TCS Daily

Real Media Reform

By James Plummer - June 20, 2003 12:00 AM

The Senate Commerce Committee on Thursday voted by voice vote to roll back much of the Federal Communications Commission's recent revision of regulations governing media ownership. The 3-2 party line vote of the FCC commissioners earlier this month eased restrictions on how many broadcast television stations one company could own nationwide, and allowed newspaper owners to purchase a television station in the same market.

The reaction from the pro-regulation crowd was swift. Even as FCC Chairman Michael Powell called for the ayes and nays from his four colleagues, two members of the women's left-activist group Code Pink in the audience began singing and chanting: "Mass deregulation of the mass communication means the end of democracy."

But what most empowers consumers - and democracy - is the ability of consumers to freely choose in an open market those media that best fit their diverse tastes and values. Indeed, "diversity, localism and competition" were the policy buzzwords repeated as a mantra by commissioners and senators between the fractious FCC meeting and a follow-up Congressional hearing. And not without reason.

The evidence does indeed indicate that diverse consumers do want "diversity," including "localism," among their media choices. But competition, not "public interest" regulation, is the only way to ensure these choices reflect the values and tastes of consumers rather than bureaucrats and special-interest groups.

And to that end, the FCC's action, for all the chanting to the contrary, was a positive step for consumers. In an age of cable, satellite, DVD and Internet, greater opportunities for horizontal and vertical integration can enable not only the media dinosaurs to diversify their offerings, but also allow new independent operators, such as the family-oriented Paxson Communications and its Pax Network, to compete by offering consumers something new.

In point of fact, Pax was only able to offer a family-friendly alternative to the big networks by owning and operating broadcast stations reaching more than 60 percent of the country. It skirted the FCC rules limiting station ownership to 35 percent of the country because UHF stations counted as only half a station.

The new FCC rules take the ownership limit up to 45 percent. But the Senate Commerce Committee action would make permanent the old 35 percent national market-penetration standard (as would a separate bill pending in the House). Such a measure would in fact hinder the diversity and competition offered by upstarts such as Pax.

The Commerce Committee bill also included a reinstatement of a ban on newspapers owning a television station in the same market. And the committee separately passed a measure revoking a grandfather clause protecting companies whose holdings already exceeded new caps on radio ownership in one market.

If members of Congress really wants to bring about more "diversity, localism and competition" in media markets, they will let the ruling stand, and instead take measures to tear down barriers to entry in broadcasting. Congress should:

  • End suppression of microradio -- Those who profess a concern for "diversity, localism and competition" could start by reversing the Radio Broadcasting Preservation Act, passed as part of the appropriations bill in 2000. The act itself overturned the FCC's modest attempt in 1999 to license low-power "microradio" broadcasters. It cut in half the small number of low-power licenses the FCC was set to grant and also barred the Commission from eliminating or reducing the "minimum distance separations" between stations on the radio dial. In effect, that limits the number of licenses for new stations while ignoring the digital technology that makes wide separation unnecessary. If diversity and competition aren't just rhetorical terms, it needs to lift the caps so scrappy start-ups can provide independent, local coverage.

  • Roll back the digital mandate -- Besides giving away a huge, valuable, swath of spectrum to the very corporations they now worry are becoming too powerful, the federal mandates increase the costs of maintaining a broadcast station by upwards of $1 million. This anti-competitive barrier to entry crowds out smaller stations, the ones that typically offer more diverse and local content.

  • Drive a stake through the estate tax -- Family-owned local media, whether they be daily newspapers or television stations, are at a distinct disadvantage with national or international corporations. Corporations never die; people do. And once every generation a family has upwards of half its capital confiscated by the federal government. This simple truth explains much of the consolidation of media and other businesses over the past century, as local owners converted their private interests into public shares of stock in media conglomerates. The current estate tax structure calls for the tax to slowly be phased to nothing in 2010, and then reinstated in 2011. That's hardly something estate planners can count upon. This typical slice of Beltway insanity provides family-run businesses with no assurance, outside of a carefully timed suicide, that the business will stay in family hands. The incentives to sell out remain. If Congress prefers independent media to corporate conglomeration, they must make the repeal of the estate tax complete and permanent.

Any one of these institutional reforms would do more to bring about true competition -- including "diversity and localism" in the electronic media -- than simply rolling back a technical regulatory decision. The question is does anyone on the Hill have the fortitude to do anything about them?

James Plummer is a policy analyst for Consumer Alert, a non-profit consumer group based in Washington, DC.

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