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HOW MANY FCCs SHOULD ONE GOVERNMENT BE ALLOWED TO OWN?
The hearings are taking place in Los Angeles, where the Tribune Co. owns both the Los Angeles Times and KTLA-TV, Channel 5.
The last time the federal regulators revisited the ownership rules was in 2003, when the Commission voted 3-2 to raise the “national audience cap” for television station owners, relax restrictions on how many radio and television stations a company may own in the same market, and allow cross-ownership of newspapers and broadcast stations in some instances.
The FCC voted at the time to expand the fraction of American households a single television broadcast company could reach through its affiliates, nationwide, from 35 percent to 45 percent. But that decision sparked controversy and Congress intervened, re-setting the limit at 39 percent -- coincidentally the same percentage of viewers that the nation’s two largest television broadcasters, News Corp. and CBS Corp., reached at the time.
Back in 2003, Thomas Hazlett (former FCC chief economist, now at the George Mason School of Law) wrote of these “reforms”:
“In relaxing existing constraints without unleashing competitive entrants now stymied by regulatory barriers, (the FCC) has produced a Country Club deregulation that largely boosts incumbents. Indeed, Chairman Michael Powell touts his efforts to save free, over-the-air television. Therein lies the problem: the FCC sees itself not as traffic cop but as media product manager. Its ‘public interest’ determination is that the American people want today’s radio and television broadcasting system, and (to paraphrase H.L. Mencken’s line about democracy), deserve to get it, good and hard.”
This might be an appropriate point to add that the parent company of the Review-Journal (my employer) owns other newspapers in various markets, and has found itself briefly owning TV stations in those same markets. Thus, federal rules against media ownership “concentration” have affected Stephens Media and its predecessor, Donrey Media.
But it is not pleading any special case to point out that federal restrictions and regulations, over the decades, have done more to hamper media competition and diversity than to promote them.
“The effect of the creation of federal spectrum allocation in the 1927 Radio Act was to cartelize radio broadcasting,” Mr. Hazlett writes in the Financial Times, “limiting upstart competitors and rewarding powerful commercial stations with enhanced profits. ‘Public interest’ licensing was first proposed not by the American Civil Liberties Union or consumer groups scurrying to head off RCA and AT&T, but by the newly-formed National Association of Broadcasters.
“Radio and TV regulation is tidily explained by the ‘capture’ theory (in which the agency is controlled by the entities it is supposed to regulate),” Prof. Hazlett continues. “Rules limit competitive entry, making licenses more valuable. Those lucky enough to get a license take this policy to the bank. Policymakers are happy because it puts them in the loop, yielding political clout in assigning and regulating licensees. But consumers are left out, as competition is reduced and innovative technologies blocked via too-tight spectrum allocations.”
Fifty years ago, restrictions on major market broadcast licenses and frequencies under the “TV Allocation Table of 1952” played a major role in the demise of the first “fourth network” in broadcast television -- Dumont -- in competition with the better established NBC, CBS and ABC.
Because FM radio can generate clear signals at lower output and thus reduce the problem of interference between stations, the early introduction of better-quality FM (the technology was available well before World War II) could have vastly increased the number of radio stations “allowed,” reducing the opportunity for the “big three” radio networks to establish their strangleholds.
Yet FM inventor Edwin Armstrong, who finally committed suicide after his patent infringement lawsuits had dragged through the courts for decades, long argued the development of FM was hindered by an arbitrary FCC spectrum reallocation, imposed by the federal regulators as a favor to his powerful competitors at RCA.
The development of such alternative news sources as “C-SPAN” had to wait for the de-regulation of cable television in the late 1970s (after the FCC had crushed the burgeoning industry for 15 years, as a favor to broadcasters.) Controversial talk radio was effectively banned by the threat to demand free time from broadcasters under the FCC’s “Fairness Doctrine” from 1949 to 1987. Within six years of the elimination of that “well-intentioned” absurdity, talk and information radio programs multiplied fourfold.
In all these examples, government regulation actually and severely limited the number of news sources available to most Americans, for decades.
Concerns about one -- or a very few -- powerful corporate interests monopolizing “all the news” accessible to a community is an emotional issue. Clearly, that would be a bad thing -- almost as bad as the situation that still prevails many a socialist nation, where radio and TV are run by the government.
But in this era of the Internet and cable and satellite TV -- of rapid advances in communications technology on all fronts -- something economists have always known has become truer than ever: Any such true monopoly can be imposed only with the help of government regulation, while the free market itself, full of upstart competitors with innovative ideas, is always the best prophylactic.
To hope that government regulators will ever stand immune from political and fat-cat influence is a pipe dream. If we want to see just how diverse the communication spectrum can really become, the key is to demand less -- not merely revised -- government intervention.
If a wealthy TV station wishes to buy a struggling local newspaper and keep the newsroom alive as its “local content generator” -- as opposed to merely hiring smiling faces to read wire reports out of Washington -- who’s harmed?
If a daily newspaper figures the Internet is the wave of the future and starts updating its Online news content -- complete with live video feeds -- around the clock, has it just launched a “TV station in the same market,” in violation of the FCC ban? Not if it uses cable and satellite feeds, apparently -- though there could be hell to pay if anyone in the loop made use of an “antenna.”
Such distinctions increasingly resemble medieval scholastics debating how many angels will fit on the head of a pin. (A 40 percent market share is a crime, but 39 percent is “just right”?)
Americans have never had to worry about a shortage of publishers, offering too slim a selection of viewpoints, in books that all look the same. And why? Because there’s never been a Federal Publishing Commission.
Just as there should be no Federal Communications Commission.