Public-Interest Groups Argue Against Loosening Ownership Rules

FCC Shouldn't Give Free Pass Based On Economic Distress: Consolidation Critics

By John Eggerton

The broadcasting industry isn't in such bad shape, a majority of public interest group representatives argued Tuesday on their way to making the point that the FCC should not loosen its ownership rules as a way to "prop up" the industry.

In fact, whether broadcasting is in a cyclical downturn and still a vital source of news and info or is a marginal player facing possible extinction depended on whether one was arguing for more regulation (the former) or less (the latter).

Representatives of media consolidation critics Free Press, United Church of Christ and Media Access Project were among the panelists assembled for the second of three hearings this week teeing up the commission's quadrennial review of media ownership rules. They were all in favor of structural regulations.

FCC Media Bureau Chief William Lake said it would take five or 10 years to figure out whether the current tanking economy for newspapers and broadcasters was a cyclical event or a sea change. He asked how the FCC should take into account the economic downturn given that it did not have the luxury of waiting until those final returns were in.

Derek Turner, research director at Free Press, said he didn't think the economic slump looked any different from past recessions. He said the FCC should be concerned about broadcasters' ability to make a profit, but that it was not the commission's job to prop up the industry, or to assume that relaxing the rules is going to be the answer to problems, many of which the industry created for itself.

He also said that even if the FCC did loosen the rules, the tendency would be for the industry to engage in the same behavior that led to its current state.

Media Access Project's Andrew Schwartzman wasn't keen on a financial bailout of the industry. He agreed with Turner that it was not the government's business to prop up industry. Besides, he argued, broadcasting and newspapers are still profitable on an operating basis and said it should not be the FCC's problem that massive overinvestment at inflated prices led to pressure from formerly private companies to meet Wall Street's quarterly expectations.

The FCC has historically allowed purchases of so-called failing stations that would otherwise violate its ownership rules.

Colin Crowell, senior advisor to FCC chairman Julius Genachowksi, asked how the FCC should treat those waivers and the criteria for them when it faces far more of those stations falling into that category.

Schwartzman said that the waivers really apply "at the margins" and should not be central to the FCC's policymaking. He said it may well be that some markets can't support certain stations, but that the FCC should be looking at the stations on an operational basis, to see "what is debt service and what isn't."

Turner said he did not think the commission should institutionalize a permanent end-run around the rules. He said if the FCC wanted to relax its failed station waiver policy, it should give it a defined time frame, after which the station owners would have to come into compliance with the rules.

While the majority of panelists said they thought structural regulations were still necessary and broadcasters should not be able to get out from under them with claims of economic distress, one panelist was squarely on the opposite side.

Former FCC Media Bureau chief Ken Ferree, now with the Progress and Freedom Foundation, said broadcasting had been marginalized as a media player by a host of new competitors. "Tinkering with ownership limits in a subset of the media industry that is suffering from a deteriorating investment environment holds little hope of effecting significant positive change.

Radio and television broadcast is a much less significant part of the media universe than they once were." said Ferree. He argued that old business models are obsolete, broadcasting is in dire economic straits, and that the FCC should get rid of all the ownership rules that are now archaic and a shackle on their ability to compete and succeed.

He went so far as to suggest the FCC should get rid of its indecency regulations so that broadcasters can compete head to head with cable and other media: "The FCC and Congress should abolish archaic broadcast speech restrictions so that broadcasters can compete with new media platforms that enjoy full First Amendment protection."

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