Newspaper/Broadcast Cross-Ownership: Time for Change

In 1975, the Federal Communications Commission (during my tenure as chair) adopted rules that prohibited the common ownership of a daily print newspaper and a full-power broadcast station (radio or television) in the same market. It did so at a time when newspapers played a dominant role in this nation’s media landscape. And the agency’s regulations largely were based on concerns about that perceived dominance and the effect that it might have on viewpoint diversity.

Now, some 42 years later, the cross-ownership prohibitions remain substantially unchanged. And this is true despite dramatic changes that have taken place in the communications marketplace. Sadly, the strength of the daily newspaper industry has greatly declined. Many papers have struggled to prosper — and, in some cases, even survive – in what has become an increasingly Internet-driven environment. Moreover, there are now many more radio and television stations than in 1975. And today’s media universe features numerous highly diverse sources of local news, information and advertising (including independent digital-only news outlets that have no print or broadcast affiliation).

All of this has caused some major newspaper/broadcast groups to move their properties into separate organizations (dividing slower growth print operations from faster growing electronic businesses). Undoubtedly, they have done so for financial reasons but also, perhaps, in recognition of the Commission’s unwillingness to make any meaningful changes to its cross-ownership regimen.

Such regulatory inertia has been especially disconcerting because Congress, in the 1996 Telecommunications Act, directed the agency to examine its ownership rules every two (now four) years to determine whether they are still “necessary” in the public interest. Given the marketplace metamorphosis that has occurred since then, it would seem difficult, if not impossible, for the Commission to contend that the cross-ownership restrictions remain necessary or even justifiable.

Further, the FCC’s inaction on cross-ownership has seemed even more puzzling given expressions made by a panel of the United States Court of Appeals for the Third Circuit. For more than 13 years, this panel (by a 2-1 majority) has maintained jurisdiction over the broadcast ownership rules and generally has resisted any deregulatory efforts. However, even it has questioned the need for a blanket proscription on newspaper/broadcast coalitions. Indeed, just last year, the judges observed that the ban’s continued operation has imposed “significant expense” on parties that otherwise might have been allowed “to engage in profitable combinations.”

Despite these Congressional and judicial nudges, the FCC to date has held firm not only on cross-ownership but on most of its other age-old broadcast ownership regulations as well. However, under the leadership of chair Ajit Pai, who long has lamented the “archaic” nature of these restrictions, the Commission now seems poised to take decisive action later this month.

The FCC’s draft Order – released to the public under a new Pai transparency initiative – would modify a number of rules (in particular, local television station ownership) and would eliminate entirely the agency’s cross-ownership regulations (including one that prohibits radio and TV station affiliations in the same market). If these actions are approved by the full five-member Commission, it would represent a deregulatory milestone. Nevertheless, it is regrettable that such welcomed relief did not come sooner in order to help remedy the ills that have afflicted the newspaper industry.

According to recent data, the number of daily papers has declined by nearly 25% since 1975 and total circulation has fallen by a third. Similarly, newspaper advertising has decreased dramatically. Over the past several decades, the general stability and profitability of elements of broadcasting might have helped to preserve at least some of the “lost” newspapers. While print journalist layoffs sadly have become all too common, staffing in local television newsrooms has steadily increased.

Concomitantly, the strength of local news reporting – always a hallmark of the “journalistic tradition” practiced by newspapers – could have been a valuable asset to many broadcasters, especially in sometimes hard-pressed smaller markets.

Still, the FCC’s planned action – better late than never – strikes me as very much in the public interest. After all, in removing restrictions that can no longer be justified, the Commission would recognize the realities of the media world as it is today, and not as it was in 1975, 1996 or perhaps even a decade or so ago.

Richard E. Wiley is chairman emeritus of Washington-based law firm Wiley, Rein and served as chair of the Federal Communications Commission from 1974 to 1977.