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The battle over media industry consolidation in the U.S. is shifting fronts. With an appellate court in June ordering the Federal Communications Commission to revise rules governing mergers among broadcast and newspaper companies, the agency is now considering competing ways to measure how many people are watching television programming. That is important because such a test is essential to gauging the level of diversity in the nation’s media, which the FCC is mandated to protect. The overriding issue, of course, is whether the U.S. government will use the new measure to ease or restrict media company deals. Hearst-Argyle Television Inc., a New York-based broadcaster with 28 stations, is lobbying the FCC to adopt a so-called viewership index that would allow broadcast companies to buy additional TV outlets in a given market if their share of the audience, based on Nielsen Media Research data, is 30 percent or less. Under this proposal, in large markets around the country, the size and number of stations a single company could own would not be restricted as long as its total combined audience did not exceed the 30 percent cap. For the biggest markets, no company could own more than three stations. Hearst-Argyle officials added that 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 threshold. The plan would likely spur media consolidation because it would replace the FCC’s blanket prohibition on mergers among the top four TV 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. Consumer groups also are petitioning the FCC to adopt a way to measure viewership, but one that would curb industry consolidation. Mark Cooper, research director at the Consumer Federation of America in Washington, opposes Hearst-Argyle’s proposal that the FCC count all TV viewers in developing media ownership limits. That approach, which equates someone watching cartoons with a person watching news, produces a distorted picture of the diversity of views on the nation’s airwaves, he said. Instead, telecom regulators should measure media diversity by tracking how many viewers watch news broadcasts, Cooper said. To that end, in October he expects to introduce a plan that would use Nielsen ratings to assess TV audiences during peak news broadcasting hours, while excluding from the count viewers of non-news programming. This approach would effectively allow a few mergers in the 10 largest U.S. markets, but bar many deals in the 150 midsize U.S. markets. “Midsize markets are far too concentrated,” Cooper said. The dispute over how audience size should figure into measuring diversity underscores the dissension within the FCC regarding media consolidation. FCC Commissioner Michael Copps, one of two Democrats on the panel who last year voted against a plan backed by Chairman Michael Powell to loosen restrictions on media deals, had pressed the agency to consider viewer data in revising media ownership limits. But the agency rejected that plan and last summer adopted regulations that, in seeking to ease media deals, weighted all TV outlets equally regardless of their size or location. “Looking at broadcast outlets as we did as equals without examining how many people are actually watching is outlandish,” Copps said. Copps said the FCC could have capped the number of people actually watching TV programming when it was developing the media rules. The 3rd U.S. Circuit Court of Appeals in Philadelphia in June stayed the FCC rules and ordered the agency to use viewer data to amend the regulations. Without a detailed viewership assessment, the FCC cannot accurately measure media diversity, the court said. “The court said to get a consistent methodology across markets that takes into account the audience that uses news,” Cooper said. “Making sure control of news production is not restricted to a handful of media companies is a key goal of the agency’s regulations, and the court recognized that.” Buoyed by the court order, Copps is now consulting experts that could help the commission determine how many people are watching a TV broadcast. His hope, he said, is that the FCC’s media bureau will listen to these specialists in drawing new media merger limits next year. One obstacle for the FCC in using audience data to measure diversity is defining what qualifies as news programming, a source close to the agency said. Making judgments about what constitutes news content presents legal, constitutional and data collection problems, he said. In its decision staying the media rules, however, the 3rd Circuit said the FCC has previously distinguished between news and entertainment in research studies “without any constitutional problems.” The court also harshly criticized an index the commission had developed to measure media diversity and validate its ownership rules. The FCC developed the diversity benchmark, which examines the broadcasters, newspapers and Internet news sites in a market, to determine if there is a sufficiently broad mix of local and national perspectives. That index does not take into account the actual number of consumers of such content. “Assigning equal market share to outlets that provide no local news almost certainly presents an understated view of concentration in several markets,” the court said. The 3rd Circuit also argued that the FCC’s diversity test is faulty because owning a broadcast station does not necessarily mean anyone is watching a company’s programming. “The assumption of equal market shares is inconsistent with the commission’s overall approach to its diversity index and also makes unrealistic assumptions about media outlets’ relative contribution to viewpoint diversity in local markets,” the court wrote. The FCC is not expected to introduce revised media rules until mid-2005. Copyright �2004 TDD, LLC. All rights reserved.

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