Washington Post 2003 Annual Report Download - page 26

two FCC cross-ownership rules restricting common ownership of television stations and newspapers and of television
stations and radio stations in the same market. This decision has been appealed to the U.S. Court of Appeals for the Third
Circuit, and that court has stayed the effectiveness of the new rules pending the outcome of the appeal. As a result, the
former local ownership and cross-ownership rules remain in effect. The rule changes approved by the FCC in June 2003,
would, if upheld, allow co-ownership of two television stations in a market as long as the two stations are not both ranked
in the top four, and would also allow co-ownership of three television stations if there are 18 or more television stations in
the market. Waivers of those limits would also be available where a station is failing and under certain other circumstances.
In addition, the rule changes would liberalize the FCC's restrictions on owning a combination of radio stations, television
stations, and daily newspapers in the same market, and would, for example, allow one entity to own a daily newspaper
and a TV station in the same market as long as there are four or more television stations in the market. Petitions for
reconsideration of the FCC's new rules are also pending at the FCC.
On December 10, 2003, the United States Supreme Court issued its decision in McConnell v. Federal Election Commission,
which upheld in the face of various First Amendment and other constitutional challenges virtually all of the provisions of the
Bipartisan Campaign Reform Act of 2002. Among the provisions upheld were those that (i) prohibit most ""soft-money''
contributions to political parties in federal elections, and (ii) impose the contribution-limit and disclosure requirements of the
Federal Election Campaign Act on any broadcast, cable television or DBS advertisement that refers to a candidate for
Federal office and is run within 60 days of a general election or 30 days of a primary election, even if the advertisement in
question is not produced by or coordinated with a candidate or a political party. These prohibitions and requirements may
reduce the amount of money political parties and independent groups have available to purchase advertising in Federal
election campaigns or otherwise discourage such advertising and thus may adversely affect the advertising revenues of the
Company's television stations.
The FCC is conducting proceedings dealing with various issues in addition to those described elsewhere in this section,
including proposals to modify its regulations relating to the operation of cable television systems (which regulations are
discussed below under ""Cable Television Operations Ì Regulation of Cable Television and Related Matters''), and
proposals that could affect the development of alternative video delivery systems that would compete in varying degrees
with both cable television and television broadcasting operations. Also, in August 2003 the FCC announced that it will be
opening an inquiry to examine its rules and policies concerning broadcasters' service to their local communities and has
scheduled a number of public hearings across the country to examine the extent to and ways in which stations are meeting
their local service obligations. The FCC has indicated that the information gathered during those hearings will assist it in
evaluating license renewal applications for TV and radio stations across the country.
The Company is unable to determine what impact the various rule changes and other matters described in this section may
ultimately have on the Company's television broadcasting operations.
Cable Television Operations
At the end of 2003 the Company (through its Cable One subsidiary) provided basic cable service to approximately
721,000 subscribers (representing about 57% of the 1,274,000 homes passed by the systems) and had in force
approximately 300,000 subscriptions to premium program services, 223,000 subscriptions to digital video service (which
number does not include approximately 4,000 free trials of that service then being offered by Cable One) and 134,000
subscriptions to cable modem service. Digital video and cable modem services are each currently available in markets
serving virtually all of Cable One's subscriber base.
The Company's cable systems are located in 19 Midwestern, Southern and Western states and typically serve smaller
communities: thus 18 of the Company's current systems pass fewer than 10,000 dwelling units, 17 pass 10,000-25,000
dwelling units, and 19 pass more than 25,000 dwelling units. The largest cluster of systems (which together serve about
89,000 subscribers) is located on the Gulf Coast of Mississippi.
Regulation of Cable Television and Related Matters
The Company's cable operations are subject to various requirements imposed by local, state and federal governmental
authorities. The franchises granted by local governmental authorities are typically nonexclusive and limited in time and
generally contain various conditions and limitations relating to payment of fees to the local authority, determined generally
as a percentage of revenues. Additionally, franchises often regulate the conditions of service and technical performance
and contain various types of restrictions on transferability. Failure to comply with such conditions and limitations may give
rise to rights of termination by the franchising authority.
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