House Slaps Down FCC's TV-Ownership Rule

The House of Representatives overwhelmingly voted Wednesday to stall the Federal Communications Commission's move to expand the number of TV stations that corporations can own.

Though President Bush says he'll veto anything that gets in the way of the FCC's looser ownership rules, Wednesday's vote signals bad news for the major TV networks, which had fought hard for the ability to add to their station chains.

Final passage of the bill containing the re-restriction measure -- a bill which has yet to be considered by the Senate -- would be particularly tough on CBS parent Viacom (VIAB) and for Fox parents Fox Entertainment (FOX) and News Corporation (NWS), since CBS and Fox already exceed the tighter ownership limitations that the House is trying to uphold. (Viacom is slated to report second-quarter results Thursday morning.)

Even if the House's measure doesn't make it into law, the proposal no doubt translates into further lobbying expenses for the major network owners, including NBC parent GE (GE) and ABC parent Disney (DIS).

Faced with a widespread revolt against the FCC's relaxed ownership rules -- one which struck a responsive chord with elected representatives wary that their hometown media might be absorbed by all-powerful absentee owners -- broadcasters last week brought dozens of general managers from their owned-and-operated stations in an effort to convice Congress that the Big Four broadcasters will address needs of their local communities.

What the House did Wednesday in its passage of a spending bill was forbid the FCC from enforcing, in the upcoming fiscal year, rules it passed earlier this year that allow networks to own stations covering up to 45% of the U.S. population, instead of the 35% cap already in place. New FCC rules that loosen ownership rules for different types of media outlets in a single location -- say, a TV station and newspaper in the same town -- would remain in place.

Despite numerous uncertainties facing the House's measure, a Legg Mason note issued Wednesday opined "the intensity would be on the side seeking to retain the 35% cap."

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