Networks Ask FCC to Relax Rules

Where do captains of industry go when their cash cows begin to produce sour milk? To Washington DC, where they beg for regulatory intervention. That's where CBS Station Group Manager Mel Kazmarin was last week, and that's what he was doing---asking the Federal Communications Commission to reconsider its prohibition against one TV network owning more than 35% of the available commercial broadcast stations in the country.

Kazmarin, who rode a merger-and-acquisition-fueled rocket to the top of the corporate pyramid, pleaded with FCC commissioners to rescind their ownership cap in light of falling numbers for the three big networks. Executives from NBC and ABC have already expressed similar sentiments in Washington. The television audience is slowly but inexorably abandoning traditional TV programming for other pursuits---the Internet foremost among them. America's original networks have also lost ground to upstart competitors like Fox Television and satellite providers like DirecTV, which now has over four million subscribers.

Home theater is another looming threat. Although it is presently enjoyed primarily by a wealthier, better-educated stratum of society, home theater continues to grow in popularity as video projectors, surround-sound receivers, DVD players, and multichannel speaker systems drop in price. Many home-theater fans---for whom movies are a first love---admit that they almost never watch network programming.

There's not much the networks can do to stop the erosion of their audience except to ask for regulatory or legislative intervention. Apparently, none of the big three have enough faith in the talents of their creative departments to make a go of it on audience appeal alone. Instead, they wish to follow the path many other industries have chosen: aggressive assimilation of competitors. The networks have all asked that the 35% limit be raised to at least 50% and that the FCC approve the concept of "duopoly"---one company operating more than one network.

Other industry executives have taken a more radical stance. Lowell "Bud" Paxson of Paxson Communications has said that the Feds should "remove ownership caps completely, allow television duopoly, allow network duopoly, allow cable to own broadcast and broadcast to own cable." He has also suggested that an investment of up to 49% in minority-owned broadcasting should not be counted toward the ownership cap. News Corp.'s Rupert Murdoch has made similar noises, asking that his investment in minority stations be considered grounds to relax the ownership cap as it applies to him.

All of these folks presumably believe in the free market, and they are hard at work to make it more free---for themselves. Kazmarin, the ultimate free-marketeer, has even asked, "What would be the harm if we owned every station in the country?"

That question was answered in no uncertain terms by Black Entertainment Network CEO Robert Johnson, who noted that monopolies create conditions that make it almost impossible for minorities and outsiders to break in. "Anytime you get tremendous concentration of ownership," Johnson said, "the people who are left out are locked out."