Well Connected
Cox Enterprises Inc.

Cox Enterprises began as a single newspaper operation in 1898, in Dayton, Ohio, where it built its first radio station, WHIO-AM, in 1934. The company's political roots start with its founder, too. James M. Cox was 28 years old when he bought his first newspaper and was 38 when he was elected, in 1908, to Congress for the first of two terms. After representing Ohio in Washington, Cox enjoyed three two-year terms as the state's governor, starting in 1913.

As Ohio governor, Cox was nominated by the Democratic Party as its presidential candidate in the 1920 election against Warren G. Harding. Cox and his running mate, Franklin D. Roosevelt, lost.

Cox's media company branched out and entered the Atlanta market in 1939 when it bought the Atlanta Journal and that paper's co-owned WSB radio station.

Television became a part of Cox's big picture when it built and launched Atlanta's first TV station, WSB-TV, in 1948. Cox bought its first cable systems in 1962 and even entered the automobile auction business in 1968. The company formed Cox Interactive Media in 1996 to repurpose and post its local news content onto its own Web sites.

Now, 108 years after it began, Cox brought in just over $12 billion in revenue in 2005, from the media conglomerate's 42 newspapers, 15 television stations, cable TV operations in 22 states and automobile auction divisions. The company's 79 radio stations, including its original WHIO, brought in $486 million in 2005.

Cox Communications, the cable division of the Cox media empire, has about 5.4 million customers nationwide, including about 940,000 who are subscribers to cable systems Cox has agreed to sell. Revenue in 2005 was $6.7 billion, or about $1,000 per subscriber per year.

Because of its heritage of media ownership and its extensive holdings, Cox's role on the broadcast-regulatory front includes a vested interest in the Federal Communications Commission's cross-ownership rules. There are three sets of local cross-ownership regulations to consider: a) the combination of a radio station, television station and newspaper; b) the case of a newspaper jointly owned with either a television or a radio station; and c) a radio station combined with a television station.

FCC rules put in place in 1975 prohibit cross-ownership of a radio station, a TV station and a daily newspaper within the same market. The agency has granted waivers of that rule in only four cases, although it "grandfathered" combinations in dozens of cities where media were jointly owned when the rule went into effect. Cox was the beneficiary of two of the grandfathered combinations, in Dayton and Atlanta.

Today, waivers are infrequently granted when a new company acquires either the newspaper or the broadcast station. The justification for granting the waiver is when disbanding the cross-ownership would be "unduly harsh," meaning that the newspaper could not find a buyer for the commonly owned station, that the sale price would be depressed or that the local community could not support a separately owned newspaper and radio station.

Suffering an exodus of readers to other media, major newspaper companies such as Cox, as well as Tribune and Gannett, have pushed for the rule's repeal. They have the support of FCC Chairman Kevin Martin, who in April urged the Newspaper Association of America to lobby more aggressively against the rule.

Under former FCC Chairman Michael Powell, in June 2003, the FCC eliminated its newspaper-broadcast and its radio-television cross-ownership limits, replacing both with a unified rule. Cross-ownership of newspapers, radio stations and television stations would be permitted in large markets, prohibited in small markets and limited in mid-sized markets. A range of other media ownership rules were relaxed in the 2003 decision, which became a source of considerable controversy, and the action was halted by Congress and by the 3rd U.S. Circuit Court of Appeals.

The changes to the newspaper-broadcast cross-ownership rule fare the best under the appeals court's decision, but the court still sent the entire package back to the FCC. In June 2006, Martin opened a new proceeding on the subject.

Cox executives currently hold a seat on the board of directors and executive committee for the National Association of Broadcasters. The company also has its own corporate-level office of public policy. At the same time, cable division Cox Communications is a major player in the National Cable Telecommunications Association, which is often quite combative with NAB on a range of policy issues in Washington.

Cox Enterprises also bid in a recent auction of radio frequencies by the FCC through a joint venture called SpectrumCo LLC. The company is 51.9 percent owned by cable system Comcast, 28.5 percent owned by Time Warner, 10.3 percent owned by Cox and 4.3 percent owned by Bright House Networks. Sprint Nextel's direct ownership in SpectrumCo is 5 percent and, unlike its partners, doesn't come with any voting or controlling rights. SpectrumCo spent $2.4 billion in Auction 66, or about 17 percent of the auction's $13.9 billion gross receipts.

Cox Radio President and CEO Robert Neil has always been independent-minded and steered his group on its own course. That occasionally means bucking the trend toward adopting new developments, such as proposed audience measurement technology, especially if Neil disagrees with arguments for adoption.

James Cox Jr., who took over the company upon his father's death in 1957, was one of the first big investors in cable television.
 
— Tony Sanders

October 2006

Sources: BIA Financial Network, Company Web site, The First 50 Years of Broadcasting, Fortune Magazine, Hoover's online, Ohio Historical Society Web site, Securities and Exchange Commission filings

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