February 2, 1996

Networks See Potential for Growth

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  • Congress Passes Bill That Reshapes Telephone, TV Industries

    NEW YORK -- Broadcasters walked away from Thursday's passage of the new telecommunications bill well satisfied with its deregulation of several parts of their industry and looking forward to a booming market in television and radio stations.

    They were also so happy to have escaped for now a threat to their access to public airwaves that they supported the bill despite the inclusion of the so-called V-chip requirement, which would block programs deemed to have offensively violent or sexual content.

    Big broadcasters, headed by the four television networks, enthusiastically backed the bill passed Thursday, mainly because it would raise from 25 percent to 35 percent the limit on how many of the country's television homes they can reach with stations they own. It will also make it possible for the first time for broadcasters to own cable systems.

    At the same time, the broadcasters were gratified to avoid a confrontation over what had been the biggest previous stumbling block to passage, the suggestion by some leading legislators, including the Senate majority leader, Bob Dole, that future use of broadcast spectrum be auctioned off to the highest bidder.

    "Without spectrum, there would be no future in broadcasting," said Richard Cotton, senior vice president of NBC.

    By agreement among Congressional leaders, the debate over the broadcast spectrum now used by broadcasters, which will be greatly expanded in the future by digital technology, was put off, perhaps to be resolved in the federal budget fight.

    Martin Franks, senior vice president of CBS, said that broadcasters' main competitors, cable operators and telephone companies, "had a lot of fun at our expense on the spectrum issue," making it look as though broadcasters were getting a free handout of public airwaves from the government.

    "We still have a lot of work to do on the spectrum issue," Franks said. But he noted that the broadcasters had a number of prominent Congressional leaders supporting their position "and at least that's a fight for another day."

    In the meantime, owners of television stations can expect a gold rush of sorts as big broadcasters look to increase their holdings to the new 35 percent limit.

    But all was not sweets and snack food for the broadcasters. They had to swallow one bitter chip: the V-chip, which will now be inserted inside new television sets.

    "We were happy the spectrum issue didn't bog the bill down," Cotton said. "The benefits of the broadcast deregulation are difficult to weigh against the negatives of the V-chip, but that's likely to wind up in court."

    Indeed, broadcasters are expected to vigorously challenge the V-chip on First Amendment grounds.

    The legislation gives the networks a year to form a rating system to classify television shows by content.

    The biggest immediate winner among the networks is CBS, whose new owner, Westinghouse Electric Corp., took a big risk when it acquired the network. Westinghouse immediately exceeded the 25 percent limit and was counting on passage of the new limit.

    CBS is already at 33 percent in television station ownership, well ahead of its competitors in that area. In addition, the company will get to keep all 38 radio stations it owns.

    "Broadcasters are very happy with this bill," Franks said. "We'll take our chances in court on the V-chip and the spectrum fight is put off. CBS has reason to be even happier with the outcome."

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