Relaxed Media Ownership Rules to Face Court, Congressional Challenges

WASHINGTON – Newly relaxed rules governing ownership of newspapers and TV and radio stations face a gauntlet of challenges in the courts and in Congress.

The eased restrictions approved by the Republican-controlled Federal Communications Commission (search) allow companies to own television stations reaching nearly half the nation's viewers and to own newspapers and TV and radio stations in the same city.

Many media companies wanted eased regulations, saying decades-old restrictions hindered their ability to grow and compete in a market changed by cable TV, satellite broadcasts and the Internet.

Critics said that despite Monday's 3-2 vote, they would keep fighting changes they say could put a few giant companies in control of what most people see, hear and read.

"The likelihood of a challenge to any major FCC action is approximately 100 percent," said Blair Levin, a former FCC official who is an analyst with the Legg Mason investment firm. He said consumer groups seeking stiffer restrictions and media companies wanting even more deregulation are expected to fight the rules.

FCC Chairman Michael Powell (search) said after the vote that the rules needed an overhaul so they wouldn't be swept away by lawsuits, leaving no restrictions on media companies. Many of the agency's past attempts to update its ownership rules were thrown out by court decisions.

"I am quite confident the vast majority of what we've done will survive in court," Powell said in an interview.

Critics already are campaigning to roll back the changes.

"As more and more Americans find out about the FCC's order and rule changes, they are going to push for Congress to overturn them," said Gene Kimmelman, public policy director for Consumers Union, which publishes Consumer Reports magazine.

Several lawmakers have proposed legislation to counter the changed rules, particularly one that now permits a single company to own TV stations that reach 45 percent of U.S. households, up from 35 percent.

"There clearly now is going to be an orgy of mergers and acquisitions," said Sen. Byron Dorgan, D-N.D., a member of the Senate Commerce Committee. He called the FCC's decision "dumb and dangerous."

South Carolina Sen. Ernest Hollings, the committee's ranking Democrat, and Mississippi Sen. Trent Lott, the former Republican leader, joined Dorgan in threatening congressional action to block the initiatives.

Committee Chairman Sen. John McCain, R-Ariz., said Sunday he opposed legislation to overturn the new regulations. McCain's committee is to hear testimony Wednesday from the FCC commissioners.

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

The commission's Democrats, Jonathan Adelstein and Michael Copps, said the changes give too much power to media giants. Copps said the decisions were flawed and legally vulnerable.

"The evidence we have gathered does not justify such loosening of the rules," Copps said.

Parts of the new rules that may be the target of lawsuits include:

-- The national ownership cap, which could be challenged from two directions. The major TV networks wanted it eliminated entirely. Consumer groups, small broadcasters and the National Association of Broadcasters wanted to keep the cap at 35 percent.

-- The UHF discount, a provision of the national cap from the 1980s left untouched by the FCC. The discount allows companies to count only half of viewers for UHF stations toward the national limit because those stations have less range and reach fewer homes. Consumer groups argue the UHF exemption effectively doubles the national limit and is outdated because cable and satellite services carry local UHF stations to the vast majority people without broadcast limits on range and clear reception.

-- Radio market changes to correct a loophole that allowed companies to exceed ownership limits in some areas. Companies do not have to sell off stations that exceed caps in redefined markets, but Clear Channel, the country's largest radio chain with 1,200 stations, has indicated it will consider a lawsuit.