Copyright 2001 Boston Herald Inc.  
The Boston Herald
May 14, 2001 Monday ALL EDITIONS
SECTION: FINANCE; Pg. 030

LENGTH: 682 words

HEADLINE: U.S. Likely to bear cross-ownership

BYLINE: By GREG GATLIN

BODY:
It appears to be less a question of if than when a 26-year-old ban on companies owning TV stations and newspapers in the same geographic area is relaxed.

Less clear is whether the Federal Communications Commission will scrap its cross-ownership rule altogether under new Chairman Michael Powell.

Alternatively it could ease the ban enough to allow for some combinations of newspaper publishers and broadcasters, while protecting against companies gaining too much media power in a given market.

"I think at a minimum we're likely to see a change in the larger cities," said Blair Levin, an analyst with Legg Mason Wood Walker in Washington. "It's just a question of whether (the rule) is eliminated in totality or whether there's     in smaller communities some kind of cutoff."

Powell has said he's skeptical of blanket limits on media ownership. Analysts say it's increasingly difficult to make the argument that allowing broadcast outlets and newspapers to combine would result in a paucity of diverse voices - at least in big cities where numerous broadcast, cable and radio outlets, along with newspapers and Internet sites, abound.

The FCC is expected to address the issue once the three newly nominated commissioners are seated.

"I think the case that will be made by the Newspaper Association (of America) and a number of broadcast groups is that the world has changed since 1975," said Richard Wiley, who was chairman of the FCC when the cross-ownership ban was put in place but now represents the newspaper association. "There was no satellite TV, cable was in its infancy, there were fewer broadcast stations anmd no Internet."

Still, Levin speculates that the FCC could draw the line at small markets, where a single owner might gain an overly dominant voice and too much power over advertisers if allowed to control the local newspaper as well as broadcast outlets.

"No one knows what's going to happen," said U.S. Rep. Edward Markey (D-Malden). "I think that in the largest markets it's likely that there will be a change."

Others, including Scott Cleland, chief executive of Precursor Group, a Washington research firm, predict "complete elimination" of the ban. Cleland notes that newspaper-broadcast combinations that might give an owner too much clout in a single market could still be blocked on antitrust grounds.

That may be true "theoretically," said Markey. But, he added, "The Bush administration has made it clear they don't intend to use antitrust law aggressively."

Another question is whether any lifting of the ban will set off a media scramble to buy up newspapers or TV and radio stations.Some predict an easing of the ban could set off all kinds of horsetrading, with media companies swapping holdings to create cross-media powerhouses within geographic areas.

"It's likely to spark some rapid consolidation," Cleland said. "The question is how much."

While broadcast stations tend to change hands rapidly, many of the large newspaper groups are family controlled. "Family interests may pre-empt shareholder interest," Cleland said.

Economic and market issues will also dictate to a degree the pace of consolidation, observers say.

"I'm not of the view that the next day lots of deals will happen," Levin said. "Over a couple years though, there is a consolidation that will dramatically transform the underlying fundamentals of business."

Experts predict "big time" content sharing. Print reporters showing up on broadcast news programs, a la arrangements like one between the Wall Street Journal and CNBC, will profliferate under cross-ownership combinations.

Media companies will pitch sweeping packaged ad deals across TV, radio and newspaper and other properties.

"Certainly on a national level, companies like Viacom and News Corp. and AOL Time Warner are demonstrating the power of selling a large platform that can be broken up in a lot of different ways," Levin said. "The question is,  is there synergy on a local level for cross-platform selling? My own view is someone will figure out how to do it successfully."

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