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Senate Democrats slammed mergers among television broadcasters Tuesday and criticized the Federal Communications Commission for failing to slow consolidation in the industry. Sen. Ernest Hollings, D-S.C., chairman of the Senate Commerce Committee, said at a hearing Tuesday morning that he is working on legislation to deter the FCC from rolling back ownership caps on media companies. The bill comes in response to FCC Chairman Michael Powell’s recent statements that the government should repeal ownership caps decried by critics as outdated (see related article). “The rules in question have encouraged the growth of locally relevant, independent programmers and distributors of media content,” Hollings said. “These critically important, independent voices energize our civic discourse and help separate our nation from those that prohibit the free flow of information.” Hollings announced the bill as the Senate Commerce Committee considered whether the government should relax two restrictions on television broadcasters: the 35 percent cap on national television station ownership and the newspaper-broadcast cross-ownership rule. The station ownership cap bars TV broadcasters from owning stations that reach more than 35 percent of the nation’s households. The newspaper-broadcast cross-ownership rule generally bars companies from owning a television station and newspaper in the same market. Critics of the rules, including Republican members of the committee, said the caps are “anachronistic” at a time when consumers have a variety of sources for programming and information. The rules date back decades, when most cities had only one or two newspapers and a handful of television stations, they said. “This new mass media market is dominated not by broadcasters and newspapers, but by multi-channel mass media,” said Sen. John McCain, R-Ariz., the committee’s ranking Republican member. “These new media are not just powerful economic competitors, they are also driving all media to become more interactive.” Hollings’ bill would force the FCC to submit a report to the Senate Commerce Committee 18 months before any changes in the ownership limits take effect that explains how the proposed rules promote media competition and diversity. The bill also would compel the agency to consider taking action to stop companies from breaking the cross-ownership rule by purchasing another newspaper. The provision comes in response to Chicago-based Tribune Co.’s $8 billion buyout of Los Angeles-based Times-Mirror Co. last year. The deal violated the cross-ownership rule in three cities, but the Tribune will not have to comply with the existing rules until 2006, when its broadcast licenses start coming up for review. Jack Fuller, president of the Tribune’s publishing group, said the cross-ownership rule makes little sense when newspapers and broadcast TV stations face intense competition from cable and the Internet. The ownership caps are redundant with antitrust law, he said. “My inclination is that antitrust law is an effective instrument against undue market power,” Fuller said. “It has worked for 100 years, and it will work now.” Mel Karmazin, president and chief operating officer of New York-based media and entertainment giant Viacom Inc., pressed the committee to support a repeal of the TV station ownership rule. Television networks need the revenue from company-owned affiliates to compete with cable stations for programming, Karmazin said. “We have a better chance of preserving free, over-the-air broadcasting,” he said. “I don’t want to take the most desirable programming and put it on cable because there are two streams of revenue [advertising and subscriptions] there.” Viacom’s CBS unit owns only 35 stations nationwide, but the cap would force it to sell some of those. A court has issued an order letting CBS keep the stations while Viacom pursues a legal challenge to the rules. One moderate Democrat, Louisiana Sen. John Breaux, agreed with Karmazin, saying the TV station ownership cap should at least be updated to reflect cable’s popularity. “Thirty-five percent is a number that has no meaning,” Breaux said. “It ought to be based on something that’s realistic [such as], what percent of the market actually looks at the broadcast.” But Hollings dismissed Karmazin’s complaints. The four major networks reported more than $4 billion in profits, a level of profit Hollings said shows that removing the cap is unnecessary. “It doesn’t sound like CBS and Viacom need any help,” the senator said. “Sumner should give you a raise,” referring to Viacom chief executive Sumner Redstone. Karmazin later complained that Congress is responding to a lobbying campaign waged by local broadcast affiliates. For years, networks have wanted to reduce the sums they pay affiliates to carry their programming. Affiliate-owners do not want the networks to gain leverage by buying additional TV stations, and they do not want more competition when stations come on the market, Karmazin told reporters. Copyright (c)2001 TDD, LLC. All rights reserved.

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