Federal Communications Commission member Michael Copps said Thursday that the commission needs to seriously study the impact of venture capital on the media business -- an impact that could potentially have disastrous and destabilizing effects, he added.
At the commission's monthly public meeting Thursday, where the various bureau chiefs summarized their 2007 achievements and 2008 priorities, Copps, invoking the 1929 stock market crash, said that notably absent from those reports was any planned study or investigation into that issue.
Copps argued that with private equity taking a bigger stake in the media -- what he called the FCC's "pell mell" approval of "rafts of private-equity deals" -- companies were increasingly no longer accountable to divulge even basic ownership information. When something goes wrong, he added, or the equity firm goes bust, what happens to the media company and who does the FCC seek out for redress?
Some of the equity deals may be good, some may be bad, he said, but we don't know, and we need to know before such deals reach a critical mass, adding, "We should at least ask the question."
He said the current economy had eerie parallels to 1929, and that one of the problems then was a lack of regulatory oversight.
Saying that the issue was not sufficiently on the FCC's radar, he put in a call for the "research or white paper or study that will "head us down the track" of answering those questions.
Asked earlier in the week if he was concerned about the rise in private equity in media ownership, FCC chairman Kevin Martin told reporters that the commission had never studied the effect of financial structure on media ownership, that he said last summer that there was no evidence that private-equity ownership affected the management of such companies and that he was still not convinced that there was any difference.