Copyright 2001 St. Louis Post-Dispatch, Inc. St.
Louis Post-Dispatch (Missouri)
December 30, 2001 Sunday Five Star Lift
SECTION: BUSINESS; Pg. F1
LENGTH: 1389 words
COULD ALTER MEDIA SCENE BY CHANGING OWNERSHIP RULES; ANALYST WOULD
EXPECT ST. LOUIS CONSOLIDATION
Christopher Carey Of The Post-Dispatch
BODY: Even before Comcast Corp. announced its $72 billion deal for AT&T
Corp.'s cable-television business, the Federal Communications Commission was
signaling that a new wave of media consolidation might be on the way.
Under the agency's chairman, Michael Powell, the FCC said
in September that it would revisit a 26-year-old rule that bars one company from
owning a TV station and a newspaper in a single market.
The deregulation-minded Powell also is taking aim at other ownership
restrictions affecting TV networks, station operators and cable companies.
"This is the first of maybe a half-dozen proceedings that
have the potential to reshape the media landscape," said Mark Cooper, research
director for the Consumer Federation of America.
FCC rules prohibit a single company from controlling more than 35 percent of the
nation's television audience or 30 percent of its cable audience.
Powell has suggested that ownership rules drafted decades
ago to promote competition and to preserve a diversity of viewpoints have
outlived their usefulness, given the rise of the Internet and the proliferation
of other information sources.
The National Association
of Broadcasters, the Newspaper Association of America and other trade groups
have called for the cross-ownership rule to be eliminated.
A coalition of public-interest groups, including the Consumer
Federation, the Center for Digital Democracy and the Media Access Project,
contend that the restrictions benefit the public and should be kept in place.
"Allowing cross-ownership will undermine the marketplace
of ideas by weakening the institutions that provide in-depth analysis, opinion
and investigative reporting and threatening the unique institutional motivation
and perspective that newspapers bring to the public debate," the groups said in
testimony submitted to the FCC this month.
trade groups counter that cross-ownership would improve the quality of news by
allowing TV stations and newspapers to share costs, resources and expertise.
Industry analysts say that if ownership restrictions are
eased or are eliminated next year, big media companies are likely to buy smaller
ones or to swap properties among themselves to create local print-and-broadcast
combinations or bigger broadcast-only clusters.
Sinclair Broadcasting Group Inc., the owner of KDNL-TV (Channel 30) in
St. Louis, is on the list of takeover targets. The company is under pressure
because of rising costs and a slump in advertising revenue.
Sinclair, which controls 62 stations in 40 markets, pulled the plug on
its local newscasts in St. Louis two months ago to save money.
Money manager Mario Gabelli has predicted that the elimination of
cross-ownership rules could lead to a newspaper-television combination in St.
His company, Gabelli Asset Management Inc., has
roughly $22 billion under management and has placed several big bets on media
companies it believes are headed for buyouts or mergers.
Gabelli's mutual funds and other investment entities control nearly
29.1 percent of the Class A shares of Pulitzer Inc., which publishes the
Post-Dispatch, the Suburban Journals of Greater St. Louis and other newspapers.
The company's Class A shares have one-tenth the voting power of the company's
Class B shares, most of which are controlled by Pulitzer family members through
the Pulitzer Inc. Voting Trust.
Gabelli has been saying
for more than a year that Pulitzer could be sold to Gannett Co., the owner of
KSDK-TV (Channel 5) or Belo Corp., the owner of KMOV-TV (Channel 4), if the ban
on cross-ownership is lifted.
Executives at Pulitzer
and Belo declined to discuss Gabelli's statements, saying Friday that their
companies have policies against commenting on rumors or speculation.
More than 40 cities have newspapers and television
stations with a common owner. Most of those combinations were in existence
before 1975 and were granted exemptions when the cross-ownership rule was imposed.
mergers in the media industry, such as Tribune Co.'s deal for Times
Mirror Co. and Gannett's deal for Central Newspapers Inc., created additional
cross-ownership pairings that would have to be reversed if the rule is not
The FCC is not the sole authority on the
matter. Companies opposed to the ownership restrictions also are fighting them
in the courts, with some success.
A federal appeals
court in Washington said this year that the FCC rule restricting cable operators
to no more than 30 percent of the U.S. audience was not justified. But the court
left open the possibility that a higher threshold might be allowed.
Jeffrey Chester is executive director of the Center for
Digital Democracy, one of the groups opposed to scrapping the ownership
He fears a scenario in which one company
or individual could own a newspaper, one or two television stations, a cable
system and other media properties in a single market.
"It's William Randolph Hearst's wildest dream," Chester said, noting
that an entity with that much media power also would have the loudest voice in a
When the FCC announced its review of
the cross-ownership rule in September, it offered figures to
support its contention that the media business has changed dramatically,
in size and in structure.
When the FCC adopted the rule
in 1975, the United States had about 1,700 daily newspapers, 7,500 radio
stations, and 1,000 television stations.
major TV networks had 95 percent of the prime-time audience.
The number of local media outlets has grown substantially, mostly on
the broadcast side of the business.
The number of
licensed radio stations has risen to 12,932 from 7,785, the FCC said. The number
of full-power TV stations has increased to 1,678 from 952, with 2,396 low-power
TV stations also having been added to the broadcast spectrum.
In addition, the number of national networks has risen to seven (ABC,
NBC, CBS, Fox, WB, PaxNet and UPN) from three.
said in announcing its review that in the 2000-2001 television season, the four
largest broadcast networks had a combined prime-time audience share of 50
percent, and the main cable networks had 42 percent.
The number of daily papers published in the United States has fallen
almost 20 percent, to 1,422 last year from 1,756 in 1975. Total circulation in
that category fell about 8 percent, to 55.8 million from 60.6 million.
But the number of weekly papers in the United States has
risen, and their combined circulation has doubled, exceeding that of the dailies
by more than 25 million readers.
The groups opposed to
the lifting of the cross-ownership rules counter the FCC's contentions with a
statistic, too. Since 1975, they say, the number of independent newspaper and
television operators has fallen 60 percent, to about 600 from about 1,500
"You have lots of variety but little
diversity," said Cooper, of the Consumer Federation. Broadcast companies are
eager to add newspapers to their holdings because newspapers account for a
bigger share of the advertising pie.
nationally spend about 45 percent of local advertising dollars on newspapers,
the FCC said. They spend about 16 percent on radio stations and about 15 percent
on broadcast TV stations.
Even the groups opposed to
the elimination of the cross-ownership rule acknowledge that some sort of
deregulation is inevitable. Three of the five seats on the FCC are held by
But the Democratic-controlled Senate is
likely to challenge at least some elements of any plan, Cooper said.
"There will be a lot more of a battle than some people
think," he said.
St. Louis media
The major St. Louis newspapers
and television stations, with their owners:
St. Louis Post-Dispatch, Pulitzer
Inc.; Suburban Journals of Greater St. Louis, Pulitzer Inc.; Belleville
News-Democrat, Knight Ridder Inc.; Alton Telegraph, Freedom Communications; St.
Louis Business Journal, American City Business Journals Inc.; The Riverfront
Times, New Times Inc.