Ownership Dereg Looks Like Uphill Climb
Posted: Thursday December 10, 2009
By Kim McAvoy, TVNewsCheck
In the late 1990s, USA Broadcasting, Barry Diller’s string of independent TV stations with big local programming ambitions, was part of the major broadcasting industry push to convince the FCC to relax the local duopoly rule so that one company could own more than one TV station in a market.
As the proceeding heated up in November 1998, according to agency records, USA Broadcasting CEO Jonathan Miller visited the office of then-Chairman Bill Kennard and the four other commissioners to make the case for deregulation. At his side that day was the company’s general counsel, a former FCC official.
Their efforts and those of other broadcasters paid off. The FCC, in August 1999, voted to permit ownership of two stations in larger markets as long as one of the two was not among the market’s four most highly rated.
Nonetheless, Diller gave up on broadcasting and a year later agreed to sell the stations to Univision for $1.1 billion. The deal allowed the Spanish-language Univision to operate second stations in seven of the top eight Hispanic markets.
Miller went on to head AOL and now Fox Interactive Media. And the general counsel who accompanied Miller on his FCC rounds, Julius Genachowski, went on to become chairman of the FCC.
As required by law, the FCC ownership rules are up for review once again. And broadcasters will soon be agitating for relief from the local restrictions, including the duopoly rule and the ban on common ownership of daily newspapers and stations in markets outside the top 20.
The broadcasters feel the rules deprive them of badly needed operational efficiencies that come from owning multiple outlets in the same locale.
Genachowski’s career stop as a broadcast executive and as an advocate for media ownership deregulation a decade ago suggests that he might consider an additional measure of relief.
But no one is counting on it. In fact, the consensus among broadcasters and others interested in the issue is that the FCC is unlikely to provide any relief anytime soon, despite the congressionally mandated proceeding.
Even if he were so inclinced, broadcast lobbyists and lawyers say, it would be tough for Genachowski to toss out structural media regulations strongly supported by congressional Democrats and liberal advocacy groups.
“I don’t see any evidence that anyone is seriously rethinking their position,” says Jerry Fritz of Allbritton Communications. “Sadly, people are still thinking that this is the 1960s and it isn’t.”
“The evidence is there to do something,” says Ken Ferree, a deregulatory-minded senior fellow at the Progress and Freedom Foundation and chief of the FCC Media Bureau when Republican Michael Powell was running the shop. “The question will be whether the will is there to do something. At the end of the day, it’s going to be a question about how much political capital they want to invest in this and whether it’s a fight they really want or not.”
Supporters of ownership restrictions are not taking Genachowski for granted. “I don’t think there is any predisposition on the part of the chairman and his circle with respect to these ownership issues,” says Andy Schwartzman of the Media Access Project.
“I accept that we are going to have to convince Julius Genachowski that we’re right in saying that the commission should not be relaxing these,” Schwartzman says. “We’re treating this as a jump ball.”
So far, in his public comments, Genachowski has given no indication of where he stands on local ownership. He declined to be interviewed for this article.
The biggest obstacle to change is Democratic Commissioner Michael Copps. He has been a strong, vocal and effective opponent of ownership deregulation. At an FCC-sponsored media ownership workshop in November, Copps — the only commissioner attending the session — reaffirmed his thinking.
“Broadcast ownership policies are supposed to encourage three essentials: localism, diversity and competition,” he said. “Years of evidence available to — but largely ignored by — the previous two commissions demonstrate rather clearly that the tsunami of media ownership that has flooded our media environment for the past two decades has kicked the braces out from under all three of these essential qualities. “
And then, just last week, he was among those raising questions about Comcast’s deal to acquire control of NBC Universal.
“I am anxious to hear more from the parties to the deal about how they believe the proposed transaction, as presently constructed, advances the public interest. It will come as no news to them that they face a very steep climb with me.”
Balancing Copps are the FCC’s two Republican commissioners — Robert McDowell and newly appointed Meredith Atwell Baker. Broadcasters see them as possible votes for deregulation, although both maintain that they are keeping open minds.
“I want to let the facts light my path to a decision. I am kind of erasing the chalkboard and will fill it up again with a new record and go from there,” McDowell says.
McDowell voted in favor of permitting broadcast-newspaper crossownership in the top 20 markets in 2008.
As a general matter, he says, regulations tend to impose costs in the form of unintended consequences.
“At the end of the day I want to be sure we are not placing more regulations on broadcasters at this very fragile and important time in their history,” he says. “Many broadcasters are drowning and the last thing we want to do is hand them a heavy rock in the form of new regulation.
“If the duopoly rule is resulting in less newsgathering because it prevents economies of scale, then we should re-examine it,” he adds.
“On the one hand,” McDowell continues, “smaller markets might have fewer voices and, therefore, we need to make sure we have a diversity of voices in those markets. Again, I don’t want to prejudge what the facts may tell me.”
The FCC’s newest Republican commissioner, Meredith Atwell Baker, supported the FCC’s relaxation of the broadcast-newspaper crossownership in 2008 when she was running the National Telecommunications and Information Administration.
But she says that she wants to take a fresh look at media ownership. “I really want to hear from the industry and the consumer groups to hear what changes they think are necessary for competition,” she says.
“I think in this economic challenging time the issue really is what are the effects on mid- to small-size markets,” she says.
“One needs to be aware of the economic realities. Is it better to have eight stations in a market or a couple stations that serve the market well? As long as we have localism covered, I am flexible to see how that outcome is met. Localism is critical and important.”
Most believe that the new Democratic commissioner, Mignon Clyburn, will follow the lead of Genachowski on the issue.
A source close to her says she’s an “open book” on media ownership.
“She’s certainly has concerns about media consolidation and is very interested in seeing diverse points of view and local ownership. But she also recognizes that it’s a changing media landscape,” according to the source.
Although the agency kicked off a review of its media ownership rules in November with the workshop, an informal, staff-level hearing, the issue does not appear to be on a fast track.
FCC insiders don’t think the agency will focus on media ownership until next summer when a notice of proposed rulemaking might be released.
Also, the agency’s plans to hold a series of field hearings next year may slow down the process and extend the debate.
“You are whistling Dixie if you think the FCC is going to do anything soon,” says one agency insider.
The FCC also has other priorities right now. It has promised Congress to come up with a plan in February for expanding access to broadband services and Genachowski is personally interested in advancing Net neutrality rules, which are intended to insure fair and open access to the Internet.
The FCC also now has to decide whether to approve Comcast’s takeover of NBCU and, if so, whether to impose any restrictions on Comcast’s management of the company. At least that should serve to reveal the current thinking of all the commissioners on media consolidation.
Despite it all, broadcasters hoping for change can take solace that the man now at the top of the agency once considered the local ownership issue from their perspective.
When Miller and Genachowski lobbied the commissioners a decade ago, they left behind their talking points. Among them: “USA Broadcasting’s experience to date demonstrates that providing significant amounts of high-quality, locally-produced diverse programming will be economically infeasible unless it can combine forces with stronger stations in its markets.”