New Media Transforms the Ownership Debate

Published October 1, 2005

On June 13, the U.S. Supreme Court declined to hear the predominant case on media ownership, Prometheus Radio v. FCC, which had been sent up from the Third Circuit Court of Appeals last summer. The High Court’s declination means the decision will fall back into the hands of the Federal Communications Commission, which must now act in accordance with the guidelines contained in the Third Circuit Court’s opinion.

New media, which encompasses Internet publications and blogs, digital television, and satellite radio, has revolutionized the way we communicate and made it a more engaging, democratic, and rich experience.

From a policy standpoint, new media changes the way we look at the current debate over media ownership. The ongoing digital revolution is creating a vibrant journalistic world that exists, thankfully, outside the ambit of government regulation. No longer is it necessary to see the debate as a simple dichotomy between “big media” and “media diversity.” The digital world is much more complex, and it requires a new way of thinking about media ownership.

In August 2003, the FCC loosened media ownership rules, some of which had been in place since 1975. The ruling raised the local station ownership limit for television networks and allowed the same company to own both the major newspaper and the major television station in the same market.

In June 2004, the Third Circuit Court of Appeals held a hearing to examine the FCC’s revisions. The court found three problems with the “diversity index,” the FCC’s analysis of the reach of various media. Specifically, the court said:

  • The diversity index required that all media outlets should be counted the same.
  • Too much weight was given to the Internet as a legitimate news source.
  • The diversity index was never released to the public.

There is some merit to the court’s argument. The diversity index was not a realistic measure of a media outlet’s reach. For instance, under the current diversity index, a student publication at a small liberal arts school would be counted the same as the New York Times. Also, the FCC would do well to show openness and make public the diversity index it has compiled.

The FCC was justified, however, in making the case that Internet journalism has fundamentally changed the media landscape. And journalism has been transformed not only by the Internet, but by various new technologies–satellite radio, digital television, and wireless technologies, to name three. This changing landscape calls for an updating of our archaic media laws.

New Media Diverse, Local

In a spring 2004 article, Neil Hickey, editor of the Columbia Journalism Review, argued that digital television, contrary to popular arguments, often allows journalists to focus more closely on local news. Hickey points to a case in North Carolina in which NewsChannel, a digital outlet of WRAL-Raleigh, ran live, complete coverage of the murder trial of a well-known local figure. This, Hickey said, was a “story of broad local interest, but one for which the station would not have pre-empted popular CBS shows on its lone analog channel.”

The Internet allows journalists from traditional platforms to provide more detailed coverage and to do so in an instantaneous, two-way forum. In many ways, Internet news is more thorough, given its endless capacity, and more democratic–readers can cross-check their news and engage in dialogue with journalists and other readers through email and discussion boards.

In a study by the Wharton School at the University of Pennsylvania, Professor Joe Waldfogel found people regularly substitute freely among Internet, broadcast TV, and newspapers. Nielsen/NetRatings recently reported 21 percent of Web users who read newspapers have transferred “primarily” to online news sources. A September 2004 study released by the Center for the Digital Future at the University of Southern California’s Annenberg School for Communication found 75 percent of Americans regularly go online. Among these people, most say the Internet is their primary source of news-related information.

Digital technology and the Internet make communication instantaneous and effortless and even recast the definition of journalism. These days, when news breaks, the first images often come from camcorders and cell phones in the hands of ordinary citizens on the scene. The social benefits of the digital age can be realized only under a set of rules that encourage competition among traditional media and with new, emerging forms of media. That is the best way to provide people with diverse, localized, and high-quality media.

The FCC should consider carefully the outcomes of the ruling it will make. The diversity index should be re-examined and made public. It would be a mistake, however, for the FCC to de-emphasize the Internet’s increasingly important role as a media actor. If we desire a vital and diverse media, our ownership laws need to move out of the analog world and into the digital age.

Daniel Corbett is with the Competitive Enterprise Institute.