News Articles

Critics: FCC stacks dereg deck

10/06/2002 08:00:00 PM Eastern

Critics of media consolidation went on the warpath last week after the FCC released a dozen economic studies painting a generally rosy picture of broadcast consolidation in the past six years—a strong hint that more deregulation is on the way.

Dereg study Cliff Notes Here's a snapshot look at how the studies come down on some of the deregulatory rules under review:
Rule What studies say Favored?
35% cap on TV-household reach Network O&Os produce most news; elimination of national radio cap led to some homogeneity of programming Toss-up
Local radio/TV-crossownership limit Advertisers do not view radio, TV as substitutes Yes
TV-duopoly limit Increased concentration can lead to more ad time, improve station finances Toss-up
Dual-network-ownership restriction Proliferation of broadcast networks; repeal of ban on network ownership created more diverse but less expensive shows Toss-up
Ban on local newspaper/broadcast combos Cross-owned stations offer more, higher-quality news, did not show manipulation of news or commentary in presidential race coverage Yes
Local radio concentration limits Increase in local concentration created more-diverse playlists, mixed results in advertising rates Toss-up

"These studies should not be a basis for abandoning broadcast-ownership limits," said Mark Cooper, research director for the Consumer Federation of America. Any FCC attorney relying on last week's research to defend new deregulation against court challenges would "get his brain handed to him," he said, suggesting that the FCC coordinated the conclusions to favor deregulation.

"We intend to get every work paper, draft and back-channel correspondence between the FCC staff and the authors," said the veteran of hundreds of court battles seeking local-cable Internet-access requirements as well as fighting telephone monopolies' rates and efforts to get into long distance.

Despite critics' chest-beating, it's unclear whether the FCC's econometric data and Ph.D.-level calculi will lead to wholesale elimination of remaining ownership restrictions, as Cooper fears, or just to some simple fine-tuning here and there.

A close examination of the FCC's new data reveals that researchers also found some downside to the sweeping deregulation ushered in by the 1996 Telecommunications Act, and most imply that it's a toss-up whether further relaxing of broadcast-ownership limits would be in the public interest.

"We have not yet begun to understand the implications," said Paul Gallant, who coordinated the studies as head of the FCC's media-ownership task force. "People who feel the outcomes are inaccurate or biased should supply us with better, more compelling analyses."

FCC Chairman Michael Powell ordered the studies after a string of court rulings beginning in March 2001 found that the FCC's media-ownership rules were based on conjecture rather than evidence.

Two clear winners in the new findings are newspaper owners Tribune and Belo Corp., which are fighting to eliminate restrictions on newspaper/broadcast combos in the same market. University of Wisconsin-Milwaukee professor David Pritchard's study of 10 markets where co-ownership was grandfathered following a 1975 ban found that corporate management did not manipulate news coverage or commentary on the 2000 presidential campaign. Others found that stations owned by newspaper companies provide more, as well as higher-rated, news and that ad buyers don't view newspaper and broadcast as interchangeable—a finding suggesting that cross-owned media won't dominate the local ad market.

"This shows there is a significant public-interest benefit of broadcast ownership by newspapers," said John Sturm, president of the Newspaper Association of America.

Other conclusions are less straightforward. Regarding the relaxation of national ownership caps, the studies found that TV-network O&Os produced more news than affiliates and that radio playlists are more diverse within individual markets. On the other hand, radio program diversity nationally is slightly less diverse now that conglomerates set corporate programming policies.

An examination of the 1995 decision allowing broadcast networks to own their own programs showed that the networks diversified program lineups but mainly by replacing some traditional comedy and drama fare with lower-cost quiz shows, newsmagazines and reality programs.

The National Association of Broadcasters, which opposes lifting the cap on TV-household reach but favors relaxing limits on TV duopolies, last week said it had not had time to comment on the studies.

Jonathan Blake, a Washington attorney representing network affiliates in their fight to retain the 35% cap, challenged the notion that network O&Os produce more news. "I'm not remotely persuaded," he said, noting that networks generally own more-profitable large-market stations with bigger news budgets. "I'm sure large-market affiliates have more news than small-market O&Os."

Although FCC Chairman Michael Powell set an April deadline for revising the ownership rules, fellow Commissioner Michael Copps insisted last week that the inconclusive nature of the "bare-bones" studies makes the seven-month timetable too ambitious. He said the FCC should hold field hearings across the country to inform a large cross-section of Americans about the issue and better gauge public opinion.

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