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The FCC's Big Grab Making Media Monopoly Part of the Constitution

The FCC’s Big Grab

by ROBERT W. McCHESNEY

As I write this, the Federal Communications Commission is poised to vote on June 2 to relax several longstanding media ownership rules. By nearly all accounts it will lead to a wave of media mergers and market consolidation that is unprecedented in U.S. history. In my view, such moves would be a disaster for our society. If you know about this and want to register your opposition, go to www.mediareform.net, where there are links to all the major campaigns to stop the FCC, along with links to news articles and considerable background information on the topic. Public pressure can stop the FCC. The www.mediareform.net site also has a comprehensive index to all of the groups working on media reform issues in the United States, as well as a complete list of the issues these groups are working on.

If you want an overview of the current situation, stay here and read on.

In 1996, Congress passed the Telecommunications Reform Act, which amended the Communications Act of 1934. The 1996 Telecom Act was a corrupt piece of work, being the product of the largest corporate lobbies all salivating at the prospect of rewriting the law to provide them a larger slice of the action. The best way to grasp how the communications law was passed is to imagine the classic scene from The Godfather II, when Hyman Roth, Michael Corleone and several other American gangsters meet on a rooftop in Havana to divide up the island between them in pre-Castro Cuba. They do so by ceremoniously each taking a slice of a cake with the outline of Cuba on it, and while they are doing this, Hyman Roth intones, "Isn’t it great to be in a country with a government that believes in a partnership with private enterprise." The 1996 Telecom Act was drafted on that proverbial rooftop, only instead of mob families there were trade associations like the National Association of Broadcasters and corporations like News Corporation and Viacom. The public played no role in the Telecom Act, and it received virtually no news media coverage, except in the business and trade press where it was covered as an issue of importance to owners and investors, not citizens in a democracy. The powerful lobbies–much like Roth and Corleone–were duking it out with each other for the largest slice of the cake, but they all agreed that the public had no right to participate in the process. It was their cake.

One of the major aims of the corporate communication lobbies in the 1996 law was to scrap longstanding ownership laws that prevented them from getting larger. These ownership restrictions had been historically about the only meaningful regulations on large media firms. They prevented, among other things, firms from owning multiple TV stations in the same community, TV stations in every community in the nation, or TV stations and radio stations and newspapers and cable TV systems in the same community. The theory behind these ownership restrictions was that when the government granted firms monopoly rights to scarce TV or radio channels, it needed to place restrictions on what media the firms could own, so that the firms would not use their monopoly profits (owning a TV or radio station has historically been the closest thing to having the right to print money in our economy, except, perhaps, for the right to own a monopoly newspaper) to corner the market on all media. That would be a very bad thing for democracy.

One might logically ask how these media ownership restrictions could have ever come into existence, if the system was so corrupt that the Havana rooftop analogy captures the policy making process. To some extent it was because there was (and is) such a deep seated hostility to concentrated media ownership in the American population. It simply violates every core tenet of a free society to have a small number of powerful media owners. To the extent there has been popular involvement in media policy making, it has been to push for more competitive media markets. Even more important, there were powerful commercial interests that wanted restrictions on media ownership. Companies that owned a small number of radio or TV stations, for example, understood that if ownership limits were lifted, huge firms would be able to muscle them out of the market. And while firms wanted to see ownership limits removed in some markets, they were very happy to have them in other markets, where, for example, they were selling their products.

By 1996, however, the largest media firms had grown so large they thought their power could tip the balance and remove the ownership limits. They miscalculated. The powerful lobbies could not reach a consensus on which ownership laws to scrap and which ones to relax. Accordingly, the 1996 law called for the five-member FCC to merely review the ownership rules every two years with an eye to eliminate them when conditions permitted. The theory was that eventually, when the Internet and digital TV worked their multi-channel magic, the media system would be so awash in media voices that there would be no reason to be concerned about media monopoly. So at that time it would be absurd, not to mention unfair, so saddle some media firms, those that worked in radio, TV and cable, with ownership limits, while other media firms were not so encumbered. The FCC’s job was to determine when the time of technological plenty had arrived and then dump the media ownership rules.

This process is often referred to as "deregulation," but it is nothing of the kind. The framing of the issue as one of "regulation" versus "deregulation" or "free markets" is ideologically loaded propaganda that obscures what is happening in toto. When media ownership rules are eliminated, there is still plenty of regulation. If you or I persist in trying to broadcast on a frequency licensed to Clear Channel, we will be arrested and sent to prison. That is serious regulation. Regulation is going to exist no matter what. Even a so-called free market media system requires massive regulation. The real framing is whether there will be regulation that makes some effort to serve the public interest or broad publicly determined values, or whether regulation will be done exclusively to the benefit of corporate interests without any public involvement. It is the latter that has been misnamed "deregulation."

There was only one media industry in 1996 where a consensus could be reached to relax media ownership rules, and that was radio. In radio broadcasting the small station owning firms lost their resolve or their ability to fight the big station owning groups and the 1996 act lifted the national limit on the number of stations a single company could own. It also let a single company own up to eight stations in a single market. The results have been catastrophic for everyone except the owners of the handful of massive companies like Clear Channel (which now owns over 1,200 stations) and Viacom that have come to rule the roost in radio. In the past seven years, U.S. radio has become vastly more commercial and has lost much of its localism and any commitment to covering the news. Ironically, what by all rights should be our most decentralized and democratic medium — because it is so inexpensive to produce a good signal — has become our most regimented and standardized. You could be airdropped into any city in the United States and hear the same oldies song or the same right wing blather. And this has nothing to do with the natural workings of any "free market;" it is the direct result of corrupt policy making.

What has happened in radio is about to be visited on the balance of the media system. We know what many of you are thinking — "hey, the media system sucks, it can’t get any worse." But one look at radio should tell you otherwise. It can get worse, much worse. And it will, unless we stop the FCC. Moreover, the political power these ever larger media firms will accrue, will make any prospective media reform down the road that much more difficult.

The FCC conducted biennial reviews of the ownership rules in 1998 and 2000, and determined the rules should remain in place. At this point the biennial review was regarded as a benign and unreviewable process. The industry lobby went through the court system to get the rules thrown out. In 2002 a right wing federal appeals court demanded that the FCC provide a justification for keeping the ownership rules, or else they would have to be thrown out. Be clear that it was the appeals court, acting as the advocate of corporations that put the new aggressive pro-industry spin on the Telecommunications Act of 1996. The appeals court interpreted the law to mean that unless the FCC could provide compelling, even overwhelming, evidence to justify keeping media ownership rules, they should be scrapped. The Court construed the statute as a one-way street, with a strong presumption in favor of deregulation. This put Michael Powell, the Chair of the FCC in an unusual position. He was supposed to go before the courts and make the case on behalf of keeping media ownership rules in the public interest. Powell was famous for his pro-industry rah-rah sentiments, and his hostility to regulation in the public interest. Having him be responsible for defending media ownership rules was along the lines of putting Katherine Harris in charge of Al Gore’s Florida recount team in 2000. Powell responded by authorizing a formal FCC review of the six main media ownership rules.

At this point, the spring and summer of 2002, the odds that the FCC would dump the rules without much of a fight were very high. Traditionally the FCC has been a corrupt body, not in the sense that its members are explicitly bribed to make specific decisions, but in the broader ethical sense of the term. The five FCC members are unknown to the general public and have virtually no contact with them. They are surrounded instead by corporate CEOs, lawyers and lobbyists. As one FCC Chairman put it, "the job of the FCC is to regulate fights between the super wealthy and the super super wealthy. The public has nothing to do with it." Over time, logically, the FCC has come to see its mission as being an advocate for the very firms it is regulating; the more profitable they are, the better the job the FCC is doing. This worldview has been encouraged by the tradition that members of the FCC tend to move on to extremely lucrative careers working for the very firms they once regulated. As it is often put, when a firm comes before the FCC, FCC members do not know whether to regard it as an entity to be regulated or as a prospective future employer. This applies across the board, to Republicans and Democrats alike. The FCC Chair who preceded Michael Powell, Democrat William Kennard, has gone on to making big bucks working on telecommunication deals for the Carlyle Group.

In theory, and in law, the FCC merely implements the will of Congress. It should be the job of Congress to force the FCC to act in the public interest, and prevent cronyism and corruption. In practice, Congress has done almost the opposite. The powerful communication corporations traditionally have the relevant committee chairs in the House and Senate wrapped around their fingers, thanks, in part, to massive campaign contributions. Media firms also have a very powerful weapon at their disposal: control over the news media. This means that debates over media policy rarely get covered in a manner that might question the legitimacy of the corporate system, and that politicians are especially sensitive to staying on good terms with the corporate media lobby.

In this context, it certainly looked like the fix was in when FCC Chair Michael Powell announced the formal review of the media ownership rules in 2002. But history has taken an unpredicted turn. Two of the five members of the FCC have shown themselves to be remarkable public servants, of a caliber found on the FCC perhaps only three or four other times in its 69 year history. This was a fluke. The two members, Michael Copps and Jonathan Adelstein, were patronage appointments to fill the two Democratic slots on the five member FCC. It just so happened that they had a degree of backbone rarely found in that far from august body. Copps, especially, insisted that it would be inappropriate for there to be any change in the media ownership rules without extensive public input. He pressed Powell to hold public hearings around the nation on the matter. Powell attended a portion of the first unofficial hearing in New York in January and convened one official public hearing in Richmond in February. But otherwise he has refused to attend any of the ten public hearings on the media ownership rules that have been held subsequently all across the nation. None of the three Republicans has attended any of these ten hearings. Copps, on the other hand, has attended all of them, and Adelstein some of them. These hearings are historically unprecedented and mark a turning point in media activism in the United States. Many of them have been jam packed with people. After seeing hundreds of people hanging from the rafters in Vermont for an April hearing, one congressional aide remarked that there is more interest concerning media policy than on almost any other issue.

There is a very good reason why Powell and the Republicans on the FCC have boycotted the public hearings: the sentiment there, from thousands and thousands of citizens from all walks of life, has been almost unanimously opposed to relaxing or eliminating the ownership rules. Indeed, much of the sentiment has been in favor of strengthening the ownership rules, especially in radio. Likewise, as of May 8, 2003, a comprehensive analysis of the 9,065 statements on media ownership submitted to the FCC by citizens unaffiliated with a self-interested corporation or trade organization found that only 11 of these submissions supported changing the rules. Eleven! That means something like 99.8 percent of the statements opposed what Powell and the Republicans on the FCC are proposing to do! One could argue that there is as much support for putting Osama bin Laden’s bust on Mount Rushmore as there is for letting fewer and fewer massive corporations own more and more media. Even conservative groups, like the National Rifle Association and Brent Bozell’s Media Research Center, oppose gutting the media ownership rules.

It is hard to avoid the conclusion that this has nothing to do with free markets or a free press, but that it is all about cronyism and corruption. The massive media firms that have bankrolled and supported the Bush administration want their payback and the administration is determined to give it to them, the public be damned. Commerce Secretary Donald Evans wrote to Powell telling him to move full speed ahead with the rules changes regardless of Congressional or public opposition.

Powell has explained his absence from the ten media ownership hearings on the grounds that he is too busy too attend them and that he knows enough about what the public thinks. At the same time, Powell finds time to address the corporate media trade association meetings and he has an open door policy for corporate media CEOs like Rupert Murdoch. The research that the FCC has developed to justify relaxing the media rules has been kept top secret; members of Congress and leading media scholars have asked to see it and been turned down. Copps and Adelstein have raised their concerns about the lack of research and debate over the proposed changes to Powell but they have been ignored and marginalized.

Powell and the Republican members of the FCC repeatedly make one claim, and only one claim, to justify relaxing the media ownership rules: That the massive increase in media channels through multi-channel television and the Internet has eliminated the need for ownership regulation of broadcast media, because the scarcity of the airwaves is no longer a relevant issue. The reality of media today, the argument goes, is that the media system is no longer oligopolistic, but, instead, it is hyper-competitive. The granting of monopoly rights to broadcast channels no longer confers monopolistic market power in the marketplace. Media ownership regulation is justified on the grounds that spectrum scarcity meant the government had a duty to regulate the amount of ownership to protect the public interest. In this era of abundance, owning multitudes of broadcast stations is no longer monopolistic or a threat to diversity and should not be prohibited. The market will be a better regulator than the government.

Or, to put it another way, Powell and his colleagues argue that corporations are no longer getting scarce and valuable beachfront property when they receive a monopoly license form the FCC; rather, they are merely getting one grain of sand on the media beach.

If the claim is wrong, however, then the movement to eliminate these rules can be seen as little more than an opportunistic effort by powerful special interests to alter regulations to suit their naked self-interest.

The problem with this claim is that it is not true. The Internet has changed much about our world, but it has not undermined the tremendous market power granted by federal license to use scarce broadcast spectrum. In ten years of the commercialized Internet, despite hundreds of millions of dollars in investment, arguably not a single original commercially viable media content site has been launched. Not one. More important, the value of radio and TV stations continues to grow at a much faster rate than the rate of inflation.

If the Internet and digital technologies were indeed undermining the value of scarce radio and TV channels, we would expect TV channels to be approaching the point where they would have much less value in the market because of all the new competition. It would be irrational to spend, say, $100 million for a mere TV station when the same money could create scores of incredible websites. But this mythological era of media abundance does not exist in any meaningful sense. These licenses to TV and radio channels still confer considerable, even extraordinary, market power. That is why their value continues to shoot up. Hence the legal justification for the media ownership rules is fully intact.

Congress understood that it was only when the new communication technologies generated an increase in bona fide commercial competition that the FCC should eliminate or relax the ownership rules. That is why the 1996 Telecommunications Act did not eliminate those rules and Congress advised the FCC to do so down the road when the market conditions had changed. It is clear, as of now, they have not changed in such a way to justify the elimination of media ownership rules. That day remains off in the future, as far as anyone can tell. And if the FCC lets the giant firms get even larger, it will go a very long way toward letting these firms have the market power to ward off any threat of new competition.

Powell has called for a June 2 vote on his proposed media ownership rules changes. Until then all attention is focused on getting Congress to force the FCC to desist from this plan. Here, too, we are beginning to see considerable movement to oppose the FCC, though we have a very long way to go. A large coalition of journalists, labor, musicians, civic organizations, peace groups, consumer groups, and organizations representing women and minority groups has begun organizing in earnest around this issue. The crucial ingredient now is to generate as much popular comment as possible. Emails, letters and phone calls need to be sent to members of Congress and the FCC. As I note at the top of this piece, the website www.mediareform.net provides an easy-to-use index of all the leading campaigns, including those of MoveOn, Common Cause and Consumers Union. It is imperative that everyone who reads this piece circulate it, or at least the website, to everyone that they know. Even if we lose on June 2, this is not the final battle in the war. Instead, it is the first battle in what is emerging as a broad democratic movement to popularize media policy-making with the aim of generating a more diverse and competitive media system with a strong and independent nonprofit and noncommercial sector.

ROBERT W. McCHESNEY is the co-author, with John Nichols, of Our Media, Not Theirs: The Democratic Struggle Against Corporate Media (Seven Stories). He can be reached at: rwmcches@uiuc.edu