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Reg review is spring-loaded

Politics, as much as hurdles constructed by federal judges, may be dictating FCC Chairman Michael Powell's decision to wait well into next year to modify broadcast-ownership rules.

By waiting until spring 2003, Powell gives himself a chance to find out which party will control Congress and, ultimately, which lawmakers he must keep happy.

"Chairman Powell wisely deferred," Washington attorney Erwin Krasnow said last week during a teleconference sponsored by SunTrust Robinson Humphrey. After this fall's elections, Powell will know whether a Republican-controlled Congress will continue the deregulatory wave launched by the 1996 Telecommunications Act or whether Democrats will try to stem the tide.

"The FCC doesn't take any action without the fingerprints, and sometimes the footprints, of Congress members being shown," Krasnow said.

At the moment, congressional intent is impossible to read with the House run by the GOP and the Senate by Democrats. Republican leaders such as House Energy and Commerce Committee Chairman Billy Tauzin (R-La.) recently criticized Powell's decision to delay relaxation of local newspaper/broadcast crossownership restrictions. The same week, Sen. Russ Feingold (D-Wis.) introduced legislation intended to crack down on a string of alleged abuses by the radio industry in the wake of the sector's rapid consolidation.

In the meantime, Powell's point man on media-ownership issues told the panel's listeners the FCC is gearing up to conduct a new round of studies aimed at helping the agency gather evidence on media diversity, consumer habits and ad practices. Judges say such evidence is necessary to justify any rules going forward.

"We've been criticized for rules that aren't internally consistent," said Paul Gallant, FCC special adviser on media ownership. For instance, in a ruling issued in April, the court harshly criticized local media "voice" tests governing the number of broadcast stations an owner can control in a market. To permit dual ownership of TV stations, markets have been measured according to the number of TV stations in the market whereas limits on radio/TV crossownership in a market count newspaper and cable systems in addition to broadcast outlets.

One study is already in the can.

Last month, the FCC unveiled results of a novel laboratory-based examination of programming prices under various levels of cable-system concentration. On July 5, the FCC was forced to revise earlier findings because of computational errors. The revised data show that program sellers' profits were underestimated when large cable systems have the right to insist that per-sub programming fees are not higher than other systems'. Despite the revision, these "most- favored-nation" contracts were still found to substantially increase big systems' bargaining power, the FCC says.

On tap is a review of the extent to which different viewpoints were offered under various commonly owned media during the 2000 presidential campaign.

A consumer survey will measure where individuals are turning for news these days, and another study will examine the extent to which advertisers believe various forms of advertising are interchangeable.

The results of the studies will be unveiled at the same time the FCC issues a notice of proposed rulemaking that could relax the 35% cap on one company's share of TV-household reach, as well as limits on TV duopolies and crossownership of cable systems and broadcast stations in the same market. Each restriction has been ordered rewritten in a string of judicial opinions issued since March 2001. The rulemaking also tees up local radio/ TV and newspaper/broadcast crossownership limits and the dual-network rule.

The Media Bureau this December also will recommend additional changes to the 30% cap on a cable company's national pay-TV subscriber share and to limits on the amount of their own programming that cable systems may include in their lineups.

Rigorous examination of each rule is required in large part because the 1996 Telecommunications Act required the FCC to review all media-ownership rules every two years and eliminate those not necessary to protect the public interest. Although the FCC says the court is interpreting the congressional mandate too rigidly, Gallant said the agency will not ask Congress to water down the law.