FCC Media Deregulation: Done Deal

Consensus has it today that the FCC is going to significantly loosen media ownership rules on June 2, based upon leaks from the FCC itself and media insiders. It would appear hearings and protestations from a variety of sources have changed Chairman Powell and the Republican 3/5 of FCC commissioner’s determination to deregulate not a whit: let the Clear Channel-ization of the media continue unabated!

The Washington Post reports:

The Federal Communications Commission is poised to relax or eliminate a wide-ranging set of media ownership rules, allowing a newspaper to buy a television station in the same city for the first time in nearly 30 years and broadcast networks to acquire more stations.

Media companies such as Rupert Murdoch’s News Corp. and the Walt Disney Co. have lobbied to lift the ownership limits, saying they need more newspapers and television and radio stations to remain viable and provide more and better local news to readers and viewers.

Public interest and other advocacy groups that have fought to keep the ownership caps say that increased consolidation has led to tighter control of the media by a few companies and fewer voices on the airwaves.

Two things are certain: On June 2, the five-member FCC will adopt most of the media-ownership recommendations delivered by staffers yesterday. Also, a wave of media deals — and probably lawsuits — will follow, as companies jockey to exploit the new rules or seek relief from them.

….Agency commissioners received a 261-page report from staff members yesterday covering the six major ownership rules up for reevaluation based on 18 months of record review and studies. According to sources, the report — which has not been made public — recommends:

• Abolishing the cross-ownership ban in large and mid-size cities while retaining it in small cities.

• Raising the number of television stations that a broadcast network, such as ABC or Fox, can own. Currently, a network cannot own a number of stations that combine to reach more than 35 percent of the national audience. That number is likely to be raised to near 45 percent.

• Allowing one company to raise the number of television stations it can own in a large market, such as Washington, from two to three while keeping the limit at two in medium-size markets and one in small cities.

Other rules, such as one that says one company can own a maximum of eight radio stations in the largest cities, will be retained. However, the definition of what constitutes a radio market will be redrawn to prevent one company from further dominating local airwaves. Another FCC rule, which forbids one of the four major television networks from buying another, will be retained, sources say.

The FCC’s two Democrats are very concerned, according to the NY Times:

In interviews today before receiving the detailed plan, the two commissioners, Michael J. Copps and Jonathan S. Adelstein, said that they were troubled by reports that the commission’s staff, after extensive consultations with Mr. Powell, would recommend raising the ownership cap while retaining the formula that discounts the audience size of UHF stations.

“I’m afraid we may be moving in a more dramatic fashion that could permanently alter the media for generations to come,” Mr. Adelstein said.

Mr. Copps said that the changes, including the sharp increase in the television ownership cap, “would be a green light to considerable and significant consolidation in the future.”

“It’s hard to imagine how the proposals foster the goals of the rules, which are diversity of voices, localism and competition,” he said.

The UHF discount is a bizarre anachronism, and if we are changing to keep up with the times, this provision should be the first to go:

the UHF discount, came about in a different regulatory and technological era, when a vast majority of viewers received television signals free over the airwaves and had to use special equipment like antennas that resembled rabbit ears to pick up UHF stations. Today, about 85 percent of viewers use paid services from cable and satellite providers, rendering the distinction between VHF and UHF largely a relic.

Officials close to Mr. Powell said today that the agency had decided to retain the discount because under the agency’s interpretation of the law, it was not clear it had the authority to alter it in the current proceedings. They said that there was nothing in the public record to justify changing the way the commission counted UHF viewers and that Mr. Powell had attributed the growth of new networks in recent years to the UHF discount, including UPN, Pax, WB and Fox.

Dan Ackman looks at the matter from a practical standpoint in Forbes:

Both Viacom and the Fox unit of News Corp. already exceed existing caps on television-station ownership as a result of their past mergers. When their mergers took place, they were met by a hodgepodge of waivers and court rulings that effectively abrogated the existing rules.

The newly proposed rule would allow a single company to own TV stations that reach 45% of U.S. households instead of the current 35% maximum. But stations like Fox and CNN, a unit of AOL Time Warner, are permitted to do that already. Existing “cross-ownership” rules, such as those limiting the ownership of a newspaper and a radio or television station in the same city, would be replaced by a single rule that would lift most of the existing restrictions, which are now often waived anyhow.

….Pundits have hailed the rule change as “the most significant in a generation.” Much more important is what has happened during that generation. Since the current regulations came into effect, the world has seen the rise of cable television, satellite television, new broadcast networks and the Internet. There are fewer daily newspapers than there once were, but many more television stations of various stripes. There are probably more magazines than ever, but arguably fewer serious journals of opinion. And anyone can put up a Web site or a Weblog and reach the world, assuming someone out there in the world wishes to be reached.

….those who are interested could use the Internet and dial up Le Monde or Al Jazeera. It’s not clear how many Americans exercise this option. By definition, most viewers tend towards middle-of-the-road opinions. Networks seeking a mass audience will try to meet them in the middle. The real problem may be that many Americans simply are not interested in knowing what’s going on. That’s unfortunate, but there’s probably nothing the FCC can do to change it.

….The paradoxical result of this wellspring of choice is a massive traffic jam in the center. But that doesn’t mean there aren’t other options on either the side of the road.

Paul Krugman, with whom I rarely agree, thinks the media explicitly curry political favor:

The plan’s defects aside – it will further reduce the diversity of news available to most people – what struck me was the horse-trading involved. One media group wrote to Mr. Powell, dropping its opposition to part of his plan “in return for favorable commission action” on another matter. That was indiscreet, but you’d have to be very naïve not to imagine that there are a lot of implicit quid pro quos out there.

And the implicit trading surely extends to news content. Imagine a TV news executive considering whether to run a major story that might damage the Bush administration – say, a follow-up on Senator Bob Graham’s charge that a Congressional report on Sept. 11 has been kept classified because it would raise embarrassing questions about the administration’s performance. Surely it would occur to that executive that the administration could punish any network running that story.

Meanwhile, both the formal rules and the codes of ethics that formerly prevented blatant partisanship are gone or ignored. Neil Cavuto of Fox News is an anchor, not a commentator. Yet after Baghdad’s fall he told “those who opposed the liberation of Iraq” – a large minority – that “you were sickening then; you are sickening now.” Fair and balanced.

We don’t have censorship in this country; it’s still possible to find different points of view. But we do have a system in which the major media companies have strong incentives to present the news in a way that pleases the party in power, and no incentive not to. [NY Times]

Whether the new rules merely reflect current reality or greatly enable the further consolidation of mass media into ever fewer hands is an open question – that media consolidation thus far, especially in radio, has reduced diversity and localism and homogenized what is supposed to be held in the public trust, is not.