Jan. 29, 2001
Vol. 13, No. 3

NEW BUSH TEAM MAY HERALD AN END TO MULTIMEDIA RULES

Cross-ownership restrictions could be dropped as early as next year

With President George W. Bush's appointment last week of Michael Powell as the chairman of the Federal Communications Commission, the tide may finally shift toward lifting the ban on newspaper-broadcast cross-ownership.

Powell is the son of Secretary of State Colin Powell, making this the first father-son team serving in the same administration since the Eisenhower years, which had George Lodge at the Labor Department and Henry Cabot Lodge at the State Department.

Powell has been an FCC commissioner for the last two years, and while he had an opportunity last spring to comment on the biennial review of the cross-ownership rules, he did not file a separate statement. But Powell's statements on other topics would lead us to believe he will favor some sort of newspaper-broadcast deregulation.

Also in this corner is Commissioner Harold Furchtgott-Roth, another Republican, and Commissioner Susan Hess, a Democrat. Assuming President Bush and Congress can agree on someone to fill the empty Democrat slot (a Democrat nominated by a Republican president and confirmed by a bifurcated Congress will probably be a moderate), the rule will be abolished in 2002, with only Commissioner Gloria Tristani, a Democrat, dissenting.

Hess filed an eloquent statement last spring pointing to the obvious benefits of the repeal of the newspaper-broadcast cross-ownership rules, which were instituted in 1975 and essentially prevent a newspaper publisher from acquiring a radio or television outlet in the same city.

Among Hess' points:

  • Broadcast TV has burgeoned since 1975 – there are now six networks and three times as many UHF stations.

  • "In the early 1970s," Hess wrote, "FM radio was a relatively new service; today, there are approximately 6000 FM radio stations in operation."

  • The cable TV "boom" hadn't happened in 1975; today, cables carrying television and other signals pass 97 percent of all households – and two-thirds of them subscribe.

  • Direct broadcast satellite delivery of television hadn't been invented yet; today, it has more than 10 million subscribers.

  • And, Hess said, "the rule was adopted decades before the Internet would become available for public use."

    Hess went on to cite a number of public benefits that could accrue from newspaper-broadcast cross-ownership: radio stations that heretofore had no news could become new outlets if owned by newspapers; UHF stations that hadn't had news broadcasts could rely upon a newspaper owner to provide a news show, and "struggling daily newspapers might stand a better chance of contributing to public discourse and the dissemination of local news and information if they were allowed to combine with local broadcast licensees, thereby maintaining viewpoint diversity."

    While it is assumed that the cross-ownership rule will fall by the wayside in the 2002 review, the real question is whether publishers are ready for this convergence of print and broadcast. In most cases, the answer is no, although some multimedia companies seem to be getting prepared. This, of course, also begs the question of whether a pure-play newspaper company is the right direction in which to be headed.

    Also, with the notion of these combined multimedia newsrooms, isn't there something odd about having separate Internet newsrooms? No. It seems that a strategy that integrates broadcast, Internet and print will be the strong hand to play in the early part of the 21st century. At a panel discussion of Wall Street analysts a couple of years ago at the Newspaper Association of America convention, those on the dais agreed that the greatest thing that would unlock the value of publicly traded newspaper companies would be the repeal of the cross-ownership rule.

    And with such a situation appearing to be on our doorstep, it behooves all of us print persons to prepare for convergence.

    Inside ...

    From NEWSINC., Jan. 29, 2001, Copyright © 2001, The Cole Group. All Rights Reserved.

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