Broadcaster/Industry ownership panel testimony


The NAB, two television groups and two minority broadcast associations were on the 11/4/09 FCC panel in preparation for the 2010 Quadrennial Review of FCC ownership rules. Here are their testimony summaries.

* David Barrett, President and CEO, Hearst Television, Inc.: Glad to make first appearance in Washington since the historic DTV transition. Will focus on state of local television competition. FCC must look forward, not backward. Competitive situation changes rapidly, each time the FCC looks at it, it’s very different. Advent of satellite TV, internet, telco MPVDs, cell phone vision is starting up. Vastly increased competition is an undisputed fact. For example, YouTube pulled in estimated 10M streams for a live concert webcast. Advertising revenues have been in freefall (-26%). Stations are in bankruptcy or reorganization. It’s increasingly difficult to pay for local news, election coverage, emergency coverage – much of which comes from no other local source. Stations are being forced to cut jobs. Ownership regulations need to be reassessed. By consolidating operational and technological resources, local TV could be more competitive. How can we realistically compete with hundreds of advertising-supported cable channels that have no public interest requirements? TV markets, all 210, average 39 media voices, and even smaller TV markets average below 150 average 20. Replace voice count, top-four restrictions with antitrust standard based on audience share. Audience share would have to be 30% or less to pair up, measured across all platforms. Applicable in large and small markets, provides bright line test. This is close to FCC approach, and some commented it’s stricter than FTC guidelines. Wants FCC to bring rules in line with economic and competitive realities.

* Jessica Gonzalez, Policy Counsel, National Hispanic Media Coalition: Wishes to improve Latino portrayal in the media. This is a great step toward a thorough and open review. It must address minority media ownership. Why is this a broken process? In the 2002 review, the FCC deregulated without explaining how it would affect minority ownership. FCC has backlog of license challenges. The diversity proceeding is a good start at moving the diversity question forward. We encourage the FCC to make some concrete alterations and make the process less dysfunctional. Three recommendations: 1) Any modification of structural ownership regs must take female and minority ownership into account – however, should not be done at the expense of the other proceeding, which is gaining steam. 2) FCC must get the necessary data, including enhanced reporting. FCC must get data (not rely on watchdog efforts) and make it accessible. 3) Commission must resolve waiver and license renewal applications, and petitions to deny, expeditiously. Licensees should not be allowed to operate indefinitely while this review process drags on. Apply the rule that’s in place at the time of license expiration.

* Jane Mago, Executive Vice President and General Counsel, National Association of Broadcasters: Three main points. 1) As FCC examines the rules, it must help broadcasters compete in the new marketplace. 2) Framework in found in the Communications Act – which says FCC must take current competitive realities into account. 3) Must rely on genuine evidence. The public is best served by rules that allow broadcasters to compete effectively. Broadcasters are diversely programmed, and that’s a good thing. Only competitively viable stations supported by adequate advertising revenue can effectively serve the public. Broadcasters must have a level playing field with competitors who do not have public interest obligations. FCC must revise newspaper cross-ownership ban; must help local TV as it competes with MVPDs. In the early 1990s FCC recognized that radio stations were losing money and could no longer serve the public interest, so it relaxed the rules per the Communications Act. Telecom 1996 – Congress understood that the state of competition for broadcasters was dismal, largely due to explosion of MVPDs. Congress directed FCC to loosen numerous ownership rules. Rules must be looked at in terms of competition. The key lesson is that the FCC must take competition into account when it looks at its rules. Must allow broadcasters to compete effectively and allow them to provide free programming to the public. Decisions must be made on real data. Audience fragmentation is real. Cable, internet have been taking greater share of advertising. Access to capital is a problem, and that may be due in part to asymmetrical regulation. A healthy, competitive broadcast industry leads to and fosters diversity and localism.

* George Mahoney, Vice President, General Counsel and Secretary, Media General: Ban on cross-ownership, a big problem for MG. The ban is unconstitutional, an anachronism, and needs to be removed. The ban is particularly harsh operators in small- and middle-sized markets. MG has 18 TV stations and 21 newspapers, plus interactive assets. We realize the customer is in charge, and if we fail to please the customer we fail. Company is structured regionally. We’re getting better at serving our customers and reaching out to non-customers. Local news: Appointment journalism is dead – people can get news when they want it – continuous news cycle. Web traffic spikes around lunchtime. We have to have the latest news on the website by 11:30, which has changed the way MG’s reporters work. Updating is a continuous process, and feeds both television and newspaper news content. Advertisers get access to this customer base. Producing this news is expensive. Future of journalism is a concern. Cross-ownership rules no longer make any sense in a digital world. It’s possible to deliver high-quality news to smaller markets, but that’s where the rules make it the most challenging. Station buying isn’t possible right now, but swapping is a good way for groups to gain better strategic alignments, and the FCC should encourage it. FCC should act quickly, and this early look at the Review is a good sign. Advertisers want multiplatform access to a community, so MG-style alignment makes economic sense.

* James Winston, Executive Director and General Counsel, National Association of Black Owned Broadcasters: 240 radio, 10 television members. Localism, diversity, competition. The FCC balance has never emphasized diversity – but was not even mentioned in public notice on the review. Failure to look at minority ownership is one of the reasons the Powell attempt was struck down in court. Minority ownership is going down. FCC needs much better information on who the minority owners are, where they are and how healthy they are. Many are facing foreclosure, some from TARP banks who are foreclosing rather than lending. Some banks are complaining that they can’t take over even more stations – one issue that needs to be assessed is amount of license control that can be held by finance sources. Ratings – PPM discriminates particularly against young minority audiences and needs to be addressed. Arbitron is failing to get accreditation and is under investigation in several states.