FCC lets TV broadcasters own 2 stations in an area

Sinclair in position to capitalize easily on rules changes

August 06, 1999|By Mark Ribbing | Mark Ribbing,SUN STAFF

Federal regulators made major changes to the rules governing television and radio station ownership yesterday, and one of the companies affected most profoundly by the adjustments is the Sinclair Broadcast Group Inc. of Baltimore.

The Federal Communications Commission voted to allow broadcast companies to own two television stations in a single market under certain circumstances.

Formerly, owning two or more stations in a market was barred by what is known as "the duopoly rule."

Depending on the number of media outlets in a market, a broadcaster may, under the new rules, own two television stations and six radio stations in the same area.

Sinclair was most affected by the FCC's adoption of new rules on ownership under which a company may own one television station and program another in the same market. In Baltimore, for example, Sinclair owns WBFF-TV and programs WNUV-TV.

These local marketing agreements, or LMAs, have been a critical part of Sinclair's corporate strategy, and have been criticized by some as a loophole that concealed the true ownership of stations and allowed broadcasters to get around the duopoly rule.

Such arrangements could easily be transformed to an outright duopoly under the FCC's new regulations. With LMAs in 19 markets, Sinclair is in a position to expand its television holdings significantly. The company announced July 26 that it is selling the bulk of its radio stations to focus on television.

Sinclair Treasurer Patrick J. Talamantes said he was satisfied with the FCC's actions. "We came out pretty well today," he said. "We didn't get all that we wanted. Given that, the commission's act was a pretty balanced response to what is a complicated issue."

Analysts said Sinclair is poised to gain handsomely from the rulings. "I think Sinclair's the primary beneficiary of this [LMA] ruling, by a long shot," said Harry J. DeMott of Credit Suisse First Boston in New York.

`Set themselves up'

"They set themselves up for this ruling a long time ago [with] all of these LMAs," DeMott said. "They were very aggressive about getting a second station in the market."

The FCC pointed out that the old three-network television system has given way to a multimedia wonderland of cable networks and satellite-television packages. In such a world, the agency said, the former limitations on television station ownership were no longer as necessary to ensure the diversity of the dial.

"These rule changes are long overdue," FCC Chairman William E. Kennard said in a statement. "We are adopting common sense rules that recognize the dramatic changes that the media marketplace has undergone since our broadcast ownership rules were adopted 30 years ago."

`Cutting out loopholes'

Not everyone agrees that the duopoly rule should be softened. Andrew Jay Schwartzman, president of the Media Access Project in Washington, criticized parts of yesterday's action but applauded the FCC's stance on LMAs.

"I'm not happy they're permitting increased ownership at all, but I'm quite glad they're cutting out the loopholes and defining ownership as ownership," Schwartzman said.

Consumer advocates have called the duopoly rule an important means of preventing a broadcast conglomerate from dominating a given community's airwaves, but the broadcast industry has castigated it as a relic and a hindrance to industry growth.

The FCC said its loosening of the duopoly rule was motivated in part by a desire to shore up financially ailing broadcast channels.

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