FCC's media-ownership restriction talks stagnate

WASHINGTON — The last time federal regulators tried to change the rules on how many media outlets companies could own, the effort bombed like a bad movie. The sequel appears to be headed for the same fate.

The Federal Communications Commission's examination of media-ownership restrictions, moving along slowly and smoothly just a few weeks ago, suddenly has devolved into a mess similar to the one that doomed proposed rule changes in 2003. Activist groups have risen up in protest, and members of Congress are complaining about the agency's flawed and rushed effort to help media giants at the expense of average Americans.

With the fate of Tribune Co.'s $8.2 billion deal to go private possibly hanging in the balance, the media-ownership debate became mired in controversy after FCC Chairman Kevin Martin, a Republican, unexpectedly pushed to wrap up the complicated process by year's end.

Last week, he unveiled a proposal to partially lift a ban on owning a newspaper and TV station in the same city. It was immediately lambasted by media companies for not going far enough and by public-interest groups and Democrats on the commission for going too far — and too fast.

"Congress and the thousands of American citizens we have talked to want a thoughtful and deliberate rulemaking, not an alarming rush to judgment ... designed to make sure that the chairman can deliver a generous gift for big media before the holidays," Democratic commissioners Michael J. Copps and Jonathan S. Adelstein said in a sharply worded statement. "For the rest of us: a lump of coal."

Four years ago, the FCC's partisan 3-2 vote to loosen media-ownership restrictions sparked a huge public outcry. Outraged lawmakers quickly scaled back one of the major rule changes. A federal court halted the rest for not being properly justified and sent them back to the FCC to be rewritten.

Martin, a commissioner at the time, appeared to have learned from that debacle, conducted by his predecessor, Michael Powell. Martin cautiously launched the FCC's reconsideration of the rules last year and earned early praise from opponents of media consolidation for committing to hold a half-dozen public hearings around the United States. Powell had held only one.

Martin moved deliberately to avoid inflaming a volatile debate that pits media companies desperate for more flexibility in the face of Internet competition against public-interest and minority groups that claim that media concentration has led to a loss of diversity and local voices. The effort was gliding along under the radar, apparently headed well into 2008, before Martin abruptly altered the script last month.

First he proposed that the FCC quickly wrap up the lengthy public-comment process, consider new rules he was still crafting and vote on them by Dec. 18.

Then he unveiled his plan to allow so-called cross-ownership in the 20 largest U.S. markets. Although the proposed change is much more limited than the broad loosening of media-ownership rules pushed by Powell, Martin's plan and timeline for approving it has been met with harsh criticism.

Martin said the FCC must wrap up its work and described his plan as a "relatively moderate change" to the media-ownership rules. "I'm hopeful that it ends up changing the debate," he said of his limited proposal.

Although the plan should draw less fire on Capitol Hill than Powell's, Martin's "determination to rush this through will run into a lot of political heat," said Blair Levin, an analyst at brokerage Stifel, Nicolaus & Co. and a former FCC chief of staff.

Indeed, Martin's plot twist threatens to turn his attempt to craft a successful new episode in the media-ownership debate into a rerun of the FCC's high-profile 2003 flop.

Copps and Adelstein are in open revolt. House and Senate committees plan to summon Martin to Capitol Hill to explain himself in coming weeks. A growing group of Democrats and Republicans in Congress are threatening to block any quick FCC action. And the Media Access Project, a public-interest law firm that filed the successful lawsuit against the 2003 rule changes, said it plans to challenge Martin's cross-ownership rule in court if the FCC approves it.

The AFL-CIO and Moveon.org have sent alerts to their members in recent weeks urging them to raise a ruckus. About 50 protesters converged on the FCC's headquarters before an Oct. 31 hearing, chanting slogans such as, "We need democratization, not consolidation."

"The way in which Martin has handled this has reignited the citizen groups," said Andrew Jay Schwartzman, president of the Media Access Project. "Their membership is riled up, and there is a real sense of, 'They're doing it to us again.'"

Even if Martin delays his timetable, as some expect, he may have so inflamed the debate that it would be hard to tamp it down now that the 2008 presidential campaign has kicked into high gear. Several Democratic presidential candidates have spoken out against Martin's plan.

"I believe both the proposed timeline and process are irresponsible," Sen. Barack Obama, D-Ill., wrote to Martin recently.

One of the leading congressional opponents of media consolidation, Sen. Byron Dorgan, D-N.D., has vowed to press ahead with legislation to force a delay of at least six months before the new rules are voted on. And Rep. John Dingell, the powerful chairman of the House Energy and Commerce Committee, wrote to Martin last week urging a delay.

Several large media conglomerates, including Walt Disney Co. and CBS Corp., are less interested in media ownership than they were in 2003 as their focus has shifted to the Internet. But the issue remains important to many companies, particularly Tribune.

The company needs the cross-ownership restriction to be lifted or to get special FCC waivers for its newspaper/broadcast combinations in Los Angeles and four other markets before it can complete an $8.2 billion deal to go private led by real-estate magnate Sam Zell. Martin's plan would help Tribune in Los Angeles, Chicago, New York and Miami/Fort Lauderdale, which are top 20 markets, but would require the company to sell its newspaper or TV stations in Hartford, Conn.

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