[opendtv] News: Few Friends for Proposal on Media
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Wed, 14 Nov 2007 09:16:47 -0500
http://www.nytimes.com/2007/11/14/business/media/14media.html?_r=1&th&emc=th&oref=slogin
Few Friends for Proposal on Media
By STEPHEN LABATON
Published: November 14, 2007
WASHINGTON, Nov. 13 - The head of the Federal Communications
Commission on Tuesday announced the details of his plan to relax the
longstanding rule that had prevented a company from owning both a
newspaper and a radio or television station in the same city.
But the deregulatory proposal of Kevin J. Martin, the chairman of the
Federal Communications Commission, may actually force some large
media conglomerates to shed stations or newspapers.
For 32 years, supporters of the restriction have maintained that it
prevents the growth of ever- larger media conglomerates and helps to
keep diverse voices on the airwaves.
These critics denounced Mr. Martin's proposal for containing what
they said were loopholes that could lead to widespread consolidation.
At the same time, however, the newspaper industry's main trade
association and an executive at the Tribune Company separately
criticized the plan and said it would not go nearly far enough to
help them.
While the plan provides a path for Samuel Zell, the Chicago real
estate investor, to complete the buyout of the Tribune Company, it
also puts some obstacles in the way - most notably a possible delay
in completing the deal until after the end of 2007, which would make
it significantly more expensive for the buyers, primarily Tribune
employees.
In a memo to employees on Tuesday, the head of Tribune suggested that
he was dissatisfied, regarding Mr. Martin's plan as not going far
enough. He also said he would seek to have it expanded.
Under the proposal, Tribune will have to sell media companies in
Hartford and possibly Chicago.
The head of the News Corporation, Rupert Murdoch, will have to fight
for an exemption if he wants to continue to control The New York Post
and two television stations - WWOR and WNYW - in the metropolitan
area.
Other companies, including Gannett and Media General, would have to
seek exemptions if they want to continue to hold newspapers and
broadcast stations in smaller markets.
In 1975, the commission adopted a rule that generally restricted a
company from owning both a newspaper and a station in the same city.
Many companies that already had such holdings at the time, including
The New York Times Company, which owns a radio station in Manhattan,
were unaffected because of a grandfather clause.
Since then, some companies have received what are supposed to be
temporary waivers until new rules are adopted. Most media companies
are operating under a waiver, the grandfather clause or both. Those
waivers are reviewed any time a station changes hands.
Mr. Martin's plan would enable a media company to own both a
newspaper and either a radio or smaller television station in the
nation's 20 largest markets. If the company owns a TV station, then
there must be at least eight independent TV stations and newspapers
in the same market.
Unless Congress intervenes, Mr. Martin appears to have the votes at
the commission to have the rules adopted next month. But that could
pose significant problems for Mr. Zell to complete the buyout of the
Tribune Company by the end of the year.
Mr. Zell wants to complete the transaction by Dec. 31 to take
advantage of tax rules that could save the newly formed company more
than $100 million. In addition, if the deal is not closed by Dec. 31,
the $34 a share that shareholders would receive would rise by an
additional 8 percent.
Tribune executives have said that their banks need 20 working days
after obtaining regulatory approval to line up $4.2 billion in
financing to complete the deal. Mr. Martin expects to complete a vote
on his plan on Dec. 18.
While Mr. Martin said he did not anticipate granting new long-term
waivers to any companies - including Tribune, he said in a telephone
call with reporters that a two-week exemption might be possible if he
already knew he had the votes to complete the rule making by Dec. 18.
Terry Holt, a spokesman for Mr. Zell, referred all questions about
the deal to Gary Weitman, a spokesman at Tribune. Mr. Weitman
declined to comment. In an e-mail message to employees, the chief
executive, Dennis J. FitzSimons, said Tribune still hoped to close
the transaction by the end of the year. He also said that the company
would "seek an expansion of cross-ownership relief" beyond what was
contained in Mr. Martin's plan.
Commission officials said that Tribune representatives had been in
discussions with officials to try to come up with a way for the
commission to provide enough of a signal of its intentions to satisfy
the bankers.
But for media deals in the future, it is unclear whether the new
rules will make it significantly easier for conglomerates to own both
a newspaper and a station in most markets.
In telephone briefings with reporters, Mr. Martin said the commission
would consider granting exemptions if other combinations were in the
public interest, but that the "presumption would be against them."
The proposal would require the commission in granting exemptions to
consider the level of media concentration and make a finding that the
companies involved would increase the amount of local news. It would
require a commitment that both the newspaper and the station exercise
independent news judgment. Finally, the commission would be obliged
to consider the financial condition of the newspaper, and whether the
owner was committed to invest significantly in the operations of a
paper in distress.
In announcing his plan, Mr. Martin said he sought to strike a
compromise that would assist what he said was a financially ailing
newspaper industry while trying to be sensitive to concerns about the
effects of media consolidation on the quality of news coverage.
"The newspaper industry has faced significant challenges recently and
I feel we have to do all we can to ensure we continue to have a
vibrant industry," Mr. Martin said.
His plan was criticized by some lawmakers, who said it would lead to
too much consolidation. They have introduced legislation to delay
action by the commission.
"The chairman of the Federal Communications Commission has put
forward what I'm sure he regards as a reasonable compromise on the
issue of media consolidation," said Senator Byron Dorgan, Democrat of
North Dakota. "But he has yet to make the case for why any further
media consolidation is necessary. Indeed, he is relying on an
assumption that newspapers are doomed and that cross-ownership is
necessary to save them. I believe this is not the case."
The plan was also attacked by the Newspaper Association of America,
which complained that it was too modest and that Mr. Martin did not
go far enough.
"The fundamental issues he raises concerning the vitality of
newspapers and assuring that local news remains available to the
public in print and in broadcast are not confined to the top 20
markets," said John F. Sturm, president and chief executive of the
trade organization.
It was also challenged in a statement by the two Democrats on the
commission, Michael J. Copps and Jonathan S. Adelstein.
The two commissioners said that despite Mr. Martin's portrayal of the
plan as a modest one, the top 20 markets constitute 43 percent of the
nation's households. And they said the plan gave loose guidelines
that would permit the commission to grant many exemptions in smaller
markets.
"This is not to my mind a modest proposal," Mr. Copps said. "It is
gift-wrapped to look like a modest proposal. It strikes me as
immodest and opens the floodgates to a lot of deals."
But for the Tribune, at least, the rules are likely to lead to some
sales of media properties. Tribune owns two TV stations and a
newspaper in Hartford, which is not one of the Top 20 markets. It
also owns a radio and a television station in Chicago, as well as The
Tribune. (The rule, as proposed, lets a company own a newspaper and
either a radio or TV station.)
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