Ownership Rules for a Digital Age

The FCC rules on media ownership enacted last fall produced a backlash in the courts, in Congress, and in public debate because they are seen to favor media owners rather than the public. And now a federal appeals court has ordered the FCC to reconsider their impact. But in all the public debate, one major issue has received no attention: The rules fail to take into account the transformation that will take place when TV switches to digital transmission.

Originally, the government expected the stations to use the digital spectrum to broadcast in high-definition. One analog channel would be swapped for one high-definition channel. But stations discovered that they could divide the digital signal into four or more separate channels, giving them the potential of multicasting four or more channels in the same market.

Moreover, the new FCC rules would allow one entity to own as many as three TV stations in a single market. When the digital transition takes place, those three channels could become 12, or more. In radio's digital transition, one analog radio channel can be compressed into two, enabling a single owner—given the FCC's current ownership limit of eight radio channels per market—to operate 16 radio channels in a single community.

That will make it possible for a single media owner to operate as many as 12 television channels, 16 radio channels and one newspaper in a single market.

That's extraordinary. It raises to a new level concerns about the impact that concentrated media ownership will have on editorial diversity and local content. It also raises concerns about "price fixing." The more concentrated the media ownership, the more pressure the owner can exert on advertisers to buy ads in multiple properties and markets in a single package.

The FCC should require television-station owners to make known their plans for their digital spectrum before it allows them to buy more stations in a market. It also should consider rolling back the current ownership limit of eight radio stations in a market.

And it should address the issue of ownership of cable systems. At the moment, because of a 2002 court ruling, there are no restrictions to prevent cable-system owners from also owning TV or radio stations or newspapers in a single market. Additionally, there is no limit on the number of television households that a single cable operator can reach nationally, which could result in subscription-rate hikes for consumers. These issues should all be addressed at once, so that the magnitude of potential media consolidation can be understood.