FCC Set to Revisit Cross-Ownership of Media

Published December 1, 2007

The head of the Federal Communications Commission (FCC) is floating several proposals for changing certain media ownership rules in the United States.

Although his office hasn’t yet released any formal details, FCC Chairman Kevin Martin has put out feelers on resolving all or part of major cross-ownership issues, say sources in FCC circles. The main element of Martin’s effort reportedly is eliminating a rule that prohibits a single company from owning television stations and newspapers in the same market–a change he, business interests, and many media analysts have long favored.

The high-profile, politicized, and polarized matter of media cross-ownership has resulted in long-running reviews at FCC and in Congress. Cross-ownership rules govern the number of newspapers, television stations, radio stations, and cable operations owned by companies in a single market.

Seeking Resolution

If Martin can bring even a small portion of the process to conclusion, it would represent progress on the issue, say Beltway observers. Caps on the numbers of properties owned–rather than the existing outright prohibition–might be a compromise scenario that will gain a positive vote, according to sources.

Rep. John D. Dingell (D-MI), chairman of the House of Representatives Committee on Energy and Commerce, urged FCC “not to rush to judgment in its media ownership proceeding” because “issues of this magnitude and importance deserve nothing less than the full and measured consideration.”

Dingell noted an appellate court largely invalidated FCC’s most recent attempt to craft ownership rules when Martin’s predecessor, Michael Powell, tried unsuccessfully to loosen nearly all limits on media ownership in 2003. That move was stopped by the Third Circuit Court of Appeals, which ruled FCC didn’t adequately justify its proposed revamps.

Policy Stalemate

Adam Thierer, a senior fellow at the Progress & Freedom Foundation, underscores key differences between the sweeping changes sought by Powell and the more select modifications now expected from Martin.

“There’s been a stalemate on media ownership for the past several years in the wake of the 2003 liberalizing attempt under Powell and opposition from Congress and the court. That comprehensive strategy failed miserably,” Thierer said. “It is unlikely that we’ll see anything that comprehensive from Martin. At best, the new attempt will be relatively narrow and not as sweeping–perhaps one or two rule changes of a limited fashion on broadcasting and newspapers.”

Thierer regards such a strategy as a “limited, half-hearted attempt to liberalize archaic ownership rules” and is dubious about the outcome. “We’ll be lucky if we see that get through,” he added.

Unnecessary Rules

According to Thierer, market structure rules such as cross-ownership bans preventing business combinations and consolidations are unneeded, especially when a better approach exists–allowing antitrust laws and enforcement to step in when there are clear, actual market power problems. “This is how market power problems are dealt with in every other sector in our economy,” he added.

“I think that the idea of relaxing some of the restrictions on media cross-ownership is a recognition of the changes currently taking place in the media with so many different technologies, service providers, and platforms,” said Wayne Brough, chief economist and research vice president at FreedomWorks.

New Outlets, Venues

Brough and Thierer point out there are now many different modern venues for accessing information and news, including hundreds of cable TV channels and uncounted numbers of Internet/online sources. They say it is unlikely for any single entity or owner to exercise extraordinary market control, and when combined with some of the weak financial positions of newsprint and broadcasting organizations, threats posed by media cross-ownership are much less significant today.

However, Brough recognizes well-organized forces regularly assemble against cross-ownership liberalization. Thierer says the “psychology of the debate” often relies on “preposterous” conspiracy and master plan theories about corporate control when the problems with government control should be the focal point.

“The rise of the Internet and other digital information sources is producing a radical change in the media landscape,” Thierer said. “And with so many multimedia sources, one wonders how much of a difference the old media operations make.”

Frank Barbetta ([email protected]) writes from Little Falls, New Jersey.