Media ownership proposals stir controversy

The last time federal regulators changed media ownership rules, a slew of deals altered the local television landscape.

Now regulators are looking into further changes that affect both TV and newspapers. Those proposals face opposition from such strange bedfellows as lobbyist groups the National Rifle Association and the National Organization for Women.

In the cross hairs is a Federal Communications Commission meeting June 2, at which commissioners will decide whether or not to relax rules governing consolidation among companies that own TV stations and newspapers in the same cities.

Under U.S. law, only an act of Congress or a federal court decision can overide the FCC in these matters.

Among the proposals are the following changes:

•  Eliminate a regulation that bans the same company from owning both a newspaper and a TV station in the same market.
•  Allow the same company to own as many as three TV stations in the same city.
•  Allow big networks to buy one another.
•  Increase the number of TV stations a single company can own.

The five-member FCC commission, which is controlled by three Republicans who usually vote in a bloc, is expected to support the drastic easing of many regulations.

According to a March 13 Standard & Poors research paper, broadcast companies already are strategizing mergers and acquisitions to take advantage of changes.

S&P says it expects any easing of regulations by the FCC could “fuel [a] transaction flurry” among media companies.

“Despite a lot of campaigning by … public interest groups, it looks like this thing is going to go through,” says TV analyst Rick Ellis of AllYourTV.com. “Although I think it’s going to be a short-term upside for a lot of shareholders in midsize broadcasting stocks, in the long term, I don’t think it’s going to be good for these companies.”

He says consolidation has been unsuccessful for AOL Time Warner Inc. and Walt Disney Co.

Other major media players are not looking to take advantage of opportunities from proposed FCC rules changes.

“From the newspaper side, you’re already starting to see some of the newspaper groups saying they aren’t so sure they’re going to get into TV because the stations are considered to be very over priced,” Ellis says.

The largest Bay Area-based media company agrees.

“We have no interest in owning TV stations,” says Polk Lafoon, spokesman for Knight-Ridder Inc. of San Jose, the second-largest newspaper publisher in the nation.

Locally, the company publishes the San Jose Mercury News and Contra Costa Times.

The National Association of Broadcasters, a Washington, D.C.-based lobbying group that represents most corporations that own TV stations, says it backs any changes that ease media ownership restrictions.
The biggest changes could come from consolidation of TV ownership in a single market.

The Bay Area already has seen some consolidation since 1999 when after a local test case, the FCC first allowed so-called “duopolies” where one company can own two stations at the same time.

At the time, Granite Broadcasting Corp. of New York, then-owner of KNTV Channel 11 in San Jose, wanted to buy Channel 20 of San Francisco.

fficials from Granite, along with the owners of the other major Bay Area TV stations, declined to be interviewed for this story.

Since that time there has been a domino effect of station ownership swaps and now the Bay Area has four duopolies (see box).

Under the proposed changes, things could change even more.

“You could have NBC and ABC owned by General Electric Co.,” says Chellie Pingree, president of Washington D.C.-based Common Cause. “If you don’t have a diversity of media ownership, there are fewer voices being represented, there is far less localism.”

Potential lack of diversity in local voices on both ends of the political spectrum has conservatives joining liberal groups in a chorus of opposition.

“When the NRA and NOW are on the same side of this issue, that tells you something. Either the planet has spun off its axis, or we’re right about this one,” Pingree says.