Last updated: June 27, 2012 - 8:10am
[Commentary] Since 1975, the Federal Communications Commission’s restriction on owning a television station and a newspaper in the same market has generated considerable debate in Washington — ranging from a slow simmer to white hot depending upon the state of the economy; the pace of the merger and acquisition market; and the growing number of media outlets. Last November, the FCC proposed relaxing the crossownership regulations in the 20 largest markets, feeding fresh fuel to the controversy.
One side of the debate, espoused most vocally by a number of public interest groups and former FCC Commissioner Michael Copps, states that newspaper-television crossownership threatens the diversity of voices and reduces journalistic quality. They further argue that such crossownership may diminish localism, result in layoffs of news staff and simply pump up the profit margins of media conglomerates. There is a concern, this argument goes, that relaxation of the crossownership rule will simply ignite another wave of media consolidation to the detriment of local consumers.
The opposing view, articulated by industry participants like Tribune (which is periodically required to petition for a waiver in its crossownership markets) and several trade associations, is that in a world with hundreds of cable channels, Internet sites, blogs and satellite services that did not exist in 1975, the threat to diversity posed by newspaper-television crossownership — if it ever existed at all — has completely evaporated. They point to studies demonstrating that co-owned print and television outlets in the same market often take opposing views regarding community issues, and that combining resources greatly enhances the ability to produce quality, in-depth investigative reporting. One way of evaluating this debate is to look at how the permitted crossownership situations have fared over the years. The first point of view is seriously undermined because a large proportion of the legacy newspaper-television crossownership operations have not survived.
The destruction of almost one-third of the legacy crossownerships leads to some interesting conclusions:
- Ownership of both a newspaper and a television station in the same market is no guarantee of financial survival, much less extraordinary profits or market power.
- The “iron fist of the marketplace,” by incentivizing operators to either divest holdings or terminate them, appears to be much more effective at ordering the competitive landscape than regulations do.
- That the regulations even exist is somewhat mystifying — restrictive regulations typically exist to control economic arrangements that are growing to create unfair market power, not those which seem to be in a process of self-destruction.
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