FCC To Stimulate More Media Consolidation “On Its Own Accord”

fccOne of the fundamental issues causing the rapid decline in country music has been the massive consolidation in the ownership of country music’s radio stations and other media outlets. As huge companies like Clear Channel & Cumulus lay off local workers to instill nationalized programming, country music becomes homogenized through matching playlists that lock out local and regional flavor. Just this week Clear Channel’s flagship personality Bobby Bones signed a new, long-term deal with the company, while The Bobby Bones Show continues to move into new markets, including most recently Boston’s WEDX which changed over to the Top 40 country format on June 13th, now giving the syndicated radio host over 70 stations.

Despite the rapid consolidation of American media (see graphic below), last week the House of Representatives convened the House Energy and Commerce Committee’s Subcommittee on Communications and Technology to weigh the need for even more consolidation to help struggling media companies deal with the new realities faced by the internet and other emerging media markets. Though the FCC’s representative at the hearing, Chief of the Media Bureau William Lake said the commission had not seen any evidence that the 1996 Telecommunications Act rules governing radio ownership needed to be revised, apparently the FCC’s commissioner has differing views. While speaking before the Media Institute, FCC Commissioner Mike O’Rielly let it be know he wants more media deregulation, and he doesn’t want to wait for Congress to act to get it done.

I will make the analogy that the FCC is poised at this pivotal moment just like the proverbial ostrich … This bird is also known for being stubborn and sticking its head in the sand. Instead of speeding forward to recognize the marketplace realities, I worry the FCC is desperately clinging to existing rules Rules that were written prior to the digital revolution, prior to Wi-Fi, and prior to the Internet. These regulations treat the various video providers that offer the same, or very similar, services, in different ways. To be fair, many of these rules if not the most impactful ones are the result of statutory provisions. Fortunately, the House Energy and Commerce Committee and the Senate Commerce Committee are looking towards reform. I defer to the Congress on the timing and content of any changes it deems appropriate. In the meantime, there is a great deal the FCC can do on its own accord to clear out the regulatory underbrush.

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Mike O’Rielly

As brought up in the Congressional hearing, one of the universally-concerning issues facing media deregulation and consolidation is the lack of the FCC delivering a mandated review of the ownership rules, which was not delivered the last time it was required in 2010, and won’t be delivered this year either, despite it being due again.

One of the biggest issues facing many broadcasters today is the FCC’s Media Ownership rules. According to Section 202(h) of the Telecommunications Act of 1996 the FCC is required to review these rules every four years. It is supposed to repeal or modify any rules that can no longer be justified due to competition. Even when writing the law 18 years ago, Congress recognized that the media landscape was becoming more competitive and wanted the ownership limits to be only as restrictive as absolutely necessary. Unfortunately, this past April, the Commission ignored this requirement and voted to punt this review until June 2016, at the earliest. With the last review completed in 2007, the FCC will go almost a decade without updating these rules. I am not aware of any precedent that allows a federal department or agency to decline to meet a statutory deadline simply because it doesn’t want to comply.

One of the FCC’s primary regulations has to do with the amount of foreign ownership that can exist in media. Foreign ownership is currently set at no more than 25%, but as the FCC’s commissioner says, he’s already bending that rule, just as he’s looking to bend the other ownership rules, and wants the foreign ownership rule relaxed in the law even more.

The Commission should revisit its foreign ownership restrictions for broadcast licensees. We’ve taken the first step. One of my first votes as a new Commissioner in November was for the order that reaffirmed the Commission’s previously held, but not universally-known, position that it would consider applications to approve foreign ownership of broadcast licenses above the 25 percent threshold. We need to go further and consider ways to expand the foreign ownership rule to attract more investment in broadcasting. Encouraging foreign ownership will not only benefit domestic broadcasters, it will also open doors for U.S. investors abroad.

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FCC Commissioner Mike O’Rielly then goes on to say, I would challenge anyone to look in the mirror and with a straight face say that we need to tighten the media ownership rules…”

However Mike O’Rielly seems to be taking into consideration only one of the FCC’s regulatory tasks. Though the commission is charged with keeping the economics of American media viable to ensure a healthy marketplace, it is also the FCC’s job to look out for the public interest in how media is serving the community at large. As Representative Anna Eshoo said during the House subcommittee hearing, “We need to examine this in terms of what consolidation is actually going to do for the American people,” arguing that further deregulation of the media was more about making outmoded business models work instead of making sure the media and the FCC are fulfilling the public’s interest. Also during the hearing, the The President of the Newspaper Guild Communications Workers of America Bernard Lunzer said, “Further concentration will mean less credible news ”¦ We need real innovation and investment ”¦ consolidation of existing organizations will not get us there.”

Despite the lack of the FCC’s federally mandated report on media ownership, and in the midst of indecision of whether Congress will act with or without the report to further deregulate the industry, by FCC Commissioner Mike O’Rielly statingthere is a great deal the FCC can do on its own accord to clear out the regulatory underbrush,” and O’Rielly’s signal he’s already working around the previously-set foreign ownership rules, the FCC appears to be set to make some deregulatory changes on their own to deal with what they believe are unfair rules governing America’s media companies. This could mean even more media consolidation, even without the required review of media ownership by the FCC, or Congressional approval.

Mike O’Rielly became FCC Commissioner on November 4th, 2013.

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