September 13, 2001
On Thursday, September 13 2001, the Federal Communications Commission launched a proceeding designed to eliminate or dramatically weaken two longstanding safeguards designed to ensure greater diversity of media ownership. They include the rule that limits some of the power of the largest cable companies, and a safeguard that prevents one company from controlling both a newspaper and a television station in the same market.
Other FCC rules proscribing the power of broadcast TV networks and the largest cable companies have also been challenged in court. Media mega-giants, including AOL Time Warner, Viacom (CBS), News Corp. (Fox), and NBC (General Electric), have found a sympathetic ally in the new Bush-appointed FCC chair, Michael Powell (son of Secretary of State Colin Powell). If the FCC (with the new administration's blessing) eliminates or weakens these rules, it will be supporting the agenda of the media giants in their drive to control most of the nation's broadcasting and cable properties. It will also be an additional giveaway of invaluable public spectrum.
Further media deregulation, as we discuss below, also threatens the future of the Internet if it is to survive as an open medium for commerce and expression. Consumers, viewers, and citizens will be greatly harmed by these attacks on our media environment. They will be faced with ever-steady rate increases for cable TV and high-speed Net services; they will witness a further decrease in local public service and diverse programming. And, most importantly, the emergence of unregulated digital media gatekeepers, able to dominate the nation's political and cultural discourse, will seriously challenge the rights of individuals in a free society to speak and receive all manner of communications.
The ownership rules on the FCC chopping block have been developed over the last fifty years. They have been an important safeguard ensuring the public's basic First Amendment rights. The rationale for these policies is that they help provide for a diverse media marketplace of ideas, essential for a democracy. They have not been perfect. But the rules have helped constrain the power of the corporate media giants. Companies could not assemble, as they wish to do now, simultaneous control over a town's cable system, several of its TV stations, many radio stations, and its newspaper. No one or two cable companies could dictate America's programming choices, as they wish to do now. And large TV networks such as ABC (Disney) and CBS, could not dictate to every local station, telling them whether the station could air a political debate or not.
These policies have also had positive effects. For example, the ownership rules have enabled some TV programming decisions to be based on how a given program could help a community, rather than on whether it sold more advertising for its New York or Los Angeles owner. That has permitted some independent and local affiliated stations to create public service and news programming very different from network fare. These policies have been a critical component in ensuring that the electronic media serve the public interest, still a bedrock requirement of our nation's Communications Act.
But over the last twenty years, the largest broadcast and cable companies have engaged in a lavishly funded and well-organized lobbying campaign, in Congress, at the FCC, and in the courts. They have found sympathetic support from politicians appreciative of their financial contributions and political endorsements. Other officials, meanwhile, fearful of retribution from the people who control the nightly local and national news or newspaper, have acquiesced to their agenda. And conservative officials supporting a deregulatory philosophy were also won over, as the TV industry cloaked its power grab in the guise of the laissez-faire free market.
Consequently, many of the ownership safeguards have already been eliminated, overturned, or severely weakened. The TV and cable industry, for example, was able to secure significant "deregulation" from Congress in 1996. Radio has also been deregulated, and has been transformed into an industry dominated by fewer and fewer owners and standardized, copycat formats.
Unable to win all of its political agenda from a relatively favorable Congress and the FCC, giant media companies such as AOLTW, News Corp. (Fox), GE (NBC) and Viacom (CBS) have now turned to the courts, arguing that the ownership caps impinge on their corporate "First Amendment" rights, and should thus be overturned. Specifically, these companies want the court to strike down both the FCC's National Ownership Rules for TV, which limit the number of stations a company can control across the country (reaching no more than 35 percent of the national audience), and the prohibition against a company owning a cable system and a TV station in the same local market. On Friday, 7 September, the US Court of Appeals for the District of Columbia Circuit heard oral arguments in the case. Unfortunately, the FCC did not effectively defend the rules by explaining to the court what is at stake for average Americans. The court will likely ask the commission to re-examine these rules. Under Michael Powell, their days will be numbered.
These legal proceedings are part of a clear strategy by some of the biggest media companies to remove any stumbling blocks to their becoming even bigger, controlling more media outlets and broadcast spectrum. Their philosophy, as expressed in the briefs filed with the court of appeals, represents a real threat to our democracy. In essence, they are saying that companies such as Viacom, News Corp, AOL Time Warner, and General Electric/NBC should be allowed to control most of the principal channels of communication, that their corporate First Amendment "free speech" rights should prevail over the public's. This position threatens to reduce the First Amendment rights of viewers and citizens to that of mere consumers and spectators. And that's a dangerous precedent for democracy, permitting a handful of companies that control the production and distribution of news, entertainment, and ideas to become further deregulated and even less accountable to the public.
In their legal filings and public pronouncements, the media conglomerates never mention what their real interests are in calling for the elimination of the ownership rules: an opportunity to gain control of additional digital spectrum and greater control over Internet access. As a result of their lobbying in 1996, TV stations were each given digital "beach front property," in the so-called HDTV spectrum allocation. (TV stations lobbied Congress successfully in 1996 to award each station additional free "digital" spectrum, supposedly so they could broadcast in HDTV.) This has been considered a huge giveaway of public resources. In a few short years the value of the spectrum giveaway has grown from $40 to $300 billion. This free spectrum will enable TV stations to compete successfully in the new digital media marketplace, but it fails to ensure that the public receives any public interest benefits. The spectrum also comes with preferential treatment for cable access, potentially including invaluable interactive TV distribution terms (the next generation of must-carry or retransmission deals). Broadcasters, according to a 4 September USA Today op-ed, now allegedly want to retain even more public spectrum, keeping the proceeds of an auction that was supposed to go into the public treasury (1). And while the spectrum has supposedly been given to local stations so it can benefit their communities, media giant Fox has demanded that their local affiliates sign an agreement giving News Corp their entire new digital spectrum (2).
The attack on the national broadcast ownership rules by most of the TV networks is not really a matter of protecting their First Amendment rights, as they claim. It's really a digital land grab for public airwaves that they haven't yet been able to secure.
The historical need for these safeguards in the so-called "old media" era of cable, TV, and newspaper is clear. But the Internet and other digital communications are also at risk. The Net has been a medium designed from the outset to be open, fostering innovation, competition, and diverse perspectives. But as the Net evolves into a broadband system, its principal access points to the home will be dominated by cable companies and their partners.
AOL Time Warner and other cable companies are seeking to dramatically overturn the limits on cable system ownership precisely so they can control the key access point for the Internet marketplace. Cable systems offer the most effective way for consumers to receive broadband. AOLTW, Comcast, Charter, and a few others want to gobble up even more cable systems. Because the cable industry has fought off open Internet access rules, they don't have to act in a nondiscriminatory manner, required by law to treat competitors fairly. Removing the cable ownership caps will allow AOLTW and a few others to be in a key position to dominate the digital future.
Without ownership limits and other safeguards, the new digital medium will unfairly favor a small number of powerful interests. The ability of new entrants, including those with different perspectives, to innovate and compete will be severely threatened. Noncommercial and independent speakers are likely to be especially marginalized because these giants will control the operation of the residential broadband digital pipes. The so-called alternative medium that these companies point to, the Net, will also be a victim of weakened or eliminated rules.
Contrary to industry claims, the ownership rules neither ban protected speech nor "prevent competition." These rules do the reverse. The companies are attempting to rewrite history, ignoring the massive consolidation that has gone on over the last twenty years. While there may be more outlets, there are fewer owners of all those networks and channels.
A good example is the recent announcement by Discovery that it was buying a rival health channel. According to Multichannel News, " Such a move might resonate with operators who have questioned whether there is enough carriage space or consumer appetite for two health-themed cable channels…. DCI is no stranger to buying and replacing cable networks. It bought CBS Eye on People and Knowledge TV, then folded them, switching their subscribers over to other Discovery services, including Discovery Health Channel, Animal Planet and Travel Channel (3)." Discovery, of course, is controlled by cable interests. The cable industry has a history of tightly controlling programming. At risk with the elimination of these rules, then, is a more diverse commercial marketplace, in which independent programmers and alternative perspectives can potentially thrive.
Fox and the others quote extensively from the Mark Fowler-era FCC, saying in essence that the Bush administration's historical (and biological) precedents supported a vision of an electronic media landscape that regards TV as a "toaster with pictures," as just another appliance (in their words). Murdoch and others are telling the Powell FCC and the new Bush administration that they expect the same kind of favorable special-interest treatment that they received from Reagan and Bush I.
But such treatment is neither warranted nor fair. Instead, Powell should conduct a serious examination of the electronic media marketplace so the public can better understand what the issues and options really are. The danger is that Powell will simply be the "good soldier," delivering to the administration and to these powerful interests a deregulatory agenda that will ultimately sap the vitality of digital communications, and place most of the nation's media in the hands of 4-5 media oligarchs.
Unfortunately, this revolution won't be televised, either, since none of these companies' news divisions will offer any serious coverage of this issue. And that is the kind of conspiratorial silence, under the guise of corporate "free speech," that our democracy simply cannot afford.
The Center for Digital Democracy intends to help lead the fight against the elimination of these rules. It is critical in the new digital era that we have a more open, diverse, and competitive environment. More expression is needed, not less.
1. Norman Ornstein, "All-but-Secret Battle Rages over Fate of Airwaves," USA Today 4 Sept. 2001.
2. National Affiliated Stations Alliance (NASA), "Early Comments and Motion for Declaratory Rulemaking," Petition to FCC for Inquiry into Network Practices, 22 June 2001. p. 24.
3. Linda Moss, "DCI Buys Some Health: Fox Cable Sells THN to Rival for $255M," Multichannel News, 3 Sept. 2001.
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