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CQ WEEKLY – TECHNOLOGY & COMMUNICATIONS
June 21, 2003
Page 1549
Surprise Reversal of Ownership Ruling Leaves FCC Chief in Uneasy Position

From the day he was nominated to the Federal Communications Commission in 1997, Michael K. Powell has been seen as a protιgι of Senate Commerce, Science and Transportation Committee Chairman John McCain, R-Ariz.

Although the two have had their differences lately, it came as a surprise June 19 when McCain and his committee approved legislation (S 1046) to reverse an FCC decision on media ownership that Powell, as chairman, largely drafted.

The committee acted before the FCC had even published the text of its June 2 ruling that would allow media companies to own larger shares of U.S. television stations.

B o x S c o r e
Bill: S 1046 — To reinstate Federal rules restricting the size of the audience any one company can reach through television stations it owns.
Latest Action: Senate Commerce, Science and Transportation Committee approved the bill by voice vote June 19.
Next Likely Action: Senate floor consideration uncertain.
Reference: Background: CQ Weekly, pp. 1439, 1394.
   

Though it is uncertain whether the full Senate will go along with the bill, its bipartisan approval in committee was a very public reprimand of Powell on the most visible, and controversial, issue the FCC has dealt this year.

Gene Kimmelman, the co-director of the Washington office of Consumers Union, called the Commerce Committee vote "an enormous rebuke to the chairman" of the FCC.

Even if the legislation ultimately dies, and the betting is that it will not even be considered in the House, the committee's criticism of the FCC — and the press attention it has focused on the issue — are certain to make life more difficult for Powell, both in his dealings with the public and with Congress.

McCain's Choice

McCain's role has been pivotal and all the more stunning because of his history with Powell.

It was McCain, in February 1997, who in effect created an opening on the FCC for Powell. In the middle of a routine news conference, he casually observed that Rachelle Chong of San Francisco, one of the Republicans on the commission at the time, should not be nominated for a second term. There was no warning, and Chong could do nothing to save her job. Her efforts to do so only alienated McCain further.

When her term expired in June, Chong was replaced by McCain's pick — Michael K. Powell.

At the time, Powell was chief of staff in the antitrust division of the Justice Department. He had been recommended for the FCC by William P. Barr, who was attorney general in the first Bush administration.

Barr was at the time general counsel of the telephone company GTE Corp., for which Powell had once done legal work. For good measure, Powell is the son of Colin L. Powell, the former Chairman of the Joint Chiefs of Staff and current secretary of State.

Despite a generally cordial relationship over the years, McCain and Powell have more recently had some differences even before the media ownership clash. In late 2001, McCain became furious with Powell over a deal the FCC cut with a bankrupt wireless company known then as NextWave Personal Communications Inc. for the return of licenses NextWave won at a federal auction. Under the proposed agreement, NextWave would receive $6 billion, and the government would get about $10 billion, in return for the company's licenses. McCain thought the taxpayers were being shortchanged, and he sent blistering letters to the FCC.

Moving Markets

The latest break began on June 2 when the FCC voted 3-2 — Powell and fellow Republican commissioners Kathleen Q. Abernathy and Kevin J. Martin are the majority — to allow media companies to own more television stations.

Under the 1996 Telecommunications Act (PL 104-104), no one company may own stations that combined are able to reach more than 35 percent of the national television audience. The FCC voted to increase that limit to 45 percent. (1996 Almanac, p 3-43)

The commission also voted to lift the ban on ownership of a newspaper and radio or television station in the same market, and changed the methods by which radio markets are defined.

Over the months that the FCC pondered its decision, it received more than 720,000 comments, all but a few in opposition.

In May, when word of the probable FCC ruling began to leak out, a bill to reverse it (S 1046) was introduced by Ted Stevens of Alaska, the second- ranking Republican on the Senate Commerce Committee, and ranking Democrat Ernest F. Hollings of South Carolina.

Stevens has a long populist streak that leads him to oppose media consolidation and Hollings has long had differences with the broadcast industry. Their bill as introduced would restore the 35 percent cap that any one broadcasting company could reach.

Broadcasters themselves are divided on the ownership cap issue, with smaller station owners and stations affiliated with TV networks, represented by the National Association of Broadcasters (NAB), favoring the Stevens-Hollings bill's stricter limits and the larger networks opposing them.

At first, McCain was skeptical about even holding a markup of the Stevens-Hollings bill. His inclination was to leave the technical decisions to the FCC.

But McCain, too, has a history of being at odds with broadcasters. For years, the broadcast lobby has successfully fended off McCain's attempts to provide political candidates with free or reduced airtime as part of his campaign finance initiatives. It got to the point where McCain did not even bother to propose free time.

To demonstrate his displeasure with the industry, McCain has held three hearings on media ownership issues, with a fourth scheduled for June 25 — the committee's second hearing on consolidation in radio.

Making Speed

With public opposition to the FCC growing, and with the senior members of the panel pressing, McCain scheduled the markup of S 1046 just 17 days after the FCC ruling — not even giving the agency time to formally publish its decision.

McCain, once a champion of deregulation, even contributed an amendment that would reverse another part of the FCC decision that would allow more consolidation in the radio business. McCain's amendment could require some big broadcasters, including Texas-based Clear Channel Communications Inc. to sell stations.

The committee further adopted an amendment by Sens. Byron L. Dorgan, D-N.D., Kay Bailey Hutchison, R-Texas, and Olympia J. Snowe, R-Maine, to reinstate the ban on newspaper-broadcaster cross-ownership.

But those changes turned broadcasters from allies of the bill into enemies. Even though the NAB favors limits on TV station ownership, the trade group opposes McCain's radio amendment and the cross-ownership amendment. The reason: its members include Clear Channel and other large radio chains, but not TV networks.

Broadcasters, now relatively united, are now hoping to persuade Senate Majority Leader Bill Frist, R-Tenn., to keep the bill off the floor.

Source: CQ Weekly
The definitive source for news about Congress.
© 2003 Congressional Quarterly Inc. All Rights Reserved

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