July 14, 2003

Examining FCC Ownership Rules

written by Professor Jeffrey Cole

 

June 2, 2003, may turn out to be one of the most important days in the history of American broadcasting. On that day the Federal Communications Commission (FCC), by a 3-2 vote along partisan lines, removed many of the restrictions on ownership of broadcast stations. The FCC rule that allowed one company to reach only 35% of the nation (in the early days it had been 25%) was loosened to permit 45% penetration, and strict cross-ownership rules denying one company the right to own a television station and a cable system or newspaper in the same market were eliminated. One immediate beneficiary of the new rules was the Tribune Company, which was permitted to own both television station KTLA-Channel 5 and the Los Angeles Times under a temporary waiver that was made permanent by the vote.

The outcome of the vote had been predetermined for weeks and was controlled by the one-vote Republican majority on the FCC. Even so, the loosening of ownership rules unleashed a firestorm of protest as evidenced by the rancorous hearings led by the Democrat Commissioners before the vote and a coalition of Republican and Democrat Senators after the vote. The Congress has the authority to undo the vote, although this is considered highly unlikely.

The issue of broadcast ownership has been a contentious one since the earliest days of broadcasting when NBC was forced to sell off one of its two networks (which became ABC) and control of the airwaves was limited from the first days of television. Back then, the players were ABC, CBS, NBC, Paramount, Fox, Columbia, Universal and Warner Bros. and their main business was film or television. Today the players are Disney, Viacom, General Electric, News Corporation, Sony, Vivendi and AOL Time Warner and television is just a small part of their overall businesses. One of the few restrictions still in place states that a broadcast license can only be held by an American citizen, which is why Japan's Sony and France's Vivendi do not own stations or networks and News Corporation's Rupert Murdoch had to become an American citizen before he could buy the stations that formed his Fox Network.

The great fear of the change in ownership is that the smaller, diverse voices in broadcasting and newspapers will be "swallowed up" by the large conglomerates, which will go on a buying spree to get to the 45% figure (Viacom and Fox were already at the 38-39% level because of temporary waivers - had the vote not gone their way, they would have had to divest). Those in favor of the new rules say that the Internet and other technologies ensure more independent voices than ever and that their critics can offer little more than "big is bad." The 1996 Communications Act required the FCC to examine ownership rules every two years so it was practically inevitable that these changes would come when the "right" majority was in place as it is now.

A comprehensive examination — a study and then hearings — of the ownership situation and whether less powerful voices have been driven out is needed and would be beneficial in serving the public's interest in determining who should own our broadcast stations.

Contact Information

Media Relations, (310) 206-7707, media.relations@anderson.ucla.edu

Media Relations