FCC eases rules on media ownership

The Federal Communications Commission votes 3-2 to relax rules limiting ownership of TV stations, radio stations and newspapers, saying decades-old regulations are obsolete.

Declan McCullagh Former Senior Writer
Declan McCullagh is the chief political correspondent for CNET. You can e-mail him or follow him on Twitter as declanm. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.
Declan McCullagh
4 min read
The Federal Communications Commission on Monday voted 3-2 to relax rules limiting ownership of TV stations, radio stations and newspapers, saying that decades-old regulations are obsolete in part because of the rise of the Internet and other new technologies.

Read more about FCC rulings
Under the new rules, broadcast networks may own TV stations that reach 45 percent of the national audience, an increase of 10 percentage points, and in most cases a company may now own both a newspaper and a radio station in the same area. Media mergers still must be approved by the FCC and the Justice Department.

The widely anticipated vote split along party lines as expected, with the three Republican commissioners backing the new rules and saying that a pair of recent appeals court decisions provided a strong impetus for the change.

During the 90-minute commission meeting that was briefly disrupted by anticorporate activists, FCC Chairman Michael Powell said America needs "modern rules that take into account the explosion of new media outlets" and are not tied to a "bygone black-and-white era." Powell added: "Without today's surgery, the rules would assuredly meet a swift death" at the hands of the federal judiciary.

Over the last few weeks, the impending vote on broadcast ownership and cross-ownership rules morphed from an obscure regulatory process into a national debate over modifying rules that had limited how many TV or radio stations a media company may own.

Powell and his allies argued that technology offers a wealth of media alternatives simply not available a generation ago. The argument goes like this: The Internet, 802.11 wireless networks, XM and Sirius satellite radio, DirecTV, hundreds of cable channels, new low-power FM radio, and more magazines and books show that deregulation tends to encourage public discourse.

Powell stressed that the vote represented a "modest although significant change" in the rules that modified them rather than eliminating them.

FCC ruling is right
Have critics been asleep for
20 years? The commission voted
wisely, and media companies should
prepare to exploit the new rules.

The two Democratic commissioners sharply dissented on Monday, claiming that the changes will curb the number of different perspectives heard on the air and even herald "the end of democracy."

"Those who believe that the Internet will save us from the same fate (of consolidation) should realize that the leading news sources on the Internet are controlled by the same media giants who control radio, TV, newspapers and cable," Commissioner Michael Copps said.

Commissioner Jonathan Adelstein, a former aide to Sen. Tom Daschle, D-S.D., said that "neither cable nor the Internet has changed the market power" of large media conglomerates. Copps added that the end of American democracy could be nigh, with a "dark cloud now looming over the future of American media."

After the vote, a small group of women activists began shouting, "Mass deregulation of the mass communication is the end of democracy!" They were escorted out of the room by police.

At one level, Monday's vote represents a high-stakes power struggle at FCC headquarters between left-leaning groups--along with a few conservative allies like the National Rifle Association--and free-market groups and Republicans in Congress. The FCC's tense internal deliberations also highlight an ideological conflict between two wildly different views of how to keep prices low and competition robust: Is it wiser to increase the number of federal regulations or to gradually rescind them?

A history lesson
The old rules came under fire in the courts, where a series of judicial rulings have gradually gutted some of the FCC's media ownership guidelines. In some of the cases, federal judges have declared the rules unconstitutional and have even ordered the commission to rewrite them.

In a February 2002 decision, the influential U.S. Court of Appeals for the D.C. Circuit sided with media companies, including Fox, NBC, Viacom, and the National Association of Broadcasters, against the FCC. The organizations had claimed the FCC exceeded its own authority and violated the First Amendment and the Administrative Procedure Act; the court agreed, saying the FCC's regulations were "arbitrary and capricious and contrary to law."

A few months later, in April 2002, the same appeals court reached a similar conclusion in the Sinclair Broadcast Group v. FCC case. In that case as well, the court tossed the old rules back to the FCC, saying: "We hold that the commission has failed to demonstrate that (the rule) is not arbitrary and capricious."

At the heart of the FCC's media ownership squabble is the 1996 Telecommunications Act, which handed the FCC broad authority to deregulate the way the broadcast and cable TV industries worked. It repealed some of the laws prohibiting telephone-cable and cable-broadcast ownership, and made it easier for a single broadcaster to reach a large number of American households.

It also set in motion the process that has led to Monday's scheduled vote. The 1996 law ordered the FCC to review "all of its ownership rules biennially as part of its regulatory reform review" and "repeal or modify any regulation it determines to be no longer in the public interest."