Copyright 2002 St. Louis Post-Dispatch, Inc. St.
Louis Post-Dispatch (Missouri)
February 22, 2002 Friday Three Star
SECTION: BUSINESS; Pg. C1
LENGTH: 1010 words
RULING COULD CHANGE LOCAL MEDIA PICTURE; OWNERS OF TV STATIONS HERE,
PULITZER ARE ON LISTS
BYLINE: Christopher Carey
Of The Post-Dispatch
companies emboldened by two appellate court rulings this week might embark soon
on a new round of industry consolidation.
likely lead to an explosion of mergers among huge companies, mergers that would
have been unthinkable just a few years ago," said David Butler, a spokesman for
Consumers Union, a public-interest group worried about the impact of such
On Tuesday, the U.S. Court of Appeals for the
District of Columbia struck down a Federal Communications Commission rule that
barred one company from owning a cable TV system and a local TV station in the
The same court ordered the FCC to
reconsider another rule limiting broadcasters to a 35 percent share of the U.S.
television audience, saying that cap appeared "arbitrary and capricious."
Both decisions have implications for the St. Louis
No sooner had the appeals court issued its
rulings than industry experts began playing out scenarios for deals among cable
companies, broadcasters and newspaper companies.
of that speculation involved Sinclair Broadcast Group Inc., which owns KDNL
(Channel 30) in St. Louis, and Acme Communications Inc., which owns KPLR
Sinclair is under financial pressure and
is looking to sell or swap some of its 63 stations. To cut costs, the
Baltimore-based chain eliminated local newscasts at its stations in St. Louis
and other cities.
Sinclair's stock has risen 15.7
percent since Tuesday on anticipation that it could be acquired. The shares
closed at $11.58 Thursday, after touching a 52-week high earlier in the
Acme's stock has jumped 24.8 percent since the
rulings, closing at $8.60 Thursday.
Acme owns nine
stations affiliated with the WB Network. Acme's biggest shareholder, Jamie
Kellner, is an executive with AOL Time Warner, which could give that company the
inside track on a buyout.
The FCC, under new Chairman
Michael Powell, has been looking at whether ownership restrictions
adopted years ago in an effort to preserve competition and a diversity of
viewpoints have outlived their usefulness.
companies have forced the issue by challenging those restrictions in court,
hence Tuesday's rulings.
restriction being reviewed by the FCC and challenged in court prohibits
broadcasters from owning television stations and newspapers in the same
Some of those combinations exist, through
grandfather clauses or temporary waivers.
observers predict a proliferation of broadcast-print combinations if that FCC
rule falls by the wayside.
Editor & Publisher, a
media trade publication, speculated in this week's edition on the fate of
numerous newspaper companies. So did Forbes magazine, on its Internet site.
Both listed Pulitzer Inc., which owns the St. Louis
Post-Dispatch and the Suburban Journals of Greater St. Louis, among the buyout
Editor & Publisher suggested that
Pulitzer would be a good fit for Gannett Inc., which owns KSDK (Channel 5) in
St. Louis. The two companies also have overlapping or complementary operations
in Tucson and Flagstaff, Ariz.
Forbes did not suggest a
buyer but said Pulitzer could be one of the next family-controlled media
companies to sell out.
Alan G. Silverglat, Pulitzer's
senior vice president for finance, discounted the speculation. "The company's
clearly not for sale," he said. "The ownership's very happy."
The FCC probably will not reach any conclusions on the
broadcast and newspaper cross-ownership rule until later this
year, said Jeff Chester, executive director of the Center for Digital
His group is part of a coalition that is
fighting Powell's deregulation-oriented agenda at the FCC, arguing that
competition and democracy could be undermined if too many broadcast and
newspaper properties end up in too few hands.
how people receive news and information," Chester said. "It's how we participate
in civic discourse."
Jim Helenthal, owner of the
Tri-State Shopper in Quincy, Ill., is in the middle of the debate.
His experiences establishing the weekly circular figured
prominently in the objections that the Consumers Union, the Center for Digital
Democracy and their partners filed this week with the FCC on the
Helenthal filed an
antitrust suit Jan. 31 against the company that owns Quincy's daily newspaper,
hometown TV station and two radio stations, claiming that it tried to use its
power to monopolize the local advertising market.
the suit, in U.S. District Court in Springfield, Helenthal complained that
Quincy Newspapers Inc. sold advertising below cost to hinder his paper and used
threats and intimidation to keep customers from using the publication.
Quincy Newspapers, whose properties include the Quincy
Herald-Whig, the Quincy Merchant and KGEM (Channel 10) denies the
"We think the lawsuit's without merit, and
the company intends to vigorously defend itself," said Vice President Ralph
Three rules from
the Federal Communications Commission are subject to revisions that could
produce changes in the broadcast and newspaper industries:
Cable ownership rule: An appeals court struck down an FCC rule
this week that prohibited cable companies from owning television stations in the
markets they serve. Cable giants such as AOL Time Warner Inc. could become able
to buy local TV outlets or even national networks.
Broadcast ownership cap: The court also ordered the FCC to
reconsider its rule barring broadcasters from owning stations that reach more
than 35 percent of the national audience. If the agency can't justify that cap,
it will have to set a new one or will have to scrap the concept.
Broadcast-newspaper ban: The FCC is reviewing a rule that, with some
exceptions, prohibits broadcast companies from owning newspapers in the same
markets as TV stations. If the agency drops the ban, media companies are likely
to join forces or are likely to swap properties to create synergies in markets
Christopher Carey:; E-mail: firstname.lastname@example.org; Phone: 314-340-8291