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FCC begins review of its rules on ownership of media outlets


WASHINGTON - The Federal Communications Commission launched yesterday what it called its most comprehensive review of rules that govern the number of mass media outlets one company can own - an issue it has grappled with for 70 years, long before anyone heard of the Internet, 24-hour cable networks and billion-dollar media conglomerates.

The issue pits media giants that seek to ease ownership restrictions - such as Rupert Murdoch's News Corp., Viacom Inc. and Tribune Co., the Chicago company that owns The Sun - against civic groups who fear that too much media power in the hands of too few erodes a vital pillar of democracy.

"I don't know of any issue before the commission that is more fraught with serious consequences for the American people than media ownership rules," said Michael J. Copps, one of the four commissioners on the body that oversees communications policy. "At stake is how radio and television are going to look in the next generation and beyond."

At its meeting yesterday in Washington, more packed than usual with lobbyists and attorneys, the commission voted unanimously to review a half-dozen major rules and expects to complete any changes by spring. The process will include public hearings, perhaps around the country, and studies that the agency has commissioned that examine the ways in which the public receives its news.

The media landscape has changed greatly since the FCC adopted rules in the 1940s, when fears were fresh of totalitarian regimes in Europe controlling information, and in the 1970s, when a rural service called cable television grew into competition for the three networks.

The FCC rules restrict one company from owning a major newspaper and television station simultaneously in one city or from owning more than one of the top television stations in a single market.

Media companies, with billions of dollars at stake, contend that the restrictions are outdated and don't account for new sources such as the Internet.

The rules are "no longer necessary because of the wide array of media out there," said R. Clark Wadlow, a Washington attorney whose media clients include Tribune. The company's array of properties include 12 daily newspapers, 23 television stations, radio and Internet outlets, and the Chicago Cubs baseball team.

Tribune wants to retain dual TV and newspaper properties it owns in Los Angeles, New York and Hartford, Conn., and share news-gathering resources between its newsrooms. It has done so for years in Chicago, where its newspaper-TV combination is allowed to remain because it predates the 1975 FCC rule on the matter.

This year, Tribune also launched a news-sharing partnership in Baltimore between The Sun and WMAR-TV, a station owned by Cincinnati-based E.W. Scripps Co.

The decades-old ownership limitations face serious challenge for at least three reasons, experts said. Recent mergers have created a bigger breed of media giants anxious to extend their reach in news, entertainment and advertising. Congress and the federal courts have become more aggressive in ordering the FCC to re-examine and justify its rules. Last but not least is the commission's chairman, Michael K. Powell. The son of the secretary of state and one of President Bush's first appointees when the president took office, Powell has assumed more of a free-market posture than his predecessors.

At a news conference after the FCC's meeting yesterday, Powell bristled at what he characterized as exaggerations of his position. But he acknowledged that he believes his agency must simplify its strictures.

"I've never said that, 'The marketplace is God.' I'm a big believer in free-market capitalism. That isn't laissez-faire," he said. "My record on this is fairly clear: The commission has not lived up to its obligation of adequately scrutinizing its rules."

All this might seem obtuse to a public already confused by the media marriages that have made strange bedfellows of Dan Rather and Ozzy Osbourne, whose CBS and MTV shows both belong to Viacom Inc., or TV detective Andy Sipowicz and Tinker Bell, who fall under the Walt Disney Co. umbrella. But advocates for the current policies contend the issue is simple: protection of as many varied sources of local news as possible to inform the public.

"I don't know what the hell has happened that you should change it," said Henry Geller, a former telecommunications adviser to President Jimmy Carter and an FCC counsel who helped write some of the rules being reconsidered. "The jewel of the Bill of Rights is the First Amendment, and its assumption is that people will get information as much as possible from diverse and antagonistic sources. When the chairman says he doesn't understand why there should not be cross-ownership, he's just kidding himself. He just got it wrong."

Geller and others cite a 1943 Supreme Court case in which the Associated Press sought to block some users from its wire service. The justices struck down that bid, saying the public was best served if many news outlets were able to compete.

Trying to compete

But supporters of change argue that their ability to compete is compromised if they can't gain efficiencies and profits by operating various media in the same city. The rules ignore modern financial and technological challenges, such as small broadcasters struggling with the expenses of switching from analog to digital broadcasting.

"In Tallahassee, the CBS-TV station has 60 percent of the total revenue, and the other four share the remaining 40 percent, but according to the FCC rules, the fourth- and fifth-largest stations can't get together. It doesn't make any sense," said Mark E. Hyman, an executive with Sinclair Broadcast Group.

The Hunt Valley-based company is one of the largest owners of independent television stations, with 63. A lawsuit that it brought against the FCC - and a partial ruling in its favor from a federal appeals court this summer - helped prod the agency toward its sweeping self-examination, the FCC said.

November's election results will also weigh heavily, especially if Republicans regain the Senate and the chairmanship of the commerce committee. It is now headed by Sen. Ernest F. Hollings, a South Carolina Democrat and a critic of Powell's FCC.

Uneven battle?

"Mr. Powell is a bright guy, and he's done the calculus about what Congress will put up with or what it won't," said Douglas Gomery, a University of Maryland journalism professor anxious about the outcome.

"The rules were put in for good purposes and have survived the test of time. In general, local news is under-covered, and we're not going to manage to get more local news by having newspapers owned by the TV stations," said Gomery, author of the book Who Owns the Media? "It might make corporations more profitable, but not help the public. And the public might not notice until it's too late to do anything about it."

But even those who favor the current limits wonder about the balance of the battle to come.

"It's one of the saddest things, but also very inspiring, to watch the Consumers Union and the Media Access Project fighting the good fight on these issues, but to say they're overmatched is to put it mildly," said Philip Napoli, a Fordham University professor in New York who studies media regulation and economics. "I think we'll see some serious relaxation and elimination of some rules."

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