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Federal Communications Commission chairman Michael Powell said Tuesday the agency is likely to replace across-the-board restrictions on media company mergers with a system in which individual deals will be reviewed based on the level of industry concentration in a given market. “My own guess is that the case-by-case approach is the leading probability for the rule,” Powell told reporters after speaking at the annual National Association of Broadcasters convention in Las Vegas. The FCC is expected June 2 to unveil new regulations loosening rules barring media industry mergers. Critics of the proposal, including the agency’s two Democratic commissioners, say it could accelerate consolidation and limit consumer choice. But Powell argued that the economic efficiencies companies gain in mergers could give them greater resources to invest in a wider variety of programming and content. Existing FCC rules ban a company from owning a newspaper and broadcast outlet in the same market; restrict mergers among the four major national television networks; limit how many radio stations a company may own; and bar a single entity from owning more than eight radio or television licenses in the same market. The FCC also is considering whether to keep regulations that cap the number of viewers a TV operator can reach at 35 percent of the U.S. audience and that ban ownership of two television stations within the same market unless at least eight other competitors are present. Powell acknowledged that so-called duopoly rules fail to deter media concentration in small communities with few broadcast or print outlets. But such problems are largely a result of current approaches to regulation, which apply blanket limits on mergers. “As long as there is a desire to have a single set of rules, you’re going to always have markets where it doesn’t make sense and markets where it doesn’t catch what you want caught,” Powell said. As an alternative, he also praised the case-by-case approach taken by the Department of Justice’s antitrust division and by the Federal Trade Commission. “In antitrust there is a reason things are done using a case-by-case approach,” Powell said. “In antitrust we don’t believe that you can know what the right answer is without looking at the specific facts of the transaction and the specifics of the market.” The FCC announced last year it plans to combine the current patchwork of media rules into a broad omnibus regulation. The agency, for example, is widely expected to eliminate the newspaper-broadcast cross-ownership rules from most major markets. “I don’t think I’ve had a single discussion about any set of ownership rules that don’t include a very robust discussion about what the impact would be on smaller markets,” Powell said. Some observers interpret such comments to suggest that FCC could elect to retain cross-ownership limits in small communities. Separately at the conference, Paxson Communications Corp. chairman and CEO Lowell Paxson said he has heard the FCC is considering a proposal that would restrict a single company from reaching more than 30 percent of the television audience in a given market. Under the current rules, a company is prohibited from owning stations to reach more than 35 percent of the national audience. Expressing support for such a plan, Paxson said it would pave the way for consolidation among TV station owners. He urged the agency to allow “triopolies,” alluding to a market in which a company could own three TV stations, rather than the present maximum of two. Paxson Communications, based in West Palm Beach, Fla., operates 63 TV stations and also owns 62 affiliate stations in the U.S. �Copyright 2003, The Deal, LLC. All rights reserved.

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