SENATORS MULL ‘LEGISLATIVE VETO’ OF FCC MEDIA OWNERSHIP RULING

The Senate is likely to address the broadcast ownership cap, although it remains unclear whether there is enough support to reverse the FCC’s decision Mon. to ease ownership rules, congressional leaders said after the FCC meeting. Senate Commerce Committee ranking Democrat Hollings (S.C.) said he believed Committee Chmn. McCain (R-Ariz.) would let the committee vote on legislation (S-1046) that would preserve the 35% cap, even though there were indications that McCain himself didn’t support retaining the cap. “I'm convinced we can get a majority vote” in the Commerce Committee, said Hollings, who informally surveyed the panel’s members. The FCC commissioners will appear before the committee Wed. to answer questions about the media ownership ruling.

Other legislative options also are on the table, Sen. Dorgan (D-N.D.) said, and he and Hollings said they would pursue any legislative avenues that could nullify or mitigate the FCC’s decision. “Congress needs to weigh in on the issue,” Dorgan said at a news conference also attended by Hollings and Sen. Lott (R-Miss.). Dorgan said he would explore the idea of a “legislative veto” that could overturn the FCC’s ruling.

A rider to appropriations legislation also is possible, Hollings said. Senate Appropriations Committee Chmn. Stevens (R-Alaska) is sponsor of a measure to keep the cap at 35%. While Hollings said he would prefer a standard legislative approach, he said he would consider any attempt to reverse the FCC’s direction. “We never like to put those communications riders on, but this is such a disastrous proceeding and finding and rule by the Commission,” Hollings said. He said such a rider could prevent the FCC from spending any money to enforce the new rules. Lott and Dorgan also said they would consider supporting an appropriations rider.

McCain said that while he wasn’t likely to vote for legislation codifying the 35% cap, he would allow committee members to vote on the legislation, a spokeswoman said. McCain said the FCC’s ruling appears “to retain important limitations on media ownership. He has said that while some form of cap appeared to be needed, he was unsure at what level the cap should be set. “These are complex decisions, however, and it is difficult to know exactly where to set these limits,” McCain said. He said the Wed. hearing featuring the FCC commissioners would begin the Commerce Committee’s examination of media ownership rules.

Several other Republican senators also reacted negatively to the FCC’s decision. Senate Communications Subcommittee Chmn. Burns (R-Mont.), a co-sponsor of Stevens’s bill, said: “Movement from the 35% level of ownership would tip the balance and risk giving excessive leverage to the networks, turning local broadcast affiliates into mere passive distribution outlets for national programming.” He said the ruling was even more “critical” for rural communities given their reliance on a limited number of news sources.

Most Republican senators focused primarily on the 35% cap, as Lott and Burns made no reference to other changes. Stevens has said he supports changes in newspaper-broadcast cross-ownership rules. But Sen. Snowe (R-Me.) joined Dorgan and Hollings to express concern about other changes. “Other approved consolidation rules will also limit freedom of expression and curtail discourse, which are the very tenets of freedom and democracy our nation is built on,” Snowe said after protesting the relaxation of the broadcast ownership cap.

House leaders made efforts to show support for the FCC’s actions. House Commerce Committee Chmn. Tauzin (R-La.) said the FCC “has taken a big step toward removing the regulatory muzzle from American broadcasters. The rules correctly reflect the continuing goals of ensuring diversity and localism and guarding against undue concentration in the marketplace.” Rep. Stearns (R-Fla.), vice chmn. of the Telecom Subcommittee, said the FCC’s actions achieved the goals of HR-1035, a bill he introduced earlier this year that would have loosened the cap to 45%.

House Commerce Committee ranking Democrat Dingell (Mich.) said the rulings was likely be challenged in court. “The battle for a reasoned approach to ownership will now return to the courts, which hopefully will reject this arbitrary action, and to the Congress, where a bipartisan coalition has already formed and is prepared to move forward,” he said. The Congressional “Tri-Caucus” of the black, Hispanic and Asian Pacific American caucuses said the ruling would undermine minority participation in media. “The FCC"s decision today will only increase the likelihood that [losses in the number of minority media owners] will continue into the near future, exacting a blow to diversity of ownership and of information that will be hard to overcome,” the tri-caucus said.

Senate Judiciary Antitrust Subcommittee leaders also expressed concerns about the rulings. Subcommittee Chmn. DeWine (R-O.) and ranking Democrat Kohl (Wis.) said the subcommittee would hold a hearing to examine the FCC vote. In a joint statement, the senators said they would carefully review all media mergers themselves and expected the Justice Dept. and FTC to also closely scrutinize media mergers. “We urge both agencies to stand guard to prevent deals which will substantially injure competition in these industries that are so vital in providing the news and information relied upon by millions of Americans,” the senators said. House Telecom Subcommittee ranking Democrat Markey (Mass.) and Senate Judiciary Committee ranking Democrat Leahy (Vt.) also spoke out against the FCC’s ruling.

Parties to the FCC proceeding made dozens and dozens of ex parte contacts with the commissioners in the days before Mon.’s decision -- and the same parties were quick to issue statements of approval and or condemnation immediately after the commissioners acted. Public interest groups were split along ideological lines, with most attacking the FCC’s action. “Big media win, little kids lose,” said Patti Miller of Children Now. The amount of protection offered for children by the new rules is “but a small rowboat for children to navigate in the tidal wave of media consolidation,” she said.

The FCC action “puts democracy on mute,” Common Cause and Free Press declared. They vowed “to continue fighting” by going to Congress. “This is a dark day for American democracy,” Common Cause Pres. Chellie Pingree said. “The FCC has ignored mounting public pressure and given the green light to a handful of media moguls to control what the American public sees, hear, and reads. That is frightening prospect.” Parents TV Council Pres. Brent Bozell charged the FCC “has opened a pandora’s box of indecency and violence on the airwaves.” Jeffery Chester of the Center for Digital Democracy (CDD) said the relaxation of the rules “represents a devastating blow to diversity and competition” in the media marketplace by allowing media companies “to amass even more power.” He said CDD would “be leading an effort to secure new national policies requiring open, nondiscriminatory access” to all media.

The FCC has weakened the “very fabric of our democracy” by allowing broadcast networks to “amass even more power” in the number of stations they can control and by setting aside the prohibition against a single company’s owning both a newspaper and a TV station in the same community, Center for Digital Democracy Exec. Dir. Jeff Chester said: “A handful of companies will gain from today’s decision, but the public at large will lose.” The only silver lining, he said, was that Powell “unwittingly galvanized legions of opposition forces, a diverse array of individuals and organizations on both sides of the political spectrum that recognized the threat posed by Powell’s doctrinaire free-market philosophy.” Gene Kimmelman of Consumers Union said there was a “groundswell of opposition to these rule changes.” As more and more people find out about the FCC’s order and rule changes, “they are going to push for Congress to overturn them,” Kimmelman said.

The FCC’s decision was a “profound betrayal” of the public trust, said David Honig, exec. dir. of the Minority Media & Telecom Council. Besides severely limiting the ability of independent voices to be heard over the airwaves, it will make it “far more difficult for new entrants, especially women and minority-owned companies, to survive in the broadcasting business,” he said. The Center for the Creative Community charged the FCC with unleashing its own “weapons of mass destruction” against competition, diversity, localism and creativity by relaxing or eliminating the media ownership limits. “The heavy casualties include not only America’s creative community, but… the American public and our nation’s democracy,” Exec. Dir. Jonathan Rintels said. There were glaring inconsistencies throughout the Commission’s order, he said.

The Black Entertainment & Telecom Assn. (BETA) said the new rules would “have a devastating impact on black media professionals… People will find it more difficult to find a job or land a promotion.” The new rules “will have serious repercussions for our democracy,” said Morton Bahr, pres. of the CWA. He called it “disgraceful that the [FCC] Republican majority… bowed to corporate interests so completely…” Said Gene Kimmelman of the Consumers Union: “In one sweeping move, 3 FCC political appointees are dramatically worsening the nation’s media landscape for decades to come.” Citing “a groundswell of opposition,” he said Consumers Union was immediately beginning a campaign to “marshal the diverse interests across the political spectrum” to preserve localism, diversity and competition among media.

Adam Thierer of the Cato Institute called the FCC action “meager… Contrary to the claims of critics, today’s… changes by the FCC represent a modest tweaking” of existing rules. Disney/ABC said it “strongly supports” increasing the ownership cap to 45%, “which reflects today’s marketplace realities.” Saying that because it had been “disciplined buyers,” owning only 10 TV stations, Disney/ABC has “substantial room” to grow. Randolph May of the Progress & Freedom Foundation called the decision “long overdue… given the huge changes in the media landscape.”

Alan Frank of Post-Newsweek Stations, chmn. of the Network Affiliated Stations Alliance (which along with NAB has been the prime opponent of raising the 35% cap), said the FCC “has taken a giant step back from our nation’s commitment to localism… The FCC has misread Congress’s will [and] it has misunderstood the court’s mandate… Today’s decision on the ownership cap removes one significant protection for local programming freedom.” John Sturm, pres. of the Newspaper Assn. of America, said that while full repeal continued to be the group’s goal, “we believe the Commission… took a significant step” in repealing the newspaper-broadcast cross-ownership prohibition under certain conditions.

NAB Pres. Edward Fritts said his board would review the FCC’s decision next week and decide then how to proceed. “Meanwhile, NAB will continue to work with the FCC to sustain and strengthen the service of free, local broadcasting to consumers,” he said.

The FCC’s overhaul of media ownership regulations is likely to spur further consolidation, which would have divergent credit implications for likely buyers vs. likely sellers, depending on how such deals are structured, Standard & Poor’s said in a report.