Copyright 2001 Boston Herald Inc. The Boston
May 14, 2001 Monday ALL EDITIONS
SECTION: FINANCE; Pg. 030
LENGTH: 682 words
Likely to bear cross-ownership
BYLINE: By GREG
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.
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
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
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.
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
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.
likely to spark some rapid consolidation," Cleland said. "The question is how
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."