With advertisers staying away in droves, time on Internet “is going begging,” offering great opportunity for public interest groups to place their public service announcement (PSAs) in unsold time, according to Claudia Caplan, ex-pres. of Earthlink. In Thurs. seminar in Washington sponsored by Kaiser Family Foundation (CD Feb 22 p3), she said of Internet advertising: “No one can figure out a way to make it work.”
Saying FCC had “no valid reason to think [national TV station ownership cap] is necessary to safeguard competition,” U.S. Appeals Court, D.C., remanded ownership cap to Commission, saying it needed further justification. In same decision, appeals court completely overturned ban on cable systems’ owning TV stations in same market, saying remand wasn’t justified because of “low” probability that FCC could justify that rule. In TV ownership cap case, court rejected networks’ suggestion that ban be overturned completely, saying rule wasn’t inherently unconstitutional and FCC might be able to justify it.
Calling Enron “America’s most corrupt company,” the United Church of Christ (UCC) challenged FCC Enforcement Bureau decision fining company $7,500 for failing to get FCC approval when it bought firms with private radio and microwave licenses. Last month, FCC said it had completed investigation of Enron’s failure to obtain regulatory approvals of those licenses, problem that bankrupt energy giant had informed Commission about in 1998 (CD Jan 17 p9). At time, Enron said responsibility for getting licenses was decentralized among its subsidiaries, which in some cases didn’t know such approvals were needed. FCC handled Enron violations with “a stunningly light hand,” UCC attorney Andrew Schwartzman said. He said “stealthy manner” in which FCC handled case “reduces confidence in Commission processes.” Deals, collectively, were “big deal,” Schwartzman said, and involved “public health and safety, so this has to be taken seriously.” Entire compliance process and early termination of investigation are “highly questionable,” he said.
Media Access Project (MAP) is pressing FTC to provide details on events leading up to proposed revision of FTC and Dept. of Justice (DoJ) antitrust oversight jurisdiction. Govt. recently dropped plan to announce proposal that would have given media merger oversight exclusively to Justice. MAP Pres. Andrew Schwartzman recently urged (CD Jan 23 p6) Senate Commerce Committee Chmn. Hollings (D-S.C.) to open investigation into FTC-DoJ plan, which critics say was devised without proper consultation with Congress or with all FTC commissioners. Hollings’s aides recently met (CD Jan 28 p3) with DoJ staff to ascertain circumstances leading to proposal, but said questions remained unanswered after meeting and additional discussions were planned. Schwartzman asked FTC Chmn. Timothy Muris in letter dated Jan. 29 to elaborate on reorganization plan “within 72 hours.”
Congress should determine whether antitrust legal community “exercised inappropriate influence” over recent plan to change FTC and Dept. of Justice (DoJ) merger review process, Media Access Project (MAP) told Senate Commerce Committee Chmn. Hollings (D-S.C.). FTC and DoJ abruptly dropped scheduled news briefing last week on details of proposal, which would have given DoJ jurisdiction over media merger reviews (CD Jan 18 p3). Critics say plan was crafted without proper consultation with Congress and all FTC commissioners. Hollings, who also leads Appropriations Commerce Subcommittee on Justice, State and Judiciary, should “pursue the matter aggressively,” MAP Pres. Andrew Schwartzman said Tues. in letter to Hollings: “MAP’s experience is that the FTC and [DoJ] have been quite effective in allocating responsibility for particular mergers. Those claiming otherwise typically are trade associations and lawyers who represent companies seeking merger approval. Their purported desire to expedite the review process may be more accurately described as an interest in obtaining approval of mergers, not improvement in antitrust enforcement.” FTC and Justice officials were meeting with Senate staffers to discuss antitrust proposal and its potential impact on Justice budget.
Sinclair Bcst. pushed case to overturn FCC decision on ownership cap, in oral argument at U.S. Appeals Court, D.C., Mon. Under what Media Access Pres. Andrew Schwartzman called “unusually harsh questioning,” by Judges David Sentelle, Judith Rogers and Stephen Williams, Sinclair argued that FCC order that limits ownership to maximum of 2 stations, where there are 8 independently owned TV stations -- “8 voices rule” -- was unconstitutional. Determination on legality of common ownership of TV stations should be left to Dept. of Justice on market-to-market basis under antitrust laws, Sinclair argued.
Only question cable experts had when asked for their predictions for 2002 was which companies would merge next. In wake of proposed Comcast acquisition of AT&T Broadband, observers said other companies -- specifically Adelphia, Cablevision and Cox -- could be next takeover targets. Among possible buyers mentioned most often was AOL-Time Warner, which lost in bidding war for AT&T Broadband. Microsoft also may look to form one or more alliances with cable company this year, experts said, to fend off competition from arch- rival AOL-TW. Only analyst who contradicted prediction of more mergers was Thomas Eagan of UBS Warburg, who said he saw more system swapping rather than merging for sake of getting bigger. Experts on consumer end of business uniformly predicted higher prices for service. And all said federal govt. probably wouldn’t cry foul on cable mergers or price increases.
Showing little adverse impact from recession in most recent tax filings, big communications associations generally enjoyed sound surpluses -- and at least 3 paid their top executives $1 million or more -- according to their latest tax returns. New leader in communications groups salary sweepstakes was CTIA Pres. Tom Wheeler, at just under $1.3 million total compensation, supplanting last year’s leader, USTA’s Roy Neel, who left partway through 2000 tax year. MPAA Pres. Jack Valenti was close 2nd at $1.16 million, followed by NCTA Pres. Robert Sachs at $1.09 million and NAB Pres. Edward Fritts at $908,552.
FCC’s attribution rules are inexorably linked to questions about ownership limits and agency should take “a fresh look” at those rules and consider changing them, NCTA Pres. Robert Sachs told reporters Tues. Outlining NCTA’s regulatory strategy for coming year, Sachs said his group would ask Commission to reconsider whether company that held only 5% stake in another actually should be considered as having control of 2nd company. Sachs said attribution rules should be reconsidered across board for cable, broadcast, other media. He said it was unfair that FCC, when looking to limit ownership, didn’t take into account fact that small investments in other media companies didn’t amount to control. “What we want are attribution rules, bottom line, which establish that a company is credited with ownership where it actually controls an entity,” Sachs said. Rules say person or entity has attributable ownership if that person or entity have 5% of voting stock or 33% of combined debt and equity.
Consumer groups were weighing their options Mon. while hundreds of thousands of people were trying to cope with losing their high-speed Internet service. Consumers Union and Media Access Project bemoaned lack of regulation that they said might have prevented shutdown of service to 850,000 customers of AT&T @Home service. Consumer groups planned in coming days to seek action from govt. and to urge officials to take greater role in overseeing Internet-over-cable service. Shutdown hit AT&T cable modem customers Fri. night after San Francisco bankruptcy court judge decided that maintaining service was burden to struggling @Home (CD Dec 3 P4). While AT&T and Charter weren’t able to secure agreements with @Home to continue providing service, other major cable MSOs did. In addition to losing stored e-mails and other information, customers’ e-mail domain names were changing.