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Thursday, March 19, 2009

I Hate To Say "We Told You So," But Can't Help Myself
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I read a letter today from Speaker Pelosi to Attorney General Holder in which she notes that the media markets have become hyper-competitive, newspapers are struggling to survive, and fundamental First Amendment newsgathering itself is threatened. So what is the Speaker's suggestion to Attorney General Holder? Ease up on that antitrust enforcement a little bit - after all, there newspapers compete with a whole new host of electronic media.

When I read the letter, I didn't know whether to laugh or cry. For the uninitiated, I spent the better part of 2002-03 helping to develop, and then publicly defending, a new set of FCC media ownership rules that were intended to . . . wait for it . . . preserve newspapers and broadcast outlets ("traditional media") in an increasingly competitive environment. At the very heart of those rules and my efforts to defend them was the notion that traditional media now are faced with competitive threats from a variety of new media including, most importantly and most dramatically, the Internet. "If you value an independent press," I said on countless occasions, "you had better allow the companies in that business to organize in economically efficient ways so that they can continue to invest in newsgathering and journalism. You can't love reporters without also loving the companies that hire them and pay their salaries."

Needless to say, I was shouted down everywhere I went by the likes of Code Pink and Free Press. "Big Media" was the boogeyman of the day, and those of us trying to save newspapers and local broadcasters were accused of exaggerating the threat that new media posed. At the same time, opposing "media consolidation" was such an easy populist message, politicians on both the left and the right clawed atop one another to get on the bandwagon. It's easy to remember examples on the left, such as Senator Dorgan's tired refrain about a train wreck near Minot, N.D. and the supposed failures of the Clear Channel-owned stations in the area, or Commissioner Copps' testimony before Congress just a few years ago in which he claimed that the newspaper business was thriving and there was therefore no need to allow them to restructure for greater operating efficiency. But populism is not partisan; there were plenty on the right who didn't hesitate to throw the Powell-FCC under the bus for trying to ease some of the ownership restrictions on traditional media when the opportunity arose.

The worst offender, though, had to be the Third Circuit court which, on appeal, second-guessed the FCC conclusions and remanded the new rules. As I said at the time, the court had no more business mucking with the FCC's 2003 media ownership rewrite than a child has playing with a loaded gun. The court in particular faulted the FCC for proposing to use a tool we called the "Diversity Index" for evaluating media mergers. In essence, we were proposing to do exactly what Speaker Pelosi has now decided DOJ should do - consider all media in a given market when making determinations about market power. The Third Circuit, though, concluded (based its highly developed expertise regarding the Internet) that the FCC had given the Internet (that is, the entire Internet, not certain given sites) too much weight in the Diversity Index (we gave it a 12% market weight, as I recall) and therefore had overstated the competition that traditional media would face from these new competitors.

Enter Speaker Pelosi. She finally has it right. Traditional media is under attack from all sides and, if we want journalism to survive, we had better start concerning ourselves with making sure that economic organizations can survive that have the wherewithal to support a strong, independent newsgathering and publishing operation. "Big media" might be a convenient boogeyman, but it is the best, and perhaps only, check on big government.

posted by W. Kenneth Ferree @ 3:46 PM | Antitrust & Competition Policy , Capitol Hill , Mass Media , The FCC

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