Posted on September 23, 2010 by David Oxenford

FCC Commissioner Baker Suggests No Government Support for Media, But Possible Relaxation of Broadcast Ownership Rules

FCC Commissioner Meredith Atwell Baker recently delivered a speech in Washington, DC, where she addressed calls for the government to take action to assist the traditional media deal with the economic issues brought about by the new media.  From time to time, there have been calls for the government to assist the traditional media, either through some sort of direct subsidies, or through regulatory changes that could assist in their news coverage to make these entities competitive in the new media world.  While the Commissioner's speech did not detail those efforts, calls have, for the most part, not suggested direct government subsidies to support traditional news media sources.  Instead, more indirect efforts have been suggested to insure that these media sources continue to serve their communities.  Calls have been made to change tax laws to allow newspapers to operate as nonprofit entities (while still soliciting advertising).  In a draft FTC option paper, there was a suggestion of taxing commercial media to provide more support to noncommercial public broadcasting entities.  Other proposals have been more direct - simply mandating more news and public affairs programming from broadcasters (with little or no discussion of the source of the revenues for such mandates).  In her speech, the Commissioner noted that some suggestions may be forthcoming from the FCC's own Future of Media report due at the end of the year (see our summary of the issues that they are exploring here), but she seemed to rule out these types of proposals, instead suggesting that the Commission could assist companies meet the new media challenge by loosening FCC restrictions on ownership.

The Commissioner suggested that no government action to bail out the media is necessary to preserve service to the public - citing the many examples of how that service is provided through new media sites that serve all sorts of communities and community groups - providing timely and detailed information on specific topics, often on a neighborhood level.  We have made that same point on these pages - the new media is already filling any void that may exist in local media coverage.  Some of these sites are produced by old media companies - as TV stations, newspapers and others develop microsites targeted to very local needs and interests.  Other sites are totally independent - developed by local interest groups or new media entrepreneurs.  So how can the Commission help these sites to develop?

The Commissioner suggested that a relaxation of the ownership rules, which is currently under consideration (see our post on the pending Notice of Inquiry on the multiple ownership rules), could help existing media companies compete in the new media world.  We've written before about the concern that the prohibition against the cross-ownership of broadcast stations and daily newspapers (except in the largest markets where waivers are available, see our post here) might well outlast the newspaper.  But there are other issues to be debated - whether to allow radio broadcasters to own more stations in their markets (to compete with Internet and satellite radio which can both provide hundreds of channels of programming to any market).  And whether to allow television consolidation in smaller markets where economic realities seem to be dictating that independent television stations may not be able to survive.  These efforts will, of course, be subject to debate, as many still react with an almost automatic suspicion of more media consolidation (see our post on the opposition to shared services agreements in the TV world).  These issues, too, should play out in more detail in the coming months, as the FCC releases its Notice of Proposed Rulemaking on reform of the multiple ownership rules, where it will set out in more detail potential changes in the ownership rules that it will seriously consider in its Quadrennial review of these rules.  Watch for more on this proceeding, probably late in the year. 
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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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