FUTURE OF MEDIA ANTITRUST OVERSIGHT UNCERTAIN

FTC, Justice Dept. Bow to Senator's Pressure

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WASHINGTON (AdAge.com) -- A behind-the-scenes agreement to revamp antitrust oversight of media deals may be dead, but its long-term effect on mergers or the Federal Trade Commission remains uncertain.

A day after FTC Chairman Timothy Muris and Charles James, the Justice Department's assistant attorney general for antitrust, bowed to pressure from Sen. Earnest "Fritz" Hollings and canceled their proposed agreement, questions remained as to whether the FTC might still cede media antitrust oversight to the Justice Department, but just do it one deal at a time.

Swapping oversight duties
Under the plan hatched by Messrs. Muris and James, the FTC would have given up all antitrust oversight of media deals to the Justice Department, while the trade commission would have taken over several areas including health care.

Critics charged that

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the plan set the stage for less intense and less independent reviews of media deals, arguing that the language of the agreement was crafted by an attorney who helped AOL through the AOL Time Warner merger. The FTC had conducted the aggressive review of that deal.

Threatened budget cuts
Sen. Hollings, the South Carloina Democrat who is chairman of Senate Commerce Committee, was among those worried that the agreement would lessen independent examination of the media deals, and he was especially angry that Congress was never consulted. The Senator soon after demanded both agencies draw up budgets with major cuts, telling AdAge.com that he didn't want to cut the budgets, but instead "eliminate" Mr. Muris.

The oversight swap was originally to have been announced back in January, but a press conference was aborted after an irate Sen. Hollings said he hadn't been consulted on the proposed plan. By the time the agreement was revealed, Sen. Hollings was blasting a federal appeal court ruling that struck down Federal Communications Commission rules barring media companies from owning a TV station and a cable system in the same market.

Today critics said they were hopeful that the decision means the FTC returns to looking at media deals.

Can't 'run away'
"It makes it harder for Mr. Muris to run away from looking at media deals," said Jeff Chester, executive director of the Center for Digital Democracy. "It's not going to be easy for Mr. Muris when it come to the lack of spine he has for these issues."

Ed Black, president-CEO of the Computer & Communications Industry Association, said his industy was hopeful. "Our industry depends on vibrant competition and effective enforcement of our antitrust statutes, and that requires a role for the Federal Trade Commission," he said.

Mr. Chester also questioned the effect the fight may have had on Mr. Muris.

"All Mr. Muris is doing is making enemies. He has shown himself to have a political tin ear," he said. "He better dust off the chair at the [conservative] foundation."

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