FTC Chair Not Gunning For Media

Calls journalism future ‘critical’; is against broadcaster tax

Why This Matters

A Fan’s Retrans Note

The players in the retransmission consent debate are usually broadcasters and cable operators, with the FCC at times a somewhat reluctant referee and legislators coaching from the sidelines. But a coalition that includes former members of the Bush and Clinton administrations and one sportswriter believes the voice of one key constituency is missing from that equation: sports fans.

In a filing last week, The Sports Fan Coalition, an ad hoc Washington lobby, said the FCC needs to keep signals on the air during retrans impasses to protect diehard rooting interests.

Cable operators have argued for that as well, but David Goodfriend, one of the driving forces behind the coalition, and a former Clinton administration staffer and EchoStar exec, says the group has applied pressure to operators regardless. “We just take one issue at a time and decide what is best for sports fans,” he points out.

But is the coalition real or, in a word, Astroturf in nature? The group has received money from Verizon, and in-kind help from Media Access Project and the Computer & Communications Industry Association. But Goodfriend denies that any advisor has control over group policy.

“Something is very wrong in the world of sports,” says coalition member and sportswriter David Zirin, whose work can be found at Edgeofsports.com. “We don’t want to reject sports, we want to reclaim it.”
John Eggerton

Jon Leibowitz, chairman of the Federal Trade Commission,
is hoping Congress will grant him new powers to combat unfair
and deceptive practices. If those powers come, Leibowitz promises
that the FTC will use the authority judiciously, adding that the commission
would even consider exempting media companies from being
targets of aiding and abetting authority—a prospect that has troubled

And while he believes that the FTC’s inquiry into the future of journalism
is critical, he does not favor taxing broadcasters or handing out
antitrust exemptions.

In a discussion with B&C Washington Bureau Chief John Eggerton,
Leibowitz covers these topics and more, including self-regulatory efforts
on food marketing. An edited transcript

You had a workshop on the future
of journalism last week. Will that be
your last one?

It’s probably the last one. We think this is a
critically important initiative at the commission
because news is changing so rapidly
and it is so vital to democracy.

You said when you launched the
workshops that the goal was to understand
the issue better before recommending
changes to current law.
What have you learned?

We have learned it is a very complicated area, and that people from
all parts of the political spectrum, from newspaper reporters to TV
producers to bloggers, all seem very willing to contribute, because I
think there is a bedrock agreement among every stakeholder we have
talked to that the future of news is critically important.

Some people have had some pretty good ideas, and some have had
ideas that are probably not such good ones. One other thing we have
learned is that anything we write, even if it is a compendium of other
people’s ideas or proposals that have come to us through our first two
workshops, is very volatile and people will write about them because
folks are passionate about this.

OK, let’s go through a few of the proposals in that compendium.
Tell us whether or not you could support them. Antitrust exemptions?

I think the commission would have concerns about endorsing any sort
of antitrust exemption. I certainly would. I am glad to see that that
initial proponents of that idea have appeared to back off.

A tax on broadcast spectrum?
From my perspective, a really bad idea-a nonstarter.

What about a tax on advertising?

I think any approach involving taxes is a really bad idea. We are always
willing to listen to folks, but I can’t imagine the commission supporting
any policy that would involve taxing one or another industry to
subsidize news. That’s a bad idea.


Once you have
collected all this input, what do you plan to do with it?

going to sit down among the commissioners and staff and try to think through
what we want to say in our report, which we hope to put out later in the year.
It is more important that we get it right than that we get it out quickly.

How will that
dovetail with the FCC. Are you talking to them?

We are
talking. We have our initiative and they have theirs and both of them, hopefully,
will shed light on the news industry and how it's changing, whether government
has a role and if so what it might be.

We are
aware of what each other is doing. I talk to [FCC Chairman] Julius
[Genachowski] I would say every couple of weeks at least on a variety of issues.
This is something we're both excited about.

How important is food marketing,
and how is the industry doing on its
self-regulatory efforts?

I think
food advertising is a very important issue at this agency.  It is an important issue for American
consumers. There is a real obesity
crisis in America. We are very supportive of self-regulation. We have seen some
meaningful steps by companies, though they certainly have more to do.

are three areas where we are involved as an agency. One is that when we see
unfair or deceptive advertising, we bring a case, and we brought a case last
week [against Kellogg]. We have also been very involved in pushing for most
robust self-regulatory efforts. Several years ago, under then Chairman Majoris,
we subpoenaed 44 food marketing and fast food companies to find out how they
were marketing to kids and how much they were spending.

We used
that process to push the industry into stronger self-regulatory commitments.
And now, following up on that, we are going back into the field shortly to see
if they are honoring those commitments. I am hoping they are, and hoping they
make some commitments beyond the ones that they made.

We will
have the next report finished probably sometime next year.

third area is working with the administration and Congress. And I think that
the commission is very supportive of the Michelle Obama inter-agency
initiative. It can be really helpful. She has the ability to put together
various parts of government and stakeholders like food marketing companies and
consumer groups and scientist and doctors who are about this in a way that no
single agency can.

We are
also working on a joint interagency report back to Congress because the
Appropriations Committee asked us to take a look at this.

What expanded power
s would the FTC get through the financial services bill and why do you ned

It would
only give us a modest expansion of our authority in four areas.  One is expanded civil penalty authority, so
that when we are going after people engaged in fraud, we can not only get
disgorgement of profits, but we can fine them if a court agrees. There will be
a real deterrent effect. And by the way, Caspar Weinberger supported this
authority when he was chairman back in the early 1970's.

second would be easier rulemaking. We are under a sort of medieval form of
rulemaking called the Magnusson-Moss Act, and it can take eight to 10 years to
make a rule. People who don't like the rule can call for time-outs, independent
referees. Even when Congress put this sort of regulatory albatross around us in
the mid-1970's, according to the people who were involved in this area, it
didn't mean to put such breaks on our rulemaking authority. We believe that
with some relief from the act, we can be a more effective agency. The third thing
is aiding and abetting authority. So, if we want to go after a fraudulent
payment processor who is helping someone rip off consumers, we can do it more

we have this authority for aiding and abetting in the telemarketing sales rule,
but not outside of that, which is peculiar.

fourth is independent litigating authority. Now, if there are violations of the
Children's Online Privacy Protection Act or the Do-Not-Call list, and there is
ongoing harm, we don't have that option. Either we go to court and stop the
ongoing harm, or send it over to the Justice Department to have them bring the
case for us because they have fining authority, and wait two months while
people's privacy is still being undermined by the continuing violation.

We believe
the expansions are pretty modest and they have bipartisan support at the
commission. That authority is in the House version of the legislation, not the
Senate. It is also supported by President Obama.

Some in the
advertising community are still concerned aiding and abetting could be used to
go after advertising.

should not be worried about it. I have talked to the commissioners.  We have talked to the staff.  It is not what we intend to do. It is not
where we want to go. We want to go after hardcore fraud.  

If [the
ad industry] had a proposal to be exempted as media companies, newspapers,
folks who are essentially conduits, we would really like to see that proposal.

notion here with aiding and abetting, we want to do things that [media companies]
would be supportive of, that your readers would be supportive of.  If they are interested in some sort of
thoughtful carve-out, we would be interested in looking at it -- and not just
us, but more importantly, the members of the conference committee [which is
reconciling the House and Senate versions of the bill].

If you got more streamlined
rulemaking authority, what rule would you like to implement?

I think
we would sit down as a commission and think through where the appropriate areas
for a rulemaking would be. And I want to say: Not every problem can be solved
by a rule for a law. You really want to let the marketplace try to solve
problems itself.  Industries can move
much faster when they recognize they need to change or improve their behavior
than you can by doing any sort of rulemaking.

So, you do not have
an itchy rulemaking trigger finger.

No.  If we are fortunate enough to get this
rulemaking authority, we will take a deep breath. We don't have any rulemakings
that we are planning already. We really only want to use this in appropriate
circumstances, which will be few rather than many.

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