Expected changes in FCC rules could mean a few large corporations will own many more TV stations and newspapers. Critics warn that could mean the loss of local coverage and independent voices in journalism.
By JEFF HARRINGTON
Published June 2, 2003
Imagine the possibilities of a feeding frenzy of dealmaking among the Tampa Bay area's media powerhouses.
The St. Petersburg Times might buy a TV station, countering Media General's news-gathering tandem of WFLA-Ch. 8 and the Tampa Tribune. Mid size media players like Media General and Scripps Howard could be snapped up by larger companies. Perhaps the Tribune Co. of Chicago or the New York Times, which owns smaller papers in Lakeland and Sarasota, could get in on the local action, too.
Not to mention the shakeup prospects if TV powerhouses such as Gannett (owner of WTSP-Ch. 10), Fox (owner of WTVT-Ch. 13) and Scripps Howard (owner of WFTS-Ch. 28) engage in some horse-trading to cluster their TV presence in certain markets.
Some of those scenarios lean much closer to fiction than likelihood. The Times' editor says the paper has no plans to go into TV, for example, and Media General's top executives say the chain's controlling family won't sell.
But all those scenarios will become at least theoretically possible today if, as expected, the Federal Communications Commission approves a sweeping and controversial loosening of media ownership rules.
The FCC is expected to lift a 28-year-old ban against one corporation owning a major newspaper and television station in the same market. (A few cross-ownership arrangements such as the Tampa Tribune and WFLA were exempted from the ban because they were already in place.)
Barring last-minute changes, the FCC also is likely to allow a TV station owner to broadcast to as much as 45 percent of the nation's households, up from the current 35 percent limit.
The ownership limits, some of which date back to the 1940s, were intended to keep any one company from controlling too much of the information disseminated over public airwaves.
But a majority of FCC commissioners, led by chairman Michael Powell, think many restrictions are outdated. Powell argues that supporters of the audience cap fail to appreciate the financial pressures that media companies are under as potential viewers spend more time on the Internet, watching rented videos and surfing cable channels.
Supporters of keeping the rules fear a consolidation of media power leading to less local coverage, more absentee management, and fewer independent voices over the airwaves and in print.
"Many of the smaller companies will be selling out, not always happily but with a sense they are not going to be able to compete," said Andrew Schwartzman, president of the Media Access Project, a nonprofit law firm.
In a 78-page analysis, The Gold Rush Begins, Lauren Fine and her fellow Merrill Lynch media researchers let fly a number of possibilities.
Entertainment companies such as Rupert Murdoch's News Corp., Disney and Viacom, the parent of CBS, are expected to make targeted acquisitions in major markets, Fine concluded. Top newspaper companies such as Gannett Co. and the Tribune Co. are expected to buy and swap stations. Smaller newspaper companies such as McClatchy and Pulitzer may become takeover candidates.
Big or small, all media companies are analyzing how they will fit into a re-alignment and consolidation of power.
"Everyone has the same map up, and they're all looking at the same markets and all trying to figure out how we best position our properties," said Catherine Mathis, spokeswoman for the New York Times Co.
The media, an industry not averse to speculation, is suddenly flush with questions about its own future:
Will inflated prices of TV stations keep some newspapers on the sidelines? Will the lure of sharing news and selling advertising packages for newspapers and TV stations be enough to convince TV companies to buy into the older medium? Will TV stations go the way of radio, with a handful of companies controlling a medium that relies more on mass-distributed content than locally focused stories? And what does all this portend for the quality of journalism?
"The greatest sport in America now in the media capitals of the country is who is going to buy whom," said Elliott Wiser, vice president and general manager of Bay News 9, a bay area cable channel owned by Bright House Networks. "That's the most frequently asked question now. It's not, "What were my May ratings?' "
The lure of convergence
Local TV stations and newspapers have flirted with pooling their resources in recent years. The St. Petersburg Times has a limited news-sharing arrangement with Channel 10. A Bay News 9 reporter works out of the Citrus Chronicle newsroom in Citrus County. The New York Times Co. uses its cable television channel in Sarasota to air content from its Sarasota Herald-Tribune.
One of the national showcases of such "convergence" is the Channel 8/Tampa Tribune combo, which has put a newspaper and a TV station under a single roof reporting to a single owner.
The prospect of that setup being replicated around the country is causing sharp divisions in journalistic boardrooms and newsrooms. Consider the take of top executives from two recent annual meetings:
After Pulitzer Inc.'s annual meeting in St. Louis, top shareholder Emily Rauh Pulitzer dismissed outright the idea of selling the company's St. Louis Post-Dispatch or otherwise capitalizing on new cross-ownership rules even though Pulitzer owned a leading St. Louis TV station until 1983.
"I have some strong misgivings, personally," she said. "It's not good for readers or listeners to have a media monopoly."
Contrast that with Media General's annual meeting, where executives said they were eager for more cross-ownership opportunities after the convergence "experiment" in Tampa.
"When the FCC rule changes, we plan to swap and purchase newspapers and broadcast stations," Media General chairman and chief executive Stewart Bryan said. "Our goal is to advance our convergence and clustering strategies in the Southeast." He has made clear he would love to own a TV station in Richmond, his chain's headquarters city, to pair with its newspaper there.
Bryan told shareholders, "We believe we've proven that convergence makes sense journalistically and, without question, improves product quality. When quality improves, circulation and audience share increase, all of which creates revenue growth."
In an interview last week, Media General president and chief operating officer Reid Ashe predicted little impact on the Tampa operation. He said he doesn't plan to buy another local TV station to supplement Channel 8, as some speculate.
Ashe concedes the FCC changes could make Media General more attractive as a takeover target because a buyer would not have to divest one of the Tampa properties. But he downplayed the likelihood of a buyout.
"Media General is not for sale and won't be for sale unless and until the Bryan family wants it to be," he said. The family controls 93 percent of the company's special stock with voting privileges.
There's speculation about a number of other possibilities in the bay area market. Viacom, viewed as a buyer, might try to buy a local station to pair with Channel 44. Pax, viewed as a seller, might put Channel 66 on the market.
The biggest question in the market, according to longtime media analyst John Morton, is whether the St. Petersburg Times will buy a television station.
Despite the Times' news-sharing relationship with Channel 10, Paul C. Tash, the newspaper's editor and president, said there is no plan to seek to buy Channel 10 or any other station.
"It's interesting to know that that would be among the options," he said, "but I think that it's far from clear that that would be a compelling option or the best option."
Tash said he is uncertain whether it is "fundamentally bad" for a newspaper to own a TV station in the same market, but he is concerned about preserving editorial independence and unique voices in the community.
"We continue to think our position as an independent newspaper is an advantage not only for the company but for our readers," he said. "I don't think it's an accident that the St. Petersburg Times is the largest daily newspaper in Florida and is also the only independently held newspaper in Florida."
The Times was not always hesitant to embrace convergence.
In the 1950s, Times publisher Nelson Poynter lobbied the FCC unsuccessfully for the Channel 8 license, which was awarded to the rival Tampa Tribune, and then for the Channel 10 license. "I thought . . . it would be ruinous if the Tampa Tribune got the license and we didn't," Poynter said later.
The other Times with a presence in the area, the New York Times, has no compunction about cross-ownership.
Mathis, the New York Times spokeswoman, said her company's few cross-ownership experiments in Florida and Massachusetts have enriched coverage.
The newspaper-TV combo is less attractive, she concedes, from an economic standpoint. In fact, some of the highest-profile cases have reported limited cost savings and only modest revenue increases from the arrangement.
Gannett has posted only $8-million in incremental revenues from co-owning the Arizona Republic and a Phoenix TV station since the cross-ownership began in early 2001. "Not a lot of money," Gannett spokeswoman Tara Connell said. "The economics aren't as pretty."
Media General has indicated that annual revenue at WFLA-TV and the Tampa Tribune has increased only 2 percent, or about $5-million, in recent years because of strategies such as dual advertising programs and cross-promotion of stories between the newspaper and the station.
In search of "duopoly'
Although media insiders love to speculate about a frenzy of newspapers buying TV stations or vice versa, that could well be the second tier of consolidation.
What's more likely, some believe, is that owners of TV stations in different markets will first engage in a round of station swapping with the goal of owning two stations per market (known as a duopoly) or, in the largest markets, three stations apiece.
In its analysis, Merrill Lynch concluded the benefits of running a duopoly "are much more proven and substantial than those of cross-ownership."
Broadcasters, in essence, can run two TV stations with one staff. They can share advertising revenues. A 10 p.m. newscast on one station can be rebroadcast with just a few tweaks on the second station at 11 p.m.
The possibility of widespread station swapping is reminiscent of radio deregulation of the 1990s, which created behemoths such as Clear Channel and Viacom's Infinity Broadcasting.
Radio station owners have benefited from greater efficiencies. The downside of radio consolidation: less innovative local programming and a reliance on syndicated, formulaic shows that listeners may not realize are produced hundreds or thousands of miles away.
Radio devotees cite one telling anecdote from January 2002, when a train derailed near Minot, N.D., sending a poisonous cloud through the town. Police tried to broadcast emergency instructions to the community through the local radio stations but were thwarted.
All six of Minot's stations are owned by Clear Channel, and on that January day they were broadcasting programming fed by satellite. That meant there was no one answering the phone in the local offices.
Neil Hickey, editor at large of the Columbia Journalism Review, speculated in a column last year about a similar situation arising in television and other media.
His nightmare scenario: Some transnational company that cares little about a local community would own the town's radio stations, daily and weekly newspapers, TV stations, local video stores and movie houses, local sports teams and many of the magazines and books that are circulating.
"Everything you read or see," Hickey wrote, "every opinion, every image and every jot of information would arrive through one corporate filter."
- Times staff writer Louis Hau contributed to this report, which also used information from Times wires. Jeff Harrington can be reached at harrington@sptimes.com or 813 226-3407.
Who owns what in Tampa Bay media . . . and what new FCC rules might mean
Newspaper / Owner / Notes
St. Petersburg Times / Poynter Institute for Media Studies / One of the nation's largest remaining independent newspapers would be allowed to buy a bay area television station under proposed FCC rules; its editor said that's not on the horizon.
Tampa Tribune / Media General / Already permitted to own television station WFLA-Ch. 8; executives say the Richmond, Va., chain isn't for sale even if bigger conglomerates go on a buying spree.
Hernando Today / Media General / Smaller sibling of the Tribune connects with its media family through Web site TBO.com.
Citrus County Chronicle / Landmark Communications / Parent company in Norfolk, Va., has ownership interest in a mix of properties, from the Virginian-Pilot to the Weather Channel.
Ledger (Lakeland) / New York Times Co. / Part of the New York newspaper's regional group of papers headquartered in Tampa.
Sarasota Herald-Tribune / New York Times Co. / Experiments with convergence through New York Times Co. ownership of a cable station in Sarasota (SNN Channel 6) housed in the same building as the Herald-Tribune.
Bradenton Herald / Knight Ridder / With many of its 31 daily papers in metro areas, Knight Ridder of San Jose, Calif., is probably as likely to be a buyer as a seller.
Weekly Planet / Creative Loafing / Cox Communications of Atlanta, a force in both print and TV, has a 25 percent stake in this small, family-owned chain of alternative weeklies.
Tampa Bay Business Journal / American City Business Journals / Charlotte, N.C., company has business weeklies in 41 markets; owned by Newhouse family, which also controls cable provider Bright House Networks in the bay area.
Broadcast TV station / Affiliation / Owner / Notes
WFLA-Ch. 8 / NBC / Media General / Coordinates coverage with the company's Tampa Tribune and TBO.com.
WTSP-Ch. 10 / CBS / Gannett / Could be in play because Gannett of McLean, Va., the nation's largest newspaper chain, has expressed cautious interest in station-swapping and in owning stations where it has newspapers.
WTVT-Ch. 13 / Fox / Fox/News Corp. / Rupert Murdoch, chairman of the New York conglomerate, says he will forgo buying more TV stations in his bid to buy satellite provider DirecTV.
WCLF-Ch. 22 / Independent / Christian TV Network / Network of nine religious stations in Florida, Tennessee, Alabama and California, headquartered in Clearwater.
WFTS-Ch. 28 / ABC / Scripps Howard / Scripps Howard, part of Cincinnati TV-cable-newspaper company E.W. Scripps, is seen as a possible takeover target by larger media companies such as Disney.
WMOR-Ch. 32 / Independent / Hearst Corp. / Hearst of New York City, which controls a collection of newspapers, international magazines and TV stations, is expected to buy and swap TV stations.
WTTA-Ch. 38 / the WB / Sinclair Broadcast Group / Group of 62 owned or operated TV stations, headquartered in Hunt Valley, Md., could be a takeover target.
WWSB-Ch.40 / ABC / Southern Broadcast Group/Calkins Media / The Sarasota station is part of a family-owned Pennsylvania company.
WTOG-Ch. 44 / UPN / Viacom International / Viacom, the parent of CBS, UPN and MTV, has said it has no plans to buy newspapers but may buy second stations in some markets.
WRMD-Ch. 49 / Telemundo / ZGS Broadcast Holdings / ZGS, of Arlington, Va., operates four affiliate stations for Telemundo, the fastest growing Spanish-language television network in the country; Telemundo is a subsidiary of NBC.
WFTT-Ch. 50 / Telefutura / Univision / Parent company reaches more than 97 percent of Hispanic households via 50 Univision TV stations, 43 affiliates, more than 1,100 cable affiliates and a Spanish-language cable network.
WVEA-Ch. 62 / Univision / Entravision Communications / Univision does not own this local Univision affiliate, but ties are close. WFTT and WVEA are housed in the same building and share the same general manager.
WXPX-Ch. 66 / Pax TV/ Paxson Communications / Bud Paxson, owner of the West Palm Beach media company and co-founder of St. Petersburg's Home Shopping Network, has hired an investment banker to shop around his 60-plus TV stations. Media General's WFLA handles advertising sales for WXPX through a joint sales agreement.
- Compiled by Times staff writers Jeff Harrington and Louis Hau and researcher John Martin from analysts reports, interviews and corporate materials.
Sounding off
A move by the Federal Communications Commission to loosen media ownership rules has touched off a lively debate about how it would effect the quality of newspaper and television journalism in America. A sampling of the views:
"The bottom line for me is the multiplicity of voices. That might be curtailed even further than it already has been in this market."
- Neil Vicino, broadcast journalism instructor at the University of South Florida and former local broadcast anchor
"You have opened the door for either great good or great misuse of power."
- Elliott Wiser, vice president and general manager of Bay News 9
"There's very little local radio any more, and I think it would be a bad thing if all the television stations in the country were owned by three companies the way all the radio stations are owned by three companies. . . . Whether it's a fundamentally bad notion for a newspaper to own a television station, I'm a little less certain about."
- Paul C. Tash, St. Petersburg Times editor and president
"Convergence (of a TV station and newspaper) makes sense journalistically and, without question, improves product quality."
- J. Stewart Bryan III, chairman and chief executive of Media General, owner of the Tampa Tribune and WFLA-Ch. 8
Convergence of a TV station and newspaper "will one day work. Now it's more contrived than it is accepted by the ones in the trenches, so to speak. . . . The cultures of broadcast journalists and newspaper journalists are very, very different. There's still a lot of resentment out there."
- Paul Catoe, president of the Tampa Bay Convention & Visitors Bureau and former general manager of WFLA-Ch. 8
"One of the most important aspects of this is a large amount of capital will be needed because prices are being run up. Wall Street cares about the numbers, and they are going to cut costs to deal with the debt service. . . . Journalism suffers."
- Andrew Schwartzman, president of the Media Access Project, a nonprofit law firm that promotes First Amendment issues in the electronic media
"It is our position that the ability to combine media assets in a given market would result in better and deeper local news coverage."
- Catherine J. Mathis, vice president of the New York Times Co.
"I have some strong misgivings, personally. It's not good for readers or listeners to have a media monopoly."
- Emily Rauh Pulitzer, biggest shareholder of Pulitzer Inc., owner of the St. Louis Post-Dispatch
- Sources: St. Petersburg Times interviews; wire reports.
