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In December the Federal Communications Commission (FCC) relaxed its media ownership rules. And in doing so it most likely invited confrontation with the US congress.

The recently approved policy allows companies to own a newspaper and a television or radio station in the same city. The 3-2 decision overturns some measures of long-standing regulation preventing media cross-ownership. Under the new ruling newspapers in the top 20 media markets are allowed to merge with broadcast stations in the same market, provided the television station isn’t among the top four rated in the city. Smaller market mergers would need to prove that the newspaper faces financial crisis.

There is also speculation that the FCC will seek to alter rules regarding the number of television and radio stations a company can own in the same city. Presently, the limit is two television stations in the large media markets as long as both aren’t among the four largest in an eight-station market. As for radio, companies are limited to owning up to eight stations in a particular market.

These prospective rule changes are already attracting attention from a variety of organizations opposed to media consolidation. Public meetings held at the end of 2007 typically drew large numbers of comments critical of loosening cross-ownership laws, arguing that it isn’t in the public’s interest. Critics will next set their sights on influencing elected officials, hoping they will intercede and kill the FCC decision.

Congressional interference in FCC rulings is not unprecedented. In 2003 similar changes to the laws were moving forth under then-chair Michael Powell. The FCC removed the restrictions on newspaper and television ownership; it also increased the percentage of media ownership permitted in a single market to 45 percent (up from 35 percent), and decided that broadcast licenses would no longer be reviewed based upon “public interest” considerations. These new rules passed the FCC by a 3-2 vote, but an odd alliance of liberal and conservative groups loudly protested, getting the attention of the US Senate and House. Congress overturned the media rule changes, but before that was enacted the US Third Circuit Court of Appeals struck down the FCC decision, claiming that the FCC had not adequately justified the new rules.

The maelstrom of discontent surrounding the 2003 proposal was in large part fueled by the repercussions of the controversial 1996 Telecommunications Act, which loosened radio ownership caps. The act relaxed ownership percentage restrictions with the stated objective of increasing competition and diversity. But critics claim that competition, localism and diversity have actually receded since those rule changes. Concerns about the radio ownership trends since 1996 are often cited as reasons to oppose further media consolidation efforts.

Another wrinkle in the ownership discussion is the emergence of online media. Most of the newspapers and broadcast stations now have an Internet presence, attracting an audience and advertising. And opinions about consolidation of online media are just as contentious as those regarding traditional media. Google and its search technology and ad placement techniques are front and center in this conversation. Those wishing to compete with Google favor consolidation; Google, though, is challenging Microsoft’s recent bid for Yahoo!, claiming that the proposed acquisition raises issues of competition and policy, and threatens innovation.

Pros and Cons of Relaxing Media Ownership Rules
There are several arguments for and against the relaxation of media ownership regulations. Those in favor of changing the rules, typically media companies and free-market and deregulation proponents, assert that:
•    The rules are outdated. They went into effect in 1974, and were not even applied retroactively; the New York Times Company already owns a radio station in the city.
•    Competition will be enhanced, as companies will have more capital to challenge the media conglomerates.
•    Costs will be more readily controlled due to consolidation. And the opportunity to repurpose content will lead to savings across platforms.
•    Media companies will be in a better position to create new products and services demanded by the consumers. New and diverse market segments can be a greater focus of attention.
•    Traditional media, and newspapers in particular, are suffering as advertising is moving to the Internet. Allowing media to combine will help them be more efficient.
•    The Internet has produced millions of new and diverse voices in the form of websites, blogs and more. Everybody now has the ability to reach a large audience, and being a media conglomerate isn’t necessarily an advantage anymore.

Of course, the anti-consolidation forces are armed with arguments against the rule changes:
•    Media conglomerates are large enough already. Consolidation trends are well-documented, and the actual number of media companies has dwindled over the years.
•    The 1996 Telecommunications Act serves as an example of tampering with the ownership laws. That act resulted in mergers of several media companies, which was the opposite of its goal to increase competition.
•    News outlets in communities are too tightly controlled by too few companies.
•    Consolidation leads to less diverse opinions and voices available in the media; the marketplace of ideas becomes limited.
•    Fewer opportunities for reaching the public and voicing concern.
•    Market-based competition is diminished, resulting in less innovation and higher prices for advertising and content.
•    It undermines the community-oriented communications crucial to democracy; media have become too large and lost touch with their audience.

Recommendation
As in 2003, the congress and senate should intervene and repeal this recent FCC decision regarding media ownership. The decision was hurried amid an arbitrary deadline; the required public hearings were sparse, hastily announced and poorly organized. Public comments ran almost entirely in opposition to these new rules, and elected officials seem to be uneasy about them as well.

Among the duties of the FCC, as laid out in the Communications Act of 1934, are to act in the “interest of the public convenience, interest, or necessity,” and to grant spectrum licenses to broadcasters for commercial use, provided the broadcasters act in the public interest. However, over the last few decades we’ve seen the FCC gradually move from its focus on public interest. During the 1980s the FCC eliminated the Fairness Doctrine, which required broadcasters to give airtime to opposing voices on matters of public importance.

Going further, the manner in which the 1996 Telecommunications Act has impacted the radio business provides more concern about the affects of relaxing media ownership restrictions. The act aimed to foster innovation, competition and diversity in radio. But as a result of the new law, now just a few large companies dominate the radio industry. This consolidation has actually made radio less competitive, with less local content, and more commercialization. Ten major companies control two thirds of listeners, revenue and spectrum in the country now; meanwhile 4,300 smaller owners fight for the remaining 33 percent. Radio station ownership has declined by a third since 1996 as smaller stations sold to conglomerates rather than compete with them.
Clear Channel and Viacom together control roughly 45 percent of the audience and sales revenue. Clear Channel owns over 1,200 stations in 300 markets, and the consolidation has enabled the company to cut costs and staff. Clear Channel largely relies on syndicated programming which has resulted in less attention to local programming; the company often uses a technology called voice-tracking to make it appear that the hosts are local and live, when the programs have really been recorded in a far-away location.

Similarly, some of the largest media corporations will benefit from the latest FCC decision, among them such behemoths as NewsCorp, Disney, General Electric and Cox which have considerable numbers of entities across most media platforms, including the Internet. There is genuine cause for concern that greater media consolidation will have a negative effect on the marketplace of ideas. Ideally media should represent the community and the public interest, but instead money and earnings reports have become the primary focus.

Proponents of less stringent media ownership rules frequently cite the Internet to demonstrate greater competition and access, and an increased number of voices in the market. But while acknowledging the tremendous growth of online media and its effect on society, the emergence of the Internet still isn’t reason enough to ease the regulations. The true power of broadcast companies lies in the license to use public spectrum. In this Internet era, television and radio stations are increasing in value. And in reality, few (if any) online media ventures based on content have become financially successful. Instead, those that are viable are websites owned wholly or partly by the larger media corporations.

In regard to the Internet, though, media consolidation is becoming a concern, too. Companies such as Google, Microsoft, Yahoo!, IAC, NewsCorp and AOL have the vast majority of holdings related to online ventures. At some point rules surrounding online ownership may become necessary, just as they have been in the world of traditional media.

Conclusion
This latest FCC rule change seems to fall in line with the recent attempts to cater to media conglomerates over the public’s best interests. This is all the more reason for congress to over-turn the FCC’s December ruling, much like it did in 2003.

What is truly required is a comprehensive assessment of media ownership and trends, which would include a thorough examination of the various broadcast, newspaper and online components. The piecemeal approach of the recent FCC plans merely serves an influential minority of moneyed interests. The current administration is politically weak, but is nonetheless seeking to pass corporate-friendly laws that have little public support.

Arguably there are more pressing issues the FCC should attend to, including improving coverage of local events and greater ownership of stations by companies controlled by women and minorities. These relevant matters need to be considered in an analysis of the media in the US.

Congress should kill the latest FCC decision and require an expansive appraisal of the current state of the media. Recommendations from this report can become the basis for future communications actions, which a new presidential administration can consider beginning in 2009.

Current FCC member Michael Copps says that the media consolidation debate is crucial to society. “At stake… are our core values of localism, diversity, competition and maintaining the multiplicity of voices and choices that undergird our marketplace of ideas and that sustain American democracy.” The US congress would do well to respect this viewpoint, and invalidate this latest attempt to modify the existing media ownership rules.