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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