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Media ruling isn't a Goliath here

June 8, 2003

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San Antonio may be home to one of the largest media giants on the planet, Clear Channel Worldwide.

But industry sources here and abroad say the Alamo City will experience little, if any, impact from a recent Federal Communications Commission (FCC) ruling relaxing some of the constraints on media ownership.

Instead, sources believe the ruling is more likely to stir up activity and controversy in markets across the nation that are either larger or smaller than mid-sized cities such as San Antonio. It's a belief shared by national media consultant Robert Unmacht and more than one local media executive.

On June 2, the FCC announced that it had adopted new, enforceable broadcast ownership rules based on what it termed "empirical evidence reflective of the current media marketplace."

Among the sweeping changes, which some critics have argued will only make the Goliaths like Clear Channel even stronger, is that a single company can now own TV stations that reach up to 45 percent of the U.S. households. The previous percentage was capped at 35 percent.

Additionally, the new ruling ends a ban on joint ownership of a newspaper and a broadcast station in the same market, lifting cross-ownership restrictions in cities including San Antonio that have nine or more television stations.

Unmacht, a partner in Nashville-based iN3 Partners, has followed Clear Channel's activities for years. He says he doesn't see the ruling having a huge positive or negative impact on the company or the San Antonio market.

One local Clear Channel source apparently agrees, predicting the ruling will do little to alter the media landscape in the Alamo City. But Clear Channel President and Chief Operating Officer Mark Mays is not at all happy with the ruling.

Said Mays shortly after the ruling was announced: "Clear Channel is deeply disappointed with (the) vote to re-regulate the radio industry. While the FCC is supposed to act in the public interest, today they missed the mark by a mile. Ultimately, the FCC chose politics over the public interest, and American consumers will be the ultimate victims."

"They were the only ones to come out with a really negative statement," says Unmacht about Clear Channel. "I'm not sure they understand this yet because they are such a radio behemoth, but the TV side at Clear Channel really came out of this well."

Unmacht and others are convinced that Clear Channel is upset that the new ruling did not increase the number of radio stations one company could own in a single market from eight to 10.

"For San Antonio, the effects on the radio side are about zero," says Unmacht. "On the TV side, anyone with a (joint sales agreement or local marketing agreement with another station) can now take that deal further."

Don Perry, regional vice president and general manager of Clear Channel's WOAI-TV, agrees with Unmacht that San Antonio will likely see little activity as a result of the FCC ruling.

"I think it's much ado about nothing in this market," he contends. "I don't see it being a factor in this market either way."

WOAI-TV does have a joint service agreement with PAX-TV's San Antonio station. But Perry says he does not believe there is room even under the new rules to convert that relationship into a purchase.

There remains speculation that the ruling may provoke Paxson Communications Corp. to unload some of its company-owned TV stations, such as the one in San Antonio. Perry says if any are indeed sold off, NBC, which owns one-third of the company, would have the initial purchase rights.

"That's a larger story waiting to play out," says Perry.

One area where the new FCC ruling could conceivably come into play in the Alamo City is in the newspaper industry. Unmacht says the Belo Corp., for example, which owns KENS-TV and recently sold KENS-AM radio to Disney, could now legally make a play for the Hearst-owned San Antonio Express-News, with which it already has a relationship via MySanAntonio.com.

In the Dallas/Fort Worth market, Belo owns WFAA-TV and the Dallas Morning News.

KENS-TV General Manager Bob McGann had no comment and directed all calls on the matter to Belo's corporate headquarters. Those calls were not returned.

"They could now purchase the (Express-News)," says Unmacht about Belo. "But I just don't see this happening in individual markets. It's going to be more about bringing two giants together, which can now happen."

Says WOAI-TV's Perry, "It's always possible Hearst could look at buying a TV station here. But I can't see who that would be."

Sources indicate that Clear Channel is not interested in entering the daily newspaper publishing business.

"At the end of the day, the ruling cleaned up some paperwork with some stations and opened the gates for the bigger moves -- the mega deals," says Unmacht. "It is going to hurt the broadcasters in the smaller markets."

Adds Virgil Thompson, who was recently promoted to vice president and general manager of Cox Radio Inc.-owned KISS-FM and KSMG-FM locally: "I absolutely agree that (the ruling) will have little impact on San Antonio. It's business as usual."

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