Contact: Andy Davis (202) 224-6654

Sen. Hollings' Floor Statement Upon Introduction of the Media
Ownership Act of 2001

July 17, 2001

Mr. HOLLINGS. Mr. President, I rise to introduce legislation, the Media Ownership Act of 2001, designed to rectify the increasing trend toward consolidation and away from a vibrant exchange of news and information in today's media marketplace. I am joined in this effort by my colleagues, Senators Inouye and Dorgan, who for years have demonstrated their tireless pursuit of the public interest in the sensible regulation of media ownership.

This legislation is necessary to stem the tide toward concentration in the broadcast and newspaper industries and force a thorough and reasoned examination of the claims that further consolidation will serve the public interest. While the phrase "public interest" may have a vague ring to it, its meaning should be quite clear to the five members of the Federal Communications Commission, which itself observed just a few months ago that it has both "the duty and authority under the Communications Act to promote diversity and competition among media voices."

Notwithstanding that duty, it has come to my attention that the FCC is planning a Notice of Proposed Rulemaking to relax or eliminate the newspaper-broadcast cross ownership rule. In addition, I understand that the FCC may consider revising, among other media ownership restrictions, the 35 percent national broadcast ownership cap later this year. I do not believe that those rules should be changed at this time. Others disagree. This legislation will enhance our debate on these issues.

Locally relevant, independent programmers and distributors of media content are critically important energizers of civic discourse in this country. Indeed, that independence, localism and diversity are what separate our nation from countries where information is not allowed to flow freely. Accordingly, any proceeding to revisit existing ownership rules involving broadcast, print, or cable television must examine the potential impact that undue influence over local and national media outlets may have on our democracy.

Because Congress understood the difficulty the Commission faces in quantifying democratic values such as localism and diversity, it gave the Commission the explicit and implicit statutory authority and responsibility to establish and maintain ownership caps in the media industry. Pursuant to that authority, the FCC has imposed limits on the ownership of broadcast and cable television properties, and on the cross-ownership within a market between broadcast and cable television stations, broadcast television and radio stations, and broadcast television and radio stations and newspapers.

These ownership restrictions are based on factors outside the bounds of a traditional competitive analysis, and carry with them the authority to prevent consolidation before it rises to the level necessary to trigger antitrust intervention. for example, in light of the importance of promoting localism and diversity, a higher importance must be ascribed to preserving the balance of power between the networks and local stations than would otherwise be expected under traditional competition analysis.

The reasons for this are simple, diversity in ownership promotes competition. Diversity in ownership creates opportunities for smaller companies, and local businessmen and women. Diversity in ownership allows creative programming and controversial points of views to find an outlet. Diversity in ownership promotes choices for advertisers. And diversity in ownership and the related restriction on national ownership groups preserves localism. And what in turn does this mean? Millions of Americans regularly receive their local news by watching their local broadcast stations or reading their daily newspaper. For these citizens, localism still matters.

The proponents of increased consolidation, however, claim that the transformed media landscape demands a deregulatory response. In my view, the burden should rest on those who wish to change the rules of the game to justify those changes. If localism and diversity can be preserved in a consolidated marketplace, prove it. Arguments alone are not persuasive.

Prior to the 1996 Telecommunications Act, the top radio station group owned 39 stations and generated annual revenues of $495 million. Today, the top group owns over 1100 stations and generates revenues of almost $3.2 billion annually. This consolidation directly undercut diversity and localism in the radio marketplace. A year before Congress passed the Telecommunications Act, the FCC lifted the rules that prohibited broadcast networks from owning and creating their own television programming. This sanctioned consolidation freed the networks to seek economic stakes in, and ownership of, television programs. As the Washington Post reported last fall in an article entitled, "Even Hits can Miss in TV's New Economy", "Just as supermarket might reserve its best shelf space for its house brands, the networks have begun to favor their in house programs over shows created by others, which are often less profitable in the long term." So we see what deregulation has brought us with radio and the market for television programming. Similar consolidation among other major media outlets should only be allowed after a thorough analysis that justifies permitting such concentration.

The legislation that we introduce today addresses the FCC's lack of enforcement of the newspaper-broadcast cross ownership rule. The FCC's jurisdiction over newspaper broadcast ownership combinations arises from its authority to oversee broadcast communications licenses. In practice, the FCC has applied the rule only when there is a transfer or renewal of a broadcast license. So, if a broadcast station owner acquires a newspaper in the same market, there is no FCC review of the cross ownership until the station's license is up for renewal. If a newspaper owner acquires a broadcast station, however, the rule is immediately triggered because the FCC has to approve the transfer of the station's broadcast license for the transaction to go forward. When the rule was adopted, television broadcast licenses were renewed every three years. Accordingly, even when the FCC did not immediately enforce the rule, the combined entity was aware it would have to come into compliance, either by requesting a waiver, or divesting either the station or newspaper, within a short period of time.

Today, however, broadcast station licenses are only renewed every eight years, thereby creating a significant loophole in the cross ownership rule, if it is only enforced by the Commission at the time of license renewals. Our bill would require the FCC to review immediately existing cross ownership combinations. The legislation requires a broadcast licensee to inform the FCC when it acquires a newspaper that would place the license in violation of the newspaper-broadcast cross ownership rule. Upon receipt of this information, the FCC could take a range of action under the legislation, including forcing divestiture, or granting a waiver to allow the combination to go forward.

In addition, our legislation steps up a process whereby we in Congress can scrutinize any alternative that the Commission devises to replace the current media ownership rules, and compare the efficacy of a new cap or ownership measurement system against the current rules, to determine whether a new measurement provides a better mechanism to promote diversity and localism. Accordingly, our bill requires the FCC to provide to the House and Senate Commerce Committees, any proposed media ownership rule changes eighteen months before they become effective. These proposals must be transmitted to the Commerce committees along with clear and ample explanation of how the new formulations will better meet the Commission's public interest obligation to promote competition, diversity, and localism.

The legislation we are introducing takes two important steps. First, it forces the FCC to enforce the current version of the FCC's newspaper-broadcast cross ownership rule. Second, it provides a check on those who might otherwise move quickly to repeal other media ownership limits without regard to the impact of the consequent consolidation on diversity, localism, and competition in the media marketplace.


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