FCC makes billionaire a media grandfather; House and Senate committees to investigate


The FCC gave Sam Zell a cross-ownership waiver; then made him buy his own latte!


That’s how I characterized the night-time farce in which the five-member Federal Communications Commission recently decided not to take a modest step toward reregulating cable television. The commission also postponed the question of whether to continue its media cross ownership ban. Since 1975 the FCC has said newspapers cannot own television stations (or vice versa) in the same metropolitan area. Twice since 2000, however, the deregulatory faction on the FCC has sought to ease or lift this cross-ownership ban. In 2003 the FCC lifted the ban over public opposition. But that fiat was reversed by a combination of court and congressional action.

Last year, however, FCC Chairman Kevin Martin began the process of rethinking the the ban. Big Media had expected Martin to get three votes to lift the ban, arguing that newspaper and television chains face competition from Web media so letting them merge could be advantageous to them and not harmful to the public. The two democrats on the commission agree with public interest groups that further media consolidation will only weaken local news coverage.

That abortive FCC meeting in late November was supposed to have lifted the cross-ownership ban in time to let billionaire Sam Zell (pictured above giving a lecture at a university) buy portions of the Tribune Company –which owns a handful of broadcast stations that it purchased before the FCC instituted the cross-ownership ban. Getting the ban lifted in 2007 was crucial to Zell’s plan to buy out Tribune, according to New York Times story in early November that said:

“Mr. Zell wants to complete the transaction by Dec. 31 to take advantage of tax rules that could save the newly formed company more than $100 million . . . Tribune executives have said that their banks need 20 working days after obtaining regulatory approval to line up $4.2 billion in financing to complete the deal. Mr. Martin expects to complete a vote on his plan on Dec. 18. “

Zell’s timetable seemed to have been thrown out the window, however, when a dispute over cable rates divided the three republicans who normally vote as a block to marginalize the two democrats. But right after its farsical meeting the FCC  told Tribune Company it would continue to enjoy a waiver from the cross-ownership ban (news  release) clearing the way for Zell to complete the transaction on his schedule. (And people say government doesn’t work!)

Meanwhile, both the Senate and House commerce committees have thrust themselves into the mix.  The senators will hold a hearing on December 13 at which all five FCC commissioners have been invited to talk (must they show or can they say no?). More recently leaders in the House launched an investigation of that very same FCC meeting that I called shameless.

Stay tuned …