Senate Hearing Over Media Ownership Rules

SEN. RON WYDEN (D-OR): Thank you. I'll be very brief, Mr. Chairman. Mr. Chairman and colleagues, I believe the Federal Communications Commission's decision rings the dinner bell for the big media conglomerates who are salivating to make a meal out of the nation's many small media outlets. And I think the question now is whether this Congress is going to stand up for the public interests. And I had town meetings around Oregon this last weekend, and this was the dominant topic. People kept coming back again and again with one person saying, The Federal Communications Commission has stood up for the powerful. Who is going to stand up for us? And now I just hope that the Congress—we have a Dorgan proposal, we have a Hollings proposal—we have a variety of initiatives—that this Congress takes steps to make sure that these big media conglomerates who just want to get bigger aren't going to end up producing policies that make this country's news and entertainment less diverse, less locally oriented and more mass-produced. We have seen what happened with radio, that kind of fake localism where DJs on one side of the country pretend to be thousands of miles away in the Pacific Northwest. We will have essentially fake diversity and fake localism become the norm if this Federal Communications decision as written goes into effect. I hope that the Congress won't allow that. I look forward to working with my colleagues, and I hope we will have a bipartisan coalition that protects the public interest on this issue, and I thank you, Mr. Chairman.

SEN. WYDEN: Thank you, Mr. Chairman. Now, Chairman Powell, I was struck by your characterization that the changes in your view were modest, and you said they reflect caution. And I'd like to ask you specifically about a couple of examples on that point.

On the newspaper-broadcast cross-ownership rule, before your decision is a general proposition, you couldn't have a merger between a TV station and a newspaper in the same town. Now, after this rule change, the merger would be allowed in about 200 markets, where about 98 percent of the American people live. My question to you is: How does that become a modest rule change?

MR. POWELL: I'd be the first to concede that I think the most significant rule change is the cross-ownership limitation. But I'd also say it's important to note that we start from the proposition of the statute having demonstrated a complete ban or prohibition is necessary. What we have found is because there have been a substantial number of grandfathered transactions, we had a lot of evidence before us that we had to deal with. Some of that evidence demonstrated enormous public interest benefit in newspaper cross- ownership for consumers. One thing, for example, we found that newspaper-owned television stations produced 50 percent more local news than non-newspaper-owned stations. We also found when we looked at quality awards for excellence in the news industry, RTNDA, the Project for Journalistic Excellence, that newspaper-owned stations often produce the highest quality news product of the local market. So we felt we couldn't defend an outright prohibition. Then it became a balancing act of how much ownership you might allow.

One of the things that people urged consistently is some of the greatest value of these combinations were in smaller and more medium sized markets, where you find a larger number of television stations that don't do news at all, or do shopping network, QVC affiliates, who have an increasingly difficult time funding the extraordinarily high cost of modern news. And so we believe we attempted to try to weigh the degree to which consumers rely on these sources and draw reasonable limits. I'll accept they can be disagreed with, but that's the way we did it.

SEN. WYDEN: On the caution concept, 15 members of the United States Senate, many members of this committee, asked you to give the public a chance to comment on specific rule changes—not just on the general concepts. You declined to give the public the opportunity to comment on specific changes. Wouldn't it have been the cautious thing to do, to let the United States people, the people of this country, comment on specific rule changes?

MR. POWELL: First of all, in my view I think there's an amazing tension here between talking about the extraordinary amount of comment we received in news coverage and input, and then simultaneously say the public hasn't had an opportunity to comment on it. I think that our process has been extremely open. I think it has provided enormous opportunity for comment. And I think that's demonstrated by the breadth of the record and the amount of comment that we received.

Secondly, I would say that I have read for 45 to 50 days the specifics of what we were going to do, and I think we have received an extraordinary amount of public comment from those news and television production coverage of our likely actions.

Candidly, with respect to actually putting out the rules—I don't say this as a defense, only to say that the commission has never done that as far as I know. In the six years I've been at the commission, I have never seen it put out the very specific rules. One of the reasons is it takes the same effort to put them out as it does to adopt them. Notices of proposed rulemaking, in order to have comment that I could rely on on the record, would require a vote of the full commission. We would have fought over what were the specific rules we were putting out in order to get them out. Indeed, we didn't know the final specifics of this rule until the eve of our vote. My concern was if we put out a notice of proposed rulemaking we would go through the same effort to get the rules adopted, we would release them, and I wouldn't be able to complete the biennial until close to the end of the year, backing up into the next one --

SEN. WYDEN: Chairman Powell --

MR. POWELL: So in my judgment I thought that was the best course.

SEN. WYDEN: Chairman Powell, there's obviously bitter disagreement in the FCC on the decision. Are you comfortable with the fact that a decision of this magnitude was made on a three-to-two vote? And what kind of effort did you make particularly with the two dissenters to try to come up with a compromised position?

MR. POWELL: I am always regretful that you can't command the full commission, but I also know in the most difficult and controversial items it often splits, because people have generally held and sharp and distinct differences, and that was the case in many of the issues involved in this particular decision.

I think we opened this process up among commissioners to the greatest degree ever seen. One of the things I did at the end of the triennial, which is also I would note a three-to-two decision, with me in the dissent. I cleared the decks between that proceeding and this proceeding. We had other major proceedings scheduled in order that we could focus on nothing but this proceeding. I instructed by bureau to be prepared to brief every commissioner once, or twice, or three times a week if necessary, to keep them abreast of what the developing options were. I had meetings with most commissioners on a weekly or biweekly basis. And then finally I would say I think there are parts of the final order that candidly I am surprised aren't unanimous. We decided, for example, to continue the prohibition against networks merging with each other; yet, I have two dissenting colleagues, and I am not entirely sure why. The radio rule actually is further restricting than the old rule, but we still have a dissent. So I think those things in my mind were intended to seek unanimity but for some reason they failed to do so.

SEN. WYDEN: Commissioners Copps and Adelstein, what efforts were made in the commission to try to find some common ground? And I would like the two of you to tell us about those efforts.

MR. COPPS: Well, I think we had—from the Day one I think the first conversation Chairman Powell and I ever had when I joined the commission was on the broad parameters of media ownership and I think we knew of one another's interests and generally where we were coming from.

The problem here is that it was not until three weeks before that we actually saw the reasoning, saw the conclusions, and some of the proposals we were headed towards. Within a week we had digested that as best we could, and I have gone back with some specific suggestions regarding the context I would like to see some of the proposals, some of the things I would like to see included, like financial syndication, vertical integration—some of those things we talked about—maybe even looking at what you can use as a supplement to not put the whole burden on these structural rules, but how do you service the cause of localism, competition and diversity through some other approaches which I think were irrelevant here, and those were not acceptable to the majority of the colleagues. So I think there was that kind of a challenge, but I think the process was less than an ideal one, but not so much for the commissioners, but mostly for the people of the United States.

SEN. WYDEN: Mr. Adelstein?

MR. ADELSTEIN: There were regular conversations of the chairman and I and the other commissioners had, and we—I tried my best to try to find common ground. And the reason we couldn't I don't think dealt so much with the process, as it was that we just simply couldn't agree on the substance of the issues. We had some good discussions.

But I'd like to respond to just a couple of the questions of the chairman about claiming that I had dissented on things that I would support and take issue with that. I made very clear in my dissent why I dissented from those provisions, including the dual-network rule. I dissented on that—I made it very clear—because it made no effort to judge whether or not Spanish language is a separate market in terms of media. There is a huge rise of Spanish-language media in this country. We supposedly under this order are trying to determine what changes in the marketplace have been taking place, and try to update our rules to take those into account—fastest-growing minority, has the fastest-growing minority media infrastructure, and yet we can allow two Hispanic networks to merge with no consideration whatsoever. I can't vote for that.

I said radio rules were tightened up and there were some beneficial provisions within the radio rules, but in fact there was a big weakening, a giant hole in the middle of the radio rules that allowed—that got rid of the current procedures, where FCC flags applications, where one owner would end of with 50 percent of the radio advertising revenue share, and the top two owners with 70 percent. This is a very important protection to make sure that competition remains in radio markets. And yet in an order that is supposedly designed to protect competition in the radio markets, we completely gutted that. Now, how can I vote for that? These are good reasons not to.

And on the question of whether or not this is a moderate or an extreme proposal, just to comment on the fact that you made, I think it's hard to characterize as moderate, when you take newspaper broadcasting, and you allow it to apply to 95 percent of the population. That's extreme, in my view. It's dramatic. And, yes, there may be circumstances where that is warranted, where a newspaper could actually help raise the caliber of a local TV station. But in other cases—in every case it eliminates a voice in a community, and those need to be balanced against each other. And the nature of that local market needs to be evaluated on a case-by-case basis to determine whether or not there's sufficient voices in that community left over after you eliminate that voice.

SEN. MCCAIN: Thank you, Commissioner Adelstein, for that wide- ranging response to Senator Wyden's comment. And we'll let Commissioner Powell respond with the next round, if necessary.

Thank you, Senator Wyden. Thank you all.

SEN. WYDEN: Mr. Chairman?

SEN. MCCAIN: Yeah, I was going to—oh, go ahead, Senator Wyden, and then Senator Sununu had follow-ups.

SEN. WYDEN: Thank you, Mr. Chairman. I have just two follow-up questions that I wanted to get into. Chairman Powell, when I asked you earlier about the cross-ownership rules, the rules with respect to newspaper and broadcast—because those rules are going to allow mergers in 98 percent of the areas where the American people live. You said that's the most significant part of the decision. My question to you is, If the FCC is going to allow all of these mergers—mergers that will cover a big chunk of the country, do you think the Federal Communications Commission has an obligation to let the public know in these markets who owns what, so that they can evaluate the independence and credibility of the communications in their area?

MR. POWELL: Just in terms of an information function?

SEN. WYDEN: Yeah. I mean, would you put on your website, for example, these cross-ownership ties, so that the public, given the fact that in the area that you said is the most significant—people would like to know about the independence and credibility of what they are getting—would you put that, for example, on your website so that people would know who owns what?

MR. POWELL: We might in fact substantially already do that. I would like to look at what we do, because all licensed broadcasters have certain public disclosure obligations about their ownership. Most of that is on public file with the commission, and I am not exactly sure what we have available web-based at the moment as opposed to file-based. But let me come back to you on that. I think that we do a great deal about that. Perhaps we can strengthen and improve that to deal with your concern.

SEN. WYDEN: Because I know people tell me they can't figure out who owns what in American communications, and this is the area that you said was the most significant—certainly doesn't fit my definition of a modest change, which is why I asked about it earlier. And I think at a minimum you ought to lay out for the American people what these cross-ownership ties are.

One last area I wanted to discuss with all of you. It looks to me like all of the arguments that the Federal Communications Commission has used against the 35 percent cap could be used against a 45 rule as well. I think you could take virtually all of them and just say this would apply to 35, 45, 48 -- whatever—and in fact I was struck, Commissioner Martin, where you said this was the area that you found particularly difficult. Wouldn't it be safer, I ask you men and women of the commission, to just have Congress step in and set the cap now? I mean, we are not talking about trying to do everything, but wouldn't it make sense for the Congress, so that we can be accountable to the people, and not deal with the fact that the arguments that I've heard today are pretty much the same for 35, 45 or 48 -- why not have Congress step in as a number of us here have said ought to be done, and set those limits now? Chairman Powell?

MR. POWELL: I couldn't disagree at all. I think that actually bears merits, because the huge difference which we have tried to illustrate for you today is that we are bound by the provision of the biennial and the statute and the standard and the court's review of it. You would be bound by none of that, and only accountable to the Constitution. So to the extent that that's the will of the people, I think it's always more defensible if it's statutory as opposed to regulatory.

SEN. WYDEN: Do any of you disagree with that? We can save some time.

MR. ADELSTEIN: I think it would be ideal if Congress would do it, but I would also say that, you know, agree with you that all of the arguments we use for 45 can be used for 35 or for 30, and we didn't even take into account the UHF discount, which means that really 45 percent can go up to 90 percent. So by not dealing with the UHF discount before we did this we let the cat out of the bag before we dealt with the whole situation. And it's really dangerous in the future. Now if we want to adjust the UHF discount, it is going to become that much more difficult to do it in a meaningful way.

SEN. WYDEN: Any of the others want to add to it?

MR. COPPS: I just hope when Congress does get involved that it will cast even a little bit wider net than that, go beyond the national views, rules, and look at the local rules, but more specific it will look at some of these other suggestions that I made today to how do you protect the public interest in these transactions.

SEN. WYDEN: I want to let Senator Sununu ask his questions, and it's in my interests, because he and I are going to lunch. (Laughter.) I will tell you the one thing you have done through your work is you have really mobilized the American people. I think they get it, and I think they understand what's at stake. I mean, the reason I've said that the dinner bell has rung for these big media conglomerates is because that's what I heard all weekend—all weekend when I was having town meetings, people said, Where in the world is the Congress when we need somebody to stand up for them? So I have disagreed profoundly with a number of these changes you all have made, and that's why I've asked those questions with respect to the question of modesty and caution. I can tell you, Chairman Powell, the people of my home state do not see anything—they don't see a shard of modesty and caution in this. I mean, they think this is the flood gates opening up. And you have mobilized the American people, and hopefully we can get bipartisan support for Congress making some changes in these polices that really reflect the public interest rather than the private concerns.

My time is up, and I am going to wait around for my lunch partner.