FCC gets static over easing of ownership rules

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National broadcasters could own more than one broadcast network, according to a Federal Communications Commission proposal issued last week. That immediately provoked a dissent from one FCC board member as well as the media-buying industry.

"Such a modification is unsupported by the record," said FCC Commissioner Gloria Tristani in a statement released to the press, "and, if ultimately adopted, would further erode the already tenuous level of diversity available on the public airwaves."

In its biennial review of broadcast ownership rules, the FCC board on a 4-1 vote proposed modifying its rules regarding dual network ownership to accommodate established or mature networks that want to own another network as long as it is "nascent" or "emerging."

ALLOWS MINOR NETWORK

The rules as they exist now prohibit the merger of the four major networks (ABC, CBS, NBC and Fox), but the modification would allow them to create or simply own a minor, national broadcast network.

The proposal specifically pointed to UPN and the WB as fitting the criteria of emerging networks. The commission "noted that since the emerging networks (UPN and WB) are nascent subsidiaries of large program producers, their merger with a major network may permit realization of substantial economic efficiencies without undue harm to FCC diversity and competition goals."

The main argument in favor of the dual-network modification was it would allow broadcasters to have parity with cable companies such as TNT, which is not restricted from owning several cable channels.

"I'm not in favor of this. It eliminates a competitive marketplace," said Allen Banks, executive media director at Saatchi & Saatchi, New York. "I just think there is a difference between cable networks that have a very small audience and UPN, which has the potential of generating a much larger audience, in conjunction with what CBS can do. These are viable networks with viable opportunities, and to have them all controlled by one media owner just eliminates some competition from the marketplace. And from that perspective, I'm not particularly happy about what they have done."

Some media-buying agencies were concerned that if one network owns another, the pricing structure for both could be set by one corporate entity. In addition, the established network might ask advertisers to support lower-rated programming on the emerg- ing network in order to purchase the higher-rated programs on the mother ship.

NOT SEPARATE

"As much as they are supposed to be separate," said Mr. Banks, "they are really not going to be separate. They'll not necessarily compete against each other. They will work together."

Some media buyers however, see opportunity in the dual-ownership waiver.

"I really don't have a problem with it," said Bob Igiel, president of the broadcast division at Young & Rubicam's Media Edge, New York. "It will provide UPN with some advantages. It will make them a more viable entity to reach younger audiences. That's all to the good."

Mr. Banks conceded UPN is not a major player at the moment and therefore its ownership status would not adversely affect media-buying capabilities in the short run. He also granted that ownership of UPN by CBS could help the nascent network stay in business and grow, lending legitimacy to the FCC decision.

"The concern I have is that it takes out one company that could become a significant player in the marketplace," said Mr. Banks, "one that we would like to be able to buy and use as a leverage point against the more mature networks. This is really all about looking down the road a little bit."

"We have to face the new landscape realistically," said Mr. Igiel. "Look at what is happening: Networks are owning programming. Production entities that are owned by networks or owned by companies that own networks are shifting those properties to themselves, syndicating them themselves. That's the real world."

Mr. Igiel said profit margins for networks are getting thinner and the ownership changes, mergers and giant media consolidations reflect the fact that big businesses are constantly struggling to survive.

"It's all driven by very clear efforts to monetize a process, a programming and distribution process where the margins have gotten thinner," said Mr. Igiel. "There will be opportunities. I have believed for a long time that media companies with huge resources make strong partners. We're big, and therefore we can help each other. There are lots of resources that a large media company has that a large media-buying company can take advantage of."

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