Cross-Ownership Ruling Could Help Papers

By: Todd Shields

A federal appeals court has opened the way for what may become a spirited round of consolidation among broadcast and cable television companies. Newspapers may benefit in a couple of ways — even as they gird to battle for audience with ever-larger media firms.

The U.S. Court of Appeals for the District of Columbia told the Federal Communications Commission (FCC) to come up with better reasons to limit any TV network’s owned-and-operated stations from reaching more than 35% of the national audience. In its Tuesday ruling, the court went further on another regulation, voiding the FCC rule that kept cable TV systems from owning local broadcast stations.

The court decision heartened those who want the FCC to jettison its ban on common ownership of a daily newspaper and a broadcast station in the same market. Like the besieged 35% broadcast standard, the rule aims to preserve the diversity of voices and local ownership.

The court’s action “is another indication that the commission should be on the path toward repealing” the newspaper-broadcast rule, said John F. Sturm, CEO and president of the Newspaper Association of America.

Opponents of media concentration reacted with alarm. “This decision erodes the public’s First Amendment rights to have a diversely owned media marketplace,” said Jeff Chester, executive director of the Center for Digital Democracy.

The ruling was a relief to Rupert Murdoch’s News Corp., the New York Post owner whose Fox Television division had exceeded the 35% threshold and wants the cap thrown out lest it be forced to disgorge stations. Elsewhere, the verdict raises expectations the cap will be relaxed, allowing networks to buy more local TV stations. Such competition could boost the market value for TV stations owned by the likes of the Tribune Co., the New York Times Co., the E.W. Scripps Co., Belo, and the Washington Post Co.

Indeed, those companies’ stocks rose the day after the ruling. But exactly who might want to sell stations was far from clear. “Irrespective of whether we could make a short-term gain, we like being in the local television business,” said Pat Butler, vice president of the Washington Post Co., which owns six network-affiliated TV stations.

Others noted the court did not reject diversity and localism as important values, leaving an opening for those who support ownership restrictions to make their case. They may get help on Capitol Hill.

“The American people will be the loser here if these ownership caps are struck down,” Sen. Byron L. Dorgan, D-N.D., who sits on the Senate Committee on Commerce, Science, and Transportation, told E&P. Dorgan criticized what he said was “an orgy of concentration” and called for hearings in the Democrat-controlled Senate.

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