Analysis – What about the public interest?


ANALYSIS – What about the public interest?

The battle lines have been drawn for the latest attempt by the FCC to reform its media ownership limits. Big financial interests want more deregulation, particularly in the biggest markets. Politicians from both parties have staked out the position that all media consolidation is bad. Both sides occasionally pay lip service to considering "the public interest," but, in fact, neither really gives a damn.

If they were really concerned about what would be good for the public they would look at the real world and try to fix what is broken – or in the process of breaking. Everyone knows that daily newspapers are in a world of hurt. New Internet challengers are taking big bites out of what used to be their cash cow – classified advertising. Their news content business is also moving online and they are trying to follow their readers. Increasingly, those readers have broadband Internet access and are demanding video as a part of news coverage. From both an economic point of view and leveraging video and reporting expertise, combining the resources of a local newspaper and a local television station makes a lot of sense, regardless of market size.

While there has been some modest deregulation of TV, allowing duopolies in very large markets, there has been no deregulation at all where there is a real crisis – in small TV markets. Markets that just a few years ago had three commercial stations now have five or six, or even more, responding to the proliferation of new national networks. The available local ad revenues, however, have not increased at the same pace. The result is that in many markets only one heritage TV station is able to staff a local news operation and turn a profit. Sometimes two. But the next station down the pecking order has a tough choice – continue to do news and maybe break even some years, or drop news and turn a profit. But if that station were allowed to acquire one of its competitors, have more ad inventory to sell and spread news programming over a second platform, it would be able to do news profitably. Some operators already have shared services agreements to jury-rig a virtual duopoly, but the real thing would work better for everyone, including local viewers.

Radio got its deregulation in 1996. In the largest markets a single company can now own eight stations. We’re not aware of anyone who is operating eight stations well in a single market, so radio can be largely bypassed on this round of dereg – except for allowing crossownership with newspapers to, hopefully, boost radio news coverage.

Dereg ideas that would really serve the public interest:

First: Eliminate the crossownership rule. Let newspapers and broadcasters team up under common ownership in local markets. There are lots of broadcast signals, so let some of them be paired with print to make it economically feasible to do good local news coverage – on air, in print and online. The only limitation we would suggest is not allowing the top billing newspaper in a DMA to acquire the top billing TV station.

Second: Allow TV duopolies in all markets. Keep the current restriction that two of the top four billing stations can’t merge for the top 50 markets. Make it no two of the top three for markets 51-100. For 101+, the restriction should be that the top two can’t merge. Letting #1 or #2 acquire #3 isn’t a problem, since #3, while it may be an affiliate of one of the "big four networks," probably isn’t a local news powerhouse by any stretch of the imagination.

Third: Allow local media combinations to be transferred intact. Once a company has built up a potent local news operation across multiple platforms, don’t force its breakup because of a sale or merger that makes a different entity the owner. If a daily newspaper buys the #3 TV station in a market and over the course of a decade or two builds it to #1, don’t require separate sales because the estate of the original owner wants to sell the media outlets. Let the public continue to benefit from that established local news leader.