For now, the deregulation trend may have been suspended anyway. The FCC's vote relaxing ownership rules was thwarted by Congress, and even the FCC came up short of eliminating the federal limit on what percentage of the U.S. population one company could reach with its stations. The limit going into 2003 was 35 percent and the FCC considered eliminating caps altogether. Instead, it chose to raise it to 45 percent. In all but the smallest markets it also loosened restrictions on cross-ownership, permitting newspapers to purchase television stations, and also permitting companies that already own one station in a market to purchase others, dependent on the total number of stations in the market. In some markets co-ownership of three stations is possible.
But even that proved too much for Congress. The House of Representatives inserted a provision in an appropriations bill that essentially forbids the FCC from taking any steps to enact the lifting of the ownership cap. The Senate passed a "resolution of disapproval" that would invalidate the FCC regulations. President Bush signaled that he would veto a bill that stopped the implementation of the new ownership regulations; in late November the White House and Congress negotiated a deal that would raise the ownership cap to 39 percent, thereby keeping Fox and Viacom within the limits of the law. Under the omnibus spending bill signed into law by President Bush in January 2004, the 39 percent cap became federal law and no longer subject to biennial FCC review, making it difficult to overturn.
Meanwhile, in September 2003 a federal appeals court in Philadelphia ordered a stay of all the new ownership rules in response to a suit from a small radio company, declaring that "if it had not delayed the order, the challengers would lose 'an adequate remedy should the new ownership rules be declared invalid in whole or in part.'"2 [1] Arguments on the case began in February 2004. This has essentially frozen action on cross-ownership and duopoly-related transactions until the law is clarified.
There are various reasons why the FCC ran into trouble. Depending on your point of view, it may have been overreaching on the part of the FCC, poor political management by Powell, the FCC chairman, public opposition to concentration, or a rare bipartisan coalition against concentration that includes everyone from the usually anti-regulatory National Rifle Association to liberal groups who favor strong government regulation like the Media Access Project.
Regardless of where the regulatory battle ends, two points seem clear for now:
Consolidation and deregulation have already transformed the media landscape and are not likely to go away.
The public and politicians from both parties have, for the first time, sent signals that they are concerned about the possible consequences of further deregulation and consolidation: a decline in the quality of the local television news.
Current trends suggest that the corporate ownership group model, with everything it implies - more centralized profit targets, sometimes added debt, out-of-town management, the opportunities for and sometimes the demands of synergy, potentially superior management and resources mixed with the risk of viewing local news as a commodity in a portfolio - is the biggest influence affecting the future of local television news.
One thing to watch will be whether - and how - ownership groups try to integrate their assets, using centralcasting and other technologies.
There has been a lull in the industry in the past year as stations have tried to recover from the recession and the FCC has been in the process of drawing up new ownership rules. This may well continue until a final resolution to that process appears. How that resolution will come about - whether in the courts, the Congress, or the White House - remains up in the air.
On the one hand, it seems more than likely that local television news will see a continuing slow decline in viewers, just as network programs are experiencing. It is hard to imagine anything happening that will sharply improve the content of local television news. But it is possible to imagine that the digital-transition could lead to an entirely different kind of television that would essentially eliminate local stations in much of the country. This would seem particularly plausible with higher ownership limits.
As it is now, affiliates generally have the same interests vis-à-vis the networks, whether they are owned by Fortune 500 corporations or a group of family members. But if the networks are able to own more stations in the biggest markets, they could pose a major challenge either to small owners or perhaps even more to regional heavyweights like Hearst and Belo. These mid-sized companies might have to grow bigger or be bought. In the past, the big broadcast networks have shown less interest in owning stations in smaller markets. The WB network, however, provides a template for what could happen next. In 109 markets (basically, the smallest markets), WB network programming is distributed via cable exclusively. A "station in a box," or SIB, is placed with a local partner in each market, usually a cable provider or a station affiliated with another network. The WB network transmits programs via satellite to the SIBs, complete with national ads. The SIB does most of the work, automating the order in which programs are played and inserting localized bits of information (like the station's call letters) where necessary.3 [2] Is it possible that the networks could one day decide to cut loose their affiliates and instead deploy SIBs throughout the country in spots where they do not already own television stations? In that case, the networks would become something not very different than the cable channels.