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Media Ownership Reform Long Overdue

The Federal Communications Commission until now has failed to ensure that it’s media ownership rules keep pace with changes in the marketplace despite clear direction from Congress in the 1996 Telecom Act to review the rules every four years and repeal or modify those no longer necessary in the public interest as the result of competition.

A prime example is the newspaper-broadcast cross-ownership restriction.

The common ownership of a daily newspaper and a radio or television station in the same local market has been illegal since 1975. Although the rule seemed to make sense as a means of promoting viewpoint diversity, in fact numerous studies have shown that audience preferences play a bigger role in editorial decision making than the viewpoint of an owner. Newspapers and broadcasters have to make money in order to compete for investment.

With the rise of other information sources including cable TV, Internet websites, and social media, there are more opportunities for viewpoint diversity than ever. Since many of these sources also compete for the advertising dollars upon which local newspapers and broadcasters primarily rely, the FCC must now focus on the need to preserve what remains of local journalism.

Within the past decade or so, the share of local video advertising revenue received by broadcasters has declined from nearly 70% to about 30%, and newspaper advertising and circulation revenue has fallen from $49 billion to $18 billion.

In 2010, the National Broadband Plan acknowledged that “traditional media and journalism institutions, which serve as essential watchdogs over both the public and private sectors, face significant challenges,” while the staff of the Federal Trade Commission proposed government subsidies among other options.

One option that wouldn’t cost the taxpayers anything would be to allow newspapers and broadcasters to pool their resources like they were permitted to do prior to 1975. Despite overwhelming evidence that something has to be done, the FCC refused to eliminate or even relax it’s media ownership rules when it had the chance last year to do so. As Chairman Ajit Pai (then a commissioner) pointed out at the time, “investments in newsgathering are more likely to be profitable when a company can distribute information over multiple platforms.”

“The Commission must realize that the viewpoint diversity it seeks to protect rests upon the backbone of newspapers,” according to the News Media Alliance, “and it must eliminate the cross-ownership ban to ensure that backbone is not compromised.”

Aside from prohibiting common ownership between newspapers and broadcast outlets in the same market, another Commission rule dating to 1971 bans combinations of overlapping TV and radio stations. The FCC has also curtailed combinations between two or more TV stations or two or more radio stations serving the same geographical area since the early 1940s. All of these outlets are facing the same pressures and deserve a fighting chance to attract investment from any source, share costs and seek new sources of revenue to remain competitive with newer information sources.

Congress anticipated two decades ago the ending of an era in which a local radio station competed only against other local radio stations, and in which the same was true for local TV and newspapers. Congress specifically targeted the media ownership rules for gradual modification and/or repeal in the ’96 Act, and it gave the FCC a chance to prove it’s value as an agile, expert agency even though the regulated entities were under no such illusion.