Capitol Broadcasting CEO Opposes FCC Ownership Rule Changes

Posted November 8, 2007 2:39 p.m. EST
Updated November 9, 2007 6:56 a.m. EST

Jim Goodmon, president and chief executive officer of Capitol Broadcasting, spoke out Thursday against changes in media ownership rules that have been proposed by the Federal Communications Commission.

Testifying before the Senate Commerce, Science and Transportation Committee, Goodmon said that in light of the current transformation of the broadcast industry to digital technology, “Now is not the time to revise media ownership rules.”

The FCC has scheduled a public hearing in Seattle on Nov. 9 to discuss its proposed rules, which could enable media companies to become larger.

“I urge Congress and the FCC to wait and carefully evaluate the impact of the digital transition on localism, diversity and competition before changing the current media ownership rules,” Goodmon said.

Capitol Broadcasting, which is privately held, operates WRAL Channel 5 and various other properties in North and South Carolina.

However, John Lavine, dean of the Medill School of Journalism at Northwestern University, took an opposing view in his testimony.

“Removing the ban will go a long, long way towards fostering quality journalism, minority voices and localism and news in the public interest,” he testified.

“It will also help ensure the viability and public service of local broadcast stations,” Lavine added.

Democratic members of the FCC have accused the chairman, Republican Kevin Martin, of calling public hearings without adequate notice and rushing the review process. Martin wants a vote by year's end, according to The Associated Press.

A House panel will have a hearing Dec. 6 to discuss the proposed changes.

Goodmon told the Senate committee that the “mistakes” made in 2003, which enabled media companies to increase ownership, should not be repeated.

“Applying the Commission's new 2003 rules, in Raleigh-Durham, Capitol could own two television stations; five or more radio stations; and the Raleigh and Durham daily newspapers, The News & Observer and the Durham Herald-Sun, respectively,” Goodmon testified.

“In North Carolina, Capitol could own 11 television stations; more than 30 radio stations; and the daily newspapers in Raleigh, Durham, Charlotte, Asheville, Greensboro, High Point and Winston-Salem. Without antitrust intervention, Capitol could also own Time-Warner Cable and an unlimited number of cable channels, Internet Web sites and magazines,” he said.

Goodmon said that in proposing the changes, “The Commission violated its own stated policy of concentrating too much potential power in the hands of a single media outlet and created the absurd results noted above.”

Sen. Daniel K. Inouye, D-Hawaii, chair of the Senate committee, said he was “very troubled” by the proposed changes.

“As we know from recent history, this is an area that requires tremendous caution,” he said. “Four years ago, the FCC substantially relaxed the rules that govern media ownership in this country. Millions of Americans contacted the FCC to complain.”

According to the AP, the new debate does not include the issue that galvanized opposition to media consolidation in 2003: a national audience cap on television broadcasters.

"The national ownership cap was really a big, big fight last time," said Dennis Wharton, spokesman for the National Association of Broadcasters. "You had the far right and the far left coalescing around this sort of perfect storm."

The FCC voted to raise the cap from 35 percent to 45 percent. It followed intense lobbying from Viacom Inc., then-owner of CBS, which was at 38 percent, and News Corp., owner of Fox Broadcasting Inc. which was at 39 percent.

After the vote, Congress set the cap at 39 percent.

The priority for broadcasters now has shifted to two other rules:

  • A prohibition against a radio or television broadcaster from owning a daily newspaper in the same community.
  • A ban on a single company owning two television stations in the same market, except in certain circumstances.

The newspaper-broadcast ban is important for the National Newspaper Association and media companies such as Tribune Co. and Media General Inc., which say the rule is an anachronism. They contend that if it were lifted, it would lead to more news on local broadcast stations.

Tribune, currently the subject of an $8.2 billion buyout that would take the company private, owns both television stations and newspapers in five markets. It has asked the FCC to temporarily waive cross-ownership restrictions until the agency votes on the issue, which would allow the deal to move forward.

Gene Kimmelman, who has followed media ownership issues for Consumers Union, the nonprofit owner of Consumer Reports magazine, said the newspaper ban is pivotal.

"The issue at stake is even more important than the previous debate because most citizens turn to their local newspaper and local broadcasters for news about their community," he said. "Allowing them to combine could enable one company to dominate the presentation of local news."

Broadcasters also want the FCC to eliminate the rule that prevents them from owning more than one television station in a single market.

Martin wants to schedule a vote on the rules Dec. 18. His position is no mystery; he was part of the 3-2 Republican majority that voted to loosen the rules in 2003.

At the time, Martin wrote that he was "particularly pleased" the commission eased the newspaper-broadcast cross-ownership rule. He noted that it was "based on a market structure that bears almost no resemblance to the current environment."

A federal appeals court later tossed out most of the rules the commissioners passed in 2003.

Based on his public statements, Martin appears likely to propose allowing broadcasters to own newspapers in the largest markets, but with limits in smaller markets.

He probably will be joined by Republicans Robert McDowell, who has displayed a deregulatory agenda in his short tenure, and Deborah Taylor Tate, who generally votes with the chairman.

The two Democratic commissioners, Michael Copps and Jonathan Adelstein, voted against the media rules in 2003, and have been vocal this time, too. Most recently, they criticized Martin for scheduling the Seattle hearing with only five days' notice.

"Clearly, the rush is on to push media consolidation to a quick and ill-considered vote," they wrote in a joint statement. "This is outrageous and not how important media policy should be made."