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Thursday, November 5, 2009

"I Hate to Introduce Reality into an FCC Proceeding"
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... Said former FCC Media Bureau Chief, and current PFF scholar, Ken Ferree at an FCC Workshop held this week on media ownership issues. In his testimony, Ken urged the Commission to consider whether ownership rules concerning broadcasters and newspapers still make sense in today's media marketplace.

While listening to opening remarks given by Commissioner Copps, I was struck by the vastly different portrayals of the media industry by Ken and the Commissioner. For example, Copps claimed media consolidation was temporarily slowed by the economic climate but will soon rear its ugly head again:

These [ownership] issues have been pending before this Commission since I got here and we have done almost nothing to stem the tide of media consolidation and lax government oversight. The consolidation was momentarily slowed by the current economic downturn--itself largely the result of the kind of policies in finance and other businesses that I've been complaining about in media for years. But consolidation is coming back, and once the economic indices start heading north, you'll see media properties galore--all pining for those elusive "economies of scale" whose chase doomed so many companies over the past few years.

Ken's testimony tells a different story:

[W]hy are we fixating on the appropriate ownership limits for broadcast properties? Indeed, today you are working on rules that limit those who may own broadcast properties; tomorrow this all may be inverted and the government may be trying to craft rules to encourage people to buy these same properties, perhaps in distress. The lead news stories today having to do with media ownership are not about acquisitions of broadcast properties, but of sales and disaggregation of large media companies. The list is quite long, but it includes such noteworthy transactions as Disney selling its radio group, Time Warner divesting its cable companies, Viacom splitting with CBS, News Corp. shedding its DIRECTV distribution arm, The Tribune Company's bankruptcy, and Clear Channel's sale of all of its television stations and its efforts to reduce its radio holdings. In short, the age of broadcast media consolidation appears to be past - we are now squarely in the age of media fragmentation.

Indeed, Ken cited various figures (from Adam Thierer's book Media Metrics) on viewership, circulation and ownership to show that the influence and health of traditional broadcasters have been waning for some time and does not directly coincide with the economic downturn.

Ken's comments on the shape of broadcast properties and newspapers also differed from the rest of the members of the panel. While all agreed that something needed to be "done" to help preserve professional media, the roll of competing distribution platforms, especially the Internet, played in the rapid deconsolidation in the market was downplayed by the other speakers. Ken, however, identified the audience fragmentation brought on by these largely unregulated platforms as a key threat to traditional media, not ownership consolidation:

Network broadcast news audiences continue to shrink and circulation figures for even the jewels of the newspaper business like the New York Times, are deteriorating. It takes a certain size and scope to support a sophisticated national news organization with bureaus in far flung locations - a size and scope that is increasingly hard to maintain. Moreover, the audience fragmentation that has occurred with the onset of new media threatens not only the ability of large organizations to cover in depth news stories with national and international implications, but also the continuing viability of local news operations in communities large and small.

Ken concluded that if a goal of the review of ownership rules is to help struggling media properties and preserve "localism" in the media sector, more regulation is definitely not the answer:

The goal of re-energizing and revitalizing local commercial broadcast service, if it ever is to be realized, will come only when the shackles that bind broadcasters' ability to respond to new competitive pressures are removed. Of course, with respect to this proceeding, that would include eliminating outdated ownership restrictions so that broadcasters can organize in economically efficient ways.

Ken's entire testimony can be read here and the entire proceeding can be viewed here.

posted by Amy Smorodin @ 2:47 PM | Communications , Mass Media , Media Regulation , The FCC

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