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The Gathering Storm Over Media Ownership


"Awful Things Will Happen"

On June 2nd, the five appointees who make up the board of the FCC will decide the future direction of American media. The implications are enormous.

by Neal Hickey

The Federal Communications Commission (FCC) whacked a hornet's nest with a stick on September 23, 2002, when it announced that it would take a hard look at all of its controversial rules on media ownership. On that day, Michael Powell, the commission's chairman, invited comments from the public about who can own what and how much in the media business. Instantly, the hornets began to swarm.

By the deadline for submissions (February 3rd), oceans of legal briefs had poured in from unions, trade associations, consumer activists, think tanks, academicians; the Newspaper Association of America, National Association of Broadcasters, Newspaper Guild, National Organization for Women, Sony, American Federation of Television and Radio Artists, National PTA, American Psychological Association, National Association of Hispanic Journalists, United Church of Christ, and roughly 13,000 other groups and individuals.

All of them pointed out, in differing ways, that the FCC was embarking on nothing less than the most massive reexamination of media ownership rules in the agency's history and that the outcome could have the most profound effects on how Americans get their news and information. Many of them argued that loosening the rules would cause a far greater concentration of media power in the hands of fewer and fewer huge companies -- even more concentration than already exists -- and the withering away of competition and diversity of viewpoints. Powell said that he and his fellow commissioners would review all the comments and evidence and hand down the new rules in late spring.

Opposition to the proposed rule changes has steadily gathered momentum, binding together a broad and diverse group of allies. The last round of public hearings in San Francisco and Los Angeles, on April 26th and 27th, attracted a large number of both ordinary citizens and activists speaking out passionately against media consolidation. Thus far, however, there is little indication that Powell has changed his mind. Over the same weekend, he told the Newspaper Association of America convention that the FCC plans to remove the cross-ownership ban which prevents newspapers from owning radio and TV stations in the same area. But with the FCC decision a week away, the fight over the future of U.S. media is growing ever more urgent with each passing day.

It is a strange battle, in a way, pitting journalists against their bosses, breaking up old alliances, and gathering momentum as the day of reckoning approaches.

In mid-January, Senator John McCain, the new chairman of the Senate Commerce Committee, grilled all five FCC commissioners about the "monumental decisions" they were about to make that "will shape the future of communications forever." Democratic senator Byron Dorgan of North Dakota called for more voices in the nation's media, but not from "one ventriloquist." Powell pointed out that reviewing the rules is mandated by the Telecommunications Act of 1996, requiring him to reexamine FCC regulations every two years and get rid of the deadwood. Also, the U.S. Court of Appeals for the D.C. Circuit has ordered the FCC to justify several of the rules or junk them.

Powell's view is that much ownership regulation no longer makes sense because it dates from the era when channels of information were scarce. Now, cable, the Internet, and direct-broadcast satellites are commonplace. Powell has been at pains to reassure his critics that he plans no scorched-earth policy that would lay waste all regulation. But defenders of the public interest -- Consumers Union, Consumer Federation of America, the Center for Digital Democracy, and many others -- fear that the FCC, with its GOP majority (three Republicans, two Democrats), will predictably facilitate Big Media's yen for the "efficiencies," the "synergies," and bottom-line values that come with gigantism. They fear those values will prevail at the expense of what's best for people who want to know what's going on in the world.

"Awful Things Will Happen"

One of the most contended of the FCC regulations forbids a single company from owning a newspaper and a television station in the same community. The Newspaper Association of America, whose member papers account for almost 90 percent of U.S. daily circulation, is ferociously campaigning to exterminate that rule. The 27-year-old ban is so archaic that it should end "without further comment or analysis," says the NAA's brief, because a mountain of evidence proves that cross-ownerships improve the quality and quantity of news and public-affairs reporting without posing any real threat to competition and viewpoint diversity. John Sturm, president of the NAA, points to 40 communities in the United States that have cross-ownerships (which existed before the rule or got special waivers). No harm, he insists, has come to the public in those markets. "Our opponents' arguments are all theoretical -- no data, just words. 'Awful things will happen,' they warned. Well guess what? Nothing awful has happened. Case closed."

That doesn't satisfy Linda Foley, president of the 35,000-member Newspaper Guild, who contends that more cross-ownerships means jobs will be lost and news consumers will receive a more homogenized diet of news and opinion. "The biggest impact," she says, "is that we would have fewer and fewer people on the local level deciding what the news agenda is." The NAA-Guild difference of opinion dramatizes an unbridgeable chasm: The owners of newspapers generally want the ban lifted and the journalists who work for those papers generally don't. Reporters, columnists, and editorial writers -- predictably -- tend to think it's an unwise career move to publicly oppose their bosses' position on the matter, which may be why journalists have mostly failed to inform Americans about what's at stake here.

A few do speak out. At Knight Ridder's Philadelphia Inquirer, Henry Holcomb, a business writer, told the Columbia Journalism Review he worries about a corporate mentality that may try to "squeeze as many dollars as possible" out of a newspaper/TV combination and "blur all of the distinctive ways we try to stimulate and inform the public."

One voice in the wilderness among newspaper proprietors is Frank Blethen, publisher of The Seattle Times. "Our opposition to cross-ownership runs against our own business interests," he says. Repeal of the rule would substantially increase the value of the Times. "It would eliminate a competitor and give us more control over the marketplace. If that's all we cared about, we'd be for it. The Blethen family could benefit financially from repeal of cross-ownership," he says, "but I guarantee you that the citizens of Seattle would not benefit from it."

Large newspaper chains and TV station groups covet these combinations out of self-interest, not the public interest, Blethen says, because owning lots of media in one market lets you control advertising rates. "It's the public company mentality, that you have to keep getting bigger as the only way to drive earnings, stock prices, and the CEO's stock options." Editors of chain-owned newspapers are mostly silent about cross-ownership, Blethen says. "We're creating a whole generation of publishers and editors who don't have the independence to speak out on these issues on behalf of the public."

New Sources of News?

In 1978, the Supreme Court, in FCC v. National Citizens Committee for Broadcasting, wrote: "It is unrealistic to expect true diversity from a commonly owned station-newspaper combination. The divergence of their viewpoints cannot be expected to be the same as if they were antagonistically run." But backers of deregulation are fond of pointing out that the Internet, cable, and direct broadcast satellites offer an array of choices that didn't exist a few decades ago. Hold on, says the opposition: Virtually all of the major Internet sites that people use for news are owned by Big Media; the editorial content is indistinguishable from what those broadcasters and newspapers put out.

On the cable side, concentration is already apparent: Two companies, Comcast and AOL Time Warner, serve 40 percent of cable households. All of the cable news networks -- CNN, CNN Headline News, Fox, MSNBC, CNBC, CNNfn -- are owned by three conglomerates: AOL Time Warner, GE, and News Corporation. Direct broadcast satellites? Two companies control virtually the entire industry, and recently, one of them (EchoStar) tried unsuccessfully to buy the other (DirecTV).

The 1996 Telecom Act lets media companies like Viacom, GE, Disney, and News Corp. -- which own, respectively, CBS, NBC, ABC, and Fox -- accumulate stations to their hearts' content, as long they reach no more than 35 percent of U.S. households. The networks have lobbied furiously to own more stations because many of those local outlets have huge profit margins of 40 percent or more and because owning them would give the networks more power over what gets on the air nationally. To bolster their push to lift the ownership caps, networks claim that their owned-and-operated stations produce better local newscasts than independent stations do. At the moment, CBS owns 21 stations; ABC, 10; NBC, 13; and Fox, 33. Most other commercial stations have affiliate contracts with a network but are owned by companies like A.H. Belo, Hearst-Argyle, Cox, and Post-Newsweek. Station groups like those think the TV networks already have too much influence and believe that letting them gobble up more TV stations will give them a stranglehold on programming -- news, public affairs, and entertainment.

The dispute has driven a wedge between the National Association of Broadcasters (whose board of directors is dominated by independent station owners) and the big TV networks, causing CBS, NBC, and Fox to quit the NAB in a huff. Dennis Wharton, an NAB vice president, says: "We think the 35 percent cap has been good for localism."

The affiliated stations argue that independent stations are far more able than network-owned stations to preempt the network's prime-time programs when a major news story of local importance breaks. Networks often use sanctions built into affiliate contracts to muscle stations into running the network's menu of entertainment shows instead of local news coverage. In September 2002, CBS strong-armed a Florida affiliate into airing the season premiere of 48 Hours instead of an important gubernatorial debate. NBC, during the 2000 political campaign, pressured its affiliates to run a baseball playoff game instead of a presidential debate. ABC's affiliate in Dallas, home of American Airlines, had to fight the network for a few minutes of airtime during Monday Night Football halftime to present local news updates on the November 12, 2001, crash of an American Airlines jet.

As with most of the ownership rules, the underlying debate is less about principle than about whose financial ox would be gored if the 35 percent cap were eliminated or eased. Affiliates (but not network-owned stations) collectively haul in tens of millions of dollars every year for renting their airtime to the networks. That so-called compensation is found money for the affiliates and goes straight to the bottom line. They don't want to lose it. Networks, on the other hand, say they can't afford to pay it any longer and want to stop. Thus, the more stations a network can own outright, the more it can improve its revenue stream, eliminate compensation, and obviate those pesky preemptions that undermine audience ratings and advertising income.

Public advocates are especially averse to the notion of one company owning two television stations in the same community (so-called duopolies) and to letting any of the Big Four TV networks -- CBS, ABC, NBC, Fox -- buy out one of the others.

In 1999, the FCC relaxed its rules to allow common ownership of two TV stations in the same market as long as one of them isn't among the community's four leading stations. About 75 such duopolies exist. For journalists, that often means combining news staffs and resources, reducing the richness of a community's news diet. In Los Angeles, for example, CBS's two stations share a news director, and so do Fox's. In New York, Fox's two stations will soon be under one roof.

The NAB recently upped the ante and began campaigning for triopolies in areas where stations are on shaky financial ground. (Viacom's president, Mel Karmazin, told a media conference in December: "How dare they say you can have only two stations in a market?")

"A Tragic Mistake"?

At a Columbia law school forum in January, FCC chairman Powell confessed he is no fan of Congress' mandate that he review media ownership rules every two years. It's "regrettable and destabilizing," he said, to go through this torturous process so often. He added: "There will be rules when this is done, [but] there won't be a rule that lets one person own everything."

That reductio ad absurdum was marginally reassuring to his opponents, but they hoped Powell would remain tightly focused on the crucial underlying principle: that the whole point of devising public policy is to do what's best for the people, not to guarantee corporations their desired "efficiencies" and "synergies," which is none of the FCC's business. As USC's filing to the commission put it, the agency's mandate to regulate is driven by the First Amendment rights of the public, not the media owners.

The Newspaper Guild's comments to the commission are equally unambiguous: "Media owners claim that relaxation of ownership rules will allow them to realize 'synergies.' [But] the commission's charge is to protect and enhance media diversity, competition, and local identity -- not efficiency." Once upon a time, says the union, broadcast stations competed for audience by doing the best possible local news. But media companies that dominate a market have little incentive to spend money on enterprise reporting and investigations.

Allowing further media concentration would be a "tragic mistake," says veteran editor Gene Roberts, now a journalism professor at the University of Maryland. "Communities deserve to be looked at with different eyes. Even with the best integrity and most solid news principles in the world, what looks like a story to one person may not to another." Easing the rules, says Roberts, is "just going to make an already bad situation even worse. There's very little news competition in most parts of the country, and we're about to have even less."

That's how it looks now, anyway. Five unelected appointees, whom most Americans have never heard of, will make those decisions in the next few days. If they get it right this time, the hornets won't swarm quite so furiously two years from now when the rules come up for review all over again.

Neil Hickey is editor at large for the Columbia Journalism Review.

Why Worry About Who Owns the Media?

by Eli Pariser

It's like something out of a nightmare, but it really happened: At 1:30 on a cold January night, a train containing hundreds of thousands of gallons of toxic ammonia derails in Minot, North Dakota. Town officials try to sound the emergency alert system, but it isn't working. Desperate to warn townspeople about the poisonous white cloud bearing down on them, the officials call their local radio stations. But no one answers any of the phones for an hour and a half. According to The New York Times, 300 people are hospitalized, some are partially blinded, and pets and livestock are killed.

Where were Minot's deejays on January 18, 2002? Where was the late-night station crew? As it turns out, six of the seven local radio stations had recently been purchased by Clear Channel Communications, a radio giant with over 1,200 stations nationwide. Economies of scale dictated that most of the local staff be cut: Minot stations ran more or less on autopilot, the programming largely dictated from further up the Clear Channel food chain. No one answered the phone because hardly anyone worked at the stations any more; the songs played in Minot were the same as those played on Clear Channel stations across the Midwest.

Companies like Clear Channel argue that economies of scale allow them to cut costs while continuing to provide quality programming. But they do so at the expense of local coverage. It's not just about emergency warnings: media mergers are decreasing coverage of local political races, local small businesses, and local events. There are only a third as many owners of newspapers and TV stations as there were in the 1970s (about 600 now; over 1,500 then). It's harder and harder for Americans to find out what's going on in their own backyards.

On June 2nd, the Federal Communications Commission (FCC) is considering relaxing or getting rid of rules to allow much more media concentration. While the actual rule changes are under wraps, they could allow enormous changes in the American media environment. For example, one company could be allowed to own ABC, CBS, and NBC. Almost certainly, media companies will be allowed to own newspapers and TV stations in the same town. We could be entering a new era of media megaliths.

Do you want one or two big companies acting as gatekeepers and controlling your access to news and entertainment? Most of us don't. And the airwaves explicitly belong to us -- the American people. We allow media companies to use them in exchange for their assurance that they're serving the public interest, and it's the FCC's job to make sure that's so. For the future of American journalism, and for the preservation of a diverse and local media, we have to hold the FCC to its mission. Otherwise, Minot's nightmare may become our national reality.

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