One of those stories on which I’ve been meaning to comment was the story from the week before last where trade press reports summarized a legal action being brought against a television station in Cleveland for having improperly used Arbitron information in connection with its efforts to sell local advertising time on Pandora, the Internet radio company. I don’t want to write about the merits of that proceeding (though it does highlight that stations need to avoid using Arbitron information without permission, as the company is aggressive in protecting what it perceives to be its intellectual property rights), but instead to ask a broader question about what such cross-selling indicates for the FCC’s ongoing analysis of the current media markets in connection with its review of the multiple ownership rules. The cross-selling between a traditional media company and a company like Pandora, which claims radio station-like ratings in many radio markets, or with any other new media company delivering audio or video, are outside of the FCC’s ownership prohibitions. Thus, traditional media companies, like the TV station involved in this case, can sell the new media company’s advertising, or theoretically even provide programming to the new media company, without any cross-interest implication. But a combination between a daily newspaper (no matter what its circulation) and a broadcast station is effectively prohibited under the FCC rules – even though the newspaper may have a smaller audience than the new media outlet in some markets.
As services like Pandora grow, claiming audiences for audio entertainment as large as many local radio stations, these companies could enter into agreements for cross-selling with traditional media companies, and could theoretically enter into arrangements for programming as well, with no restrictions short of those potentially imposed by antitrust laws. So a new media company can cross-sell with television stations (or newspapers, though according to an article last week, both Pandora’s partnerships with television stations and newspapers for joint sales are being phased out and replaced with their own sales forces), without any FCC regulation. A service like YouTube, serving up an amazing amount of video content each day, could enter into partnerships with daily newspapers or multiple radio station owners without triggering any of the cross-interest issues raised by a similar agreement with a television station. Any of these large scale Internet audio or video services could even buy radio or television properties without triggering any FCC concern at all. Yet, we are still arguing over whether the cross-ownership of a newspaper and broadcast station should be allowed.