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The New D.C.: Friend or Foe?

With Republicans in power in Washington, media lobbyists expect their mergers to move through the system much more easily than they did under Democrats, who often consented to corporate combinations only in exchange for public-interest requirements.

Without an antitrust chief in place, it's unclear exactly how George W. Bush's administration will handle media mergers. The public's earliest chance to see how the administration thinks will be when the FCC makes a decision later this year on News Corp.'s purchase of Chris-Craft's eight TV stations; another chance may be News Corp.'s purchase of satellite TV company DirecTV.

News Corp.'s Chris-Craft purchase faces some regulatory concerns-such as an FCC rule limiting foreign ownership of U.S. companies and another forbidding cross ownership of TV stations and newspapers in the same market (New York City in this case)-but it should fare better in a more deregulatory environment.

Some mergers that closed during the Clinton administration ended up with conditions. Just before the White House changed hands, the Federal Trade Commission and the FCC required AOL Time Warner to open its cable networks to competitors that want to offer high-speed Internet service, forbade the company from imposing content limits on interactive-TV services, and placed restrictions on advanced instant-messaging services.

Regulatory agencies during the Clinton administration also approved AT&T's purchase of first Tele-Communications Inc. and then Media One but imposed strict conditions on what the company would have to spin off in order to stay within the bounds of agreements struck with the agencies. AT&T has been lobbying Congress to rid itself of some of the rules that would force it to divest some holdings, but so far to no avail.

Industry executives hope they will be able to move deals through the regulatory gauntlet faster and with less scrutiny now that Republicans are in power both in the White House and in Congress. Execs are encouraged by the rise of former antitrust attorney and FCC Commissioner Michael Powell to the agency's chair. While a commissioner, Powell gave several speeches with a deregulatory bent, and he is a clear champion of the free market.

Powell will be intimately involved in Congressional efforts this year to reform the FCC. Both Senate Commerce Committee Chairman John McCain (R-Ariz.) and House Energy and Commerce Committee Chairman Billy Tauzin (R-La.) say it's their top legislative priority this year. Both men are enthusiastic supporters of Powell, and McCain has been Powell's congressional champion. With the three all focused on changing the agency, it's a sure bet something will get done.

Action is expected on a bill, sponsored by Reps. Richard Burr (R-N.C.) and Chip Pickering (R-Miss.), setting time limits for the FCC's reviews of mergers, says Ken Johnson, committee spokesman.

Last year, Burr and Pickering introduced similar legislation, but it didn't pass. Sens. Mike DeWine (R-Ohio) and Herb Kohl (D-Wis.) managed to get a time-limits bill through the Senate Judiciary Committee, but it never made it to the Senate floor. Sources say Sen. Ernest Hollings (D-S.C.), the powerful ranking member on the Senate Commerce Committee, made sure the bill never saw the light of day. With Hollings still ranking high on Commerce, similar efforts this year are likely to meet with the same result, unless perhaps Hollings has another piece of legislation he would like to push through in exchange.

Merger-review deadlines hold no appeal for Powell. Although he admits the FCC could use some changes, he's not a strong backer of deadlines on reviews.

"I am not necessarily in favor of prophylactic time limits..I really hope we will be able to increase the pace," he told the press.

However, the speed at which mergers are approved isn't fully in the FCC's hands. Typically, the agency waits until the antitrust outfits-the Department of Justice or the Federal Trade Commission, depending on the merger-complete their review, which usually takes some months. Once that's complete, the FCC will add its two cents.

Whether 2001 will prove to be a big year for media mergers is uncertain. With an economic downturn looming, only a few big media companies left, and the Internet bubble burst, the question remains: What's left to buy and who can afford it?