*Pages 1--9 from Microsoft Word - 28346.doc* WRITTEN STATEMENT of KATHLEEN Q. ABERNATHY Commissioner, Federal Communications Commission on The 2002 Broadcast Ownership Biennial Regulatory Review Before the Committee on Commerce, Science, and Transportation United States Senate Wednesday, June 4, 2003 9: 30 a. m. 1 5 First, in the process of retaining our current limits on ownership of radio stations, we have tightened our definition of radio markets to ensure that it more accurately reflects the level of competition in these markets. Second, our television ownership rules continue to maintain the prohibition of mergers among any of the top four networks. Third, for such other matters as restrictions on local television ownership, the national television cap, and our cross- ownership rules, we have preserved structural limitations in revised forms. We have modified these restrictions because, not only do the former rules fail to promote competition, localism and diversity, but they may actually be harming these goals. For example, the record demonstrates that combinations of two television stations actually produce more local news. The record also demonstrates that newspaper-owned television stations provide more news and public affairs programming and receive more industry awards for such programming than unaffiliated stations. If we kept our existing rules unchanged, we would artificially restrict such benefits to local communities with no countervailing advantages. While the public can benefit from some combinations, I strongly believe that the Commission must continue to impose prophylactic rules to ensure that the public receives a range of independent and competitive sources of local news and information in each market. The changes we made to our local television ownership rule will allow common ownership of no more than two television stations in markets with 17 or fewer television stations, and no more than three television stations in markets with 18 or more television stations (thereby ensuring a minimum of six distinct owners in many markets). Moreover, media companies may not own more than one of the top four stations in a market. The changes we are making to the newspaper/ broadcast and radio/ television 6 6 cross- ownership rules restrict any such combination in all markets with three or fewer television stations, and allow for limited combinations in mid- sized markets. Our new cross- media limits recognize that broadcast television and radio and newspapers continue to be the primary sources of local news and information, and the rules restrict ownership accordingly. With respect to the national television cap, the record in this case supported raising it to 45 percent. I believe this level will preserve the affiliate/ network relationship and help ensure that television programming reflects the tastes and values of local communities. Allowing networks to increase their reach to 45 percent of the national audience, moreover, compared to 35 percent or proposals of 40 percent, translates into an increase of their presence in only a handful of markets. 1 Despite the significant degree of structural regulation that we are retaining, I realize that some people will oppose our decision on the ground that the four major networks air the programming that is chosen by approximately 75 percent of viewers during prime time. To me, the critical fact is that these providers control no more than 25 percent of the broadcast and cable channels in the average home, even apart from the Internet and other pipelines into the home. This means that Americans are watching these providers because they prefer their content, not because they lack alternatives. New Initiatives The defining characteristic our biennial review decision is balance. We have undertaken affirmative steps to retain limits on ownership where they can be shown by 1 Moreover, the percentage of commercial stations that the networks own is very small: CBS owns 2. 9%; Fox, 2.8%, NBC, 2. 2%, and ABC, 0.8%. Even if these companies increased their national reach to 45%, these percentages will only increase modestly. 7 7 actual evidence to promote competition, localism, and diversity. In the process of reaching this balance, we have also taken some additional steps. First, I was concerned that allowing an entity to own more than one television station in a market could decrease the amount of children’s educational and informational programming available to families in those communities. I did not want to see the amount and diversity of such programming diminished if stations that are commonly owned in the same market simply re- run the same shows on each station. Accordingly, I was pleased that we clarified in the order that commonly owned stations must air distinct children’s programming to comply with our rules. Second, our decision also leads the Commission down a path of providing more opportunities for small businesses, many of which are minority- and woman- owned businesses. The order restricts transfers of most existing combinations that fall out of compliance with our new rules unless the purchaser is a small broadcaster. In doing so, we are creating new opportunities for participation in broadcasting without threatening diversity or competition in these markets. Third, I also am pleased that, as part of this decision, we decided to issue a Further Notice of Proposed Rulemaking to explore opportunities to advance ownership by minorities and women in broadcasting. Furthermore, I commend Chairman Powell on his formation of a Federal Advisory Committee to assist the agency in creating new opportunities for minorities and women in the communications sector. 8