How Martin’s Plan Would Hurt Minority Owners

The U.S. media system doesn’t look like the vast majority of Americans. People of color — who comprise a third of the population — own just 3 percent of the nation’s commercial TV stations.Martin’s proposal doesn’t merely ignore the disgraceful state of media diversity; it would actually make the situation worse.

Fact No. 8: Martin’s Plan Would Harm Minority Owners

On the surface, Martin hoped to quell critics’ concerns by claiming to relax the newspaper/broadcast cross-ownership ban only in the top 20 markets and by letting newspapers combine with broadcast stations only outside of the four top-rated channels.

The problem is that nearly half of the stations owned by people of color are in the top 20 markets, and none of these are among the top four stations. That puts the few minority-owned stations directly in the cross-hairs of consolidation.

Targets for takeover

Overall, nearly 90 percent of minority-owned stations are not ranked among the top four in their respective markets. If the ban is lifted, minority-owned stations will be targeted by newspaper owners seeking to purchase a station. And increased consolidation will only decrease opportunities for people of color to enter the market and purchase stations of their own.

One of the myths manufactured by Martin and his allies is that the current ban is especially bad for minority owners, because it keeps them from establishing synergy between print and broadcast outlets. But there are currently no minority-owned companies that already own both daily newspapers and radio or TV stations. And it’s the Big Media giants — not smaller minority owners — that are pushing for these rule changes.

Who’s counting?

Martin released his new plan despite repeated requests from his colleagues, Congress and civil rights leaders to first address the crisis in minority ownership by creating an independent task force to examine the impact of consolidation — before considering any new rules.

So far, the FCC has failed even to conduct an accurate count of minority-owned stations. And a recent FCC study failed to identify 69 percent of minority owners and 75 percent of women owners. Yet Martin’s accelerated timetable leaves no time for an independent study of how his proposal will affect minority media ownership.

In rejecting the FCC’s previous attempt to overhaul media ownership rules in 2003, the federal courts specifically cited the issue of minority ownership. In addition, congressional leaders such as Sen. Barack Obama (D-Ill.), Sen. Robert Menendez (D-N.J.), Sen. John Kerry (D-Mass.), Rep. Hilda Solis (D-Calif.) and Rep. John Conyers (D-Mich.) as well as more than 20 national civil rights groups, including Rainbow PUSH, the Leadership Conference on Civil Rights and the National Council of La Raza, have called on Martin to address the ownership diversity crisis rather than perpetuate it.

Reining in media consolidation is the only way to promote media ownership by people of color and by women. Other policies aimed at promoting minority and female ownership won’t work if media consolidation continues unchecked.

Next: A broken and corrupt process creates bad policies.

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The Internet Is an Opportunity, not just a Threat

The Internet. The Internet. The Internet. At Wednesday’s FCC oversight hearing on Capitol Hill, those were the two magic words cited by anyone advocating more media consolidation.

The Internet is also FCC Chairman Kevin Martin’s favorite excuse for why we need to let a handful of Big Media companies swallow up even more local outlets. In making his case against the ban on newspaper-broadcast cross-ownership in the New York Times, he wrote “the undeniable reality that the media marketplace has changed considerably over the last three decades.”

But the emergence of the Internet needs to be put in the proper context. The Internet hasn’t replaced TV or newspapers as the primary sources of local news for most Americans — and it won’t do so anytime soon.

Fact No. 7: The Internet is an opportunity, not a death sentence

The Internet presents more of an opportunity than a threat to the newspaper industry. Local newspapers are by far the dominant source for local news on the Internet. As these companies navigate the changing terrain and modify their business models, they will continue to thrive financially.

Consider:

• Recent data from the Newspaper Association of America shows that nearly 60 million Americans visited local newspaper Web sites during the second quarter of 2007, visiting an average of eight times per month, a jump of nearly 10 percent from the year before.
• While newspapers may have lost some of their traditional circulation since 2000, they’ve gained that back over five-fold in online readership.
• Online ad spending continues to grow rapidly, increasing to $5.5 billion for the first half of 2007, a nearly 20 percent increase above the same period in 2006.

More competition, not less

There will always be a strong demand for local news reporting, regardless of how it is delivered. Data suggests that some of the more financially “troubled” newspaper chains (such as Tribune) haven’t navigated the online transition as well as other chains that are thriving online and off.

Mergers and consolidation — and more corporate welfare — certainly aren’t the answer to solving the mismanagement of traditional media. There is very little evidence that this strategy will succeed financially in the long run, and it is not worth the democratic costs in terms of the loss of diverse and antagonistic news sources.

These enterprises need to adapt and take advantage of the opportunities in cyberspace. Print and broadcast outlets are just beginning to compete head-to-head in the online sphere. To allow them to consolidate now will only stifle viewpoint diversity and competition in the future.

Over the next two weeks at StopBigMedia.com, we’ll be counting down the “10 Facts Kevin Martin Doesn’t Want You to Know” about his new media ownership rules, as exposed in our new report — Devil in the Details.

Next: Martin’s plan would harm minority owners.

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Live Blogging Today’s FCC Oversight Hearing

Over at the Free Press Action Network, we’ll be live blogging today’s FCC oversight hearing, which is scheduled to start at 9:30 a.m. All five FCC commissioners are going to testify at the event.

As Federal Communications Commission Chairman Kevin Martin continues to push a massive giveaway to Big Media, the House Energy and Commerce Committee is looking into how the FCC has handled this media ownership proceeding. There should be some tough questions.

You can watch the hearing on C-SPAN at http://www.cspan.org (it’s the Web site feed, not the main channels).

There’s an audio feed at http://energycommerce.house.gov/

Tune in … and join the conversation.

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Media Ownership Act Moves Forward

Thanks to tens of thousands of calls and letters from activists like you, the bipartisan Media Ownership Act of 2007 (S. 2332) was passed unanimously by the Senate Commerce Committee yesterday.

The bill, introduced by Sens. Byron Dorgan (D-N.D.) and Sen. Trent Lott (R-Miss.), would put the brakes on the FCC’s rush more media consolidation. It would direct the FCC to seriously address the issue of localism and create an independent minority and female ownership task force — before moving forward with any changes to media ownership limits. The bill would also give the public a 90-day comment period on any proposed rules.

“Chairman Martin’s policymaking by press release has run into a brick wall of bipartisan opposition in Congress,” said Ben Scott, policy director of Free Press. “The Senate has joined the American public in demanding that the FCC protect the public interest and shelve its plans for handouts to corporate media.”

The next stop for the bill should be the Senate floor. Its bipartisan support is growing, and the list of co-sponsors now includes: Joseph Biden (D-Del.), Barbara Boxer (D-Calif.), Maria Cantwell (D-Wash.), Hillary Rodham Clinton (D-N.Y.), Susan Collins (R-Maine), Larry Craig (R-Idaho), Christopher Dodd (D-Conn.), Richard Durbin (D-Ill.), Russell Feingold (D-Wis.), Dianne Feinstein (D-Calif.), John Kerry (D-Mass.), Bill Nelson (D-Fla.), Barack Obama (D-Ill.), Bernie Sanders (I-Vt.), Olympia Snowe (R-Maine), and Jon Tester (D-Mont.).

If you don’t see your senator on this list, send them a message.

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The Death of Newspapers Is Greatly Exaggerated

FCC Chairman Kevin Martin claims that he is removing the newspaper/broadcast cross-ownership ban to “improve the health of the newspaper industry,” which he claims will “wither and die” without drastic action. But there is simply no good evidence showing the newspaper industry is in such grave danger.

Fact No. 6: Cross-ownership won’t solve newspapers’ financial woes.

It is highly questionable whether the FCC, which has no jurisdiction over newspapers, should be using broadcast regulations to “save” the newspaper industry. If the goal here is to promote media diversity, it’s hard to see how that would be accomplished with fewer newsrooms.

Though print circulation of daily newspapers has declined, Martin’s claims that newspapers are an “endangered species” are greatly exaggerated. Consider that:

• Revenue per circulated copy increased from 2005 to 2006 (the last year for which full financial data is available).
• Industry-wide, newspapers still enjoy operating profit margins near or above 20 percent — higher than the S&P 500 average.
• Recent mergers and acquisitions demonstrate that newspapers remain highly valued properties. Prices paid for newspaper companies have been above 10 times cash flow, with average stock prices at eight times cash flow. These values are considered quite healthy by financial industry standards.
• William Dean Singleton, CEO of MediaNews Group (a strong advocate of eliminating the cross-ownership ban) recently characterized the newspaper industry as “very, very, very profitable” and predicted it will continue to be so “for a very long time.”

Bad business bailout?

Moreover, there’s little or no evidence to suggest that cross-ownership will improve the finances of newspaper companies.

• Tribune Co. is often cited as one of the most financially troubled newspaper companies. Yet it is by far the largest owner of cross-owned newspaper-TV combinations operating under temporary waivers. If cross-ownership hasn’t helped save Tribune, why will it bring financial benefits to other newspaper companies?
• Many TV-owning newspaper companies are selling off their broadcast properties. The New York Times Co. recently sold all of its TV stations, and Belo Corp. has announced a plan to spin its TV stations off separately from its newspaper business.

These trends suggest that newspaper companies will be fine if they focus on their core mission of providing quality journalism and work to attract online readers. Lifting the cross-ownership ban seems designed to benefit certain companies like Tribune, Media General and Gannett, which bet heavily on this specific business model. The public interest is too important to bail out to a few conglomerates that mismanaged their businesses.

Over the next two weeks at StopBigMedia.com, we’ll be counting down the “10 Facts Kevin Martin Doesn’t Want You to Know” about his new media ownership rules, as exposed in our new report — Devil in the Details.

Next: The Internet is an opportunity, not a death sentence

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Cross-Ownership Doesn’t Create More Local News

Coverage of Friday’s early Hanukkah gift from Kevin Martin to Sam Zell shows that most people are still missing the fundamental flaw in the FCC Chairman’s argument for more media consolidation.

Chairman Martin — and his media industry backers — long have criticized the ban on one company owning both the daily newspaper and broadcast outlets in the same market as an outdated relic. They’ve even claimed that increased consolidation creates more local news. This simply is not true.

Fact No. 5: Cross-Ownership Doesn’t Create More Local News

In reality, cross-ownership results in a net loss in the amount of local news produced across local broadcast markets. The latest studies by Free Press, Consumer Federation of America and Consumers Union include detailed analysis of recent FCC data that conclusively demonstrates the harms of cross-ownership. Among their findings:

• Cross-ownership crowds out the competition. The presence of a cross-owned station leads other stations in a market to collectively curtail their news output by about 25 percent.
• Cross-owned stations — and markets with cross-owned stations — don’t produce more local news.

In markets without cross-ownership, local TV news stations generally take their cues from the local newspaper. Since these papers are independently owned, all the local TV news departments have reasonably equal access to the newspaper’s reporters and editors.

However, this mutually beneficial relationship is destroyed in markets with cross-ownership. Cross-owned TV stations are able to use their exclusive access to the local newspaper to shut out competitors from the stories that they would normally report. This leads these stations to curtail their local news operations.

Moreover, the data shows that cross-owned stations do not increase their own local news output. When cross-ownership is permitted, the public is harmed not only because they lose an independent voice, but because less news is available to them.

Ignoring the evidence

Martin is not unaware of this evidence. It has been filed in the official FCC docket and was presented to the commission at its Oct. 31 localism hearing in Washington, D.C. At that event, one of the other FCC commissioners even called it “a bombshell.”

Yet Martin moved forward anyway with a proposal that argues cross-owned combinations should be considered “in the public interest” in the top 20 markets and allowed elsewhere. This claim flies in the face of compelling evidence that reaches the exact opposite conclusion.

Over the next two weeks at StopBigMedia.com, we’ll be counting down the “10 Facts Kevin Martin Doesn’t Want You to Know” about his new media ownership rules, as exposed in our new report — Devil in the Details.

Next: Cross-ownership won’t solve newspapers’ financial woes

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FCC to Tribune: So Sue Me

Late on Friday — which FCC watchers know is the only time new policies are announced — the agency effectively granted Tribune Co. further waivers to operate both TV stations and the major daily newspaper in Chicago, Los Angeles, New York, Miami and Hartford Conn.

The FCC had been under intense lobbying pressure to approve the waivers so that real estate magnate Sam Zell could complete his complex buyout of Tribune before the end of the year. But FCC Kevin Martin didn’t stop there.

The FCC could have issued a single temporary waiver while it sorts out the rules governing newspaper-broadcast cross-ownership everywhere. But the FCC’s maneuver is far more complicated — and devious.

Rules made to be broken

Under the terms of the FCC’s order, which passed on a 3-2, party-line vote, Tribune would get a permanent waiver to operate WGN TV and radio and the Chicago Tribune in the nation’s third-largest city. In the other markets, the company gets waivers for at least two years or six months after the end of litigation — whichever is longer.

Here’s the catch: Tribune’s actual request for a waiver was denied, but they’ll automatically get a two-year extension if they sue the FCC for denying that request.

This arrangement is unprecedented and actually encourages Tribune to file a lawsuit to get the decision tossed out. Here’s how FCC Commissioner Michael Copps, who cast one of the dissenting votes, describes Martin’s evil genius:

If the majority simply granted a two-year waiver to Tribune – which would have been the straightforward thing to do – Tribune would have been unable to go to court because a party cannot file an appeal if their waiver request is granted. So what does this Order do? It denies the waiver request but offers an automatic (and unprecedented) waiver extension as soon as Tribune runs to the courthouse door, lasting for two years or until the litigation concludes – whichever is longer. Presto! Tribune gets at least a two-year waiver plus the ability to go to court immediately and see if they can get the entire rule thrown out.

It gets worse. The 3rd U.S. Circuit Court of Appeals — which rejected the FCC’s last attempt to gut media ownership rules in the landmark Prometheus v. FCC decision — reserved the right to review any new rules issued by the FCC. But Friday’s order would let Tribune take its case before the far more industry-friendly D.C. Circuit. While that court can’t eliminate the ban on “newspaper/broadcast cross-ownership” entirely, it could do serious damage.

The fix is in

So basically Martin is asking for a lawsuit from Tribune in which the FCC would be a highly reluctant defendant of rules its own chairman doesn’t support. Martin is telling Tribune, “I’ll deny your waivers unless you sue me.” Wink, wink. Nudge, nudge.

This corrupt, backdoor method of gutting regulations is a specialty of the Bush administration. Here’s how High Country News described the technique when applied to environmental protections:

The Bush administration has developed its own style of courtroom aikido — a martial art that specializes in absorbing the energy of one’s opponent. The administration encourages lawsuits from the logging companies, homebuilders, snowmobilers and off-road drivers, as well as property-rights proponents, all of which challenge the laws and regulations. Then it effectively surrenders, by making only weak defenses in court, or hurriedly agreeing to settlements that cave in to the challengers.

The same theory applies to the clear-cutting of local media.

Reading the fine print

The new Tribune waivers arrive as Martin is trying to lift the ban against one company owning both the daily paper and a TV or radio station in nearly every market. His strategy is the same in both efforts: Pretend you’re presenting a modest compromise, while leaving massive loopholes in the fine print.

The flaws are there to see for anyone who bothers to look. As our report Devil in the Details makes clear, Martin’s plan is corporate welfare for Big Media that would unleash more consolidation in any market among stations of any size. Moreover, the latest evidence shows that cross-ownership doesn’t create more local news and won’t solve the self-inflicted woes of the newspaper industry.

But Martin knows that most of the media won’t bother to dig beneath the surface or cover this story outside of the business pages. The networks and cable news channels? Forget about it. Nobody wants to cover their bosses.

What now?

The corruption and collusion on display here is so cunning it’s hard not to have some grudging admiration. Martin is trying to make it so complicated that no one but media lawyers will know what he’s doing. He’s set an arbitrary Dec. 18 deadline hoping that’s too fast for the public to catch on or for Congress to catch up.

But it’s not over yet. Tomorrow, the Senate Commerce Committee will vote on a bill — the bipartisan Media Ownership Act (S. 2332) — that would put the brakes on Martin’s rush. On Wednesday, the entire FCC will go to Capitol Hill for an oversight hearing in the House. They’ll face the Senate a week later.

The public doesn’t want more media consolidation. That’s something that 99 percent of Americans — judging by the millions of comments filed with the FCC since 2003 — can agree on. With those kinds of numbers, it doesn’t take a political genius to recognize a winning issue. But Congress won’t act unless they hear from their constituents.

Four years ago, an unprecedented public outcry helped stop the FCC from pushing through these same rules. We can stop them again. But the time to act is now.

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Weak Standards Will Not Protect the Public

The ease with which waivers could be granted under Martin’s plan to eliminate cross-ownership is very troubling given the FCC’s record under the current, stricter standards.

Fact No. 4: FCC History Shows Weak Standards Will Not Protect the Public

The existing cross-ownership rule forbids newspaper-broadcast cross-ownership, but the FCC has still managed to grant “temporary” waivers indefinitely or to simply ignore the rule altogether. Friday’s FCC decision to grant further waivers to Tribune Co. is just the latest example — more on that soon.

The problem with waivers

By themselves, waivers are problematic. Waivers eliminate transparency. Citizens lack the time to follow hundreds of waiver cases in markets across the country. Waivers also require more resources than consumer groups can muster. Media companies can hire million-dollar lawyers for each application, while consumer groups and citizens cannot.

But the FCC’s record makes the prospect of more waivers even more discouraging. Since 2001, the FCC has never denied a request for a temporary cross-ownership waiver, even though citizen groups have challenged requests in at least eight cases in California, New York, Connecticut, South Carolina, Florida, Georgia and Tennessee.

FCC inaction

The FCC also grants “temporary” waivers requiring sales — but doesn’t force the companies to sell
when waivers expire:

• In 2001, Tribune received a temporary waiver from having to sell a TV station or newspaper in Hartford, Conn. Tribune sold nothing. In 2003, after the waiver expired, a local citizen sued Tribune and a federal judge ruled against Tribune. Then the FCC stepped in and — instead of punishing Tribune — granted another two-year waiver, overruling the judge.
• In 2001, the FCC gave Fox a “temporary” waiver to sell a newspaper or broadcast station in two years. Fox made no effort to sell. The FCC made no effort to enforce. In 2006, after three years in violation, the FCC gave Fox another two-year waiver.

Remember, these examples occurred under much stricter rules than Martin has proposed. Under the much weaker standard of “presumption,” we can expect the FCC to open the floodgates of consolidation permanently.

Over the next two weeks at StopBigMedia.com, we’ll be counting down the “10 Facts Kevin Martin Doesn’t Want You to Know” about his new media ownership rules, as exposed in our new report — Devil in the Details.

Next:Cross-ownership doesn’t create more local news.

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With Loophole, Papers Can Own TV Stations of any Size

Fact No. 3: Loopholes allow newspapers to own TV stations of any size

On its face, Martin’s proposal to abolish cross-ownership in the top 20 markets would also prohibit a company that owns a newspaper from buying one of the four top-rated stations in the same market. But the same vague standards that would allow cross-ownership outside the top 20 markets could also permit combinations that include any station in a market.

Companies looking to combine would only need to obtain a waiver from the FCC Again, the standards are so lax that almost any combination could be approved by a willing FCC. Instead of allowing just smaller stations to merge, a company that can meet the same vague requirements could apply for a waiver to own the major daily newspaper and the top-rated station in nearly every market.

Here’s a chart that shows how the waivers would work:

Over the next two weeks at StopBigMedia.com, we’ll be counting down the “10 Facts Kevin Martin Doesn’t Want You to Know” about his new media ownership rules, as exposed in our new report — Devil in the Details.

Next: FCC history shows weak standards won’t protect the public

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