Media Ownership (Broadcast Television) Full Committee Hearing

Tuesday, May 13 2003 - 9:30 AM - SR-253

Description: Members will hear testimony on issues relating to media

ownership, particularly the television broadcast ownership rules

currently being reviewed by the Federal Communications Commission.

Senator McCain will preside.

Panel 1:

Mr. Mel Karmazin President and COO, Viacom Inc.

Mr. Jim Goodmon President and CEO, Capitol Broadcasting Company, Inc.

Mr. Frank A. Blethen Publisher, Seattle Times

Mr. William Dean Singleton Vice Chairman and CEO, Media News Group,

Also, Publisher of the Denver Post and Salt Lake Tribune

Panel 2:

Mr. Gene Kimmelman Director, Consumers Union

Dr. Kent Mikkelsen Vice President, Economists, Inc.

SENATE COMMERCE COMMITTEE TO HOLD HEARING ON MEDIA OWNERSHIP IN BROADCAST

TELEVISION

The Senate Committee on Commerce, Science and Transportation will hold a

hearing of the full committee on the matter of media ownership regulations

in the broadcast television industry. The hearing will be held next Tuesday,

May 13, 2003 at 9:30 AM in room SR-253 of the Russell Building. The FCC

plans to rule on changes to the rules regulating various media outlets,

including broadcast TV, on June 2nd. A list of witnesses can be found at the

link below.

[SOURCE: US Senate Commerce Committee]

http://commerce.senate.gov/hearings/witnesslist.cfm?id=758

By Jeremy Pelofsky

LAS VEGAS (Reuters) - A divided U.S. Senate Commerce Committee will

again delve into the thorny issue of what limits should be placed on

media ownership before federal regulators finish overhauling those

rules in June, a committee official said on Sunday.

The panel will likely hold a hearing on the subject before the Federal

Communications Commission (news - web sites) plans to issue the

revamped regulations on June 2, committee staffer Bill Bailey told

reporters.

The agency is considering overhauling a 35 percent cap on how much of

the national television audience one can reach, common ownership of

multiple stations in a market, and whether a company can own a

newspaper and a radio or television station in a single market, among

others.

FCC (news - web sites) Chairman Michael Powell (news) set that

deadline to finish the rulemaking but some on the Senate committee --

Sens. Olympia Snowe and Susan Collins of Maine, and Wayne Allard of

Colorado -- have pushed for a delay until the public can comment on

the new rules that could change the media landscape.

Yet other lawmakers on the panel, Sens. Sam Brownback of Kansas and

John Breaux of Louisiana, have urged the FCC to complete the new

regulations quickly to give companies greater certainty about their

future.

Senate Commerce Committee Chairman Sen. John McCain, "thinks its an

important issue and that, as such, we should be informed about,"

Bailey said. "He wants to make sure the committee is fully informed

about it."

The details of who would testify have yet to be worked out, he told

reporters after speaking to the American Bar Association's Forum on

Communications Law.

The new public airing of the subject could prove to frustrate Powell

who last week called those seeking to delay the adoption of new rules

as "noisemakers" who are merely trying to prevent change.

Powell has said he expects the rules would not be eliminated but

liberalized after a federal appeals court questioned their

justification. Depending on how far the agency goes, it could set off

a wave of mergers and acquisitions.

The Senate Commerce Committee in January waded into the issue and

Powell assured the panel that the FCC would not allow one company to

dominate local airwaves or other media outlets.

Tribune Co. has been pushing to scrap the ban on common ownership of

television stations and newspapers while major broadcast networks NBC,

a unit of General Electric Co., Viacom's CBS and News Corp.'s Fox have

sought to lift the cap on how much of the national audience they can

reach.

Consumer groups and smaller broadcasters and some newspaper owners

have lobbied the FCC to keep the rules to preserve diversity of

content and local programming.

FCC Democrats Frustrated on Media Review

By DAVID HO Associated Press Writer

May 10, 2003, 3:29 PM EDT

WASHINGTON -- The Federal Communications Commission's two Democrats

said Friday they are frustrated by lack of information on the agency's

review of media ownership rules and their chairman's refusal to make

proposed changes public.

The agency's media bureau is expected to provide a draft proposal on

rule changes to the five FCC commissioners by the end of Monday, three

weeks before a planned vote on overhauling rules that govern ownership

of newspapers and television and radio stations.

The FCC has been studying whether those decades-old restrictions still

reflect a market altered by satellite broadcasts, cable television and

the Internet.

FCC Chairman Michael Powell has said repeatedly that the rules are

outdated and should be changed. The two other Republican commissioners

are thought to have similar views.

Many large media companies are seeking broad changes to a rules regime

that they contend hurts business.

Commissioner Michael Copps, one of the FCC's two Democrats, said that

with only a few weeks until the vote, "We don't know what we're going

to be working on. It's like a state secret."

Copps spoke on Capitol Hill alongside Democrats from the Senate

Commerce Committee at a panel discussion of experts opposed to media

consolidation.

Sens. Ernest Hollings of South Carolina, Ron Wyden of Oregon and Byron

Dorgan of North Dakota said eased ownership restrictions will leave a

few giant media companies in control of what people see, read and

hear.

"The country is really standing on a cliff when it comes to media

concentration," Wyden said. "When you go over that cliff you are going

to be fundamentally changing what this country is about, and not for

the better."

Current ownership rules prevent mergers between major television

networks and limit the number of TV and radio stations a company can

own in a market. The rules also prohibit any single company from

owning TV stations that reach more than 35 percent of U.S. households

or owning a newspaper and a radio or television station in the same

city.

A 1996 law required the FCC to study ownership rules every two years.

Many changes proposed since then have remained unfinished or were sent

back to the FCC after court challenges. Last year, the agency combined

reviews of a half-dozen rules into the single effort now under way.

The FCC eased the restriction on major TV network mergers in 2001 by

allowing the networks to combine with newer networks like WB or UPN.

Copps criticized arguments that the rules should be eased because

cable TV and the Internet provide more diversity as sources of news

and entertainment. He said most cable channels and sources of online

news already are owned by a few large media companies.

Copps has traveled around the country with fellow FCC Democrat

Jonathan Adelstein in recent months to get public comment on the

review. Powell refused their repeated requests to have more than one

public FCC hearing.

Lawmakers, musicians, academics and consumer groups have asked Powell

to delay the media ownership vote or make public in advance details of

proposed changes. Other lawmakers, mainly Republicans, and Commerce

Secretary Donald Evans have urged Powell to stay on schedule.

Powell has said there is no need for more public comment, and he sees

no reason to delay.

Adelstein said the June 2 vote is "a rush to judgment." He said he

asked Powell to make the recommendations public in a briefing to the

commissioners, but the chairman refused.

"It would be helpful to him to eliminate the charge that the public

isn't being involved in this," Adelstein said. "He said he wouldn't do

it."

Powell had no immediate comment on the Democrats' statements, but last

week he singled out Adelstein as one of the commissioners who had been

helpful in working with him developing the media ownership proposal.

Adelstein said he was pessimistic his contributions would be included

in the draft.

"Most people in this country have no idea what's about to happen to

them even though their very democracy is at stake," he said.

In the past, FCC commissioners occasionally have asked that an item on

their agenda be postponed for a month. Copps and Adelstein said that

remains an option, but they will wait until they see the proposal.

Powell is not obligated to grant a delay.

* __

On the Net: FCC: http://www.fcc.gov

MEDIA OWNERSHIP

MEDIA FIGHT FOCUSES ON LOCAL TV STATIONS

The effects of media consolidation on local programming depends on which

side of the fence one sits - at least that was the general feeling at

yesterday's Senate Commerce Committee hearing on the FCC's proposed

relaxation of TV ownership rules. According to Viacom president Mel

Karmazin, networks are losing money in the wake of increased competition

from cable and the rising costs of programming, especially sporting events.

Local network affiliates, represented yesterday by James Goodmon of Capitol

Broadcasting Company in Raleigh, NC, argue that increased concentration by

networks eliminates local content from locally owned stations and prevents

those stations from pre-empting network content that the community might

find objectionable or simply not prefer to watch. The hearing proceeded amid

other interesting developments leading up to the FCC's June 2nd deadline for

voting on the issue, such as the introduction of bills in both the House and

Senate to lock in the 35% network ownership cap and a request from

Democratic FCC Commissioners Michael Copps and Jonathan Adelstein to

postpone the vote.

[SOURCE: The Washington Post; AUTHOR: Frank Ahrens]

http://www.washingtonpost.com/wp-dyn/articles/A51872-2003May13.html

================================================================================

---------------------------------05-14-2003-------------------------------------

================================================================================

Media Fight Focuses on Local TV Stations

By Frank Ahrens Washington Post Staff Writer Wednesday, May 14, 2003;

Page E01

If broadcast networks such as ABC and Fox are prevented from buying

more local television stations, viewers may soon have to watch NFL

games on cable or satellite, meaning football fans who depend on free,

over-the-air television would be out of luck.

Or if they are allowed to buy more stations, they would use their

increased muscle to force network programming onto independently owned

affiliate stations, even when they would rather show local programs or

preempt network programs that may offend community standards.

Either and both arguments may be true. Local television station

autonomy is at the heart of one of the media ownership rules set to be

changed soon by the Federal Communications Commission. It was also

Topic A yesterday at a Senate hearing chaired by Sen. John McCain

(R-Ariz.) but starring Viacom Inc. President Mel Karmazin.

"Costs are going up, audience is going down, competition is

increasing," Karmazin told the Committee on Commerce, Science and

Transportation. Viacom owns CBS, 35 television stations and cable

channels such as MTV and Nickelodeon. "The only way to help is to

relax the ownership rules," allowing networks to buy more stations and

increase revenue, he said.

On June 2, the FCC is scheduled to vote -- and likely pass -- several

rules that will make it easier for media giants to buy more newspapers

and radio and television stations. Several lawmakers and public

interest groups oppose relaxing the rules. The FCC "is putting us on a

glide path for big media conglomerates to gobble up independent

stations," Sen. Ron Wyden (D-Ore.) said yesterday.

(Yesterday afternoon, Democratic FCC commissioners Michael J. Copps

and Jonathan S. Adelstein asked Michael K. Powell, the agency's

Republican chairman, to postpone the vote, a request typically honored

under FCC tradition. Usually, such votes are rescheduled for the

commission's next open meeting, about one month later. Powell said he

will respond promptly. Republican commissioners Kathleen Q. Abernathy

and Kevin J. Martin want the vote to proceed as scheduled.)

Perhaps the most controversial of the six major media ownership rules

teed up for review is the "35-percent cap" on station ownership.

Networks are not allowed to own a number of stations that combine to

reach more than 35 percent of the national audience. Thanks to waivers

and shifting market shares, all of the major networks hover around the

35 percent figure, with some actually above the limit, anticipating

its lifting.

The FCC's media bureau has recommended raising that number to about 45

percent. Powell is sympathetic to Karmazin. The chairman has said that

broadcast television needs regulatory help to continue providing free

public-interest programming. ABC, CBS, NBC and Fox are steadily losing

audience to cable channels. For the first time last year, the

aggregate cable audience surpassed that of the combined networks.

About 85 percent of viewers have cable or satellite service.

Further, cable channels have two revenue streams -- advertising and

subscription -- where broadcast has one. The smallest major network,

however, still has an audience larger than the biggest cable channel,

meaning networks can charge advertisers more for commercials.

The rising cost of programming, especially rights fees that networks

pay sports leagues to broadcast games, means that networks lose money

by putting their shows on broadcast stations instead of cable, the

networks say. "Sports content will be the first to go to cable,"

Karmazin warned, noting that CBS paid $6 billion to broadcast the NCAA

men's basketball tournament for 11 years. "Then other [programming]

will follow."

The surest way to save free television, the networks argue, is to let

them to buy more stations, which routinely log profit margins of 20

percent to 50 percent.

Not everyone agrees. Last week, Rep. Richard Burr (R-N.C.) and three

other members introduced legislation that would codify, or essentially

set in stone, the 35 percent cap. Sens. Ernest F. Hollings (D-S.C.)

and Ted Stevens (R-Alaska) introduced the same bill yesterday.

The Network Affiliated Station Alliance, representing 600 stations not

owned by networks, is pushing to keep the 35 percent cap, saying that

increased network station ownership would put independently owned

stations at a disadvantage when dealing with the networks and would

hurt localism. The Alliance is led by Alan Frank, chief executive of

Post-Newsweek Stations Inc., the six-station group owned by The

Washington Post Co.

That sentiment was echoed at yesterday's hearing by James F. Goodmon,

chief executive of Capitol Broadcasting Co., a five-station television

group based in Raleigh, N.C. When Goodmon's Fox-affiliate station

received Fox's "Who Wants to Marry a Multi-Millionaire?" reality show,

station management refused to air it, saying it would offend Raleigh

community standards. "It was demeaning to marriage and family,"

Goodmon said. Goodmon's affiliate agreement with Fox allows his

station to preempt network programming if he believes it will offend

his audience. After much negotiation, Fox allowed the preemption.

However, Goodmon said, if he wants to preempt Fox programming to

carry, say, a basketball game between two local college teams, he gets

one "strike" from the network. Two more strikes -- preemptions not

based on community standards -- and he could lose his Fox affiliation.

If Fox and other networks are allowed to buy more stations, local

station owners like him will have even less leverage against the

networks, Goodmon said.

Powell and some lawmakers argue that the explosion of cable channels

and the Internet gives news consumers many more sources for news in

addition to local television stations, thereby protecting them from

increased consolidation.

But Goodmon pointed out that most viewers still get their local news

from local broadcast stations. "You can have 500 cable channels and

never hear the name of your town mentioned," he said.

TechNews.com Home

c 2003 The Washington Post Company

the site to see/listen the Senate hearing of yesterday:

http://video.c-span.org:8080/ramgen//odrive/e051303_media.rm

FCC SEES LOCAL GAIN TO AGE OF MAX MEDIA

While local programming took center stage at Tuesday's media ownership

hearing before the Senate Commerce Committee, TV-newspaper / radio-newspaper

cross-ownership was the source of a particularly heated exchange. Chairman

John McCain (R-AZ), equipped with a list of newspapers and their editorial

position on a 1996 FCC decision to either give away or auction off $70

billion in digital spectrum licenses, noted that every company that

supported the free spectrum was owned by a company with broadcast TV

holdings. McCain asked William Dean Singleton, head of the newspaper lobby

and president of MediaNews Group, whether this was "an anomaly," which

Singleton assured him it was. That McCain was less than convinced is

indicative of a widespread disagreement over whether relaxing rules on

cross-ownership will affect editorial content at the local level. Lawmakers

like McCain, along with public interest and consumer groups, believe that

increased concentration will lead to a monopoly of information in a given

market. In contrast, market observers note that the financial benefits of

cross-ownership to this point have been minimal, and companies such as

Viacom have indicated that they have no plans to purchase papers in markets

where they own broadcast stations.

[SOURCE: The Washington Post; AUTHOR: Frank Ahrens]

http://www.washingtonpost.com/wp-dyn/articles/A61585-2003May15.html

================================================================================

---------------------------------05-16-2003-------------------------------------

================================================================================

FCC Sees Local Gain to Age of Max Media

By Frank Ahrens Washington Post Staff Writer Friday, May 16, 2003;

Page E01

Sen. John McCain was pushing hard to find out if media consolidation

has led to control of the news. In his hand, the feisty Arizona

Republican had a list. He wanted answers.

McCain squinted and leaned into the microphone at Tuesday's hearing

before his Commerce, Science and Transportation Committee. His gaze

was fixed on witness William Dean Singleton, president of both the

newspaper industry's lobbying group and MediaNews Group, which owns 50

newspapers, including the flagship Denver Post. What followed was a

telling moment, largely overlooked in that day's news coverage of the

hearing, that illustrated the escalating tension on media ownership.

When the Federal Communications Commission was debating whether it

should give away or sell $70 billion worth of digital broadcast

spectrum in 1996, newspaper editorial pages weighed in. McCain's list,

a consumer group survey, found that every paper favoring a giveaway

was owned by a company that also owned television stations that,

naturally, wanted the spectrum for free.

Every paper opposing a giveaway was owned by a company with no

substantial interest in television.

"Do you think that's an anomaly?" McCain asked, referring to his list.

"I do," Singleton replied.

"So, it's a coincidence," McCain finished, with more than a little

sarcasm in his voice.

None of Singleton's papers editorialized on the giveaway, but he

happened to be the guy who wandered into McCain's cross hairs. He also

happened to be testifying that the FCC should loosen its ownership

rules to let newspaper companies buy television stations, meaning

media companies could extend their influence even further than McCain

suggested it already has reached.

The FCC is preparing to relax or eliminate several key media ownership

rules, letting media companies buy more newspapers and television

stations. The agency is set to vote on June 2 to drop the 28-year-old

ban that prohibits a newspaper from buying a television or radio

station in the same city, except in the smallest cities.

Should the rule be eliminated, several companies have made it clear

that they will acquire stations, sparking concern from public interest

groups and everyday news consumers worried that one company would

control a greater slice of news in their city. Despite the FCC's

arguments that today's viewers have more information sources than

before, such as cable and the Internet, data show that most people

still get almost all of their local news from their community

newspapers and television stations. When a newspaper buys a station,

say those who favor keeping the ban, it eliminates a competitor,

possibly leading to price-fixing advertising rates in the market.

Eighteen months of research conducted by the FCC's Media Bureau on

cross-ownership, however, has led to the belief that lifting the ban

is good for local news, the bureau says.

There are about 50 cities where companies have received FCC waivers

allowing them to own a newspaper and television station. The FCC data

show that these stations produce 50 percent more local news than

stations not owned by newspapers.

"From our selfish company point of view, we know that, for example, if

we ever bought the TV station in a market where we have a newspaper,

the quality of the news on that station would go up," New York Times

Co. President Russell Lewis said in an interview earlier this year.

Singleton agrees. In an interview yesterday, he said that his

MediaNews company would look to buy four stations, but none in Denver,

in the months after the ban is lifted.

Fears of rapid consolidation are unjustified, he said.