Global Policy Forum

by Seth Schiesel

The consolidation of television station ownership that has swept through big cities in recent years may soon extend to many smaller cities and towns. A federal court in Washington ordered the Federal Communications Commission yesterday to reconsider its rule that, in practice, prevents a single company from owning more than one television station in a small or medium-size market. Over the last year, the same court has struck down or asked the F.C.C. to reconsider a series of media ownership rules, leaving the door open for the current chairman, Michael K. Powell, to lead the commission in scaling back regulations put in place under his predecessors.

Mr. Powell, a Republican commissioner who was made the agency's chairman last year by President Bush, has often spoken out against rules that curbed consolidation in the media and telecommunications industries, at times calling them outdated and potentially inefficient. Few regulatory experts expect the station ownership rule to survive in its current form. "To a very significant extent, the rules are going to go away," said Blair Levin, a former chief of staff at the commission who is now a regulatory analyst in Washington for Legg Mason (news/quote), the investment bank. "The F.C.C. clearly will end up liberalizing the rule. The only question is how far and how many markets it affects."

Media experts said that the ruling could allow additional acquisition of local television stations by media giants including the News Corporation (news/quote) and Viacom (news/quote), as well as by smaller station-owning companies like the Sinclair Broadcast Group (news/quote), which filed the lawsuit that led to yesterday's decision.

The F.C.C. rule allows a company to own two television stations in a local broadcast market only if there are at least seven other companies owning stations in that market. In practice that has limited two-station ownership to a few dozen of the largest metropolitan areas. Yesterday's ruling was the latest in a recent series of legal and regulatory moves that have weakened regulations limiting the size of media companies.

In February, the United States Court of Appeals for the District of Columbia Circuit, which issued yesterday's decision, threw out rules that had prevented one company from owning both a television station and a cable television system in the same market. As part of the February ruling, the court also ordered the F.C.C. to reconsider its rule that prevents one company from owning a collection of stations that reach more than 35 percent of the nation's homes with televisions.

Last year, the same court essentially invalidated the commission's rules limiting the number of cable television systems that one company may own.

Even as the court has sent many rules back to the F.C.C. for reconsideration, the commission has not appeared especially eager to preserve them. Even without court action, the commission is now considering whether to relax its rules that often prevent one company from owning a newspaper and a television station in the same market. "The big picture is that the court believes that media restrictions are generally an abridgment of free speech and are arbitrary and capricious," said Scott Cleland, chief executive of the Precursor Group, a research company in Washington. David Fiske, an F.C.C. spokesman, would say yesterday only, "We're studying the decision and how to proceed."

The rule will be kept in place pending the commission's review.

Until 1999, a company could not own more than a single television station in any given market. That year, the F.C.C. established a new rule allowing a company to own two stations in a market - a so-called duopoly - as long as there were at least seven other station-owning companies in that market. The provision came to be known as the "eight voices" rule. In practice, the rule allowed duopolies only in markets with at least nine full-power television stations. Such markets include New York, which has at least 15 stations and is where the News Corporation has established a duopoly by owning WNYW, Channel 5, and WWOR, Channel 9. F.C.C. officials estimated yesterday that approximately 70 duopolies had been approved in about 40 markets since 1999.

In yesterday's ruling, the court ruled that the F.C.C. had not adequately explained why newspapers, the Internet, cable channels and other media were not counted among the eight local "voices" that would allow for a television duopoly. If those other types of media outlets were included among the eight voices, duopolies would be allowed in many more markets, potentially including Baltimore; Charleston, S.C.; Columbus, Ohio; Dayton, Ohio; and Syracuse, according to communications experts.

Yesterday's decision was written by Judge Judith W. Rogers and was joined by Senior Judge Stephen F. Williams. Judge David B. Sentelle joined much of the decision but dissented in part, writing that he would have invalidated the rule altogether rather than send it back to the F.C.C. for reconsideration.

The ruling drew criticism from consumer advocates. "We're very concerned about it because this opens the door to one broadcast company owning multiple local stations and possibly owning the dominant newspaper and the cable company, given the entire series of court rulings overturning ownership limits," said Gene Kimmelman, director of the Washington office of Consumers Union.

In a statement, David Smith, the president of Sinclair, the television company that challenged the eight voices rule, expressed the sentiment of many other media executives. "The court's decision validates what we have been saying all along," he said, "that the rules governing television ownership are outdated, without basis, and anticompetitive in today's media environment."

Jessica Reif Cohen, a media analyst for Merrill Lynch, said the ruling helped companies that have already been acquiring duopolies. "Obviously, it's a positive for each of the companies in the industry who are keenly interested in gaining more duopolies," she said, mentioning the News Corporation, owner of the Fox network, and Viacom, which owns CBS, as well as Univision, the Spanish-language broadcaster.

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