Stop the FCC's Covert Operation


By Thane Peterson Here's a quiz. Name a hot political issue that unites the following people and groups:

Singer Neil Diamond

The National Rifle Assn.

The Consumers Union, the organization that publishes Consumer Reports

Senator Trent Lott (R-Miss.)

Media mogul Ted Turner, founder of CNN

Entertainment and Internet mogul Barry Diller

The National Organization for Women

Conservative New York Times columnist William Safire

Code Pink, Women for Peace, an antiwar group

The African American/Asian American/Hispanic Caucus of Congress

The answer: All are publicly opposed to the Federal Communications Commission's plans to vote on new rules governing media ownership on June 2. It's not clear exactly what the FCC will be voting on because, incredibly, Commission Chairman Michael Powell has never deigned to make public the 250-page document laying out the plan. But the general idea is to loosen rules that restrict the share any one company can own of the national TV market and allow cross-ownership of TV stations and newspapers in local markets.

Most analysts believe the changes would lead to a wave of consolidation in the national media market, which is already dominated by a handful of big companies such as AOL TimeWarner (AOL), Viacom (VIA), and News Corp. (NWS).

APPALLED AND UNITED. Barring a last-minute change of heart, Powell intends to go ahead with the vote, despite requests for a delay from the two Democrats (out of five members) on the FCC and a passel of lawmakers from both parties. Powell won't share the details of the plan even with Congress.

This is undemocratic and disgraceful. Whether you're conservative, liberal, or in the middle, we should all be appalled by the way the FCC is acting in this case.

First off, allowing further consolidation of the U.S. media business is wrong on its face. Most of the usual "bigger is better" arguments don't apply. Media companies don't face the same sort of harsh foreign competition that confront auto and steel companies, for instance, partly because foreign ownership of them is restricted.

Moreover, our system of government invests print and broadcast media with special privileges (one reason they're so profitable) but also with special responsibilities precisely because they are so important to the functioning of our democracy. The "efficiencies" that come with mergers will likely mean fewer reporters, less local news, and a diminishing of the debate democracy needs to function.

NEW MATH. New technology simply isn't taking up the slack. You may think what you know about the world comes from the Internet, radio, and TV. But most actual news gathering is still done by print organizations such as newspapers, news agencies like the Associated Press and Bloomberg, and news magazines like BusinessWeek. Rush Limbaugh, Matt Drudge, and your favorite news anchor may put a spin on information in the public domain, but they aren't out gathering it. In small and medium-sized communities, the local newspaper is the sole source of information about government policies and local elections. More consolidation is likely to hurt, not help.

Yet, Powell has held only one official public hearing on the proposed changes, and has refused to attend most of the ad hoc meetings held around the country by Jonathan Adelstein and Michael Copps, the two Democrats on the FCC. The reason, Powell says, is that he prefers to focus on empirical studies -- and, in any case, the public has had plenty of chance to comment via the FCC's Web Site (www.fcc.gov).

If you actually go to the site and read some of the empirical studies the FCC appears to be relying on, however, they're pretty appalling. I came away wondering, why is the FCC making such monumental decisions with so little real information to go on?

FUZZY LOGIC. The FCC staff seems to have bent over backward to conclude that media consolidation has few ill effects. Take this conclusion by staffers Keith Brown and George Williams last September as to why radio advertising rates soared 81% (68% excluding inflation) in the five years after the FCC deregulated the radio market. Almost all of the lift came from "economic growth," they conclude. Oh really.

Rates might have gone up even more without consolidation, the study says. "A greater presence of large national owners in a local market appears to decrease the advertising rates paid by national and regional advertising agencies."

Does that make sense to you? It sure doesn't to me. If economic factors were, indeed, the cause of such a huge increase, why didn't radio ad rates plunge when the recession took hold last year? And why the emphasis on "national and regional" ad agencies when one of the FCC's mandates is to promote local diversity?

OVERWHELMING REACTION. The study glosses over one of the main problems with radio consolidation: That local advertisers have been squeezed out by big national ad firms. The truth is that as media markets consolidate, Wal-Mart (WMT) and K Mart (KM) may get good deals on radio ads, but a small, independent hardware store has a hard time getting its message across.

Worse, many of the studies by their own admission don't prove much of anything. For instance, David Pritchard, a journalism professor at the University of Wisconsin-Milwaukee, analyzed coverage of the 2000 Presidential elections in 10 markets to see if newspapers and TV stations with the same owner tend to have a similar political slant. He was cautious in coming to any conclusions from such a small sample. But if you read the footnotes, you discover that four of the newspapers he discusses are owned by Tribune Co. (TRB), which has the relatively unusual policy of not requiring its cross-owned local outlets to coordinate their Presidential endorsements. Doesn't that make the study even less representative?

To its credit, the FCC has a wonderful Web site and an electronic system that makes it easy for citizens to comment on issues under consideration. To date, the FCC has received more than 20,000 comments on its plans to change media ownership rules -- and, as of a tally on May 8, they were running more than 99% against. In addition, NRA members sent some 300,000 postcards opposing the changes, and activist groups such as MoveOn.org have taken out ads in major newspapers criticizing the plans. Has the FCC considered this outpouring? We'll know on June 1, but don't hold your breath.

UNMENTIONABLE PROTESTS. In 2001, two university professors studied five FCC decisions going back to 1996 and found that none of the decisions reflected public comment. One FCC staffer interviewed for the study noted that electronic comments from average citizens carry little weight with the commission because they are "nontechnical in nature."

The FCC tends to be pretty cavalier about how it handles public comment in general. For instance, Concerned Women for America, a conservative group that aims to ensure that "Biblical principles" are followed in American public policy, discovered late last year that the FCC received nearly 7,000 indecency complaints about CBS' Victoria's Secret Lingerie TV show -- and logged them as a single complaint. As a result, Concerned Women says, the FCC officially counted only 97 complaints received during the fourth quarter.

The bottom line here: If the FCC isn't listening to the public, it isn't acting in the public good. To go ahead with this vote on June 2 would be a travesty of public service. Peterson is a contributing editor at BusinessWeek Online. Follow his weekly Moveable Feast column, only on BusinessWeek Online


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