Tuesday, June 3, 2003

Local consequences up for debate

Some media ownership changes possible

By John Eckberg
The Cincinnati Enquirer

What effects the FCC's vote to loosen restrictions on TV station ownership might have in Cincinnati was the subject of a hot debate Monday in the media community.

"In Cincinnati, there will be very little impact," said John F. Lansing, senior vice president for television for the E.W. Scripps Co., which owns WCPO-TV as well as the Cincinnati Post and Kentucky Post.

"Now the ability to own a TV station for a newspaper company is much less limited, and in a town that has a dominant newspaper, that newspaper could own the top-ranked newspaper and an unlimited number of radio stations."

But newspaper industry analyst John Morton, president of Morton Research Inc., a media-consulting firm in Silver Spring, Md., and a newspaper industry columnist for American Journalism Review, suggested that Cincinnati might be in for changes after all.

"Clearly, one of the things that is going to happen is that companies like Gannett, that own a TV station in a market where they don't have a newspaper, are likely to be able to swap one of those television stations for a TV station in a market where they do have a newspaper," he said.

Gannett Co. Inc. is parent of The Cincinnati Enquirer, USA Today and about 100 other daily newspapers.

On the other hand, Morton said, it is unlikely that broadcasters - radio or TV - will be able to pick up a newspaper from a bargain bin.

"Large newspaper companies view newspaper properties as very valuable," he said. "It is very difficult to acquire them. And once they own them, they are loathe to give them up."

Gannett had no comment on Monday's vote. But CEO Doug McCorkindale "has said in the past that Gannett is always in the market for good properties and that we will look at all that are offered to us," said Tara Connell, vice president of corporate communications.

Gannett owned both the Enquirer and WLWT-TV after it purchased Multimedia Inc. in 1995. It received a temporary waiver from the cross-ownership rule, but finally divested itself of WLWT in 1997.

Monday, the Federal Communications Commission relaxed television ownership caps to prohibit a company from owning stations that reach more than 45 percent of the national viewing audience and permitting television-newspaper cross-ownership.

Scripps owned the Post and WCPO before the FCC prohibition was put in place.

Monday's FCC action - the first major overhaul of broadcast rules since the 1996 Telecommunications Act - kept intact some TV station ownership limits under a complex array of regulations.

The FCC disappointed Clear Channel Communications, which once had its radio division based in Covington and which owns a TV station and eight radio stations in the Cincinnati market.

Chief operating officer Mark Mays charged the FCC with "missing the mark" in its efforts to act in the public interest.

"This FCC action will extinguish the substantial consumer benefits brought on by radio deregulation in 1996," Mays says. "Unfortunately, the FCC chose politics over the public interest, and American consumers will be the ultimate victims."

Still, Terry Jacobs, the chairman and chief executive of Regent Communications, which owns or operates 76 radio stations in 16 markets, predicted that the new rules - in conjunction with the relaxation of capital gains rules - could mean more media properties will be for sale.

"That will have some impact on the willingness of people to cash out," he said.

But the rule could also lead some in the radio industry to look at newspaper acquisitions, though that is less likely since major newspaper chains rarely sell properties.

Covington-based Regent has followed the debate closely, he said.

"I'd say we are looking to create more value in areas where we have a presence," he said. "If that means doing something with newspapers, we'll look at that. We see this as creating new opportunities - but not just (in) newspapers, there is also television."

Newspapers seem pleased

Those in the newspaper industry appeared to like the decision the most.

"Since we've been shut out of local ownership for the past three decades, this is a pretty good day," John Sturm, president of the Newspaper Association of America, told Dow Jones News Service. He said 85 percent of all markets would be deregulated.

Indeed, Lansing said, major media companies were likely to take early advantage of any opportunities.

Scripps operates 21 daily newspapers, 10 TV stations, four cable and satellite television programming services and a home shopping network. Shares in Cincinnati-based Scripps closed Monday at $88.88, up 81 cents.

"Newspaper companies will be the early movers," Lansing said. "They are incentivized to look for ways to grow their business. But I don't think the electronic media looks (good) to print as a growth strategy."

E-mail jeckberg@enquirer.com

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