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Adam D. Thierer
Media Deregulation Is Dead
The FCC’s toothless reforms are a victory for the status quo.
15 November 2007

This week, Federal Communications Commission chairman Kevin Martin announced long-promised revisions to America’s archaic, convoluted media-ownership rules. The result: no serious deregulation, just tinkering at the margins. In fact, of the half-dozen rules currently on the books, Martin is proposing to revise only one—the newspaper/broadcast cross-ownership rule. “No changes to the other media-ownership rules [are] currently under review,” Martin’s press release notes tersely, leaving many TV and radio broadcasters wondering when they will ever get regulatory relief.

The newspaper/broadcast cross-ownership rule, which has been in effect since 1975, prohibits a newspaper owner from owning a radio or television station in the same media market. In a New York Times op-ed Tuesday, Martin warned that “in many towns and cities, the newspaper is an endangered species,” and that “if we don’t act to improve the health of the newspaper industry, we will see newspapers wither and die.” Moreover, he wrote, “The ban on newspapers owning a broadcast station in their local markets may end up hurting the quality of news and the commitment of news organizations to their local communities.” In other words, newspapers need the flexibility to change business arrangements and ally with others to survive.

These are good arguments for scrapping a regulation that dates to a bygone era. But Martin isn’t proposing anything so far-reaching. Instead, he would loosen the rule only in the nation’s 20 largest media markets—and only for newspapers, not other struggling sectors like broadcast radio. His proposal pales beside a previous reform effort in 2003, when then-FCC chairman Michael Powell advocated relaxing the newspaper/broadcast cross-ownership rule in 170 media markets. Martin’s new rule would stipulate that, if the transaction involved a television station, at least eight independently owned and operated major media voices—defined as major newspapers and full-power, commercial TV stations—would have to remain in the local media markets following the transaction. Further, the TV station involved in the deal could not be one of that market’s top four stations.

But the deregulatory micromanagement doesn’t end there. Under Martin’s new rule, even if a media operator qualifies for a transaction, the FCC can ultimately stop it if it doesn’t satisfy other subjective criteria. For example, the commission will consider whether the new entity “will increase the amount of local news in the market,” “continue to exercise its own independent news judgment,” and make a “commitment to invest significantly in newsroom operations.”

This isn’t deregulation; it’s reregulation. Such subjective criteria will invite protracted fights at the FCC about every proposed media deal, and open the door to new forms of regulatory meddling by policymakers looking to extract unrelated concessions—from favorable political ad rates to coverage of pet issues—from struggling firms in exchange for relief. In other words, the FCC will throw you a life preserver only after your head’s already underwater—and then they’ll force you to make all sorts of promises before reeling you in. It’s inexplicable how the FCC gets away with any of this in a nation that values media operators’ First Amendment rights.

Why is Martin exerting significant political energy pursuing a modest liberalization effort that will accomplish so little? Perhaps he believes that by tweaking the rules he can have the best of both worlds: partial market deregulation, but also appeasement of the antimedia zealots who decry all liberalization efforts. But the new rule won’t make either side happy. The only media operators that seemingly benefit from Martin’s proposal are those papers in serious trouble in major markets. Certainly, they should be free to take steps to strengthen or save their enterprises before they find themselves in dire financial straits.

But it is the small- and midsized-market operators that most need flexibility to respond to new challenges before they “wither and die,” to use Martin’s phrase. These smaller-market players get nothing from Martin’s new proposal, and they’re left to wonder what their future holds as new media entities and technologies erode the foundations of their business. Ask yourself: When was the last time you shopped for a new car, or much of anything else, in the classifieds section of your local newspaper? And if you’re a businessman, would you be more likely to place an ad in a newspaper or on the Internet? These questions can help us appreciate what small and midsized newspapers are up against today as Google, Craigslist, eBay, and others decimate their traditional business model.

Martin isn’t going to make the media critics happy, either. The hordes of antimedia activists, who vociferously oppose any changes to FCC rules, will no doubt continue to issue Chicken Little statements about the approaching media apocalypse, the death of deliberative democracy, and so on. Secretly, however, these critics must be rejoicing. They secured a major court victory in 2004 when they turned back the FCC’s previous and far more comprehensive effort to liberalize ownership rules, but Martin’s halfhearted proposal represents an even more significant victory for proponents of the regulatory status quo: it signals the death of any serious effort to reform media regulation in the United States.

At some point, however, the chickens will come home to roost. Martin isn’t exaggerating when he says that newspapers are an endangered species in some towns and cities. What happens when the modern media revolution starts sweeping papers (and, potentially, some small-market radio and TV broadcasters) into history’s dustbin? Will the media critics tell us that this is all for the best, and that it somehow benefits “deliberative democracy” and “media localism”? In their zeal to block a rational marketplace response to the increasing challenges that media operators face, the critics are helping to kill the very newspapers that they claim to be trying to save. Perhaps they think no one will notice—since the papers won’t be around to run their own obituaries.

Adam Thierer is Senior Fellow at the Progress & Freedom Foundation (www.pff.org) in Washington, D.C. and Director of PFF’s Center for Digital Media Freedom.

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More by Adam D. Thierer:
A Media Welfare State?
The Digital Skeptic
Plato Wrote It Down
More . . .
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