FCC's Martin: Jury Still Out on Private-Equity Impact
The Federal Communications Commission is monitoring the potential impact of private-equity ownership of media properties, chairman Kevin Martin said, but it is too early to tell whether it has any negative implications for the public interest and localism or requires changes in how the FCC tracks attributable ownership interests in media properties.
Responding to a letter from top Hill Democrats concerned about the private-equity trend, Martin's response -- released Wednesday by Telecommunications & Internet Subcommittee chairman Rep. Ed Markey (D-Mass.) -- said it was a relatively new phenomenon and suggested that the jury was still out on the degree to which that private money and the management techniques and lack of transparency ran counter to the public-trustee role of licensees, and how much the insutlation from quarterly earnings reports allowed them to build a stronger business from which to serve the public interest.
Martin said the commission would consider whether it needed to change its attribution rules in light of the more complicated mix of debt and equity in privately funded ownership as part of its ongoing review of media-ownership rules, but he added, "We are not aware of evidence suggesting that the commission's broadcast and cable attribution rules do not adequately capture private-equity ownership and control."
But he added that if anyone had such evidence that the rules were not "capturing" equity-firm interests that should be counted toward ownership but weren't, "we would need to revise our attribution rules."
Martin said the commission had not had any problems with the "management and financial transparency" of media entities owned by private-equity firms.
"The commission will continue to monitor the impact of private-equity ownership on the ability of commission licensees to make capital investments in the communications infrastructure that will enable them to serve the public interest," he said, adding that given the trend's "recent origins in the communications sector, it is too early to identify all of the issues that this investment vehicle might raise," including whether it represents "any different or unique issues from ownership by public corporations or sole proprietors."
Martin was responding to a July 12 letter from Markey and Rep. John Dingell (D-Mich.), chairmen of the House Energy & Commerce Committee, asking for responses to various concerns about private-equity takeovers of media companies, including Univision Communications and Clear Channel Communications.