2006 - Shrinking Big Media - Without Ownership Reform
For the last 10 years, since the liberalization of ownership rules under the 1996 Telecommunications Act, the broadcast industry has been in the process of putting together cross-market platforms in radio, television and newspapers in markets across the country. In the flap over media ownership that began with the FCC's 2003 multiple ownership decision, and which continues through the current proceeding, media critics have sought the shrinking of big media companies, which they hold responsible for everything from violence and indecency on the airwaves to the lack of new music on radio. Now, suddenly, 2006 has brought a restructuring of big media, without any government intervention whatsoever. What impact will this restructuring have on the current proceeding?
The announcement by Clear Channel Communications that it is being sold, and at the same time it's selling all of its television stations and over 400 of its radio stations in 90 smaller markets, is but the most recent example of that emerging trend. CBS, which itself was split off from Viacom, is in the process of selling off a number of its radio properties in smaller markets. ABC also has a deal to sell off the bulk of its radio properties, and announced in its comments in the current multiple ownership proceeding that it did not care what the FCC did, as it had no intent of acquiring any additional broadcast stations or newspaper properties. Similarly, Tribune is exploring strategic options that reportedly include splitting its broadcast and newspaper properties. The New York Times has also announced that its exploring spinning off its television properties.
All of this unforced media divestiture should have an impact on the current multiple ownership proceeding. On a practical level, who is going to push for the current proceeding to be completed? Many of the players who were active in the past no longer seem like they will care about the outcome of this proceeding, and others seem like they will be preoccupied, at least in the short term, with their business deals. While the FCC has announced the scheduling of its second field hearing (in Nashville on December 11), it still has 4 more promised hearings to hold at some point in the future. Unless these are scheduled quickly, and without the big players pushing the FCC to move quickly, the decision could easily drag.
So who is left to actively push the FCC to reach a decision in this proceeding? On the TV side, Fox and Sinclair seem likely to be the most active proponents of great deregulation - and, based on past history, most likely to pursue court actions to obtain ownership relief if the FCC does not move quickly on the current proceeding. Gannett and the Journal Corporation own newspaper and TV stations and may push for more relief. Clear Channel had been the major proponent of further radio deregulation. Will their activity continue?
But, while the proponents of deregulation may not be as numerous, it will be difficult for critics of media consolidation to sustain arguments that big media will keep expanding until it eventually dominates public discourse in all media markets. The current wave of radio divestitures seem to indicate that, unlike fast food restaurants, small markets do not generate a return similar to large markets, or at least not one that is meaningful to a large public corporation. On the TV side, the divestiture of television stations by newspaper companies seem to hint that the cross-promotional benefits of these media do not always offer the economic benefits that some had thought. If the private markets come to these conclusions, and lead to big media breaking itself up, is there really any need for government regulations on media ownership? And with increased competition from the new digital media, concentrating in "old" media does not seem to be a priority for most companies, again raising questions about how much ownership regulation is necessary.
We will see how these trends eventually play out when the FCC reaches its ownership decision - whenever that may be.
Over-The-Air (Local) commercial broadcasting is not a good sandbox for the free market. All local stations operate with a license issued by the federal government. Without license regulation, anyone could be on the radio or TV and the service would be useless.
Since licenses are a carefully controlled privilege, it should be possible for small businesses and established community groups to buy a local radio station. Instead, over-the-air local commercial radio has become the sandbox of big investors, resulting in over-valued pricing that excludes those who should have access to the license, but can't pay the conglomerate price.
Is there a need for regulation of ownership? Yes, as long as the over-the-air service is subject to license regulation, the distribution of those licenses should be carefully controlled, too. How can it be fair otherwise?