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May
16, 2003
The FCC's Big Grab
Making
Media Monopoly Part of the Constitution
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
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