Government relaxes rules on network ownership

<br>WASHINGTON (AP) _ The Federal Communications Commission relaxed its restriction against two networks belonging to a single company, a decision that most immediately impacts Viacom Inc.'s ownership

Thursday, April 19th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ The Federal Communications Commission relaxed its restriction against two networks belonging to a single company, a decision that most immediately impacts Viacom Inc.'s ownership of CBS and the fledgling UPN network.

The commission voted 3-1 for the change Thursday.

Under the action, one of the four major television networks _ ABC, CBS, NBC or Fox _ can belong to the same company as a smaller, emerging network such as UPN or WB. However, the commission kept in place a prohibition on two of the four major networks merging.

The action also marks the beginning of what observers expect to be a wave of decisions under the new GOP-led FCC to ease regulations on media businesses. Such actions could ultimately allow companies to grow in size and scope and affect what Americans see, hear and read.

The modification adopted Thursday will enable Viacom Inc., which acquired CBS in a merger last year, to hold on to the UPN network as well. Without the rule change, Viacom would have been forced to shed UPN _ which has more than 200 affiliate broadcast stations _ by May.

Viacom officials have argued that UPN needs the backing of a major company to remain financially viable. They have also noted that the network serves minority viewers particularly well, with some of the top-rated shows among black audiences.

FCC Commissioner Susan Ness mentioned the benefits of keeping alive networks that serve niche and minority audiences and cited economic analysis ``that this will help buttress the local stations that are affiliates of this network.'' But she warned future commissions against allowing the four major networks to combine.

UPN is home to programs such as ``The Hughleys,'' ``Moesha,'' ``World Wrestling Federation Smackdown!'' and ``Star Trek: Voyager.''

Viacom said the agency's action recognizes the high level of competition already in the marketplace.

``We are encouraged by the FCC's willingness to revisit and amend its traditional positions in light of the realities of communications in the 21st century,'' the company said in a statement. Viacom is pushing for the commission to relax other broadcasting limits as well.

But commissioner Gloria Tristani, the sole dissenting vote, said the action would ``only further erode the already tenuous level of diversity on the airwaves.''

Advocacy groups say the agency has no research to back up claims that such an action serves the public interest.

``This is a blow against diversity and competition that will have a very negative impact on the democratic process,'' said Jeff Chester of the Center for Media Education.

FCC Chairman Michael Powell has said media ownership rules must be justified in today's competitive market or done away with it. That could signal the commission's approach to several key rules under review.

In May, the commission will begin evaluating whether to modify a rule that prohibits a company from owning a broadcast station and daily newspaper in the same locale. A final decision could be months away, but any major easing of that restriction would be significant, experts say.

``It creates the potential for different kinds of companies than we have now,'' said Blair Levin, a former FCC official who now is a regulatory analyst with Legg Mason.

Still another rule likely to get a fresh look is a restriction on a company reaching more than 35 percent of U.S. TV households through the stations it owns.

The networks vigorously oppose the cap, arguing it no longer can be justified with so many competing media outlets, and they have a legal challenge pending in court. Local affiliates oppose any increase in the cap, fearing such a move would give networks even greater power in negotiations to distribute shows.

Viacom has an interest in the outcome of that proceeding as well. Because of its takeover of CBS last year, Viacom now exceeds the federal limit with a national audience reach of 41 percent. The FCC ordered the company to get rid of some stations by May to come under the cap. But earlier this month, an appeals court suspended that requirement.

Some experts believe the networks' battle to undo the ownership limit may have been given a boost by an appeals court decision in March throwing out similar restrictions on cable TV companies. The court determined that the cable rules _ limiting the number of subscribers one company can reach _ impeded too heavily on free speech.