Posted on: Tuesday, June 3, 2003
FCC Questions and Answers
Associated Press
| Rule changes
• The TV ownership rule prohibited a company from owning stations that would reach more than 35 percent of U.S. TV households. The new rule raises the cap to 45 percent. • The new local TV multiple ownership rule allows a company to own two stations in a market if the market has five or more stations. When companies own multiple stations only one can be among the top four in the ratings. The FCC will consider waivers for mergers between two top-four TV stations in markets with 11 or fewer stations. • Cross-ownership restrictions limited joint ownership in a city of radio and TV stations and ownership of a daily newspaper and a broadcast station. The FCC lifted all restrictions in markets with nine or more TV stations. |
A. While it's true that media companies have become much bigger over time, their businesses have changed tremendously since the ownership rules were adopted between 1941 and 1975. Cable TV and satellite weren't around when many of the rules were put in place, and the FCC says traditional over-the-air broadcasters shouldn't be limited by the old restraints on their growth since they now have serious competition.
Q. So does that mean there are going to be even more mergers between big media companies?
A. Not necessarily. Analysts believe many of the transactions now allowed under the new rules may occur among individual TV stations and newspapers, rather than all-at-once mergers like the one between such giants as AOL and Time Warner.
For instance, a local TV station can now own a newspaper in the same city in which it operates, but it's not clear that every station will want to do that.
Q. What's the benefit of owning a newspaper and a television station in the same town, anyway?
A. Media companies that do operate a newspaper and TV station in the same town, under exceptions from the old FCC rules, say they can make more money by selling packages of deals to advertisers. They can also use each outlet to promote the other and share news stories among their broadcast and print reporters.
Q. Who will benefit the most?
A. The most immediate beneficiaries are sure to be major owners of television stations, like CBS parent company Viacom Inc. These companies are now allowed to own even larger arrays of local stations, which generate money that the parent companies can use to make or buy expensive programming for the national networks.
Q. Why are some people upset about this?
A. Public interest groups are worried that an increasing concentration of media ownership in a few hands might lead to a further erosion in the quality of news and information that the public gets, especially local news on TV.
