AD COMMUNITY WARY OF TV RULE SHIFTS

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Broadcasters are pleased but advertisers are wary of Federal Communication Commission proposals to dramatically raise TV station ownership limits.

The FCC last week began seeking comment on proposals to overhaul local and national TV ownership rules. The commission is considering allowing a company to own any number of stations, subject to an audience reach limitation that would increase from the current 25% to 50% eventually. Companies now can own no more than 12 stations, or have a 25% national reach.

On the local level, the FCC is considering allowing common ownership of two TV stations in certain large markets and narrower radius limits preventing overlap between two nearby markets. Also, it may allow common ownership of a radio station and TV station in the same market. This situation already exists in several major markets that were grandfathered in before the 1970 rules change.

The FCC is considering relaxing broadcast ownership restrictions as the networks face increasing competition from cable and the prospect of going up against new media, such as direct broadcast satellite, wireless cable and telephone video dial tone services.

"They are enormously positive changes," said Richard Cotton, exec VP-general counsel at NBC. "They really represent a major step forward in the process of bringing broadcast regulations into the modern era."

The FCC proposals acknowledge what has already been happening in the industry. Several big broadcasters have taken minority stakes in or entered joint ventures with other broadcast groups to create strategic alliances that effectively can reach up to 50% of U.S. homes. These include the Fox Broadcasting Co. and New World Communications Group alliance, and the CBS and Group W Broadcasting joint venture.

But some of these alliances could be at risk-as the FCC also said last week it will examine imposing limits on them.

The ad community, however, is wary of the move to allowing increased station ownership. An increased ownership concentration could bring higher ad rates.

"We're seeing [higher ad rates] in radio where the FCC is allowing duopolies and local marketing agreements," said Howard Nass, senior VP-corporate director of local broadcast at Foote, Cone & Belding, New York. "It's subtle, but it's happening. I think it will happen more in TV because there are fewer station options. It makes me very nervous to concentrate ownership."

Other media buyers, however, think stronger networks will bring better programming and a bigger audience.

"It won't necessarily lead to higher ad rates because of the competitive scenario," said Bob Zach, exec VP-media director at Hill, Holliday, Connors, Cosmopulos, Boston.

The Association of National Advertisers, which generally takes pro-competitive positions on media actions, had no position on the FCC proposal.

The National Association of Broadcasters hailed the move.

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