Public broadcasters will be allowed to accept ad money, as long as they limit those ads to programming on their excess DTV channel capacity that isn’t broadcast to general public, FCC ruled 3-1 Thurs. Commission said public broadcasters could solicit funding outside traditional sources -- donations from viewers, philanthropic organizations, corporate underwriters, govt. subsidies. It said ruling was intended to help public broadcasters make transition to DTV from analog, but it has no sunset provision, meaning alternative revenue streams still will be available after DTV transition is complete. Mass Media Bureau Chief Roy Stuart said money also could go into producing programming. Examples of kinds of services that may be offered as ancillary or supplementary in digital TV signal include subscription video, paging or voice messaging services, computer software distribution, data transmissions, interactive materials. FCC officials didn’t rule out subscription video offerings such as premium services much like HBO or Showtime delivered over cable systems. Commission did rule that noncommercial educational (NCE) TV licensees must pay fee to federal Treasury of 5% of gross revenue generated by those extra services, just like commercial broadcasters. Currently, public TV (PTV) doesn’t run commercials, but conversion to DTV would allow them to support several programming streams.
Media watchdogs say they're closely monitoring negotiations between Viacom’s UPN and advertisers for signs that product placements will become rampant in cable network’s fall shows. With increasingly bleak economy and tough ad environment for TV concerns, watchdogs expressed reservations about $30 million deal between UPN and advertisers represented by Omnicom Group, including Cingular Wireless, Gillette, McDonald’s, State Farm Insurance and others. Deal already is done, UPN official said, but details of “value-added” elements still were being worked out. Still on table are product placements in shows themselves, logo “bugs” in corner of TV screen and other corporate sponsorship ideas. “If commercial speech overwhelms artistic expression, that’s a source of concern,” critical observer said.
Industry analysts expressed doubts that consumer groups would be successful with their challenge to FCC rules capping number of subscribers cable companies could reach (CD Aug 6 p9). Analysts said it was unlikely U.S. Supreme Court would take case, but if it did, justices were likely to affirm ruling of U.S. Appeals Court, D.C., that overturned cap. Andrew Schwartzman of Media Access Project, which appealed to Supreme Court on behalf of Consumer Federation of America and Consumers Union, acknowledged high court was unlikely to take case, especially since FCC and Justice had bowed out. “We are not overly optimistic,” Schwartzman said. Nevertheless, public’s interest merits appeal, he said.
DBS industry will leave behind most of U.S. TV stations when new spot beam satellites are launched, according to study by Equal Airwaves Right Now (EARN), organization supported by 20 broadcast companies and consumer groups. At least 2/3 of U.S. market (1,100 TV stations) won’t receive local TV signals, said EARN study, The Left Behind Project. In news conference at National Press Club Tues., group cited new study as demonstrating why FCC should license competing services such as Northpoint. EARN Exec. Dir. Peter Pitts said “satellite giants” made decisions on must-carry “based on pure profit and politics” with no consideration of “public interest.” He said policy on local TV carriage was “wrong.”
U.S. Appeals Court, D.C., rejected petition by public interest groups for full court to reconsider its earlier decision striking down 30% cable ownership cap. In order received Mon. by Media Access Project, which represented consumer groups, D.C. Circuit turned down request to review March cap decision by 3- judge panel. Media Access Project Pres. Andrew Schwartzman said groups probably would file appeal of decision at U.S. Supreme Court, even though FCC Chmn. Powell had indicated that he probably would not go that route.
White House announced Fri. it intended to nominate 3 Washington insiders as FCC Commissioners: (1) Kevin Martin, FCC transition leader for President Bush and former aide to FCC Comr. Furchtgott-Roth. (2) Kathleen Abernathy, vp of startup network provider Broadband Office Communications, who is former U S West regulatory vp and one-time adviser to ex-FCC Comr. James Quello. (3) Mike Copps, who worked for Sen. Hollings (D-S.C.) for 15 years before leaving Hill in 1980s to work in private industry and finally Commerce Dept. in international trade area. Formal nomination won’t happen for several weeks while paperwork is prepared and security clearances completed. After that comes Senate confirmation process.
In his first meeting with reporters as FCC chmn., Michael Powell was very upfront on several issues -- such as consumer protection, cable rates and 35% TV station ownership cap -- which has lead to both praise and criticism for positions he took (CD Feb 7 p2). On plus side, NBC Washington Vp Robert Okun predicted Powell would be “an assertive chairman with a market-oriented agenda, which is very refreshing.” Washington attorney Richard Wiley, who chaired FCC 1974-1977, called Powell’s statements “very learned, very erudite… He laid out his philosophy in very candid terms.”
There’s no dearth of candidates for 3 vacancies on FCC -- with more than half dozen Republicans seeking 2 spots, while members of Congress push their favorites for Democratic vacancy. Third seat opened for sure Wed. when Comr. Furchtgott-Roth announced he wouldn’t seek reappointment to term that expired June 30. One of other vacancies is that of departed Chmn. Kennard. Comr. Ness is filling other one under recess appointment.
As FCC Chmn. Kennard departs today, he leaves legacy as extremely decent man who might have been more effective if he were more of a politician, industry officials told us. “He is a prince of a man, honorable, honest,” said one telecom lobbyist. “But I don’t believe he’s a politician at heart and it’s hard for that kind of person to survive the political cauldron in Washington.” No one we talked with disputed Kennard’s honorable nature. Even his ideological opposite, Comr. Furchtgott-Roth, said Thurs. that he viewed Kennard’s departure to make way for Republican as “somewhat bittersweet” because Kennard was “one of the finest, most decent individuals I've ever met.”
AOL Time Warner, having completed its merger late Thurs. night following FCC’s approval, announced its new 16-member board. Company said new board -- 8 members each from AOL’s and Time Warner’s old 11- member boards -- would meet for first time later this week. New board consists of: (1) XO Communications Chmn.-CEO Daniel Akerson. (2) Barksdale Group partner James Barksdale. (3) Hilton Hotels Pres.-CEO Stephen Bollenbach. (4) AOL Time Warner Chmn. Steve Case. (5) Kleiner, Perkins, Caufield & Byers partner Frank Caufield. (6) CGLS Fund partner Miles Gilburne. (7) Hills & Co. Chmn.-CEO Carla Hills. (8) AOL Time Warner CEO Gerald Levin. (9) Colgate-Palmolive Chmn.-CEO Reuben Mark. (10) Former Philip Morris Chmn.-CEO Michael Miles. (11) AOL Time Warner Vice Chmn. Kenneth Novack. (12) AOL Time Warner Co-COO Richard Parsons. (13) AOL Time Warner Co-COO Robert Pittman. (14) Fannie Mae Chmn.-CEO Franklin Raines. (15) AOL Time Warner Vice Chmn. Ted Turner. (16) Vincent Enterprises Chmn. Francis Vincent. In one interesting footnote to FCC’s approval of takeover, consumer groups that had fought for strong regulatory conditions on deal ended up urging Commission to okay it even though they and other critics didn’t gain interoperability of AOL’s current instant messaging (IM) services. New ex parte filing from last week reveals that Media Access Project’s Andrew Schwartzman and Consumers Union’s Gene Kimmelman pressed Comr. Tristani, last holdout in IM fight, to vote for approval because agency had won as much as it could. Despite their strong support for “full interoperability of instant messaging services,” Schwartzman and Kimmelman said, “the net value of the relief the Commission could provide to consumers and the public from a properly crafted decision justified acceptance of an order which did not provide full interoperability.” Sources said consumer advocates also probably feared what might happen if merger review lingered beyond Democratic Chmn. Kennard’s tenure, which will end Fri.