FCC VOTES TO RELAX DUAL-NETWORK OWNERSHIP RULES

FCC Mass Media Bureau Chief Roy Stewart said agency’s final order will allow Viacom to hold onto UPN even if order doesn’t take effect until after May 4, current deadline for Viacom to shed UPN unless it receives last-min. waiver from CBS purchase conditions. “We'll take some action,” he said. “We'll put something in this document indicating that they don’t have to get rid of UPN network.”

In adopting dual-network change, FCC cited statistics indicating that “significant changes in the video marketplace” had occurred since rules were last revised because of Telecom Act 5 years ago. Commission said that while number of commercial and noncommercial TV stations increased between 1996 and 2000, prime- time viewership among 6 broadcast networks fell to 58% from 71%. Agency also pointed out that combined cable and DBS penetration of TV households had grown to nearly 84%, providing greater competition to broadcasters. I said number of cable channels climbed to 214 last year, from 162 in 1996.

Turning to diversity concerns raised by public interest and minority groups, dual-network R&O said rule change wouldn’t affect diversity at local market level because that’s province of network affiliates, not networks themselves. At national level, order concluded that merger of major and emerging networks actually would diversity by permitting emerging networks to keep delivering minority-oriented and niche programming. Given UPN’s precarious financial health, Commission said failure to amend rule could cause that network to go under, depriving viewers of its programming. Agency said network failure “could also imperil the position of many of that network’s affiliates,” hurting diversity of local stations.

FCC Chmn. Powell hailed dual-network change as “an important step” that “will not harm, and indeed is likely to promote, competitive efficiency and diversity.” Saying “any efficiencies gained through such mergers would likely make the emerging networks more effective competitors,” Powell said order affirmed Commission’s earlier tentative conclusion that rule “no longer serves the public interest, and therefore should be repealed.” Calling Viacom’s ownership of UPN “essential to the continued viability of UPN and its local affiliated stations,” he said network’s demise “would result in a loss of diversity” of national programming for minority and urban audiences. He said “outlet diversity at the local level would also be jeopardized if the stability of the affiliates was put at risk.”

Comr. Tristani delivered stinging dissent to majority’s decision, saying rule change “will only further erode the already tenuous level of diversity on the public airwaves.” While it might be true that “a duopolized UPN is better than a dead UPN,” she said, she didn’t see public interest justification for gutting rule. At most, she asserted, agency should have considered waiver request by UPN and Viacom, not elimination of rule. “Wholesale abandonment of well-settled rules is not the way to save a struggling network or promote the public interest,” she said. “Decreasing the number of owners of broadcast networks is simply not a means to achieve greater viewpoint diversity. Sadly, the train of consolidation continues to run on time.”

Comr. Ness stressed that FCC chose not to relax its ban on mergers among Big 4 networks, which she said “would dangerously diminish source and viewpoint diversity” in U.S. She also argued that rule change “does not implicate other media ownership restrictions.” She said she backed change even though it would reduce “source diversity” because it would “maintain outlet and viewpoint diversity… The net benefit to diversity through the preservation of small, niche-oriented networks leads me to support this action.”

Comr. Furchtgott-Roth, who also backed amendment, said “my only regret” is that rule change didn’t go further. Urging FCC to “get out of the game” of imposing competitive restrictions, he called for sweeping elimination of media ownership caps and other limits, saying such rules “reflected a time when the Commission mistrusted the antitrust agencies.”

Viacom, which had been seeking waiver of May 4 deadline for shedding UPN if dual-network rules weren’t changed, said it was “extremely pleased” by FCC’s action. Saying that decision “correctly reflects the highly competitive nature of the broadcast industry,” Viacom said it was “encouraged by the FCC’s willingness to revisit and amend its traditional positions in light of the realities of communications in the 21st century.” Company said it hoped that “the Commission will take additional actions in the future to rationalize other areas under its oversight.”

Black Entertainment & Telecom Assn. (BETA), group representing African American professionals and executives, immediately criticized FCC for relaxing dual-network rule and called on Congress to investigate. BETA Pres. Talib Karim said change “would fly in the face of competition and media diversity, stated goals of the 1996 Telecom Act.” He contended that “reduced competition spells reduced quality black programming as well as reduced opportunities for black producers, directors, writers, actors and other media professionals.” Citing several recent Viacom programming moves and talent firings that “have disenchanted many in the black community,” BETA sent letters Thurs. to Senate Commerce Committee Chmn. McCain (R-Ariz.) and House Commerce Committee Chmn. Tauzin (R-La.) urging them to hold public hearings on FCC’s move.