Posted on November 1, 2009 by David Oxenford

FCC Senior Advisor to Chairman to Study Media Change and a Workshop on Media Financing for Small Business - Looking to Reinvent the Broadcast Industry?

The Commission is worried about the future of the broadcast media, and they are trying to figure out what they can do.  The last two weeks have been full of news about actions being taken by the FCC which may or may not lead to a reshaping of broadcasting as we know it.  We wrote about the discussion of re-purposing some or all of the television spectrum for wireless broadband users.  We also told you about the workshops to be held this week as the first step in the Commission's Quadrennial review of it multiple ownership rules - looking at whether to allow more media consolidation to help broadcasters compete in the new media landscape or, conversely, whether there should be a reexamination of the existing rules to make them more restrictive against big media.  Last week, the Commission announced two more actions - the appointment of a Senior Advisor to FCC Chairman Julius Genachowski to study "the future of media in a changing technological landscape", and a workshop on "Capitalization Strategies for Small and Disadvantaged Businesses."  What is the impact of all of these actions?

The appointment of the Senior Advisor, Steven Waldman, is perhaps the most interesting action.  Mr. Waldman, the founder of the website Belief.net (recently sold to News Corp), is charged with determining how the FCC can assure that the media will serve the public interest in the 21st century, and that "all Americans receive the information, educational content, and news they seek."  He is instructed to work with all Bureaus to determine how best to implement these ambitious goals.  It is interesting that, while one might be inclined to look at this with the assumption that his charge is to look at broadcasting, the public notice announcing his appointment and his charge does not once use the word "broadcast" or "broadcasting."  Instead, it talks almost exclusively about the new media and technology and the potential that they have for serving the public good.

This reliance on the new media, and the mantra that is being chanted regularly by the new Commission, seemingly approaches media issues from a position where there is an assumption (perhaps rebuttable, but there nevertheless), that the new media is where all the action is and where all the attention should be placed.  This is reflected by the proposals (about which we wrote here, and which have gained much press since we wrote about these ideas) to re-allot television spectrum to broadband, with the idea that this will serve the new media at the expense of the dinosaurs in the broadcast industry - exchanging a sure thing that serves virtually the entire country for a promise of service in the future.  It also ties into a feeling that seems to be pervading government, that the "traditional media" can no longer be counted on to serve the needs of the public.  Not only is there this appointment, but there is also the upcoming workshop at the FTC on how newsgathering will survive in the future in light of the technological and economic challenges to newspapers and other traditional media.  Perhaps, in the words of Monty Python, it's time for the broadcast industry to rally and cry - "not dead yet" - as a vibrant though challenged industry is being almost assumed by the regulators to be out of business.

The Capital Formation workshop is perhaps a good sign that the Commission has not totally abandoned the broadcast industry, as the Public Notice announcing that event does specifically refer to the broadcast industry.  The lack of financing to acquire broadcast stations has been cited by many observers as the biggest impediment to minorities and other new entrants getting into broadcast ownership.  We are bound to hear those issues discussed in this week's workshops on the new multiple ownership proceeding.  While the Capital Formation workshop may be one way to address that deficit, we do note that the companies who are identified as participating do not seem to have a broadcast background, but from their descriptions in the public notice, they all seem to be more invested in technology companies.  Will potential owners who attend the session be disappointed by the lack of broadcast investors who are present?

These actions show the conflicted nature of the FCC when it comes to broadcasting.  What kind of reform is possible, and what kind of broadcast industry will we see in the future?  Will regulation recognize the change in technology and allow broadcasters to adapt to the changes, or will regulation force that change, or will broadcasters continue to be regulated as they always have been (or as they once were 25 years ago as some proponents of more regulation seem to suggest)?  These will no doubt be questions addressed on these pages many times in the coming months. 

 
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Posted on May 25, 2009 by David Oxenford

Localism Without Government Regulation

This past week, I attended the BIAfn Winning Media Strategies Conference in Washington, DC.  During the course of the conference, there was much talk about how broadcasters and publishers need to provide unique service to their communities in order to survive in the competitive media marketplace.  The point was made over and over again that, in each market there are unique attributes and personalities that a station should be covering in its programming, and should be exploiting even more broadly through their digital assets, to tie it to its community.  Only by doing so will the station be able to survive in the new media environment - and by doing so, the station may be able to thrive.  In fact, I was stuck by a statement by USC's Adam Clayton Powell III that domination of the local online and digital media marketplace was "the broadcasters to lose."  In other words, the broadcaster has such unque promotional abilities with its current audience that it can establish its brand in the online and in the mobile world far easier than other media players.  But there were also the repeated warning that there is more and more competition for this local digital market from new entrants and other media entities and that, if the broadcasters did not take advantage of their current advantage, the local service would come from someone else.  What most stuck me was that there was no question that the superservice to local needs would be coming from someone - broadcaster or not - as a result of marketplace developments, not because of any government mandate.  The broadcaster has to adapt to and compete in this new media marketplace or become culturally and economically irrelevant.  The broadcaster needs to serve the local market to meet these challenges, not because some Washington agency has ordered him to do so.  And the broadcaster needs to serve his community in a way that the public will find compelling, not in a way that the government thinks is best.

At BIAfn, the presentation that made the greatest impact was probably that of Greenspun Media from Las Vegas, which has reinvented a secondary newspaper and a Low Power TV station as an on-line powerhouse, uncovering the aspects of the community that would draw the largest audience and covering that information in great detail.  The Las Vegas Sun site not only covers hard news, but also the gaming industry, University of Las Vegas sports and even state government issues in a way that its audience seems to find interesting.  Even a history of Las Vegas, in great detail, is included.  And video plays a big part of the site, with the company in development of a hip news and events program, 702.tv, that will soon be a daily program on the television station and online (featuring local "celebrities" doing the weather, including strippers and Neil Diamond sound-alikes).  While some attendees at the conference thought that Las Vegas presented unique opportunities that might not be available in all communities, many were immediately speculating on the opportunities in their own communities to find unique personalities and events that could be developed on-air and on-line in ways to maximize their connection with their audience. 

After the conference on Friday, I found two emails waiting in my inbox from broadcast industry pundits, both echoing the same sentiment that was reflected at the conference - that broadcasters need to take advantage of their current connection with their markets to grow their digital platforms, or someone else will come along and preempt the opportunity.  See the comments from Hear 2.0 and Inside Music Media - both making the case that broadcasters must change to serve their communities to meet the new competitive threats.  The message seems clear - broadcasters need to serve their communities or someone else will (see this blog post by USC Professor David Westphal, cited by Powell in his remarks, about how these other new media entrants can micro-target audiences and survive economically) .

All of these commentators seem to agree that there will be more and more service to local communities - either provided by broadcasters or by someone else.  And this service will be provided without the need for any FCC mandates.  The service will come if there is a market for that service - a need that can't be artificially manufactured by government fiat.  The FCC in the mid-1980s recognized that a broadcaster would either provide local service or be replaced by someone else who would, justifying the abolition of detailed public interest requirements.  This was a full decade before the service that is now provided by the Internet was even a possibility.  To now talk about reviving those detailed localism mandates, when the competition is far greater than anything imagined in the 1980s, seems almost impossible to justify.  We'll see what happens as the FCC deals with its localism proceeding in the near future.
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Posted on May 14, 2009 by David Oxenford

Even Though Old Media May Be Dying - Let's Regulate Them While We Can - Broadcast License Renewals Every Three Years?

In a speech to the Free Press Summit, Acting FCC Chairman Michael Copps suggested that broadcast license renewals should no longer be a "postcard", but instead should be a real test of the broadcaster's service to the public interest - and should happen every three years, rather than on the eight year renewal cycle that is currently provided for by the law.  While the Chairman acknowledged that many suggest that the old media are in troubled times and may well be supplanted by new forms of communications, "If old media is going to be with us a while still...we still need to get serious about defining broadcasters’ public interest obligations and reinvigorating our license renewal process."  In other words, while broadcasters may be dying, we should regulate them while we can.

First, it should be pointed out that the broadcast license renewal is no longer a postcard, and really hasn't been for almost 20 years.  The current renewal forms require certifications on many matters demonstrating a broadcaster's service to the public and its compliance with the rules, and additional documentation on EEO performance and other matters.  TV broadcasters also have substantial renewal submissions on their compliance with their obligations under the Children's television rules.  Issues of noncompliance with the rules resulted in many fines in the last renewal cycle, demonstrating that this is not a process where the FCC is without teeth.  Yet most of these fines were for paperwork violations (e.g. not keeping detailed records of EEO outreach or quarterly issues programs lists demonstrating the public interest programming broadcast by a station), not for any substantive claims that station licensees were fundamentally unqualified and should forfeit their licenses.  In fact, the Acting Chairman's speech recognizes that most broadcasters do a fine job serving their communities, yet he believes that more regulation is necessary to police those that don't.  But is this the time to be imposing additional regulatory burdens on all of the industry, for the actions of a few.  Will the overall public interest be served by such actions?  .

As we wrote years ago when this proposal was proposal was previously floated by Commissioner Copps, the license renewal process was lengthened based on findings that the old process was cumbersome and unnecessary - often provoking litigation and delay, but only rarely uncovering any real evidence of serious problems with a licensee warranting Commission action.  There simply were no benefits to the substantially increased costs of the 3 year license term.  Moreover, the processing of the applications imposed a substantial burden on an already overworked FCC staff that took their attention off of the processing of the many other matters already before them. 

The period was gradually extended - going to 5 years for TV and 7 years for radio, and reaching its current 8 year term as part of the Telecommunications Act of 1996.  The Act specifies that the license renewal term shall be for "not more than 8 years," theoretically leaving the FCC with the flexibility to decide on some term less than 8 years.  However, when the Commission decided in 1997 to extend the renewal term to the full 8 years, it did so relying on statements of Congressional intent that Congress had expected to lighten the regulatory burden on broadcasters by extending the term for the full period.  Thus, were the FCC to try to shorten this period, it would have to explain why these findings were no longer relevant.

According to Broadcasting and Cable, Commissioner Copps later stated that he did not expect to rule on localism issues, or presumably raise this license renewal extension, during his interim chairmanship.  And the NAB immediately objected to the proposal.  Yet, as this issue has been raised by the Acting Chairman before, and as he will remain on the Commission even when the permanent Chair is seated, we can no doubt expect to hear this proposal raised yet again, perhaps in a formal setting, in the near future.  Broadcasters should be prepared to address any such formal proposal. 
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