GR EXTRA!

Obsolete media ownership rules are killing the industry . . .

. . . if, that is, death is defined as anything less than 10% profits

Andy Zipser, Editor

04 Nov 2009

The Guild Reporter

The last of three Federal Communications Commission workshops, held in preparation for next year's quadrennial review of the FCC's media ownership rules, gave industry representatives more of a voice than  in earlier sessions. So it came as no surprise that today's prepared remarks focused mostly on competitiveness -- or, more accurately, on how ownership regulations interfere with competitiveness -- and only tangentially on the issues of diversity and localism that so dominated the discussion Monday and Tuesday.

Typical was Jane Mago of the National Association of Broadcasters, who contended that her industry's traditional business model is "under assault," that the newspaper cross-ownership ban "is out of date" and that the FCC is engaged in "assymetric regulation" of broadcast media, to cable's benefit.  At the end of her remarks Mago abruptly acknowledged, as if in an afterthought, that she hadn't addressed either localism or diversity, "but having a healthy, competitive broadcast industry is the way you foster both localism and diversity."

Indeed, although the FCC invited comments on all three elements of media competitiveness, localism and diversity, today's hearing underscored the deep rift between entrenched business interests on one hand and public interest groups and academics on the other. At times, those differences shaded toward hard-nosed contempt for ivory-tower impracticality. The FCC, argued Media General's George Mahoney, "needs to go out and look at the real world and see what's really happening." At another point he observed, "What I've seen missing in the commission's deliberations is the way the real world actually works."

That way, according to Mago, Mahoney and David Barrett, of Hearst Television, is a capital-intensive  technologically-driven shift toward multi-platform journalism and a 24/7 news cycle -- even as the internet "is sucking ad dollars out of the market" while stealing content and contributing virtually nothing to the mix. The only way the mass media can save themselves is to pool resources and combine operations, but that solution is thwarted by the FCC's outmoded regulations.

"Cross-ownership restrictions no longer make sense in today's multi-platform world," Mahoney argued -- indeed, he added, the cross-ownership ban "stands in the way of better journalism."

But there was no evidence presented for the idea that socially desirable outcomes  will flow automatically if only the news media were nourished back to health. And as observed by James Winston, representing the National Association of Black-Owned Broadcasters, "The goal that always gets short shrift is diversity." The number of minority-owned broadcast outlets has declined 35% since passage of the deregulatory 1996 Telecommunications Act, "so I don't think that a conversation that begins with a  request for greater relaxation of ownership rules is going to get our support," he added.

Jennifer Gonzalez, of the National Hispanic Media Coalition, noted that the FCC's ownership rules have been in limbo since 2002, when the commission largely relaxed its ownership rules -- and smacked into an adverse federal court decision that criticized it for "failing to adequately consider how  it would effect minority and female ownership" of media outlets. In the years since, she added, numerous cross-ownership waivers have been allowed to lapse without any adverse FCC action, essentially mocking the whole process, while the number of minority-owned broadcast stations has declined to just 7% of the total.

None of the panelists in any of the three workshops was able to reconcile the apparently conflicting demands of unfettered competitiveness on one hand and increased diversity and localism on the other, suggesting that perhaps no such resolution is possible. The way the "real world actually works," as Mahoney instructed the FCC to examine, is that decades of media consolidation have led inexorably toward more homogeneity, not less. Indeed, it's worth noting that neither Media General nor Hearst have embraced diversity within their own newsrooms: as documented by the Knight Foundation, both news organizations lag most of their peer group in hiring news employees that reflect the racial and ethnic composition of  the communities they serve.

On the other hand, industry complaints that there will be no media diversity or localism if their media outlets don't survive must be taken with a grain of salt. Although there's no question that revenues have been severely truncated by the recession and by internet poaching, it's also true that extensive cost-cutting -- and adoption of new technologies -- has enabled most media companies to maintain operating profits. Sometimes it's all a matter of degree. As David Barnett quipped at one point, the Hearst family wouldn't have stayed in the business as long as it has "if it had to be content with 5% to 10% returns."

The FCC is accepting public comments on all these issues through Nov. 20, and some time next year will open a formal rule-making procedure that presumably will take such comments into account.