Senate eyes media mergers

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Media consolidation is hitting a speed bump as newly empowered Senate Democrats try to slow efforts to allow big media companies a larger share of local markets.

Worried about what Sen. Byron Dorgan, (D., N.D.), described as "an orgy of mergers," Democrats last week introduced legislation to force the Federal Communications Commission to get congressional approval before loosening current ownership limits.

Crafted by Sen. Ernest "Fritz" Hollings, who heads the Senate Commerce Committee, the legislation would require congressional approval if the FCC moves to drop its current broadcast ownership cap or its cross ownership ban.

The ownership cap limits one broadcaster from owning stations reaching more than 35% of viewers and listeners in a market. The cross-ownership ban prevents newspaper companies from buying broadcast stations in the towns their newspapers serve.

TV and radio powerhouse Viacom, which as a result of last year's acquisition of CBS now exceeds the 35% cap and faces the prospect of selling off stations, has been pushing the FCC to drop the cap. The Newspaper Association of America has been pushing to drop cross-ownership rules.

Viacom President-Chief Operating Officer Mel Karmazin last week testified before Sen. Hollings' committee urging the cap be dropped. But what he heard was Sen. Hollings, (D., S.C.), and other Democrats call for vigorous enforcement and denounce FCC Chairman Michael Powell's push to reexamine limits. Democrats were also critical of the FCC for not looking carefully enough at non-economic public interest issues in media consolidation.

President Bush appointed Mr. Powell, already a commissioner, FCC chairman in January.

"Diversity in ownership promotes competition ... creates opportunities for smaller companies ... allows creative programming and controversial points of view to find an outlet ... promotes choices for advertisers and preserves localism so [consumers] are afforded access to at least several sources for the local news and information," said Sen. Hollings. He added that Mr. Powell's statement that the ownership limits are no longer necessary "is not the law."

Sen. Dorgan, who is co-sponsoring the legislation, said the consolidation isn't good for consumers. "What is happening is not healthy," he said.

Mr. Karmazin said lifting the cap is necessary to promote competition in the industry and to give TV networks the profits to pay for better programming.

Reiterating statements he made in an earlier Advertising Age interview, Mr. Karmazin said at a press conference that as programming costs rise and newly consolidated advertisers and agencies bring increasing pressure to bear against rate hikes, buying more stations to better leverage programming investments is necessary.

He denied consolidation would have an effect on advertisers, saying that even if Viacom is approaching 5% of the broadcast ad market, some ad agencies have more than that.

"The advertisers have the money. All they have to do is just say, `No,"' he said, adding that even if Viacom were to buy more stations, advertisers could buy around the company.

Viacom's push to lift the broadcast cap has created an internal war in the TV industry. Station owners warn a change would allow networks to quickly take over local stations and make programming decisions based on national rather than local needs.

Alan Frank, president of Washington Post Co.'s Post-Newsweek Stations and chairman of the Network Affiliated Stations Alliance, warned eliminating the cap would have the effect of letting just a few individuals make news and programming decisions for the entire country.

Jack Fuller, president of publishing at Tribune Co., said cross ownership of newspapers and broadcast stations allows more efficient use of resources. Through a grandfather clause, Tribune owns a newspaper, TV station and radio station in Chicago; it's seeking approval to hold both TV stations and newspapers in Los Angeles and New York following its 2000 purchase of Times-Mirror Co.

Some Republicans support lifting ownership restrictions. Sen. John McCain, (R., Ariz.), former committee chairman and now its ranking GOP member, said current limits were set when there were far fewer sources of information. He called current limits "anachronistic" and "anti-competitive."

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