Sustaining Democracy in a Digital Age

A Blog from New America's Media Policy Initiative

Is Media Consolidation in the Public Interest?

Published:  January 31, 2013
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Panelists at "Media Ownership and the Public Interest" at the Newseum on January 24, 2013.

How does media consolidation affect women and minority ownership opportunities and local reporting?  Experts debate proposed FCC rules, at forum on “Media Ownership and the Public Interest.”

Minorities now account for 37 percent and women over 50 percent of the United States population.  According to data from the U.S. Census Bureau the number Hispanics and African-Americans is set to rise.  Over half of all babies born in the country are from African American, Hispanic, mixed race and other minority backgrounds.  In light of the recent presidential election, media outlets have been keen to draw attention to the changing demographics of America.  They point to how the shifting racial make-up of the country accounts for a dwindling base of voters for candidates who oppose support for contraception, immigration reform and other programs popular with women and minorities. 

The growing diversity of America, however, has no parallel in the nation’s media.  When it comes to representation, employment and ownership of America’s news and entertainment industry, recent data gathered by the FCC shows that women and minorities are grossly underrepresented across the board.  Women, over half the population, own less than 7 percent of broadcast outlets.  Hispanic communities own less than 3 percent of broadcast stations, while African Americans, Native Americans and Asian Americans all hold less than 1 percent of the broadcast licenses.  What policies need to be put in place to advance the longstanding public interest goal of media diversity?

The New America Foundation’s Media Policy Initiative and the USC Annenberg Center on Communication Leadership and Policy co-hosted a conversation, “Media Ownership and the Public Interest” at the Newseum on 24 January 2013. 

The discussion was sparked by rule changes proposed by the Federal Communications Commission (FCC) in 2012 that would allow for greater consolidation of media ownership, and by a number of letters from members of Congress, the public interest and the civil rights community protesting the proposed changes.

“The civil and human rights community cares about media ownership,” said Wade Henderson, president of the Leadership Conference on Civil and Human Rights in his opening remarks. “The way the public looks at issues, indeed whether the public is even aware of issues like voter discrimination, immigration reform, or fair housing is directly related to the way these issues are covered by the media.” 

The FCC has discussed correcting the disparities in media ownership for the past thirty-five years, yet little has been accomplished.  Since 1999 minority television ownership has dropped by 50 percent and minority radio ownership has dropped by 9 percent in the past three years.  Recent statistics from the FCC are not encouraging.   The latest FCC report confirmed that women and people of color remain woefully underrepresented in broadcast ownership.  For example, African Americans own just five full-power television stations, a mere 0.4 percent of full-power TV stations.

A proposal to relax the rules, again

In 2007 and 2011 the commission was told by a federal court of appeals to assess the impact of its existing media ownership policy on women and people of color before moving forward with a 2007 proposal by then FCC Chairman Kevin Martin to relax the ban on newspaper-broadcast cross ownership.   

“When the court last threw out these FCC rules they said to the FCC deal with diversity first,” said Craig Aaron, president of Free Press and panelist at the Newseum event.  Still the FCC has neglected to complete these studies. 

Despite lacking the research, FCC Chairman Julius Genachowski proposed that a single company be allowed to own a major newspaper and television station in the same market.   Genachowski further proposes the elimination of the rule limiting radio-television cross ownership. 

The latest proposal would allow for a major newspaper in the top 20 U.S. markets to be purchased by a television station in that market, so long as that station is not one of the top four television stations in that market.  Genachowski’s proposed new rules grant a single corporation the ability to own up to eight radio stations, two television stations, a major newspaper and provide Internet service in the same market. 

According to Steven Waldman, a former senior advisor to Genachowski, “The rationale for that is that there are more players in the larger markets.”  If a large market has 9 station owners and it decreases to 8, Waldman said, “if it were to help to get a combined entity of a newspaper and TV station to do more local news that would be a good trade off.”

Yet, when the moderator, Adam Clayton Powell III of USC-Annenberg, questioned why the policy only pertained to the top 20 markets and not 25 or 15, Waldman could not provide an answer.  Waldman also made clear that he was not in a position to speak for the FCC. 

“What the FCC is proposing would allow somebody like our friend Rupert Murdoch,” said Aaron, who was alarmed about the proposed rule change, “to buy the L.A. Times and the Chicago Tribune because his TV stations are outside of the top four.” Such a deal is illegal by current cross ownership bans since Murdoch owns two Fox television stations in both Chicago and Los Angeles, America’s second and third most populated cities.

To consolidate or not to consolidate

What happens when fewer companies are allowed to own more media outlets? Is it possible that more consolidation would best serve the public interest?    

“When we talk about public interest and policy that effects public interest,” according to Waldman, “one of the important contexts for this discussion is that we are in a crisis of local accountability journalism.”  Pointing to massive layoffs in newsrooms across the country in recent years, Waldman noted that local coverage has been cut in the process—reporters on schools, courts, hospitals, and other issues of profound importance to local communities.  “The watchdog function of journalism is eroding,” he said. 

Waldman’s diagnosis of the cause of these serious transformations in American news is not media consolidation, “I would say that the cause is the Internet and the fact that readers and advertisers have other places to peddle their wares and get their news.” Still, newspapers have had to find ways to stay profitable.  Therefore, according to Waldman, the solution is not to block company mergers but to find creative ways to jumpstart local journalism and minority media start-ups.  Waldman suggested imposing a transaction fee with each merger, collected to be used as an endowment to subsidize local media.

Waldman’s acceptance of more local consolidation did not sit well with Bernie Lunzer, President of the Newspaper Guild. “This current idea increases the value of the current properties, but it’s not going to add to any employment,” Lunzer stated. “It’s not going to bring anything back to communities.” Consolidation has traditionally led to newsroom layoffs that are 33 percent more likely to affect a person of color in an industry that is comprised of about a 10 percent minority workforce.  Lunzer added, “I can tell you on a anecdotal basis that women have left newsrooms in a huge way, as well as people of color.” 

One in three newsroom layoffs effected minority staff.  Hispanics, African Americans, Asian Americans and Native Americans account for about 22 percent of television employees and 12 percent of the radio workforce.  About 90 percent of newspaper industry staff is white, according to 2012 data compiled by the American Society of News Editors. 

Arguing that media consolidation is ultimately in the public interest, Jane Mago, Executive Vice President of Legal and Regulatory Affairs at the National Association of Broadcasters, the largest advocacy group for broadcasters in the nation, pointed out that women and minorities are gaining higher positions in the broadcast industry.  A stronger industry, she argued, is better for the public interest. 

On behalf of the NAB Mago said, “We have looked at the minority ownership situation and said it’s abysmal.” The problem, she said, is not consolidation, but lack of access to capital.  As a solution to the disparities, the NAB proposes “incubator programs” that train minority leaders how to work in the industry and increase access to capital for future investment.

Looking to what media consolidation has accomplished in the recent past—when large companies buy smaller ones—Aaron argued that mergers have amounted to less local coverage.  “The results,” said Aaron, “are tens of thousands of working journalists losing their jobs. We are seeing the number of minority owners, diverse owners dropping and so I think continued media consolidation and relaxation […] is a big deal.”

The newspaper industry used to report 30 to 40 percent profit margins and instead of investing that profit in web innovation and their newsrooms, the newspaper companies bought up smaller papers, acquiring mountains of debt in the process. “We’ve seen its damage to journalism,” Aaron said speaking about media consolidation, “It is bad for business.  Look at the Tribune Company, a company that got so big, took on so much debt, and now it’s drowning in it.”  The economic downturn and a failure to keep up with a changing marketplace resulted in profit loss combined with an acquired massive debt.  The industry’s solution has been dramatic newsroom layoffs.

Where is the data?

The courts have twice now ruled that the FCC should conduct comprehensive studies to determine the reasons behind the lack of women and minority ownership. According to Mago, the National Association of Broadcasters supports conducting these studies. 

“We agree.  This is exactly something that needs to be done,” said Mago. But she argues keeping the current rules have not solved any problems.

 “How come consolidation is always the first priority?” asked Aaron in response.   

The FCC proposal does refer to a study to support their decision to consolidate.  According to Waldman, the FCC relied upon a study showing, “that combined entities of newspapers and broadcasters did produce more news then they were before.” However, even Waldman, a defender of the FCC proposal, suggested the findings were not definitive.  The Poynter Institute found: “Individual television stations that are cross-owned with newspapers air more local news than comparable stations in the market. However, the television markets that contain these cross-ownership relationships do not air any more (or perhaps air even less) local news programming than comparable markets (presumably due to a reduction in news from the non-cross-owned stations).”

Policymaking

The Federal Communications Commission already permits the granting of waivers in the broadcast-newspaper cross ownership policy in circumstances where entities can demonstrate a public interest need.  “So why change the rules?” inquired an audience member.  Another audience member, a representative from the National Newspaper Association (a group in favor of the proposed rule change) suggested that the option to apply for a waiver for cross ownership might be too much of an impediment for an investor.  If a radio station is not producing local news, he suggested, it simply made sense for the local newspaper to provide local news for the radio station.   In that case, a waiver might block a seemingly harmless and natural partnership.

Lunzer had reservations, pointing to the fact that these partnerships in no way solve the problem of diversity or a lack of journalism.  Rather they are ultimately designed to increase profits.  “I still would like to see some better dialogue about things that are actually going to create new content, bring in new voices, and create some kind of way to get new messages out,” Lunzer remarked.

Craig Aaron brought the conversation back to the need for more data. “We cannot continue the discussion until the FCC conducts the studies and stops rushing into these rules changes,” he commented. “You’ve actually got to actually make the case and get past this hypothetical.”

The NAB, the courts, and the public interest community all agree that the FCC should conduct studies on the effects of media consolidation on diversity and the ability of a consolidated market to meet public interest needs.  The disagreement is one of timing.  While the NAB says that the rules on the books are old, should be updated promptly, and that the studies can come after the new rules have taken effect, the civil rights community, the public interest community, and some members of Congress thinks it’s imperative that the studies come first in order to inform any rule changes. 

A moral issue and a congressional issue

Members of the audience agreed that these issues require serious consideration because of their serious consequence.  Those who own media outlets control who have access to those outlets.  “When people of color can’t speak for themselves or own their own outlets, when they are close to 30-40% of the population,” commented a member of the audience, “I think it’s a very moral question.”

Studies suggest that the diverse public is not represented in the media industry in terms of employment or ownership, and some question whether public interest obligations can be met when those providing news and information represent a different set of interests than the public being served.  “When people of color can’t speak for themselves, when other people have to tell our stories,” said a member of the audience, “it marginalizes our community.”

Forty-eight members of the House of Representatives and 13 Senators have written letters to the FCC regarding Chairman Genachowski’s new ownership rules.  Jane Mago, who worked at the FCC for twenty-six years, and Steve Waldman, former advisor to the Chairman, both agreed that letters from Congress should be taken very seriously at the commission. 

Senator Bernie Sanders (I-VT), one of the most active congressional voices on the issue of media consolidation, closed the event.  “It will be a disaster when in a given community we have one large multi-national conglomerate owning local television stations, radio stations, and newspapers,” Senator Sanders said, “essentially being the only voice of information for that given community.”

 “A vibrant democracy is not going to survive unless we have a vibrant media, where we hear different points of view, where it is owned by different segments of our society, women, minorities,” the Senator told the audience. 

The discussion at the Newseum offered industry leaders and leaders from the public interest an opportunity to voice their stance on this immediate policy concern. When one-third of the nation’s adults lack a reliable broadband connection, broadcast media and newspapers continue to provide an essential service to the country.  What hangs in the balance is the fate of America’s most relied upon news and information outlets, TV and newspapers are still where most Americans go to learn about their communities, their country, and the world.  

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