User:Tomozojisan/sandbox

Media cross ownership rule

Summary

The media cross ownership rules were promulgated by the Federal Communications Commission (FCC). They limit the number of different media outlets a company can own in a market. For instance, since 1975, media companies were generally prohibited from owning a newspaper and a broadcast station in the same market.

Debates

Under the US Constitution, freedom of speech is protected as a fundamental right of citizens, which is often seen as based on the “market place of ideas” concept. That is, free exchange of ideas is not only a means for the fulfillment of individual rights and the attainment of truth but also a mechanism for improving citizen’s decision-making and preserving the integrity of the democratic process. The goal of this rule is to safeguard such a “market place of ideas,” by promoting competition and diversity of different media outlets. This should generate public benefits from a diverse array of owners that have a diverse array of programs and service viewpoints. Conversely, if private ownership is advanced in an unfettered way, it could reduce the number of people who can own the media to a handful, result in high market concentration, and eliminate smaller and commercially marginal media. It could lead to authoritarianism and political corruption. On the other hand, research shows that not all effects of consolidation are bad. From a theoretical perspective, one might expect consolidation to reduce program duplication and promote content variety as media companies try to cater to heterogeneous audiences.

United States

Establishment (1975)

In 1975, the FCC established a newspaper/broadcast cross-ownership rule that prohibited the common ownership of a daily newspaper and any full-power broadcast station serving the same community. This ban was considered as supporting the public interest by fostering diversity. Deregulation movement Backed by the strong belief in deregulation since the Reagan Administration, the Telecommunications Act of 1996 required the FCC to conduct periodic reviews of its media ownership rules and to assess whether, in light of media competition, the rules continued to be in the public interest. If this test was not passed, the rules were to be repealed or modified. After several revisions were proposed, many of which remained unfinished or were sent back to the FCC after court challenges brought by media companies, there were two big attempts at revisions in 2003 and 2007.

2003

In June 2003, as part of its comprehensive review, the FCC issued its Media Ownership Decision by a 3-2 vote. This decision relaxed several ownership rules, and eliminated the newspaper/broadcast cross ownership ban. The agency argued that the rule was not necessary in the public interest. On the other hand, the FCC continued to be concerned about media concentration but tried to assess it differently. It introduced the new cross-ownership regulation called “cross-media limits”. To this end, the agency adopted the “Diversity Index” (DI) to measure the degree of concentration of local markets from the perspective of diversity. DI was developed based on the Herfindahl-Hirschmann Index (HHI), which is a standard economic measure of market concentration used by the U.S. Justice Department and the Federal Trade Commission in evaluating proposed mergers. Several months later, public interest groups such as the Prometheus Radio Project and consumer groups such as the Consumer Federation of America petitioned to review the FCC’s Report and Order (R&O), arguing that the agency’s decision violated its statutory mandates. Broadcasters also petitioned the court, because, in their view, the proposed deregulation was not enough to make media companies competitive. The decision of the Third Circuit in Philadelphia (Prometheus Radio Project v. Federal Communications Commission, 2004) was that, although the repeal of the ban was reasonable, the new limit rule using “DI” should be suspended because the FCC’s argument about this rule had been insufficient. The FCC appealed to the Supreme Court, but the FCC lost after all.

2007

Since 2000, newspaper’s print circulation and advertisement revenue accompanying the scale of the circulation have been declining. Considering newspapers’ role in the production of news and information in society, it was necessary for newspapers to cooperate with other media like broadcast in order to remain competitive by providing consumers with valuable information, especially the local news. In December 2007, the FCC prescribed the exception to the ban of cross-ownership. The new rule, according to the FCC, would support the availability and sustainability of local news while not significantly increasing local concentration or harming diversity. A combination of newspaper/broadcast station would be approved when:

 (1)   It was in the top 20 Designated Market Areas (DMAs)
 (2)	It was as a combination of a daily newspaper and a television station
 (3)	If the television station is not ranked among the top four stations in the DMA
 (4)	If at least eight independent “major media voices” remain in the DMA

In addition, the FCC would also consider:

 (1)   whether the cross-ownership will increase the amount of local news disseminated through the affected media outlets in the combination
 (2)	whether each affected media outlet in the combination will exercise its own independent news judgment
 (3)	the level of concentration in the Nielsen DMA
 (4)	the financial condition of the newspaper or broadcast outlet, if the newspaper or broadcast station is in financial distress, and the proposed owner’s commitment to invest significantly in newsroom operations

This deregulation also stirred up a dispute from various groups. The FCC was soon taken to court again by both public interest groups and broadcasters. Before the court made its decision, the FCC declared that it would re-examine this order, taking advantage of the inauguration of democrat President Obama. Then, the Court of Appeals for the Third Circuit granted a temporary injunction suspending the FCC’s R&O and extended its final decision. But in March 2010, the court resumed the trial and upheld the order of the FCC.

2011

In May 2010, the FCC announced a Notice of Inquiry (NOI) as the fifth review of its media ownership rules, pursuant to Section 202 of the Telecommunications Act of 1996. This NOI asked for input such as 1) whether the current rules continue to foster competition, localism, and diversity; 2) how to define, measure, and promote competition, localism, and diversity and how ownership structure affects these goals; and 3) how to weigh these public interest goals if they conflict with each other. And then, in June, the FCC released its Request for Quotation (RFQ) for media ownership studies, requesting nine economic studies to evaluate the current marketplace and the state of the media industry.

Opinions of stakeholders

Advocates of deregulation

Media companies/associations such as National Association of Broadcasters (NAB), National Cable & Telecommunications Association (NCTA) or Newspaper Association of America (NAA): They assert that the existing restrictions are both economically inefficient and unnecessary to secure diversity, considering the explosion of new media.

Opponents of deregulation

Public interest groups, such as Public Knowledge, the Media Access Project, and Free Press; consumer advocates, such as Consumer Federation of America; small broadcasters; writers; musicians; academics and other associations such as the National Rifle Association: They worry that diversity in local news reporting would suffer through media concentration between a big television station and a newspaper company.

International comparison

There are various forms of regulation on cross media ownership among countries. International comparisons are meaningful in that they enable us to assess domestic regulation in a different light.

Newspaper/broadcast cross ownership rules in Japan

In Japan, major newspaper companies have controlled their keiretsu (group) broadcasters since the beginning of broadcasting in 1950s, although there are restrictions.

Regulation

As a general regulation on media ownership, Broadcast Act (No. 132 of 1950) requires that a broadcaster shall not be owned by another broadcaster or those who have “control” on it (Art. 93). This rule purposes to protect and foster diversity, plurality and localism of information. “Control” means 1) stockholding more than certain amount (e.g. 20%) and 2) interlocking directorate. There are detailed rules of media ownership in the ministerial ordinance of the Ministry of Internal affairs and Communication (No. 29 of 2008), including cross ownership rule. It permits the ownership of a combination of a television and a radio broadcast in the same area as an exception of the general rule. As an exception of this exception, cross ownership of this television/radio combination and a newspaper is prohibited. It has also an exception, however, where there is no risk of exclusive distribution of news or information by this television/radio/newspaper combination in the area. So far, all broadcasts/newspaper cross ownership cases have been recognized as the exceptions and authorized.

Arguments The Nihon Shinbun Kyokai (NSK), or The Japan Newspaper Publishers & Editors Association has asserted that such cross ownership rule should be repealed because it will not do harm to the three purposes (diversity, plurality and localism) in view of the latest situation of diversity of media such as cable, satellite broadcasting and Internet. Broadcasters also agree with deregulation because, in face of business deterioration, they need to advance close cooperation with newspaper companies. On the other hand, some journalists oppose the current situation and argue that cross ownership should be strictly banned. In addition, cross ownership would be inappropriate from the viewpoint of the “partial regulation” theory, a powerful argument for restricting broadcast that suggests equity and plurality of information can be promoted through checks and balances between (regulated) broadcasts and (non-regulated) press media such as newspapers. The broadcasts/newspaper combination may make such checks and balances difficult. In 2006, the study group in Ministry of Communication concluded that, on the assumption that the importance and the purposes of the regulation had not been changed, standards for judging an exception of the ban of a broadcasts/newspaper combination should be more definite and judgment procedure should be more transparent. After regime change in 2009, the democratic government tried to give periodical review of the cross ownership rule by legal force, but the bill was rejected by the Diet because enough arguments about legislation had been made.

See also:

Concentration of media ownership Media ownership Media concentration Telecommunications Act of 1996 Prometheus Radio Project v. FCC Federal Communications Commission