Power Shift
As
the FCC prepares to alter the media map,
battle lines are drawn
© Graham Roumieu/MAGNET REPS
BY
NEIL HICKEY
Bringing the story up to date: The Federal Communications Commission
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 3, 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. And so the battle was joined,
growing louder through the fall and winter.
And
the lines have been drawn. 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.” A
Democratic senator, Byron Dorgan of North Dakota, called for more
voices in the nation’s media, but not from “one ventriloquist.”
A passionate, daylong seminar was held at Columbia’s law
school (“the most important meeting taking place anywhere
in America today,” Commissioner Michael Copps told the symposiasts).
In late February, the FCC was to hold a hearing of its own in
Richmond, Virginia, followed by two others (at the University
of Washington and Duke) organized by Copps personally. Copps,
a Democratic appointee, complained that the policy review was
moving too fast, and that the issues should be ventilated far
more publicly before any decisions were made. Powell sternly disagreed,
saying that “you don’t need a nineteenth century whistle-stop
tour to hear from America.”
Powell has regularly pointed out that reviewing the rules is no
pet project of his own, but was mandated by the Telecommunications
Act of 1996 (signed by President Clinton), requiring him to reexamine
FCC regulations every two years and get rid of the dead wood.
Also: that the U.S. Court of Appeals for the D.C. Circuit has
ordered the FCC to justify several of the rules or junk them.
Still, Powell’s own view (“validate or eliminate”
has been his cry) 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. His legal adviser, Susan Eid, puts it this way:
“The chairman has long since advocated that, if you’re
going to do an honest evaluation of the rules, you have to look
at the marketplace as it exists today, not how it looked thirty
or forty years ago when we had black-and-white TV, no remote control,
and three choices of TV programs.” The presumption is on
repeal of the rules, she says, unless hard evidence proves they
serve the public interest. 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. Those advocates were not reassured in October
when the FCC released twelve new elaborate studies of the media
marketplace that, in total, suggested that media consolidation
isn’t such a bad idea. The consumerists countered that the
studies were tainted and tilted, and that they telegraphed the
commission’s hidden intentions to favor Big Media at the
expense of the public when the time comes to change the rules.
‘AWFUL THINGS WILL HAPPEN’
One of the most contentious of the FCC regulations forbids a single
company to own 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 twenty-seven-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, recalls that the cross-ownership rule was
born in a different world a quarter century ago, and that “whatever
it was designed to prevent or remedy is irrelevant now.”
He points to forty 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. What
more evidence do we need? Case closed.”
That doesn’t satisfy Linda Foley, president of the 35,000-member
Newspaper Guild, who fires from the opposite battlement: more
cross-ownerships means jobs will be lost, and news consumers will
receive a more homogenized diet of news and opinion. “The
biggest impact 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 cjr 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.” Would TV people who acquired a newspaper be respectful
of what they don’t know about newspapering, he wonders? Will
they understand the subtleties of print culture?
One voice in the wilderness among newspaper proprietors is Frank
Blethen, publisher of The Seattle Times, whose family has controlled
the paper for generations. “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.”
But he’s sure that these clusters don’t produce good
journalism. “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, he 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?
As long ago as 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.” Defenders
of the rule offer evidence that newspapers and television stations
are by far the most popular sources of news and thus ought not
be melded into one voice. 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, so no great damage is done by losing a journalistic
voice or two in a community. 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. Moreover, they
point out, most Internet users go to the Web for national and
international news, not local. And besides that, the Internet
is not a mass medium, no matter what you may have heard: little
more than half of U.S. households have Internet connections, and
among minorities and poor people, the figure is a lot lower.
On the cable side, concentration is already apparent: two owners,
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).
Thus, most sources of news are tapped from the same old barrels.
‘MORE VOICES, NOT FEWER’
Are TV networks too big for their boots? TV stations think so.
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 heart’s 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 (networks make far less), and because owning them would
give the networks more power than they already have 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. No
they don’t, insist the indies. At the moment, CBS owns twenty-one
stations; ABC, ten; NBC, thirteen; and Fox, thirty-three. 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 thirty-five-percent cap has been good
for localism.” An influential group called the Network Affiliated
Stations Alliance, which represents 600 stations, agrees. Its
chairman, Alan Frank, the president of Post-Newsweek’s station
group, tells cjr: “We feel it’s important for democracy
that we have more voices, not fewer. Further consolidation is
not good for the country. Our system of broadcasting is set up
very clearly as being locally based. That’s its strength.”
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. Still, 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. (Some refused.) 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. But the simple truth is that stations rarely preempt the
network for local coverage lest they enrage viewers devoted to
Survivor, The Bachelorette, and Joe Millionaire.
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 have made it no secret that they
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. Hostile guns from many quarters are bearing
on the 35 percent rule; however, the smart money is betting that
the FCC will hedge its bet and raise the limit to 40 percent or
50 percent rather than discard it altogether.
‘HOW DARE YOU?’
Among the other ownership rules, 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, and eight others
remain. About seventy-five 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. (Since 1995, the number of entities owning
commercial TV stations has dropped 40 percent.)
The NAB argues that the FCC ought to okay these media marriages
because some small TV stations are losing money, and if they go
out of business, the community will lose one newsroom covering
the local scene. In a new tack, 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?”)
At the national level, far more conspicuous consequences for news
would result if, let us say, CBS took over NBC. (Viacom, CBS’s
parent, once expressed such an interest.) That can’t happen
now, but if the rule is altered, two news divisions inevitably
would become one, giving viewers less choice in hearing about
wars, elections, national policy, and the Washington ballyhoo.
(Meanwhile, Dan Rather and Tom Brokaw would suffer the indignity
of sharing the anchor chores.)
In April 2002, NBC acquired Telemundo, the Spanish-language network,
and promptly merged the two networks’ newsrooms in Miami.
The assumption, says Herta Suarez, AFTRA’s national director
of special projects, is that NBC will do the same in cities such
as Los Angeles and Chicago, where both networks have news operations.
“This will reduce opportunities for journalists to work,”
she says, “and also what the public will learn.” (Suarez
also laments that NBC pays Latino staffers less than Anglos for
the same work.) Juan Gonzalez, president of the National Association
of Hispanic Journalists, says that the goal of giving Americans
a diversity of opinions and analyses “has been virtually
forgotten.”
A ‘TRAGIC MISTAKE?’
At the Columbia law school forum in January, chairman Powell confessed
he is no fan of Congress’s 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 he 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. Safeguarding those rights has
“been understood to permit restricting the media industry’s
natural desire to concentrate ownership in order to achieve economies
of scale.” Sandra Ortiz, author of the USC brief and executive
director of the university’s communications law center, says
that the once-revered concept of local media ownership has become
“so rare as to be almost quaint.”
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.” AFTRA
points out that media conglomerates, in hot pursuit of higher
profits, customarily put heavy pressure on their newspapers and
broadcast stations to cut costs, with negative consequences on
the journalism. 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 enterprisers and investigations. Depriving people
of that “is to enter onto a slippery slope that will leave
the public wondering whose ‘truth’ is being told.”
Allowing further media concentration would be a “tragic mistake,”
says the 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 months. 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.
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Neil Hickey is CJR's editor at large.
