(Adds Sen. Dorgan reaction, analyst comment, waiver detail,
By Peter Kaplan
WASHINGTON Dec 18 The Federal Communications
Commission narrowly approved on Tuesday a loosening of media
ownership restrictions in the 20 biggest U.S. cities, despite
objections from consumer groups and a threat by some U.S.
senators to revoke the action.
The FCC voted 3-2, along party lines, to ease the
32-year-old ban on ownership of a newspaper and broadcast
outlet in a single market.
In addition, the FCC action exempted 36 newspaper-broadcast
ownership combinations that had been grandfathered under the
previous rule. It also gave exemptions to six combinations that
were pending before the agency.
The FCC's Republican chairman, Kevin Martin, called the
move a "relatively minimal loosening of the ban" that could
help bolster ailing newspapers in big cities by spreading local
news gathering costs across multiple media platforms.
The vote came over the objections of the FCC's two
Democratic commissioners who said easing the ownership rule
would lead to more consolidation in the industry, eliminate
independent voices and degrade local news coverage.
They also said it created a loophole that would let media
owners combine newspapers and broadcast outlets in many smaller
markets around the United States, not just the top 20 cities. The S&P publishing index .GSPPUBL gained 1.7 percent.
The FCC action provoked an immediate rebuke from members of
Congress. Martin's chief critic in the U.S. Senate, Democratic
Sen. Byron Dorgan, of North Dakota, vowed to make good on a
threat to pass legislation overturning the changes.
"We're not done with this, not by a long shot," he said.
LEGAL CHALLENGE SEEN
Analysts at Stifel Nicolaus said the rule changes would
probably be challenged in court and on Capitol Hill. But
opponents in Congress "will likely have to overcome core
Republican resistance and a possible presidential veto," they
said in a research note.
The chairman of the House Energy and Commerce Committee,
Democratic Rep. John Dingell of Michigan, said he was "greatly
displeased" that Martin had gone ahead with the vote.
"Despite specific bipartisan and bicameral opposition, the
Federal Communications Commission acted arrogantly and brazenly
today to weaken the newspaper/broadcast cross-ownership ban,"
Dingell said in a statement.
Existing FCC rules ban ownership of a newspaper, and a
television or radio station in the same market, unless the FCC
grants a waiver.
Outside the top 20 markets, companies can now get the
cross-ownership ban waived if they convince the FCC the
broadcast station or the newspaper is financially "failing," or
that the combination would lead to a significant increase in
local news coverage.
"The FCC has never attempted such a brazen act of defiance
against Congress," said Democratic Commissioner Jonathan
Adelstein. "The law does not say we are to serve those who seek
to profit by using the public airwaves."
The vote came a day after a group of 25 senators led by
Dorgan sent a letter to Martin warning they would "move
legislation to revoke the rule and nullify the vote" if the FCC
went ahead with the ownership rule changes.
The group, including Senate Commerce Committee Chairman
Daniel Inouye, a Democrat from Hawaii, and the panel's top
Republican, Ted Stevens of Alaska, said the FCC had not spent
enough time studying the issue and seeking public input.
On Nov. 30, the three Republican commissioners approved an
order temporarily waiving the ownership restrictions for media
group Tribune Co TRB.N, allowing the company to proceed with
its planned leveraged buy-out.
The previously pending applications for ownership waivers
that the FCC granted on Tuesday included newspaper-broadcast
combinations owned by Gannett Co (GCI.N) in Phoenix, Arizona,
as well as outlets owned by Media General Inc MEG.N in Myrtle
Beach, South Carolina; Columbus, Georgia; Panama City, Florida
and the Tri-Cities area around the Virginia-Tennessee border.
Tribune shares ended 3.2 percent higher, Media General
stock closed up 2.1 percent, News Corp NWSa.N finished 1.2
percent higher and Gannett rose 1 percent, all on the New York
While the FCC loosened the ownership rules for
newspaper-broadcast combinations, the agency moved on Tuesday
to clamp down on U.S. cable operators.
In a move that is likely to face another court challenge,
the commissioners voted to bar cable companies such as Comcast
Corp (CMCSA.O), Charter Communications (CHTR.O) and Cablevision
CVC.N from owning systems that have more than a 30-percent
share of U.S. multichannel video subscribers.
(Reporting by Peter Kaplan, editing by Tim Dobbyn)