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Big-Media Backlash Stuns Nets

Lawmakers in Congress are taking on Big Media, an assault on consolidation that could sweep in the cable industry, an aide to Federal Communications Commission chairman Michael Powell said last week.

Perhaps as early as this week, the Senate Appropriations Committee could vote on an amendment that would restore to 35% the number of TV households nationally that a TV station group can reach with its signals. The FCC raised the cap to 45% in June, triggering a backlash on Capitol Hill.

Susan Eid, Powell's top mass media adviser, said moving the cap to 45% was modest deregulation. Congressional hostility to the change, she said, could spread from the broadcasting to the cable industry.

Cable next?

"I think that it's really an indictment on large media companies, and that includes cable companies and programmers. I think the [cable] industry needs to be cautious because I think you are next on the list," said Eid, who resigned her post last week after spending many years working for Powell.

Initially, many reports viewed hostile congressional reaction to FCC deregulation of the broadcast industry — which also included allowing the common ownership of a TV station and a newspaper in the same market for the first time since 1975 — as routine Capitol Hill posturing that would soon blow over.

But in the last six weeks, the Senate Commerce Committee has voted to restore the 35% cap and the newspaper-broadcast crossownership ban.

Last week, the House Appropriations Committee voted 40-25 to reimpose the 35% cap.

The action on Capitol Hill has stunned the Big Four networks.

Under a 45% cap, the Big Four would be allowed to own more TV stations. But their affiliates have been lobbying aggressively against ABC, CBS, NBC and Fox to keep the 35% cap because they fear being outgunned at the bargaining table if the networks are allowed to grow too large.

Blow to Tauzin

One network lobbyist, who asked not to be named, said it was frustrating and amazing to see so much angst over a 45% cap imposed by a Republican-controlled FCC, at a time when both the White House and Congress are under GOP control.

The House Appropriations Committee vote was a major setback for House Commerce Committee chairman Billy Tauzin (R-La.), who backed the FCC's deregulatory moves and opposed efforts in Congress to rescind them.

"This fight is not over yet. This limits our options, but it does not eliminate all of them," Tauzin spokesman Ken Johnson said last week.

Johnson said he expects that when House and Senate appropriators meet in conference to fashion a uniform bill, the 35% cap provision will be removed.

"We have been told the president intends to veto it if it does not come out in conference," Johnson said.

Normally, lawmakers resist using spending bills to effect a change in policy and consider such a step a last resort.

Last week, Sens. Byron Dorgan (D-N.D.) and Trent Lott (R-Miss.) introduced a bipartisan resolution under the Congressional Review Act that, if successful, would void all of the FCC's new broadcast-ownership policies.

Because the resolution was endorsed by 35 senators, Dorgan said he and Lott were guaranteed a Senate vote.

"We do know there will be a full vote in the Senate to disapprove these rules and regulations," Dorgan told reporters last week.

'It's about substance'

Both Dorgan and Lott said they were troubled because in some markets, one company could own the cable system, one or two TV stations, the local newspaper, and several radio stations.

"This is not just about Michael Powell. It's about an issue. It's about substance," said Lott, the former Senate Majority Leader, who cleared the way for Powell's FCC nomination in 1997. "Republicans can be wrong just like Democrats can be wrong."

Kenneth Ferree, chief of the FCC's Media Bureau and a major architect of the new rules, said last week he was not surprised by the congressional reaction so far.

"It really isn't surprising," Ferree said. "Congress can change the law. That's what they do. They are Congress."

Ferree, a panelist at the New England Cable & Telecommunications Association convention here, said that although the FCC vote occurred along partisan lines, he and his staff tried to take an analytical approach to the job.

"We started this process trying to make it as — I know there are cynical people out there — nonpolitical as we could make it," Ferree said. "I think that the product that we produced was faithful to both the facts and the law."

In the Telecommunications Act of 1996, Congress ordered the FCC to review its broadcast-ownership rules every two years, and to modify or repeal outdated regulations. Since March 2001, the U.S. Court of Appeals for the D.C. Circuit has tossed out the 35% cap, a local TV station multiple-ownership rule, national cable ownership rules, and a rule that barred the common ownership of a TV station and a cable system in the same market.

"Congress can change the law. That's what they do. They are Congress," Ferree said. "If they end up changing the law, that's fine and we do what they tell us to do."

Whether that happens he couldn't say.

"I can't begin to handicap the chances of any of this legislation ultimately become law at this point," Ferree said.