Feds continue media two-step

Capitol Hill fumbles with consolidation, cross-ownership, calls for help

Andy Zipser, Editor

01 Dec 2009

The Guild Reporter

The gnashing of teeth and rending of constitutional cloth over the future of newspapers continued throughout the fall with as little result as in the preceding summer and spring.

Of Senator Ben Cardin’s “Newspaper Revitalization Act,” introduced last March to provide newspapers with an explicitly legal mechanism for restructuring as non-profit corporations, there has been little evidence. And, apparently, little Congressional interest. A hearing Sept. 24 by the Joint Economic Committee, titled “The Future of Newspapers: The Impact on the Economy and Democracy,” drew only three of its House and Senate members. And while the committee’s chair, Rep. Carolyn B. Maloney of New York, has sponsored the House version of Cardin’s bill, her remarks at the hearing were notably defensive.

“I want to be very clear,” she emphasized at the outset. “This is not about bailouts. No one’s talking about bailouts. We’re through with bailouts.”

Actually, a few voices have been raised in recent months attempting to do just that, arguing that serious journalism—if not newspapers themselves—is at least as deserving of public support as the country’s financial sector or the auto industry. But the nuances of such a view get swept away by a reflexive citing of First Amendment concerns and fears that the media’s watchdog role will be compromised by any government involvement, historical evidence or the experiences of other countries notwithstanding.

For example, Paul Starr, a Princeton University professor of sociology and public affairs, tugged in that direction at the Joint Economic Committee hearing by outlining the government’s historical support of the press. Conversely, he pointed out, the existing paradigm already is failing, with ever fewer reporters covering state and local government, suggesting that the watchdog is being defanged anyway.

The industry’s corporate interests, on the other hand, are entirely happy to wave the First Amendment flag—anything to keep the government out of their business—while seizing on the emergency to advance their financial well-being. So it was no surprise that the testimony of John Sturm, president and CEO of the Newspaper Association of America, focused entirely on fiddling with the tax code, such as his suggestion that newspapers be allowed to spread net operating losses over five years instead of two.

The same kind of near-sightedness was on display in early November, when the Federal Communications Commission held a three-day workshop in preparation for its quadrennial review of media ownership rules, scheduled for next year. Those rules principally affect the airwaves, setting limits on how many radio or broadcast television outlets a single owner may control in each market, but also limit cross-ownership of media, including newspapers. The purpose of the rules is to prevent media monopolies. The hope of every business, on the other hand, is to have a monopoly.

That newspaper owners are not immune to this impulse was evident on the third day of the FCC’s workshop, which was given over largely to corporate representatives after a day of academics and a day of public interest groups. Whereas the first two groups essentially had argued for more regulation, to promote media competition, diversity and localism, the industry’s voices were raised as one on behalf of the FCC butting out of their business.

Typical was Jane Mago of the National Association of Broadcasters, who contended that her industry’s traditional business model is “under assault” and that the newspaper cross-ownership ban “is out of date.” The FCC, chimed in 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, they argued, is to pool resources and combine operations—a solution thwarted by the FCC’s outmoded regulations.

In fact, the history of mass media has been half a century or more of relentless consolidation and corporatization, in good times and in bad. The process has always been justified as good for democracy—the cross-ownership ban “stands in the way of better journalism,” Mahoney told the FCC workshop participants—despite abundant evidence this isn’t true. Moreover, it’s clear that “better journalism” isn’t what drives the process.

As David Barrett 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”—a newspaper profit margin that was considered normal as late as the 1960s, before newspapers became cash cows.