Court, Philadelphia, to the FCC’s ownership rules, Stevens said. “Now litigators are attacking an act of Congress, not an FCC rule.”

Several sources said a court challenge to legislation was much more difficult than a challenge to FCC rules. One House Democratic source anticipated the networks would file a court challenge to the constitutionality of an ownership cap. However, the source said it would be harder for networks to fight an enacted ownership cap than one the FCC had decreed.

The timetable for consideration of the legislation was uncertain at our deadline. The House is likely return Dec. 8 to consider the bill. Some reports said the Senate also could return around that time for a brief session on the omnibus. Other reports said that might not happen until Jan. At an afternoon news conference, Stevens said he wasn’t sure what plans the Senate had to consider the bill: “We have to get the full Senate back. We have to figure out how to do that.”

Stevens said that now that the omnibus had been introduced, it couldn’t be changed. However, he did say there were mechanisms to return it to conference if some changes were needed. “It would be a shame to have to reconference the bill,” Stevens said: “It would just add further delay… We have to begin next year’s work.”

Some Senate Democrats were upset about the bill’s being changed after an agreement had been reached last Wed. (CD Nov 21 p1). In a letter to appropriations leaders, Dorgan, an omnibus conferee, said he hadn’t introduced any amendments because he had understood that portion of the bill would be closed to further action. He said he would fight to overturn the FCC’s rule “any way I can.”

Senate Commerce Committee ranking Democrat Hollings (S.C.) said: “The Republicans’ decision to make the broadcast ownership cap 39% was no ‘compromise’ at all. It was a total violation of the conference agreement. The Republicans went into a closet, met with themselves and announced a ‘compromise.'” One House Democrat aide said he wondered whether those Democrats would get over their anger over the procedure and support the bill. The permanence of the ownership cap should be a strong selling point to Democrats who opposed the 45% limit, the source said. -- Terry Lane, J.L. Laws