FCC Votes to Relax Media Ownership Rules

A divided Federal Communications Commission (search) on Monday approved new rules relaxing decades-old restrictions on media ownership, despite fears about reducing the diversity of viewpoints.

After months of debate and lobbying by companies and consumer advocates, the Republican-controlled commission voted 3-2 along party lines to adopt a series of changes favored by media companies.

Citing a need to update decades-old rules to reflect new sources of entertainment, information and news via cable television and the Internet, the FCC voted to allow the broadcast networks to own television stations that reach a combined 45 percent of the national audience, up from 35 percent, and to lift a ban that prevents a company from owning both a newspaper and a television or radio station -- except in the smallest markets.

The decision was a victory for FCC Chairman Michael Powell (search), who has faced growing criticism from diverse interests opposed to his move toward deregulation.

"Our actions will advance our goals of diversity and localism," Powell said. He said the old restrictions were too outdated to survive legal challenges and the FCC "wrote rules to match the times."

Companies could own two television stations in most markets as long as they are not both in the top four, based on ratings. Additionally, a company could own three stations in markets where there are at least 18 stations, like Los Angeles.

The two Democrats on the FCC opposed relaxing the regulations, arguing that the changes would concentrate ownership in the hands of a few, reduce the diversity of viewpoints and stifle reporting of local news.

"Today the Federal Communications Commission empowers America's new media elite with unacceptable levels of influence over the ideas and information upon which our society and our democracy depend," said Commissioner Michael Copps.

The FCC is required to review media ownership rules every two years but the major revamping follows federal appeals court criticism that the agency had not justified the need for them.

The rule changes are expected to face court challenges from media companies wanting more deregulation and consumer groups seeking stricter restrictions. The critics of eased rules include consumer advocates, civil rights and religious groups, small broadcasters, writers, musicians, academicians and the National Rifle Association (search).

The FCC also changed how local radio markets are defined to correct a problem that has allowed companies to exceed ownership limits in some areas.

The government adopted the ownership rules between 1941 and 1975 to encourage competition and prevent monopoly control of the media.

"When we look back in three to five years, we will say that this is the moment when the media map was reinvented," said Blair Levin, a former FCC official who now is an analyst with the Legg Mason investment firm.

The FCC kept in place a ban on mergers among the four largest television networks -- ABC owned by Walt Disney Co. (DIS), CBS owned by Viacom Inc. (VIA), News Corp.(NWS)'s  Fox network and NBC, run by General Electric (GE).

News Corp. is the parent company of the Fox News Channel, which operates FOXNews.com.

News Corp. and Viacom stand to benefit from a higher national TV ownership cap because mergers have left them above the 35 percent level. Those companies, along with NBC, persuaded an appeals court last year to reject that cap and send it back to the FCC for revision.

The FCC also took steps to prevent radio companies from dominating markets by revamping how markets are defined and left intact the maximum number of radio stations a company can own, up to eight in markets where there are 45 radio stations.

Clear Channel Communications Inc. (CCU) owns almost 1,200 and has been pilloried by lawmakers and consumer groups for dominating the airwaves in small towns and cities. While the FCC will take action to prevent that from happening again, the agency is not expected to try to break the company's grip.

Reuters and the Associated Press contributed to this report.