As the Obama administration fills its top level government posts, all eyes are now turning to the next levels of government appointments which, at some point, will include a new Chair of the FCC and potentially other new FCC Commissioners. We wrote about our hopes for an Obama administration at the FCC immediately after the election, and now other voices in Washington are weighing in. And, as one might expect, with so many different perspectives, the advice is far from consistent. As we wrote in our analysis, the appointment of the FCC Chair is crucial as it is the FCC Chair, far more than the President or the White House, who sets the tone for Communications policy. This is made clear by the extensive regulations either adopted or proposed for broadcasters by the current Republican FCC, seemingly at the direction of the current chairman, regulations that would not have been expected from a Republican administration. In light of the economic challenges facing broadcasters, as evidenced by today’s news that two television companies – Tribune and Equity – declared bankruptcy, and another, NBC, has announced a cut back in prime time programming, replacing it with a prime time, 5 day a week Jay Leno program.
So what should the transition team look to accomplish at the FCC? In one of the most perceptive articles that I’ve seen recently, Harry Jessell in TV Newsday has urged the new Commission to simply do nothing on broadcast regulation for the next year. The current state of the economy and its ramifications for the advertising that is the lifeblood of the broadcast industry simply leaves no room for broadcasters to have to bear new costs for new regulations. Broadcasting and Cable magazine has echoed that sentiment last week. Recently, not only have we seen the economy and the state of the broadcast industry been reflected by the actions announced by Tribune, Equity and NBC today, but we’ve seen numerous mainstream press articles about the economic peril in which the entire broadcast industry finds itself. In one recent article, radio’s dramatic decline in revenues was highlighted, even as the industry’s listenership remains high (as confirmed by BIA’s recent prediction that radio revenues will decline by 7% in the coming year, coming after declines this year – perhaps the first two year decline in revenues in radio history). I recently attended the Radio Ink Forecast 2009 conference in New York. While the conference is off the record, I don’t think that I’d be betraying any confidences to state that there was much concern about the short term health of the radio industry.
In a New York Times article last Monday, the focus was on TV, where the cost cutting caused by declining revenue has led to the termination of the contracts of many long-serving, high priced television anchors. With the digital transition upon us in just over two months, and the likely disruptions that will cause, along with the slowdown of the economy and the loss of revenue in a non-political, non-Olympic year, TV is in no better position than radio to weather the addition of new regulations. And there are potentially many regulatory issues that could hit television – from the already adopted but never implemented FCC Form 355 (see our summary here and our speculation as to the reasons for the implementation delays here), to potential new rules on violent programs and ads for unhealthy food and prescription drugs, to the potential adoption of rules prohibiting embedded advertising and product placement, the potential for mischief is great. For more, see my discussion of these concerns in my keynote at the Future of Television Conference held in New York last month, video of which is available here.
But citizens groups are also pushing their agendas for the new FCC. Free Press, an advocacy group opposed to media consolidation, has published an ad calling for more citizen participation in the FCC’s agenda, and called for the appointment of FCC Commissioners who share these views. Other public interest groups have made similar comments.
Certainly citizens should have a voice in any decision of their government. But the new FCC must remember that those in the industry are citizens too, and they are usually the best informed citizens as to the economics of their businesses. The transition team needs to take those voices into account, as well as the real struggles of the companies that operate the stations, and take a light touch to broadcast regulation that could further damage the already precarious health of this industry.