Media Companies Succeed in Easing Ownership

Media Companies Succeed in Easing Ownership
Limits

By STEPHEN LABATON

WASHINGTON, April 15 — After years of litigation and lobbying, the nation's largest broadcasters, cable companies and other media outlets have begun winning important changes to federal rules that restrict their ability to grow larger and to dominate new markets.

The changes achieved by the powerful media and telecommunications companies reflect a new regulatory climate in Washington, both at the Federal Communications Commission and before a federal appeals court here.

In a marked departure from decades of Supreme Court opinions on the subject, the agency and the appeals court have become significantly more sympathetic to the free- speech rights of corporations and more skeptical of the role of government in promoting diversity in mass media.

Consumer groups say the regulations that are being rolled back have been crucial instruments for promoting a diversity of viewpoints in the news and entertainment businesses. The companies reply that technologies including the Internet have made the rules obsolete.

The next industry victory is expected this week, when the communications agency is scheduled to relax a rule that for decades has prohibited one television network from buying another.

And within a few weeks, officials said, the agency will begin to loosen a 26-year-old regulation restricting a company from owning a television station and a newspaper in the same market.

In recent weeks, the federal court, the United States Court of Appeals for the District of Columbia, has handed two big victories to the largest companies in the cable and broadcasting industries. It struck down the rules that limit how big a cable company can grow, and it expressed grave doubts about comparable rules that have limited the nationwide size of broadcasters.

"This administration, the new leadership at the Federal Communications Commission and the courts are looking at every important ownership rule and saying, `If you can't rationalize it, eliminate it,' " said Richard Wiley, a former chairman of the commission. "Everything is in play." As a senior parter at the law firm of Wiley, Rein & Fielding, he represents a number of leading media and broadcasting companies.

The changes have been denounced by some consumer groups, which say they will further concentrate media power in many markets with limited competition, sharply reducing the diversity of viewpoints on the airwaves and diminishing the number of companies distributing such services.

"These rules have been vital," said Andrew Jay Schwartzman, president of the Media Access Project, a nonpartisan group dedicated to promoting the public's right to hear and be heard through diverse news and information outlets.

"They assure that the American public has access to news, information and programming reflecting many different perspectives and many tastes," he said. "The erosion of these rules portends a troubling sameness and enables a cartelization in which a handful of owners with increasingly common interests have the ability to shape public tastes, and less likelihood that one will be off the reservation."

Taken together, the rollbacks by the federal appeals court and the F.C.C. represent the most significant changes in the media ownership rules in many years. Some of the rules being revised or abandoned, such as the limitations on the number of stations that a broadcaster can own, date back to the dawn of television in the 1940's.

Others, such as restrictions generally prohibiting a company from owning a station and a newspaper in the same market, were adopted in the 1970's and long ago survived legal challenges in cases resolved by the Supreme Court.

Some policy makers say that the changing climate, particularly among judges, is similar to the sharp reversal of the courts on affirmative action in the last 20 years. Federal courts once supported affirmative action programs but ultimately abandoned them after becoming skeptical that they could achieve their goals of promoting racial diversity in the workplace and at educational institutions.

Similarly, the federal judges in the Washington court have indicated a deep skepticism that government- imposed limits on media ownership will effectively promote diversity on the airwaves.

The changes by the courts and the F.C.C. will benefit an array of media conglomerates, including Viacom (the parent of CBS), AT&T, AOL Time Warner, Disney, (the parent of ABC), General Electric (the parent of NBC), the Tribune Company, and the companies controlled by Rupert Murdoch.

Those companies say that the rules have become both unnecessary and anachronistic at a time when new technologies such as the Internet make it more difficult for one company to control information coming into homes.

Officials said that on Thursday the F.C.C. will relax a regulation known as the "dual-network rule" that prohibits a network from buying another. The change will permit Viacom to own CBS and have a large interest in UPN, a second, far smaller
network.

A few weeks later, agency officials said, the commission will begin to substantially loosen or repeal the 1975 regulation that restricts a company from owning both a television station and a newspaper in the same market. At a recent gathering with reporters, Michael Powell, the new chairman of the F.C.C., called the cross-ownership restriction a "hard sell" that he was skeptical of keeping.

"I don't know why there's something inherent about a newspaper and something inherent about a broadcaster that means they can't be combined," he said.

Earlier this month, the federal appeals court temporarily blocked the F.C.C. from carrying out its limits on the market size of a broadcasting company. The court order was issued after Viacom demonstrated to the judges that it had a strong likelihood of prevailing in its case, asserting that the rule prohibiting a company from controlling more than 35 percent of the television market should be struck down. Last week, the F.C.C. decided not to appeal that decision. A Democratically controlled F.C.C. almost certainly would have appealed it.

And shortly before that, the same court struck down as unconstitutional the regulations limiting the nation's largest cable companies from growing larger and from broadcasting more of their own shows. That case was brought by a unit of AOL Time Warner, the nation's second- largest cable company after AT&T. The rule that was struck down had prohibited a company from serving more than 30 percent of the cable and satellite television market and from providing more than 40 percent of its channels with programming from its affiliated companies.

The relaxation of the rules is a consequence of a new conservative Republican regulatory climate in Washington and an expansive reading of the First Amendment by the United States Court of Appeals for the District of Columbia that makes it difficult, if not impossible, to justify ownership limits.

Earlier opinions by the Supreme Court and other courts sought to carefully balance the limited First Amendment interests of the companies against the competing public interest responsibilities of the F.C.C. in assuring a diversity of voices.

In a series of opinions running from the 1940's through the 1970's, the Supreme Court gave broad deference to the F.C.C. to take measures to promote diversity even though the justices acknowledged the difficulty of finding clear empirical evidence that the regulations achieved such ends.

The recent appeals court decisions, however, have given short shrift to the diversity claims and demanded a far greater level of evidence to justify the regulations.