Breaking and associated brands will be offline for scheduled maintenance Friday Feb. 26 9 PM US EST to Saturday Feb. 27 6 AM EST. We apologize for the inconvenience.


Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The Federal Communications Commission may radically revise its approach to restricting broadcast mergers if a federal appeals court rejects the agency’s most recent effort to limit media concentration. Unlike the FCC’s current regulatory treatment of local markets, which restricts the size of the audience a broadcaster may reach, the new method would cap the number of people who actually view cable and television broadcasts. Adopting the new approach could open the door to more mergers. Industry officials pressed FCC Chief Michael Powell last year to implement a system centered on actual, instead of potential, viewership. But the chairman elected to stick with the status quo. Next time could be different, industry players said. “The [FCC] will realize that viewership should be the starting point for the ownership rules,” said Wade Hargrove, legal adviser to Hearst-Argyle Television Inc. Industry advocates could soon find out if they will get their wish. The federal appeals court in Philadelphia is expected shortly to overturn at least part of the FCC’s media merger rules, which the agency adopted last year amid a fractious national debate over the perils of media consolidation. Such a decision will force the FCC to find a new approach to controlling media concentration. “If the court throws the rules back to the FCC to review again, this approach of taking into account viewership will likely surface again at the agency,” Hargrove said. Adopting any new media merger regulations would likely take more than a year from the time of the federal appeals court ruling. The process could extend even longer if President Bush loses his re-election bid or if Powell resigns from the commission. Yet supporters said such a change in inevitable. Advocates of the viewership model argue the current system is faulty because owning a broadcast station does not necessarily mean anyone is watching a company’s programming. Without a detailed viewership assessment, the FCC cannot accurately measure media diversity, a key goal of the agency’s rules, sources said. While disagreeing on the extent of such a system, broadcast companies, lawmakers and consumer groups all contend that the agency must incorporate a count of viewers into the metrics for developing rules aimed at fostering diversity in the nation’s airwaves. Hargrove and Hearst-Argyle president David Barrett pushed for the new approach in a meeting with Powell just weeks before the agency revised the media merger rules in June 2003. Their proposal would permit a company to buy additional TV stations in a market if its share of the audience based on Nielsen Media Research data is percent or less. In large markets the size and number of stations a single company could own would not be restricted as long as the total combined viewership did not exceed the cap. For the biggest markets, no company could own more than three stations. Hearst-Argyle officials added the restriction because some media hubs, such as Los Angeles and New York, have so many TV outlets that one company could have owned up to 10 stations without exceeding the 30 percent cap. Such a change would likely spur broadcast industry consolidation because it would replace the blanket prohibition on mergers among the top four stations in midsize and large markets. Companies that surpass the audience cap through organic growth, rather than mergers, would not be required to divest assets, though they could not complete additional in-market deals. Sources close to the FCC said Powell was considering a variant of the Hearst-Argyle proposal. Under his plan, he would have set the cap at 25 percent of viewers and retained the ban on owning more than one of the top four stations in a given market. The viewership cap would not replace the national cap on the percentage of U.S. households a single TV company could serve. Congress has set that limit at 39 percent of U.S. households. Sources also said Powell found the new approach intriguing because it appears more aligned with the agency’s duty to ensure mergers are in the pubic interest. For example, the FCC’s rewrite of the media rules last year increased from two to three the number of TV stations a single company may own in certain large markets. The change was based on a general understanding that consumers have more media options available to them in big markets. But the change ignores whether anyone is watching those stations. Despite Powell’s interest, FCC chief economist Simon Wilkie was strongly against the audience strategy, and his views prevailed with the chairman, sources said. Wilkie, who declined to comment, subsequently left the commission. Andrew Schwartzman, president of Media Access Project, a Washington-based public interest law firm, said limits based on measuring TV audiences are viable only if used in tandem with other restrictions, such as banning mergers among the top four stations in a market. That would limit a media conglomerate’s ability to control all the top stations, which could limit local news coverage, he said. �Copyright 2004, The Deal, LLC. All rights reserved.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.