Kennard Backs TV-Ownership Rules

Las Vegas -- The broadcast industry shouldn't expect
sweeping regulatory changes in the face of competition from cable, satellite TV and the

Federal Communications Commission chairman William Kennard
rejected calls last week for scrapping FCC ownership rules that prevent broadcasters from
owning more than one television station in the same market.

"I don't think that it's time to completely
deregulate all of the ownership rules in the broadcast industry," Kennard said at the
National Association of Broadcasters Convention here.

Instead, he extended an olive branch by inviting the NAB to
help craft "common-sense" ownership-relief rules, granting broadcasters
"flexibility" in acquiring new properties.

"At the same time, I don't think that we can
afford to keep broadcasters in the Dark Ages of black-and-white-era rules, because the
world has changed," he said. "With the changing realities of today's
marketplace, you do need the flexibility to seize these opportunities so that you can be a
player in the information age."

Kennard conceded that the FCC has been struggling with the
issue since the Telecommunications Act of 1996 instructed the agency to adjust or abandon
ownership limitations as a way of spurring competition.

"We have to bring these ownership-rule proceedings to
a close," Kennard said. "They've been pending for far too long. There is
too much uncertainty in the marketplace. We've been doing too much rule by waiver at
the FCC."

Meanwhile, during a later session, FCC commissioners
bristled at the notion that the agency was dragging its feet on digital must-carry rules
in order to goad cable operators and broadcasters into negotiating private deals.

Commissioner Susan Ness said digital TV remains an FCC
item, with plans calling for the agency to address the issue later this year.

"I can't tell you what the outcome will be. But I
don't think that anybody is winking an eye with respect to digital must-carry,"
Ness said, adding that she continuously urges cable operators and broadcasters to
"talk to each other."

Ness conceded that one concern is that digital must-carry
regulations would result in quality cable programming being bumped by operators that are
forced to carry broadcast offerings.

"It's a complicated issue, but [broadcasters]
have to come up with compelling programming," Ness said. "That's going to
make this a lot easier."

Asked about plans for boosting direct-broadcast satellite
competition, Kennard warned against assuming that "just because we only have
two" DBS providers, after DirecTV Inc. and EchoStar Communications Corp. wrap up
acquisitions, competition will diminish.

However, Jimmy Schaeffler, a DBS analyst with The Carmel
Group, noted that DBS licenses are decreasing at a time when the industry is about to hit
10 million subscribers.