CU Launches Campaign to Overturn FCC Rule Changes

Consumers Union Launches Campaign to Overturn FCC Rule Changes
Statement of Gene Kimmelman
Consumers Union on the FCC decision on Media Ownership

WASHINGTON, DC — “In one sweeping move, three FCC political appointees are dramatically worsening the nation’s media landscape for decades to come. Like the wolf in sheep’s clothing fable, these three Commissioners are saying their “modest” changes to media ownership rules are necessary to reflect today’s abundant new media choices. But in reality their action is masking a much more cynical and dangerous plan.
“Voting against the public interest, and for the financial interests of a handful of corporate media giants, Chairman Powell, Commissioners Abernathy and Martin have loosened restrictions on who can own what media in this nation. They have handed a financial bonanza to media moguls who want to buy up profitable television stations and newspapers, without getting anything in return for the American people who own the airwaves — no commitment for better news reporting, no commitment to cover local issues, no commitment to present unbiased information, no meaningful commitment for more children’s programming, no commitment for anything in the public interest.
“Allowing a merger between a dominant newspaper and a large TV station in local communities across the country, as the FCC order does, is likely to create local news giants that stifle reporting of different points of view. Such a news and information giant is a frightening prospect for democracy. Public policy should err in favor of more competition, not less, so communities around the nation can enjoy a greater diversity of viewpoints so critical to democratic dialogue and debate.
“There is a groundswell of opposition to these rule changes. As more and more Americans find out about the FCC’s order and rule changes, they are going to push for Congress to overturn them. Consumers Union is launching a campaign today to help marshal the diverse interests across the political spectrum who want to make sure that localism, diversity and competition are preserved.
To find out more click on the “Who Owns the News” section of www.consumersunion.org.


Separating Fact from Fiction in the FCC’s Media Ownership Order

Fiction: If the Federal Communications Commission does not relax media ownership rules, this will mean the end of “free over-the-air television.”
Fact: FCC Chairman Michael Powell repeats a mantra of concern for “free over-the-air television,” defending an industry that has morphed into conglomerates that own both broadcast and cable networks. This claim is a cover to benefit a handful of powerful media corporations. For most U.S. households, television is neither free, nor over the air. More than 85% of all TV households receive their service via cable or satellite. Broadcast/cable conglomerates’ (e.g. Viacom/CBS, News Corp./Fox, ABC/Disney, and AOL Time Warner) TV stations have congressionally-mandated Must Carry and Retransmission Consent which allows them not only guaranteed carriage on cable, but the possibility of earning significant revenues from their programming. When Mr. Powell strengthens the hands of the broadcast side of these businesses, he helps their profitability across the board.
Furthermore, even stand-alone television networks and local TV stations are among the most profitable businesses in America. The notion that relaxation of ownership rules is necessary for continued “free over-the-air television” is not based on marketplace reality.
By allowing networks to increase the number of stations they may own, and maintaining unaltered the networks’ Must Carry and Retransmission Consent rights, the FCC is effectively pumping up the market power of the networks’ cable holdings-where they have no public interest obligations whatsoever.
Fiction: Lifting the Newspaper/Broadcast Cross Ownership ban will result in more and better production of local news.
Fact: Most communities across America have only one newspaper or one dominant newspaper with more than 80 percent of readers. If a dominant newspaper, one of the key sources of news in a community, merges with the leading television station – and most communities have no more than four stations that cover local news – that company will dominate that market because it will now own that previously independent source of news. It may save a buck or two to cut reporters at the television station or newspaper covering the same local beat, but that means less competition for stories, lazier journalism, and fewer independent voices essential to democracy. Watchdogs will become lap dogs as one-company media towns pop up all over America.
In addition, the “synergies” that the major networks tout as being the essential reason for these cross-ownerships amount to nothing more than smoke, mirrors and better advertising opportunities, according to some media experts.
In their book, The News About the News, Leonard Downie and Robert Kaiser note that “[m]uch of this news sharing amounts to little more than cross-promotion among co-owned or cooperating media. . . .With a few exceptions, attempts at synergy have produced relatively little additional original or improved journalism or new revenue. They mostly have ‘repurposed’ journalism already being produced by one news medium for use by another. In practice, this usually has meant repackaging newspaper journalism on television and the Internet, because newspapers continue to have by far the largest and most talented news-gathering staffs.”
Fiction: Because of all the new sources of information available, especially cable television and Internet services, the rules are no longer relevant or necessary.
Fact: The facts before the FCC show that most people still get their news and information from broadcast news and television. While the Internet has emerged as a new distribution channel for those same sources-there is virtually no local news content on the Internet except that which is produced by local TV stations and newspapers-it is simply not a new voice. Cable television is much the same story. Many viewers watch their local broadcast stations over cable television, but again, there is no new voice. In the few communities where there are local cable news channels those channels are often owned by broadcast affiliates.
Fiction: Broadcasters need to be able to buy more television stations in order to achieve cost efficiencies to compete with cable and satellite.
Fact: Again, TV stations and networks are highly profitable businesses. Even so, stations can already obtain a waiver of the duopoly rule (which prohibits a broadcaster from owning two stations in a market in some instances) if they can demonstrate that they will otherwise fail, and a similar waiver exists for the acquisition of failing newspapers.
Fiction: The FCC has done careful market analysis exactly as the court required.
Fact:/ The Commission’s order shows a clear ends-oriented bias directed at helping the largest media companies, counts voices in the same inconsistent manner that got them in trouble last time, and has eschewed rigorous market structure analysis entirely. The way in which the Commission is manipulating the UHF discount (which counts a UHF broadcast TV station as only half when tallying the number of stations a broadcast company owns) is perhaps the best example. When counting the number of broadcast stations the networks own for the purpose of the 35% National Television Station Ownership rule, they discount UHF stations by half-allowing the largest broadcasters to own more. When counting the number of voices in a market for the Newspaper/Broadcast Cross-Ownership prohibition, the FCC has arbitrarily chosen not to use the UHF discount-inflating the number of voices in a market and allowing more cross-ownership.
It is interesting that when getting rid of the UHF discount served the interests of the networks in 1995 (when they wanted to remove the Prime Time Access Rule), the networks’ economists argued that it should be eliminated, saying the discount was outdated because of the emergence of cable television. The Commission seems ready to update rules to current market conditions except where current market conditions run counter to the interests of the largest media companies.
The Commission is ignoring even the most basic tenets of economic analysis in devising its new media ownership rules. The FCC is completely ignoring audience share in its new rules. For example, in the newspaper/broadcast TV cross-ownership context, the Commission is not looking at audience share or its newspaper equivalent, circulation. It is simply not possible to understand or meaningfully analyze market structure without using these basic tools.
Fiction: The FCC’s hands were tied by the courts to make this decision on June 2nd.
Fact: The courts have not forced the FCC to make this decision by a particular date. Absolutely nothing in law would have precluded the FCC from giving Congress and the public additional time and a specific proposal upon which to comment. It was highly unusual for the majority to deny the 30-day extension asked for by the other commissioners, which is almost always given as a matter of courtesy.

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