SENATE REPUBLICANS EXPRESS CONCERNS ABOUT MEDIA OWNERSHIP

The delivery of local content was a central theme in the Senate Commerce Committee’s hearing on media ownership Tues., with some panelists and senators questioning how the FCC’s proposed rule changes June 2 could affect the nation’s democracy. While the effects of media consolidation on local content were debated, it appeared clear that a majority of committee members, including several Republicans, had at least some reservations about the FCC’s direction.

Committee Chmn. McCain (R-Ariz.) said a majority of committee members felt the FCC should at least allow more time for public comment on media ownership changes, if not scrap some or all of the proposed changes altogether. He said the one thing all senators could agree on was that no one company should be able to control all of the media outlets in a community.

Senate Appropriations Chmn. Stevens (R-Alaska), Communications Subcommittee Chmn. Burns (R-Mont.), and Sens. Lott (R-Miss.) and Snowe (R-Me.) joined the Democrats in raising at least some issues with the FCC’s rulemaking. Snowe especially expressed frustrations with the Commission for not providing more details about the potential changes. McCain said the size and scope of Clear Channel was a “warning sign” but didn’t specifically endorse or reject any proposed rule changes. “I'm concerned about, but unsure of, how we maintain the balance that is necessary,” he said.

Stevens and Committee’s ranking Democrat Hollings (S.C.) announced they would introduce a bill to retain the 35% national broadcast ownership cap by statute. Burns is another co-signer. But while Hollings, who didn’t attend the hearing, has detailed his objections to nearly all proposed ownership changes. Stevens kept his concerns focused on the national broadcast ownership cap and said the broadcast- newspaper cross-ownership rules should be relaxed.

Once the FCC issues its decision on media ownership, which is scheduled June 2, McCain said he would call the commissioners before his committee. However, a few Democrats said the committee should hear from the commissioners before the decision. “Its critical that we have Michael Powell up here before the ruling,” Sen. Wyden (D-Ore.) said. However, McCain said he was concerned about influencing the FCC before it made its decision. “The FCC is an independent agency and I want to be careful how we treat it,” he said. In his opening statement, McCain said he thought the FCC had gathered enough information to make a ruling.

Viacom COO Mel Karmazin told the senators that relaxing ownership restrictions on the broadcasting industry would make it more efficient and competitive and would promote better content. He said a recent study commissioned by Viacom, Fox, NBC and Economists Inc. found that network-owned stations provided 37% more local news each week than did independently owned stations. Karmazin also said many stations not owned by a network were owned by other corporations that weren’t headquartered locally, citing the Washington Post’s ownership of a Detroit TV station as an example.

While Karmazin argued for complete relaxation of TV ownership rules, he acknowledged to Sen. Dorgan (D-N.D.) that situations like that of Minot, N.D. -- where all 6 radio stations are owned by one company -- should be avoided. But he said that while the 8-station ownership cap was too high for Minot, it was too low for N.Y.C.

Only local broadcasters target coverage to local audiences, Capitol Bcstg. CEO James Goodmon said, and the market presence of cable, the Internet and satellites shouldn’t be used to justify further local consolidation since they provided little local news. He said local owners were more likely to challenge network content standards in light of local community character, saying he had done so when one of his N.C. Fox affiliates didn’t air Married by America. “There’s never been a network-owned station to preempt a network program for local reasons,” he said. Karmazin countered that networks did allow some community control over programming decisions, but said affiliates couldn’t be allowed to have too much control or the network would lose relevance.

Goodmon said the 35% cap on broadcast ownership was misleading, saying it actually was a 70% cap because UHF stations counted only half. Karmazin disagreed, saying UHF frequency was of poor quality and would lose relevance as more DTV stations moved into VHF channels. Meanwhile, House Commerce Committee ranking Democrat Dingell (Mich.) and Committee Vice Chmn. Burr (R-N.C.) wrote Powell Mon. arguing that the UHF 50% discount should be eliminated. Dingell and Burr also have introduced legislation (HR-2052) similar to that proposed by Stevens that would preserve the 35% broadcast ownership cap. Consumers Union wrote to all House members Tues. urging support of the bill.

Several senators raised questions about potential conflicts of interest in media consolidation. McCain questioned Goodmon on how much pressure the networks put on affiliates to take all network content. Goodmon said while there were contractual obligations to air shows, affiliates could exercise some local control. Wyden asked whether coverage of accounting irregularities would be different if the charges were levied against a media corporation. Karmazin said one of the biggest editorial critics of the AOL Time Warner merger was Fortune Magazine, which is owned by Time Warner.

The questioning became most intense when Sen. Sununu (R- N.H.) vigorously questioned Seattle Times Publisher Frank Blethen, who said fellow panelist and newspaper owner William Singleton was a “threat to democracy.” “That’s an outrageous statement. It’s a strong and inappropriate charge,” Sununu said. He didn’t express a sharp view on the ownership issue.

Blethen said further media consolidation would take a toll on democracy by limiting public discourse. “This is the beginning of the end of our democracy,” he said. But Sununu pushed him, asking Blethens why he -- the owner of 6 newspapers -- wasn’t a threat to democracy but Singleton -- the owner of 50 newspapers -- was. “To say we're a problem because we have 50 papers, but [Blethen] is not a problem with 6 papers, doesn’t make sense,” said Singelton, who is vice chmn.-CEO of Media News Group, publisher of the Denver Post and Salt Lake Tribune.

But Blethen, one of the few newspaper publishers to oppose easing the newspaper-broadcast cross-ownership rules, said media companies that weren’t locally owned were disengaged from the communities they served. “If you don’t have local ownership, you lose interest in local coverage,” Blethen said. Of the 1,500 newspapers in the U.S., only about 280 “classify as independent,” he said.

Singleton contended that there wasn’t a problem with newspaper consolidation and that allowing newspapers to own TV stations would create better news coverage in the community. The major 12 newspaper conglomerates own 22% of the newspapers in the U.S., he said.

McCain asked Singleton why all newspapers that had ownership of broadcast TV stations editorially supported awarding broadcasters spectrum for DTV transfer and newspapers without broadcast holdings editorialized against the spectrum transfer. (McCain strongly opposed the transfer and often refers to it as a $70 billion giveaway.) Singleton said newspapers had independent editorial boards and classified McCain’s point as an “anomaly.” McCain sarcastically referred to it as a “coincidence.”

Consumers Union Dir. Gene Kimmelman and Economists Inc. Vp Kent Mikkelsen were scheduled to testify on what was to be a 2nd panel, but McCain canceled the panel after the first one ran until noon. McCain said there would be another ownership hearing in May and he would invite them back to testify then.