NAA 's Sturm Tells House Panel FCC Cross-Ownership Proposal Offers Little Help For Newspapers

By: Mark Fitzgerald Federal Communications Commission (FCC) Chairman Kevin Martin's proposal to ease newspaper/broadcast cross-ownership restrictions for the nation's biggest dailies is not sufficient or just, Newspaper Association of America (NAA) President and CEO John F. Sturm told a House panel in Washington, D.C. Wednesday.

"In light of the remarkably one-sided record before the commission demonstrating that the current ban is counterproductive to the interests of newspaper publishers, broadcasters, and local communities alike, the chairman's recent proposal will provide only a modicum of the regulatory relief that would be fully justified in the agency's proceeding," Sturm said, according to a transcript of his prepared testimony.

But at the same hearing, Media Access Project President and CEO Andrew Jay Schwartzman argued that Martin's proposal "deceptively packaged to conceal the fact that it is actually a radical repeal of existing rules."

The FCC, he argued, "is rushing to judgment based on a manipulated and flawed research record. The commission continues to suppress information, has failed to comply with the peer review requirements of the Data Quality Act and evidently intends to adopt a rule which cannot possibly take into account thousands of pages of new information which has just been filed."

Martin has scheduled a Dec. 18 vote on his proposal. Sturm suggested in his testimony that the newspaper association considers that none too soon.

"While defenders of the status quo have characterized the FCC chairman's plan to move forward in this proceeding in the near future as a 'rush to judgment,' the facts show that such action is, in reality, woefully overdue," Sturm said.

NAA's Sturm said the FCC prohibition of common ownership of newspapers and broadcast in the same market is the only regulation adopted during the 1960s and 1970s that has not been eased at all.

"For example, since 1999, broadcasters have been permitted to own two TV stations in many markets," he said. " In 1996, Congress determined that a single party should be permitted to own as many as eight radio stations in large markets. By contrast, new newspaper/broadcast combinations are strictly prohibited in all markets."

But Martin's proposal to allow dailies in the 20 largest Nielsen DMAs (Designated Market Areas) to own either one TV station or one radio station does not go nearly far enough to redress the regulatory imbalance, Sturm told the Telecommunications and the Internet Subcommittee of the House of Representatives Committee on Energy and Commerce.

"In fact, the chairman's proposal would give newspaper publishers and broadcasters only modest regulatory relief in an intensely competitive environment," Sturm said.

Even in the top 20 markets, he argued, the proposed rule would create only a 'presumption' in favor of cross-ownership, "meaning that opponents would have an opportunity to make the case that a given combination should be precluded."

"To qualify for such a presumption, moreover, newspaper publishers could own, at most, only one TV station or one radio station -- but not both," he added. "In this respect, the new rule would be considerably more limited than the current TV/radio cross-ownership rule, pursuant to which one entity can own up to two full-power TV stations and as many as six or seven radio stations within the same market. What is more, daily newspapers would be prohibited from owning same-market TV stations that are ranked among the top four in their markets based on audience share. While it is true that the proposal includes a waiver standard for combinations that do not meet the strict criteria for a presumption in favor of cross-ownership, the possibility of waivers is nothing new -- the FCC always has the capacity to waive its rules when the public interest would be served as a result."

Newspapers in smaller markets deserve an opportunity to enjoy the efficiencies of newspaper/broadcast combinations, Sturm argued.

"Notwithstanding the economic challenges confronting the newspaper industry, dailies that are part of newspaper/broadcast combinations have remained especially well-equipped to continue providing exceptional local service," he said "This has proven especially true in medium and small-sized markets. In many such communities, cross-ownership has helped to stem losses in newspaper circulation."

In his prepared testimony, Media Access Project chief Schwartzman said the FCC's action last week in giving cross-ownership waivers to Tribune Co. "add insult to injury."

"In its zeal to eviscerate FCC procedure and precedent, the majority constructed a scheme which is clearly intended to undercut the U.S. Court of Appeals for the Third Circuit, which has retained jurisdiction over the FCC's ownership rules proceeding," he said.

Tribune had asked for the waivers in order to complete its going-private deal under new ownership by an employee stock ownership plan headed by Chicago real estate magnate Sam Zell. In addition to granting temporary waivers for four market where it owns both dailies and broadcast outlets, the FCC granted a permanent waiver for the Chicago market where it has for decades operated the Chicago Tribune, the superstation WGN-TV, and WGN-AM.