The FCC Can—and Should—Update Its Rules to Combat Rising Cross-Ownership

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The Federal Communications Commission is required by law to review its media ownership rules every four years to determine whether they remain “necessary in the public interest.” If they do not, the FCC is to “repeal or modify” the regulations. Contrary to the apparent belief of the FCC, the Quadrennial Review is not simply about eliminating or relaxing rules. Rather, the purpose of the review is to serve the public interest. Therefore, when the FCC decides whether to keep, repeal, or modify current rules, some rules may need to be enhanced.

In its recent Notice of Proposed Rulemaking (NPRM) to initiate this year’s review, the FCC singled out three rules to review, all of which limit the number of stations that may be owned in a broadcasting market. The NPRM seeks comment on whether these rules continue to be necessary in the public interest or whether they should be modified or eliminated. This is far too narrow and does not comply with the statute. If we really want to modernize the ownership limits to address today’s unprecedented levels of concentration, new enhanced rules are desperately needed. That includes rules designed to break up the rise in cross-ownership of video service providers, broadband providers, and online information services such as Hulu or HBO Go.

Where Did the Quadrennial Review Standard Come From?

Supporters of deregulation have always maintained that Section 202(h) of the Communications Act, which mandates the quadrennial review, is purely deregulatory, but the courts have rejected this interpretation. In Prometheus Radio Project, public interest groups challenged the FCC’s then deregulatory method of conducting quadrennial reviews. The court explained that when the FCC determines which rules are “necessary for public interest,” the term “necessary” does not mean “essential” or “indispensable,” but rather “convenient,” “useful,” or “helpful.” This standard shows that the quadrennial review is not only about repealing or modifying existing media ownership rules, but also about updating and improving them to reflect market realities.

Upon each review, the FCC must always ask, “does this rule serve the public interest?” In order to make this analysis, the FCC should then ask whether the rule must be repealed, modified, or whether additional new rules are necessary in light of changes in the marketplace. As the FCC and Congress have stressed, the FCC’s role is not simply to preserve existing competition. It has a responsibility to affirmatively promote access to diverse and competing sources of news and opinions, and, according to the Supreme Court, prevent levels of concentration that would be acceptable under antitrust.

The Rise of New Technologies Makes Media Ownership Rules More Relevant, Not Less.

One reason updating media ownership rules is so crucial is because local, traditional media is still very relevant. As the NPRM states: “Broadcast television and radio stations remain important fixtures in local communities.” A recent Pew Research Center study found that watching television remains the preferred mode of news consumption in the U.S over reading and listening. Television also continues to rank as the preferred platform for news consumption over print, the internet, or radio. Eighty-one percent of Americans ages 65 and older primarily get their news from television, as do 65 percent of those ages 50-64, and 36 percent of those ages 30-49. Moreover, 42 percent of Americans ages 30-49 primarily get their news from news websites, and 36 percent of those ages 18-29 primarily get their news from social media. Cross-ownership therefore amplifies power far more than simple aggregate figures suggest. For example, cross-ownership of television broadcast stations, cable networks, and internet news sites provides control of the dominant pathway for news for adults 30-49 (internet news sites), 50-65 (television) and 65+ (television). Limiting cross-ownership provides a much greater likelihood of individuals in different demographics receiving information from diverse and unaffiliated sources.

In addition, Harvard professor Yochai Benkler’s research shows how media ownership rules have real consequences on behavior. Benkler found that conservative media outlets, such as Fox News, have much more polarizing effects than do internet platforms like Facebook and Twitter, and that Fox in particular is a source of widespread conspiracy theories, such as Pizzagate. Broadcast media greatly influences consumers, and media ownership rules can help ensure that networks remain diverse and do not become endless echo chambers with unchecked power.

The FCC Has the Authority to Enhance Media Ownership Rules.

The FCC has the authority to limit how much a company with “licensed facilities” may own. Under Section 533(c) of the Communications Act, “[t]he Commission may prescribe rules with respect to the ownership or control of cable systems by persons who own or control other media of mass communications . . .”  The statute explains that “media of mass communication” includes “television, radio, cable television, multipoint distribution service, direct broadcast satellite service, and other services, the licensed facilities of which may be substantially devoted toward providing programming or other information services . . .” (emphasis added)

That includes broadcasters, cable operators, Title II telecommunications providers (Section 214), and mobile services (licensed under Sections 301, 303, and 309). The FCC also has the authority to limit their ownership of any “information service.” This includes any online content, such as Yahoo!, or streaming service, such as HBO Go. It also includes, since December 2017, any broadband access service (although that may change when the D.C. Circuit hands down its decision on net neutrality).

Many companies today own various media of mass communication, which include cable systems, radio stations, broadcast satellite services (e.g. DirecTV), and information services (e.g. broadband; text messaging). Because the Communications Act broadly defines media of mass communication and gives the Commission authority to control it, the Commission can and should put limits on cross-ownership. Having richer cross-ownership rules will help limit broadcast licenses and combat unrestrained consolidation, which ultimately helps competition, localism, and diversity—the main goals of the quadrennial review.


Image credit: Free Press Pics

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