Thought Piece
I have been watching the FCC for the last twenty plus years, from the Telecommunication Act of 1996 onward. In fact, I have watched in horror when Chairman Tom Wheeler tried to reimpose the Telecommunication Act of 1934 back in 2014. While the telecommunications industry has undergone a remarkable transformation in the last two decades, the agency that regulates them has fallen farther and farther behind the technology.
Then, there is the complexity of regulation. It is lawyer’s dream factory. There are telecommunication laws, regulations, and rules in descending order of importance. That said, it is unfathomable that a vestige of the past, known as the “8 Voice Rule,” could have any bearing of the FCC today. And, yet it does.
So now, Chairman Ajit Pai has been trying modernize the FCC, while various stakeholders have resisted, by returning to a light-handed and humble approach to regulation. If there was a federal agency that should reform itself, it is the FCC. Steve
New Rules for More Media Competition
Limits on media ownership don’t reflect Digital Age reality.
The price of trying to change Washington is furious political opposition, and the latest target is Ajit Pai, who has announced he wants the Federal Communications Commission to rewrite restrictions on local media ownership that have been in place since the Ford Administration.
Under current rules, media companies generally can’t own a daily print newspaper and a TV or radio station in the same community, and there are also restrictions on holding multiple TV and radio stations. Chairman Pai wants to eliminate these rules, though the FCC would retain some limits on the radio and TV stations a single entity could hold in the same area. Another rule allows the acquisition of two TV stations only if at least eight independently owned competitors also operate in the area. Mr. Pai would eliminate this “eight-voices test” and weigh other broadcasting expansions case by case.
The FCC created ownership restrictions to ensure no single entity dominates the news. But the rules were written when newspapers were thriving and there were only a handful of TV channels. In the Digital Age, media competition has never been more intense.
Pew Research Center reported in September that 43% of Americans often get their news online, second to TV at 50%. Among those under age 50, digital media has already surpassed TV. More than 90% of Americans now consume some news online, and two-thirds read some on social media.
Broadcasters now compete with cable news, satellite radio, podcasts, YouTube, Netflixand myriad other digital sources. Craigslist killed classified ads, and Facebook and Google have swallowed up digital advertising, profiting off the work of newsrooms they don’t own or run. Newspaper ad revenue dwindled in 2016 to a third of what it was 10 years earlier.
Mr. Pai’s critics fret about local-media consolidation, but the alternative may be its extinction. The FCC’s archaic ownership rules have cut off bleeding local newspapers from would-be investors. Broadcasters and print newsrooms could combine to save money on everything from human resources to information technology.
Opponents also worry that bigger media companies would reduce or eliminate local news. But more efficient newsrooms have more money to pay for local reporting. The FCC’s research shows that cross-owned TV stations provide more local news than their non-cross-owned counterparts.
Critics also point out that Sinclair Broadcasting would benefit from eliminating the “eight-voices test.” Sinclair has a conservative political bent, and it’s seeking the FCC’s approval to acquire Tribune Media Group. The merger would leave Sinclair with up to 177 stations. But there are plenty of media alternatives for these markets (including our sister company, 21st Century Fox ), and anyone who fears conservative media dominance isn’t paying attention to the real world.
Many of those who oppose Mr. Pai also fret that Donald Trump wants to control the media. But Mr. Pai’s reforms would decrease the federal government’s control over the American media marketplace. The new FCC rules would encourage competition, not stifle it.
