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Court set for media ownership
arguments
No ruling likely until the
spring
By Leon Lazaroff
Tribune
national correspondent
Published February
11, 2004
The battle
over media ownership moves to Philadelphia Wednesday in a case
likely to have broad impact on the size of the country's largest TV,
newspaper and radio companies.
The U.S. Court of Appeals in
Philadelphia is scheduled to hear arguments from the media companies
that largely supported the sweeping ownership rules changes passed
in June by the Federal Communications Commission, and consumer
advocacy groups that successfully sued to stop the rules from being
enacted.
A three-judge
panel has allotted time for lawyers representing such companies as
Viacom Inc., Fox Broadcasting Co., Clear Channel Communications Inc.
and Tribune Co., owner of the Chicago Tribune, to face off against
lawyers representing the San Francisco-based Media Alliance and the
Washington, D.C.-based Center for Digital Democracy.
The new
rules, which lay out the type and quantity of media properties that
a company can own in a single market and nationally, were to take
effect in the fall. But the federal appeals court in Philadelphia
put the rules on hold in early September, questioning whether they
were in the public interest.
The court is expected to rule on
the case in the spring.
"The industry is watching this very
closely," said Brian Shipman, a media analyst at UBS Warburg. "There
are definitely companies out there that would like to pursue
acquisitions and would be very disappointed if the court blocks the
rules, or if they're overturned by a congressional
effort."
Rules governing ownership of multiple TV stations
nationwide and ownership of a newspaper and a TV station in the same
market are likely to take center stage at the hearing. That's
because Congress last month approved legislation allowing media
companies to reach with their broadcasts 39 percent of the national
audience, up from 35 percent.
The commission's new
cross-ownership rule would largely eliminate a ban in place since
1975 that forbids a newspaper company from buying a TV station in
the same market.
Along with Tribune, newspaper companies
Gannett Co., owner of USA Today, and Belo Corp., publisher of the
Dallas Morning News, are eager to take advantage of the potential
cost savings and advertising opportunities that come with owning
newspapers and TV stations in the same market.
Tribune
Chairman and Chief Executive Dennis FitzSimons said recently that if
the appellate court strikes down the new commission rule permitting
cross-ownership, Tribune would seek to appeal the decision to the
Supreme Court.
As far as John Sturm sees it, local television
would be better served with a well-financed newspaper company as a
station's owner than an underfunded station "running Laverne and
Shirley reruns."
"Where there is cross-ownership already,
there has been no harm to quality of diversity, and, more important,
those local stations do more and better local news than anyone
else," said Sturm, president of the Newspaper Association of
America.
Because Tribune owned WGN-Ch. 9 before 1975, and
Belo owned a broadcast station in Dallas, neither was forced to
divest when the rule took effect.
Cheryl Leanza, deputy
director of the Media Access Project, counters that if the
cross-ownership rule takes effect, media consolidation would
continue unabated, exacerbating what she described as the
increasingly uncompetitive nature of some local advertising markets,
while reducing the coverage and diversity of local news.
The
Media Access Project, a Washington, D.C., public-interest law firm,
filed the suit before the appeals court on behalf of the Prometheus
Radio Project, a Philadelphia-based advocacy group promoting
low-power radio stations.
In determining the impact of
consolidation on local markets, Leanza said, the FCC understated the
influence of newspapers and TV as sources of information and
overstated the influence of radio and the Internet. The importance
of ownership also was underplayed, she said.
The commission
"said it would measure localism by who owns local news and create a
diversity index," Leanza said. "But, in fact, their data doesn't
measure local news, or who owns or produces local news. At the
bottom it says one thing and does another. Their analysis is
bankrupt."
Lawyers for the media companies argue that
existing rules were written at a time when three TV stations were
the norm in most cities and cable, satellite TV, the Internet and
national newspapers were, at best, in their infant
stages.
"The marketplace of ideas is so dramatically
different than in the past that it's clear the elimination of a
participant is less important if it improves the quality of that
marketplace," said Carter Phillips, a lawyer who represents Tribune
and Media General Inc., which owns newspapers and TV stations,
primarily in the Southeast.
With Republican leaders in the
House and Senate firmly behind the commission's media ownership
changes, the appeals court panel may represent the best chance
consumer groups have to overturn all or parts of the new
rules.
Nonetheless, Michael Copps, one of two Democrats on
the five-member FCC board to vote against the rules, said Congress
is likely to debate media ownership. And, as took place at a January
commission hearing in San Antonio, liberal and conservative advocacy
groups have vowed to continue to press their positions at public
forums.
"All of these venues are important--Congress, the
courts, public opinion," Copps said. "One is not more important than
the other. The game is far from
over."
Copyright © 2004, Chicago Tribune
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