Posted 1/15/2003 10:09 PM Updated 1/16/2003 12:25 AM
Relaxing rules raises concerns about diverse media voices
By David Lieberman, USA TODAY
URL:http://www.usatoday.com/money/media/2003-01-15-mediaown_x.htm
NEW YORK — An earthquake may soon jolt the media landscape in many communities as a result of a major debate raging at the Federal Communications Commission.
Commissioners intend to decide this spring whether to relax or ax a basket of decades-old media ownership rules intended to provide multiple owners and voices in a market. The rules say who can (and can't) own TV and radio stations and broadcast networks — as well as how many a company can own in total and in a market, how much of the country it can serve and whether it can own other media voices, such as a newspaper, in a market.
An FCC easing could set off a dealmaking stampede — and give fewer big owners enormous influence over a community's politics and economy.
"The rules go to the heart and soul of what our media system is all about," Commissioner Michael Copps says. "How much localism and regional creativity will we be able to get? And it goes to the nature of political dialogue and the multiplicity of voices. I don't think there's anything as important that the FCC will consider this year."
Many investment bankers certainly would agree. They're salivating over the potential windfall they could collect from mergers. At the extreme, for example, if all the rules under review were lifted, it would theoretically be possible for AOL Time Warner to merge with NBC, radio giant Clear Channel and The New York Times Co.
As a practical matter, early deals will probably be purchases and swaps that increase companies' leverage in specific markets. Rule changes could enable a company to own a community's daily newspaper and several of its TV and radio stations. Companies thought best-positioned for such dickering include Tribune, Gannett (owner of USA TODAY), Viacom and News Corp.
Cable companies could also be early dealmakers, due to the fact that the FCC has no plans to challenge a recent court ruling that threw out its rule against owning a cable system and TV station in the same market.
That FCC decision is one reason consolidation foes think Chairman Michael Powell, a Republican, is inclined to relax more ownership rules.
He's already getting heat for that perception, even from some prominent Republicans. "Encouraging local competition and preventing one company from having too much control of the content in a single media market is essential for the best interest of consumers and our country," Sen. Kay Bailey Hutchison, R-Texas, said this week when Powell appeared before the Senate Commerce Committee.
Powell hinted the gates would not be thrown completely open. He said his critics' "more melodramatic versions of what's likely to come out of the commission" don't necessarily reflect "what the majority of the commission thinks."
But he'll probably be pressed on that again today as he and three other commissioners meet in a major all-day forum on media ownership at the Columbia University Law School. Included will be top media executives, analysts and scholars.
Thus far the FCC has planned only one public comment session on the rules, on a still-undetermined date next month in Richmond, Va.
Copps, a Democrat, says there'll be more hearings. "We need to get out to other states and markets. And they might be done on a shoestring if I have to get in a car with my legal adviser."
Although the political temperature on the issue is rising, few believe that the FCC will leave current rules. Court challenges against two already have succeeded. Activists and lobbyists — including those for media giants — are engaged in a fierce battle to influence the commission.
Supporters of current limits say communities will suffer if regulators relax ownership rules. They see fewer voices and less local control in most markets. They believe media companies would have financial incentives to create fluffy content they could use across all their print, TV and radio outlets and downplay local news that may be costly to report, controversial and visually uninteresting.
"School board and road-building decisions won't get covered," warns Mark Cooper of the Consumer Federation of America. "And if election coverage isn't balanced, fewer people will vote. This is about citizens and civic discourse, not consumers and profits."
But those who want limits relaxed counter that the only way to save quality newspapers and stations is to let them merge to get the financial strength to compete with new rivals on cable and the Internet.
"When you get into smaller markets, free local TV news is really in danger," says Don Cornwell, CEO of station owner Granite Broadcasting. "The marketplace is going to have its way. If TV stations get weaker and weaker because they can't consolidate, then they'll go out of business. There are some hard choices that have to be made."
Other supporters add that current rules unfairly favor some media players over others.
"The only people who can't own a TV or radio station are aliens, convicted felons and newspaper publishers," says Newspaper Association of America CEO John Sturm. If the FCC doesn't drop the barrier to owning a newspaper and TV station in one market, "We'll be in court to blow the whole thing out. I don't think the rules will stand scrutiny."
The FCC didn't exactly ask to referee this brawl. In the Telecommunications Act of 1996, Congress required it to review media ownership rules every two years. The process intensified last March when the D.C. Court of Appeals ordered the FCC to justify its station-ownership limits or scrap them.
"This is not an emotional or political debate," says FCC Media Bureau Chief Ken Ferree. "It's really a scientific and empirical question we're trying to address" in determining how much concentration is too much. "I need to be able to say, 'Your honor, here's the data.' "
But consolidation foes say it's an impossible burden to prove harm in deals that have yet to happen. "It's a fix," says Andrew Schwartzman, CEO of the Media Access Project, a public interest law firm. "And the media companies are laughing all the way."
The FCC tried to make the debate more concrete in October by releasing a dozen studies it commissioned on ownership issues. "Nothing like this has been done on such a broad scale ever at the FCC," Ferree says.
Here, too, however, critics suspect a hidden agenda: Most of the research seemed to support deregulation. One study found that media companies that owned TV stations and newspapers typically didn't coordinate editorial views in the 2000 presidential election. Another study questioned whether TV stations could remain profitable in a "sea of competition" from cable and satellite providers.
But the FCC and others are paying special attention to what happened to radio as a result of the massive consolidation unleashed by the 1996 Telecom Act, which wiped out key ownership limits.
"It's the one area where we have gone through consolidation and can test it," Copps says.
Even Powell says that he's "concerned about the concentration" that took place in radio.
A few companies, led by Clear Channel, now dominate key markets and radio formats. Four — Viacom, Clear Channel, Disney and Entercom — have two-thirds of listeners for news radio stations. Meanwhile, the typical radio news staff went from 4.5 people in 1994 to 1.6 in 2002, according to the Radio-Television News Directors Association.
"They're gutting content," says Michael Turner, president of the Information Policy Institute, a non-partisan think tank. "National and regional news has replaced local news." He adds, "In five years ad prices in radio have gone up 90%."
That's not the way the industry sees it.
"Consolidation has been essential in preserving radio, which was cratering before the '96 act," says Jeff Baumann, executive vice president of law and regulatory policy at the National Association of Broadcasters. "It preserved a lot of outlets."
The debate becomes even trickier when you consider whether consolidation has increased or diminished the diversity of listeners' music options.
Some researchers say that consolidation leaves consumers with more variety. The average number of music radio formats in the largest markets grew from 29 to 37 from 1996 to 2000. The reason? Companies that buy several stations eliminate duplication to reach as many different audiences as possible.
Others argue that's an illusion, that listeners actually have fewer choices because many of today's pop music radio formats overlap. For example, lots of songs on "rock," "active rock" and "alternative" play lists are the same.
But even if commissioners are disturbed by what's happened to radio, they may find other reasons to relax rules. Powell, for one, is intrigued by considering diversity across all media — not simply within radio, TV, newspapers or Internet. "At bottom, the issue is to look at how do consumers use media today, so we can decide what limitations are needed to ensure there's a robust diversity of voices," Ferree says.
They believe that media-savvy people now easily flip from one medium to another to get news and entertainment. Viewers who can't find enough news on broadcast TV turn to the Internet, newspapers or radio, according to one of the FCC studies.
Critics, though, say that's too facile.
"Policymakers who believe the Internet, radio and newspapers are substitutes for TV ought to be required to run their next campaigns with ads everywhere except TV and see how the public responds," says Gene Kimmelman of Consumers Union.
Ferree is determined to avoid glib answers to the complicated questions facing the commission.
"It's easy to be superficial about this stuff," he says. "If I ask 10 people, 'What do you think about media consolidation?' they'd say, 'I'm against it.' But you have to put it into a context."
Yet with all these issues, Copps says, "Every day I become more concerned that we're nowhere near having the information we need. The worst-case scenario is rushing to judgment. How do you put the genie back in the bottle?
"Not only do we not have all the answers, we don't have all the questions." |
