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Analysis: FCC and 'marketplace' of ideas

By T.K. MALOY, UPI Deputy Business Editor

WASHINGTON, June 2 (UPI) -- With Monday's ruling from the Federal Communications Commission easing rules of media ownership, the doors have been opened for a potential spate of mergers and consolidation in the more than $200 billion industry, which some warn may lead to "Big Brother" media monopolies.

The FCC decision comes as regulators and media companies continue coming to grips with a world that now includes TV, cable, direct satellite TV, radio and the Internet.

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The commission's debate on the issue and the final vote revealed a fractured FCC, with Republican members Kathleen Q. Abernathy, Kevin J. Martin and FCC Chairman Michael Powell voting for the ruling, and Democratic members Jonathan S. Adelstein and Michael J. Copps voting against.

Each member of the commission issued statements on his or her view as the ruling was released Monday.

For Abernathy the concerns over rampant media conglomeration will ultimately prove unfounded.

"Those who oppose our decision will continue to fear a mythical media monopoly that will descend upon our media landscape without any regulatory review of its power," she said. "But the reality is that under today's order there will continue to be hundreds of pathways into the American home in the average American city or town.

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"The reality is that we are continuing to impose a national television ownership cap in recognition of the important role affiliates play in promoting localism, competition, and diversity. "

Copps voiced opposition.

"I dissent to this decision. I dissent on grounds of substance. I dissent on grounds of process. I dissent because today the Federal Communications Commission empowers America's new Media Elite with unacceptable levels of influence over the media on which our society and our democracy so heavily depend," he said.

Under the terms of the FCC ruling, longtime regulations restricting consolidation and "cross ownership" of media in cities and regions around the United States have been relaxed. Previously -- with some exceptions -- the FCC did not allow, for instance, ownership by a newspaper of a television station in the same city, or placed limitations on the number of stations a major television network could own at the national level.

Monday's ruling changes that.

The ruling allows for any given news media company to own a number of TV stations collectively reaching up to 45 percent of U.S. households, up from 35 percent, and for media corporations -- such as the Tribune Co., Gannett Co. Inc. or News Corp. -- to own a newspaper and TV station in the same city.

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However, the ruling also continues restricting the major TV networks (ABC, CBS, FOX, NBC) from owning each other. Under the current ownership status quo, some networks do own smaller networks, such as such as NBC's ownership of Spanish-language Telemundo and part interest in Pax; and Viacom's ownership of both CBS and UPN.

At question ultimately, under this ruling, is whether the news and views the American people read, hear and view on a daily basis, will become narrow and overly uniform?

The concerns voiced by a broad range of interest groups -- many not usually allied with each other -- are that the potential for less competition in the news business will lead to a lesser diversity of voices and a "marketplace of ideas" that is less vibrant.

"We are at a crossroads -- for the Federal Communications Commission, for television, radio, and newspapers, and for the American people. The decision we five make today will recast our entire media landscape for years to come," said Copps.

For Copps, it comes down to whether "a few corporations will be ceded gatekeeper control over the civil dialogue of our country; content control over our music, entertainment and information; and veto power over the majority of what we and our families watch, hear and read."

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Groups ranging from the National Organization of Women to the National Rifle Organization opposed the rule change, fearing their particular views would be diluted or not aired or printed at all in a more uniform media world.

AFMA, the worldwide trade organization of independent film and television, was one of many groups that went on record against any easing of ownership restrictions, with AMFA head Jean Prewitt writing to the FCC to warn that larger TV/media conglomerates would lead to less independent programming.

"The independent film and television industry has an enormous stake in the outcome of the FCC's biennial review examining media ownership. The burgeoning media consolidation of the recent years has almost entirely closed off the television industry to independent producers and distributors," said Prewitt shortly before the FCC released its decision. "We believe that to loosen the ownership restriction under review would once and for all silence independent voices and eliminate any hope for diversity in programming."

In the strict business sense, media industry analyst do not expect a large immediate wave of mergers, but instead a slower steady trend toward consolidation in certain markets based on where it best fits the bottom line of various media biggies.

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Among other factors holding back some purchases at the moment, is that the stock of some smaller media properties has gone up during the months leading up to the FCC decision.

Media expert Laura Behrens, a senior analyst with research consulting firm GartnerG2, predicted that while there would be no broad sweep of national mergers, there would be a trend toward some consolidation at the local level.

"These rules operate at the level of local markets," Behrens said. "Changes will take place, market by market."

While some companies such as Gannett, primarily a newspaper publisher (including USA Today), may consolidate geographically by buying out some television stations where it owns newspapers, Behrens added, "I don't think you will see TV (companies) buying newspapers."

Ken Marlin, managing director of Marlin and Associates, a media investment bank, noted that even with potential consolidation, there are still many more media outlets than when the FCC first began its regulation of media ownership.

"These rules were first devised when New York City had only a handful of TV stations and Newspapers, and a double handful of radio stations. At that time three very big commercial radio and television networks clearly dominated the airwaves (both Radio and TV). Many smaller communities had but one newspaper, and even fewer TV and radio stations. There was no Internet and no cable," Marlin said. "Yes, a rush of media deals may follow. But why is that a matter for public interest concern. We are not talking about total world domination by two or three mega moguls."

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Marlin added, however, "We are still talking about competition among some powerful players including GE; Gannett; Tribune Co.; McGraw Hill; Media General; News Corp.; Viacom; Walt Disney Co; and some very large financial players."

FCC commissioner Abernathy believes that the operative word to the change of rules is "balance," noting in her statement: "It goes without saying that none of us wants to see media ownership concentrated in the hands of a few."

According to Abernathy, "The net result of our order is balance: We have preserved core values by maintaining safeguards to protect against undue concentration, we have altered rules as necessary to respond to the dramatic changes that have occurred in the marketplace ..."

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