Newspaper-Radio Cross Ownership Comments

Media Diversity Main Page


Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554

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In the Matter of

Newspaper/Radio Cross-Ownership
Waiver Policy
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)     MM Docket No. 96-197
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COMMENTS OF BLACK CITIZENS
FOR A FAIR MEDIA, ET AL.

Black Citizens for a Fair Media, Center for Media Education, Chinese for Affirmative Action, Communications Task Force, Hispanic National Bar Association, League of United Latin American Citizens, Minority Media Telecommunications Council, National Association for Better Broadcasting, NOW Legal Defense and Education Fund, Office of Communication of the United Church of Christ, Philadelphia Lesbian and Gay Task Force, Telecommunications Research and Action Center, Washington Area Citizens Coalition Interested in Viewers' Constitutional Rights, Wider Opportunities for Women, Women's Institute for Freedom of the Press ("Black Citizens et al.") hereby submit comments in response to the Commission's Notice of Inquiry, Newspaper/Radio Cross-Ownership Waiver Policy, MM Docket No. 96-197, (released October 1, 1996) (the Notice).

Black Citizens et al. are public interest organizations representing the interests and viewpoints of thousands of mass media audience members.1 These radio listeners and newspaper readers have a strong interest in receiving information, ideas, perspectives, and viewpoints from diverse sources. Access to such information facilitates informed participation in the affairs of their local communities and the nation.

The Commission initiated this proceeding to determine what changes, if any, should be made to its newspaper/radio cross-ownership waiver policy.2 The Notice specifically queries whether the Commission should adopt an objective standard against which requests for waiver will be measured.3 While Black Citizens et al. does not object to the Commission adopting a more objective waiver standard, we believe that the Commission's current waiver policy has served as an important bulwark in protecting local diversity. More important, we recognize that the recent elimination of national ownership limits for radio and the ensuing trend toward consolidation and concentration of ownership place the diversity values that the rule protects at risk and makes the waiver policy more important than ever.

Parts I through III of these comments demonstrate that, should the Commission choose to alter its waiver policy, only limited changes are warranted. Parts IV and V propose an objective waiver standard that will be easy to administer, allow the FCC to distinguish meritorious waiver requests, and thereby protect local diversity.

I.     The Current Waiver Policy to the Newspaper/Radio Cross-Ownership Restriction Serves the Public Interest Well.

As the Notice acknowledges, the daily newspaper/radio cross-ownership rule has long reflected Congress' and the Commission's judgment that routinely "granting a broadcast license to an entity in the same community as that in which the entity also publishes a newspaper would harm local diversity."4 The strict application of this rule has successfully protected diversity of viewpoint in many communities, which today enjoy a more vigorous market of diverse and competitive sources than they would have absent the restriction.

It is uncontroversial that "diversity of viewpoints from antagonistic sources is at the heart of the Commission's licensing responsibility."5 However, other commenters will likely disagree about what diversity means and how it can best be achieved. Some commenters may even offer the Commission evidence that radio stations currently offer widely diverse programming and program formats and will conclude that the Commission is unnecessarily concerned about diversity.6 Notice at para. 9.7

The Commission, however, has long recognized the importance of distinguishing between diversity of programming, and diversity of viewpoints and sources accomplished through diversity of ownership.8 As the Commission noted in 1975, when it cited the potential dangers of concentrated ownership: The significance of ownership from the standpoint of "the widest possible dissemination of information" lies in the fact that ownership carries with it the power to select, to edit, and to choose the methods, manner and emphasis of presentation, all of which are a critical aspect of the Commission's concern with the public interest.9

The FCC's public policy judgment that separate ownership is the best way to achieve viewpoint diversity has changed little since 1975. In the 1995 review of its broadcast ownership policies, the Commission acknowledges that: without diversity of outlets, there would be no real viewpoint diversity "if all programming passed through the same filter, the material and views presented to the public would not be diverse. Similarly, the Commission has felt that without diversity of sources, the variety of views would necessarily be circumscribed."10 Diverse programming can be accomplished by a single owner programming many media outlets. However, diversity of viewpoints will always be threatened by such common ownership. A common owner has the power to control and manipulate the information released through its outlets. This potential for the common owner to exercise editorial control threatens the First Amendment goal of the "widest possible dissemination of information."

The Notice also acknowledges that newspapers have a powerful presence in their local markets and queries whether that distinguishes the newspaper/radio cross-ownership rule.11 We believe that it does. Newspapers and television are the most important tools for shaping public opinion on local issues. Local news, public affairs, and issue-responsive programming enable citizens to become fully informed and strengthen our participatory democracy. Protecting diversity of viewpoints through separate ownership at the local level must remain a central mission of the Commission.

As a preliminary matter, Black Citizens et al. note that the scope of this proceeding is extremely narrow. The Notice never once contemplates changes to the crossownership rule; instead it focuses on possible alterations to the policy under which waivers of that rule are granted. Adopting a waiver policy so flexible that it undercuts the purpose or success of the rule is beyond the scope of this proceeding. Only limited changes to the waiver policy are permissible if the Commission is to avoid a de facto repeal of the rule.

The Notice also states that "while the Commission now clearly has the authority to reevaluate its waiver policy for newspaper-broadcast combinations it is without specific guidance on whether or how that authority should be exercised."12 Black Citizens et al. do not here challenge the Commission's authority to amend its waiver policy. However, we believe that the congressional intent expressed both in the 1994 Appropriations Act and more recently in the Telecommunications Act of 1996 ("1996 Act") provide the Commission ample guidance.

First, the 1994 Appropriations Act prohibited the FCC from using appropriated funds to alter the daily newspaper/radio cross-ownership rule, but allowed the FCC to amend its policy for evaluating waivers of the rule.13 The Act's legislative history described Congress' intent regarding modifications to the waiver policy:

Therefore, while the Commission has the discretion to change its waiver policy, this language provides a clear and unambiguous expression of Congress' intent regarding the substance of any change.15 Supra, note 4.16 17497 U.S. 547, 572 (1990), (citing Fullilove v. Klutznick, 448 U.S., at 502-503 (year).18 Id. (citing Fullilove v. Klutznick, 448 U.S., at 502-503).19

The Commission recently recognized the value of this expression of Congress' intent when it approved the merger of the Walt Disney Company and Capital Cities/ABC. It specifically referred to the "clarification language" which Congress included in the conference report accompanying the 1994 Appropriations Act.20 Moreover, in refusing to grant the permanent waivers sought by Disney, the Commission highlighted the paucity of Disney's public interest showing as compared to Congress' standard.21

In addition, the legislative history of the 1996 Telecommunications Act provides further guidance and should caution the Commission against broad changes to the waiver policy. The fact that Congress explicitly considered and rejected a repeal of the newspaper/radio cross-ownership rule confirms the continued importance of the rule.22 While Congress appeared willing to tolerate the risks associated with increasing the local ownership limits for radio and repealing limits on national ownership of radio, it drew the line at newspaper/radio cross-ownership. Congress apparently had a specific vision where a number of large media corporations would compete in a market in part defined by the cross-ownership restriction. Nothing in the 1996 Act even refers to, much less alters, its previous statements that careful scrutiny of waiver requests is an important safeguard for preserving and fostering diversity of viewpoints.

II.     Changes in the Media Landscape Since the 1975 Adoption of the Newspaper/Radio Cross-Ownership Rule Make it More Important, Not Less.

The 1996 Telecommunications Act lifted a significant number of ownership limitations, which has and will continue to result in greater concentration in ownership at the local level. Prior to the passage of the 1996 Act, a party could only own one AM and one FM station in a single market without seeking a waiver. Now, subject to limits imposed by antitrust laws, an owner can hold up to eight radio stations in a local market.23 The fear that initially prompted adoption of the newspaper/radio cross-ownership restriction"that the local station might own the daily newspaper" should be exponentially increased by the prospect of a conglomerate owning eight local radio stations and a daily newspaper. Combining the power of a daily newspaper with control over a significant portion of the radio spectrum would allow that owner to control the debate on many issues in the local community. It is easy to see how newsworthy events that are unpopular with the group owner could go unreported and how viewpoints unacceptable to or even critical of that owner might be suppressed. The newspaper/radio cross-ownership restriction plays the vitally important role of preventing large media corporations from dividing up local territories as secure, protected enclaves, similar to the zones of non-competition in telephony previously maintained by the Baby Bells. Apparently, Congress envisioned a marketplace where media corporations would compete not only on the national level, but"as a result of strict enforcement of the newspaper/radio cross-ownership rule"on the local level as well.

Local competition is fostered because, in the absence of an easily obtainable waiver, the rule will force media corporations desiring to grow to venture into new local markets. For each such market, they will have to decide between becoming a major radio voice with numerous stations, or a major newspaper voice with no radio stations.2425 Local markets would, therefore, be served by a diverse group of national and local media corporations and dissemination of diverse viewpoints would be encouraged. Without the rule and a strict waiver policy, widespread local competition among national media corporations is unlikely to occur.

A cautious approach to relaxing the waiver policy is further justified by the fact that the communications market, especially the radio market, is in flux.26 Thus far, the 1996 Act has not produced the vigorous competition and robust diversity that was promised.27 In addition, it is unclear whether the sweeping changes in policy embodied in the 1996 Act will ever lead to meaningful competition among national media corporations or, even if some competition results, how the policy changes will affect the diversity of local voices.

As the Commission is well aware, in the year following the passage of the 1996 Act a flood of mergers, consolidations, station swaps and sales have occurred. Certainly, this has been true of radio where, for example, Clear Channel Communications now owns more than 100 stations, making it second only to Westinghouse (which itself owns 77 independent radio stations and multiple stations in the nation's top ten radio markets) in terms of audience reach; Chancellor Broadcasting Co., with the purchase of 12 radio stations from Colfax Communications, boasts 53 stations in 15 markets; and Gannett's merger with Multimedia Entertainment yielded a media portfolio including 92 newspapers, 13 radio stations, five television stations, and a cable arm with subscribers in five states.28 There has been similar widespread consolidation in television, cable, and telephony with the creation of Time Warner/Turner, the world's largest media company, and Bell Atlantic/Nynex, the largest regional telephone company in the United States since 1987.29 In such a setting, when considering relaxing important safeguards that protect diversity of viewpoint and competition, wisdom counsels caution.

Some might argue that changes in the communications industry that have led to increased concentration of media ownership have increased diversity and the amount of information available, ultimately benefiting the average consumer. We disagree.

As we discussed in section 1.A. above, the argument that concentrated ownership leads to diversity rests on the faulty assumption that the goal of the newspaper/radio cross-ownership rule is diversity of programming, when the rule was actually designed to promote diversity of viewpoint. The reality is that if a particular local matter or issue is distasteful or contrary to the owner's self-interest, that owner can force all of its outlets to ignore the issue or spin it as the owner prefers. Three recent examples illustrate this potential for self-censorship and suppression of certain viewpoints.

First, as the Commission deliberated over whether incumbent television licensees should automatically receive additional spectrum or whether auctions should be held, the broadcast media were conspicuously absent from the debate. Were it not for newspapers, the public would not have been adequately informed. A similar story can be told about the continuing controversy over television ratings. Again, much of the debate and all of the investigative reporting and conscientious journalism has occurred in the print media. Finally, media coverage of itself is a particularly strong example of the threat of self-censorship. When Time Warner announced the acquisition of Turner Broadcasting, the CEOs of both companies were interviewed on CNN by Larry King. King was widely criticized in journalistic circles for his "softball" interview.30

In addition, the market incentives facing common owners and their quest for increased economic efficiency also thwart viewpoint diversity. Consider, for example, the trend toward fewer and smaller news departments on the television network level. As the parent corporations of news divisions have grown, the size of the news staffs have shrunk. This trend has occurred even as news programs account for a larger percentage of the prime time programming line-up. Networks have responded, in general, by filling the air with more commentary and more recycled stories"not with more news.31 It is only the addition of new competitors that has added to the overall number of news reporters actually gathering news.

This national trend will likely be repeated at the local level as concentration of ownership increases and especially if waivers of the cross-ownership rules are routinely granted. A parent corporation will have the incentive to reduce or consolidate the news staffs at its commonly-owned radio stations and newspapers. The result will be less news and fewer diverse viewpoints at the local level. The best safeguard against this trend is for the FCC to encourage the separate ownership of radio and newspapers, which will inevitably lead to more journalists on the streets doing actual news gathering and reporting diverse viewpoints.

One of the arguments which helped justify raising the limits on the number of radio stations a common owner could control in a local market was that consumers might be better served.32 Proponents reasoned that in a local market where eight radio stations were controlled by separate owners, each station would likely compete to find the broadest possible audience. By contrast, common owners would have incentives to target each station's programming to a different segment of the audience and more choices would be available to listeners.

Again, this argument misses the distinction between diversity of programming and viewpoint. Equally important, even if that argument was persuasive when setting radio ownership limits, it does not apply to the radio/newspaper cross-ownership rule. Even if an owner had a reason to broadcast a full spectrum of choices for consumers over its eight radio stations, its newspaper would not be a ninth voice to further increase that spectrum. Rather, the newspaper is a totally different service which in practice will seek a mass audience. The relaxation of the cross-ownership rule will not increase diversity of programming along this line of reasoning.

The Notice further questions whether the presence and growth of non-broadcast media should affect waiver policy.33 The Commission will no doubt be told by other commenters that the explosion of information available from the Internet, DBS, cable and other video and information sources has made protecting diversity of viewpoints through diverse ownership unnecessary. Both the relative infancy of these technologies and reality of cross-ownerships in these media undermine this argument.

New technologies may increase the "noise" level without adding significant local viewpoints. Most of the new technologies are not locally based and do not provide news or information on local issues. For example, DBS providers are prohibited from offering some local programming. DBS customers who can receive the signal of network affiliate - i.e., the vast majority of subscribers - must get network programming through traditional over-the-air broadcasts.

Although cable television and the Internet may have the potential to facilitate antagonistic debate on local issues, they do not now serve that purpose to any significant degree. On cable, PEG access and leased access, the two avenues most likely to include local content, are underutilized. Even if the Internet was a good source of local programming, it is not an independent media voice. Many of the online news services are currently owned by the major newspapers like The Washington Post and The New York Times.34 These services provide little original material and generally update their Web sites from news agencies.35 Far from creating an independent media voice that decreases the concern about overreaching by cross-owned newspaper/radio combinations, the Internet may increase the power of newspapers to reach a mass audience and extend the newspaper franchise.

In addition, these new technologies, specifically the Internet and DBS, fail to reach large segments of the community. The Internet and DBS simply do not have the same mass audience capacity that newspapers or radio do. First, the Internet is not a medium of mass communication, but a narrowcast medium that targets particular persons. Access to the Internet is costly and using the Internet requires a level of technical expertise that not everyone will attain. DBS also requires significant purchases and monthly payments before consumers can participate.36 Conversely, simply turning on a radio or buying the daily newspaper has been and will continue to be within the reach of the vast majority of local citizens. The media outlets which can reach all such citizens are of much greater importance when it comes to the "widest possible dissemination of information" on local issues of importance in a participatory democracy.

III.     Entry Barriers for Minorities and Women Remain, and Will Be Increased by Any Substantial Relaxation of the Current Waiver Policy.

The Notice queries in 20 whether relaxation of the waiver policy will increase barriers to entry for prospective radio broadcasters or newspaper owners. Black Citizens et al. believe that substantial barriers to entry for small businesses, especially minorities and women, are endemic to the current broadcast industry environment and that relaxing the cross-ownership waiver policy would significantly increase those barriers.

It is uncontroversial that entry barriers for minorities and women still exist. For example, although the overall percentage of minority-owned, commercial broadcast stations remained fairly constant at just below three percent between 1993 and 1995, the years for which statistics are readily available, acquisitions of broadcast stations by minorities have declined steadily.37 Minorities acquired 26 stations in 1993, as compared to 19 stations in 1994, and only nine stations in 1995.38 Many factors contribute to the underrepresentation of minority owners in broadcast, including the elimination of incentives for financing minority enterprises and the changes to the national and local ownership limits for radio imposed by the 1996 Act.39 The resulting trend toward consolidation in the radio market has also reduced the ability of small, independent radio stations to compete against larger group owners.40 Relaxation of the newspaper/radio cross-ownership waiver policy will lead to increased consolidation and raise market entry barriers even higher.

In 1995, the Commission issued a Notice of Proposed Rule Making addressing the need to eliminate entry barriers for women and minorities; that rulemaking is still pending.41 Congress also recognizes that substantial barriers to entry for small businesses still exist and, in the 1996 Act, directed the Commission to identify and eliminate those barriers.42 Black Citizens et al., therefore, perceive a fundamental inconsistency between the instant proceeding which considers liberalizing the waiver policy applicable to newspaper/radio cross-ownership and these other proceedings that seek to eliminate barriers to entry for small businesses.

Because of spectrum scarcity and the prior allotment of broadcast frequencies, purchasing an existing station is the only way for women and minorities to enter the broadcast market.43 Statistics show that a substantial number of television station owners started as radio station owners, in part because start-up costs for radio stations are lower than for television. Radio is also a pivotal entry point for minorities and women into the telecommunications market because managerial experience in radio prepares individuals for ownership and is consequently a major criterion for obtaining financing for station acquisitions.44 Therefore, relaxing the waiver policy in the current market climate would frustrate both the Commission's and Congress' objective of increasing diversity of viewpoint through diversity of ownership.45

IV.     If the Commission Decides to Adopt a Presumptive Waiver Policy, it Should Adopt a Market Rank/Independent Voice Standard, Place Limits on the Number of Cross-Owned Properties a Licensee Can Own, and Condition Waivers on the Licensee's Promise of Specific and Quantifiable Public Interest Benefits.

At paragraphs 10 - 13 of the Notice, the Commission queries whether it should adopt objective criteria for evaluating waiver requests. Specifically, the Notice seeks comment on which factors the Commission should consider and asks whether waivers should be limited to markets of specific numerical rank, whether a specified number of independent voices should remain after the waiver, and whether media ownership limits affecting eligibility for waiver should be imposed. The Commission also requests comment on several proposed combinations of these factors.

Assuming that the Commission decides to adopt a presumptive waiver policy, Black Citizens et al. propose that the Commission only consider granting a waiver if the licensee meets the following criteria: (a) Market rank/independent voice: The waiver is sought in one of the top 25 markets, and if it were granted, 30 independently-owned and controlled broadcast voices would remain in the market; and (b) Ownership limit: Post-waiver, the licensee would own no more than one AM station, one FM station, and one daily newspaper in any local market; and (c) Offsetting benefits: The waiver applicant has demonstrated specific and quantifiable public interest benefits that would offset the loss of diversity and the Commission has affirmatively determined that the loss of diversity will likely be offset. The foundation of our proposal is the belief that the Commission should maintain a strong presumption against granting waivers.

Our proposed waiver standard is modeled after both the test that the Commission has used to evaluate requests for waiver of the one-to-a-market rule and Congressional intent expressed in the legislative history to the 1994 Appropriations Act.46 We recognize that the 1996 Act relaxed the one-to-a-market waiver standard to include the top 50 markets.47 However, in order to ensure that only the most diverse and competitively robust markets will be affected, we strongly oppose reducing the minimum below thirty. The primary justification for adopting a "presumptive waiver" standard is the assumption that "a large number of broadcast outlets and separate voices will remain" in the local market,48 and therefore, that viewpoint diversity is not threatened. Reducing the minimum independent voice requirement undercuts the presumption.

One key question the Notice poses is which media outlets in the local market should count when computing the number of independent voices that will remain after the waiver.49 The Notice also seeks comment on whether non-broadcast media like cable and other video-delivery services should be included.50 We propose the following approach that will enable the Commission quickly to assess the robustness of the diversity present in the local market. First, it is crucial that, as in the one-to-a-market context, only "separately owned, operated and controlled broadcast licensees" - that is, both commercial and non-commercial radio and television stations - be counted. Therefore, stations that are involved in joint sales agreements (JSAs) or local marketing agreements (LMAs) would not count as independent voices.51 Black Citizens et al. urge the Commission to consider these increasingly popular arrangements indicia of common ownership. If one partner in the JSA or LMA controls other voices in the market, that person poses the same threat to local diversity as would a nominal owner.52

Non-broadcast media should also be excluded.53 At paragraph 12 of the Notice, the Commission tentatively concludes that most non-broadcast services should not be counted because the cross-ownership rule is about local diversity and these media do not generally provide local programming.54 We agree. Most non-broadcast media do not have the capacity to reach a general, mass audience and do not broadcast programming on local issues. The Internet merely expands the power of existing media like newspapers (through electronic publishing), but is not itself a new, competing medium of mass communication. As we explained in Part II.C., cable, the Internet and other technologies also require subscription fees or technical expertise to which many segments of society do not have access.55 In addition, waiver applicants have an incentive to inflate the count of independent media voices and to include national and niche media that either cover few local issues or add little diversity, claiming, for example, that magazines advertising used cars for sale, high school publications, or PTA newsletters add to diversity.56

In addition, after grant of the waiver, a licensee should only own one AM station, one FM station, and one daily newspaper in any local market.57 This restriction will prevent cross-ownerships where a common owner controls such a large number of radio stations that it could unduly influence the market. It also is consistent with Congress' vision, which lifted local ownership limits for radio but refused to repeal the cross-ownership restriction. If an applicant already owns an AM, FM and a daily newspaper, a waiver should only be considered in very unusual circumstances.58 For example, waiver might be permissible where (a) an intensive examination reveals that the applicant fulfilled the promises it made in order to receive the earlier waiver and (b) more extensive promises, for example to provide greater offsetting benefits, are made for the new waiver.

An essential part of our proposed waiver policy is that applicants for waiver promise to provide public interest benefits to offset the inevitable loss of diversity and that the public should have a meaningful opportunity to comment. As we explained in section 1.B., in 1994 Congress contemplated that waiver applicants would make offers of "specified benefits" and that the Commission would make a "separate affirmative determination" in each case that the benefits would offset the reduction in diversity. We also believe that the Commission should facilitate meaningful public participation in the waiver process by issuing (or requiring the applicant to issue) a public notice that the members of the affected community would likely see. In this regard, public notice on the FCC World Wide Web site or in a legal periodical is insufficient.59

The Commission asks what offsetting benefits should be considered.60 It is vital that promises for offsetting benefits be concrete and demonstrable, whether they are quantitative or qualitative in nature. If vague promises are enough to obtain a waiver, it is likely that the offsetting benefits will never materialize.

Valid offsetting benefits include:

  1. implementing a minority/female incubator program;
  2. specific promises to expand or introduce coverage of local news and public affairs;
  3. commitments to enhance local political coverage by providing free air time to local candidates and accepting political advertising from all local candidates
  4. producing or airing additional children's educational programming;
  5. hiring additional reporters and news staff dedicated to local news coverage; and
  6. encouraging and providing a forum for public access/citizen speech.

Black Citizens et al. believe that a minority/female incubator program is one particularly worthy way of attempting to achieve "offsetting benefits" because such a program directly attacks the barriers to market entry that waivers and consolidated radio station ownership produce. While diversity at the local level might temporarily suffer from the waiver, increasing minority or female ownership in that same market could directly offset that loss.61Minority and Female Ownership NPRM, at 16.62See Comments of Black Citizens for a Fair Media, et al., May 17, 1995 and Reply Comments filed July 10, 1995. 63

Conversely, because licensees are already required to serve the public interest, it is not sufficient for a licensee to offer benefits that it currently provides as part of its duty as a Commission licensee or to make promises that primarily benefit the station and only indirectly benefit the public. Insufficient offsetting benefits might include:

  1. purchasing new equipment like sound trucks and weather radar or new technological advances that any owner would probably need in order to remain competitive;
  2. unspecified administrative and economic efficiencies or efficiencies and cost savings gained through access to a common national advertising sales group;
  3. increasing the number of legal, human resources, accounting, technical and public affairs personnel (unless the increase in staff is devoted to local matters as indicated above); and
  4. claims that the applicant's public service record is stronger than the previous owner's.

The Commission should refuse to consider waiver requests premised on this type of showing.

Further, these promises of public interest benefits must be enforceable by the Commission. We propose that the waiver be conditioned on the licensee's good faith efforts to achieve public interest benefits. Not only would that approach signal to the licensee the seriousness of its commitment, but also it would give the Commission the authority to assess at license renewal whether the licensee has made a good faith effort to fulfill its promises. At license renewal, the Commission should re-examine the underlying public interest basis for the waiver, and the broadcaster should make a specific showing that it has complied with the commitments on which the waiver was based. If the waiver no longer serves the public interest or the licensee has failed to keep its promises, the Commission should revoke the waiver.

However, given the increase in the license term for radio from five to eight years, a system of enforcement based solely on review at license renewal is insufficient. First, the Commission would not be able to respond to changes in the ownership pattern of the local market, nor would it be able to identify licensees who fail to make good faith efforts to achieve offsetting benefits. Also, review at license renewal would not allow a licensee to correct its approach to achieving public interest benefits. To avoid these problems inherent in delayed review, licensees should be required to inform the FCC by filing a notice of modification, and advise listeners through on-air announcements, of any significant deviation from the public interest commitments it made in connection with the waiver. Of course, the licensee may also explain the deviation and propose an alternative way of fulfilling its obligations. This notification procedure would allow the Commission easily to monitor the success of its waiver policy.

The Commission should also retain its current policy which requires a licensee to seek a new waiver before purchasing cross-owned broadcast properties.64 The newspaper/radio cross-ownership restriction applies "to new ownership patterns however created."65 Black Citizens et al. believe that continued application of this aspect of the rule is particularly important because, in a rapidly changing market, the circumstances which justified a waiver at one point in time may no longer exist at a later date. For example, the number of independent voices in the market may fall below the 30-voice benchmark. And even if a waiver can be justified under the new market circumstances existing when a buyer seeks control of a waivered combination, it is important that the buyer itself seek a new waiver. The waiver process would serve as an important reminder to the new owner of the promises made to achieve offsetting benefits, and would give the Commission the chance to evaluate whether those promises have been kept and the offsetting benefits achieved.

V.     Waiver requests that are based on other factors like "saving a failing voice" should only be granted if the licensee can substantiate the objective claims on which the waiver request is based.

In paragraph 19, the Notice seeks comment on whether "saving a failing voice" might be one situation justifying a waiver of the newspaper/radio cross-ownership restriction. Indeed, one of the four original grounds for obtaining a waiver would require a showing that separate ownership of a newspaper and radio station were not possible in the locality.66

Although Black Citizens et al. does not object in principle to basing waivers on "saving a failing voice," we are skeptical of claims that a waiver applicant is the only possible buyer interested in a particular property. In some circumstances, it is probably more likely that the seller has set too high an asking price and that lowering the price could create new interest from the market. We urge the Commission to heighten the evidentiary standard for proving that a waiver applicant is the only available party to "save a failing voice." We believe that the test has been applied too loosely in the past, relying, for example, on self-serving, in-house analyses of the market conditions.

In addition, the standard of proof is not parallel to similar grounds for waiver such as "inability to sell." In the context of waivers based on the "inability to sell," the Commission requires precise documentation: [W]e shall not give any weight to a showing that does not include a full description of the effort made to sell . . . the price at which it was listed and a certification of a station (or if it applies, newspaper) broker that in his view this price is consistent with the fair market value of the station (or newspaper) in question.67 Specifically, we recommend that the Commission only grant a waiver based on "saving a failing voice" if the waiver applicant substantiates its claim with an independent study describing the potential market for a property and its actual market value.

Conclusion

For the foregoing reasons, we urge the Commission not to adopt sweeping changes to its newspaper/radio cross-ownership waiver policy. If the Commission decides to change its policy at all, we recommend that waivers only be granted in the top 25 markets, where 30 independent voices would remain after the waiver and where specific and quantifiable public interest benefits will offset the loss of diversity. We believe that such policy would help preserve competition and strengthen local diversity of viewpoint.







Tom Mullooly
Sam Halpern
Law Student Interns

Of Counsel:
Andrew Jay Schwartzmann, Esq.
Gigi Sohn, Esq.
Joseph S. Paykel, Esq.
Media Access Project
1707 L Street, N.W.
Suite 400
Washington, D.C. 20036

February 7, 1997

Respectfully submitted,

Karen M. Edwards, Esq.

Angela Campbell, Esq.

Georgetown University Law Center
Institute for Public Representation
600 New Jersey Avenue, N.W.
Suite 312
Washington, D.C. 20001

     Counsel for Black Citizens, et al.

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1.      Black Citizens for a Fair Media has been an active participant before the Commission, the Courts and the Department of Justice on communications issues for more than 30 years. The Center for Media Education (CME) was founded in 1991 to improve the quality of electronic media on behalf of children, families, nonprofit groups and the general public. To carry out its mission, CME engages in a variety of activities, including public education, research, advocacy and outreach to the press. Founded in 1969, Chinese for Affirmative Action (CAA) is a voluntary membership organization supported by tax-exempt organizations dedicated to promoting equal opportunities for Asian Americans and other racial minorities. CAA has worked with members of the broadcast industry to promote employment opportunities and to advocate an accurate portrayal of Asian Americans in the mass media. The Communications Task Force was founded in the mid-1970's and is comprised of lawyers, consultants, broadcasters, government employees, journalists and corporate executives involved in the telecommunications field. The Task Force works to promote equal employment opportunity, diversity in ownership and balanced program content in the telecommunications industry. League of United Latin American Citizens (LULAC), chartered in 1929, is the oldest and largest national Hispanic membership organization with over 100,000 members throughout the country. Its objectives are to protect and defend the civil rights of all Americans, and to improve the quality of life for all Americans. LULAC has often appeared before the FCC to vindicate the rights of minorities, particularly Hispanics, who are denied full enjoyment of their constitutional rights. Minority Media and Telecommunications Council (MMTC) is a non-profit organization that focuses on minority advancement in communications. Formerly known as the Minority Ownership Litigation Fund, and then the Minority Ownership and Employment Council, MMTC has had a long-standing interest in fostering minority media ownership. National Association for Better Broadcasting is a Los Angeles based organization dedicated to furthering public involvement in, and access to, the media in an effort to obtain qualitatively and quantitatively more responsive programming, consistent with the public interest standard and the first amendment. NOW Legal Defense and Education Fund (NOWLDEF) is a non-profit public interest law firm committed to securing and protecting women's right to be free from discrimination. Founded in 1970 by members of the National Organization of Women, NOWLDEF is an independent organization that has used litigation, legislation and public education to promote women's equality. Since its inception, NOWLDEF has had a particular interest in promoting women's involvement in media and communications. In the 1980's, NOWLDEF's Media Project campaigned for greater representation of women in media outlets; currently, NOWLDEF monitors, and when necessary, initiates litigation, to ensure women's access to "non-traditional" employment. For the past 25 years, the Office of Communication for the United Church of Christ (UCC) has been a stalwart civil advocate on behalf of the public interest. UCC represents individuals traditionally disenfranchised from the electronic media: the elderly, the disabled, low-income individuals, and minorities. The Philadelphia Lesbian and Gay Task Force is a civil and human rights advocacy organization formed in 1978. Its statewide research efforts in discrimination and violence, as well as its negotiations in public policy, focus on civil rights, mass media equity and education equity goals on behalf of nearly one million gay and lesbian people in Pennsylvania. Since 1989, the Task Force has been extensively involved in mass media research as well as women and minority coalition efforts to challenge Philadelphia broadcast licensees for the consistent under-representation, marginalization, and devaluation of women and racial and ethnic minorities in both programming and employment. Telecommunications Research and Action Center (TRAC) is a non-profit, tax-exempt organization dealing with telecommunications issues. With a membership of about 1,000 people, TRAC operates a strong advocacy program based on opposition to consumer access line charges, an interest in local measured service, and a generally pro-regulatory position. Washington Area Citizens Coalition Interested in Viewers' Constitutional Rights (WACCI-VCR) is a non-profit organization which seeks to promote diversity of ownership and employment in the mass media for the benefit of all Americans, and to protect expression of diverse viewpoints. Wider Opportunities for Women (WOW) is a national women's employment organization that works to achieve economic independence and equality of opportunity for women and girls. For nearly 30 years, WOW has helped women learn to earn, with programs emphasizing literacy, technical and nontraditional skills, and career development. WOW also leads the Women's Work Force Network, which is comprised of over 500 independent women's employment programs and reaches more than 300,000 women each year. The Women's Institute for Freedom of the Press (WIFP) is a network of some 800 women who work in the media, or are concerned about media issues. Founded in 1972, WIFP uses education, research and publishing to promote equality of public access to the media, and citizens' rights to freedom of the press in all forms of media.

2.      Notice at 9.

3.      Notice at 10.

4.      Notice at 3, note 6.

5.      Multiple Ownership of Standard, FM and Television Broadcast Stations, Second Report and Order, 50 FCC 2d 1046, 1079 (1975)("Second Report and Order"), recon., 53 FCC 2d 589 (1975), aff'd sub nom (noting "[t]he multiple ownership rules rest on two foundations: the twin goals of diversity of viewpoints and economic competition. The Commission has a responsibility to consider various aspects of the qualifications of licensees or applicants, among them the question of multiple ownership.") See also FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775, 797 (1978)(quoting Second Report and Order, 50 FCC 2d at, 1079-80)(stating, "it is unrealistic to expect true diversity from a commonly owned station-newspaper combination. The divergency of their viewpoints cannot be expected to be the same as if they were antagonistically run.").

6.      Even the Notice implies that one way to view diversity is in terms of "increased dissemination of news and information in the relevant local market.

7.      Notice at 9.

8.      See e.g. NewCity Communications of Massachusetts, Inc., 10 FCC Rcd 4985, 4990 (1995)(stating "ownership diversity is preferred as a means of furthering our goals of promoting viewpoint diversity and competition.") The Commission has stated that three kinds of diversity are "integral to the ultimate goal of providing the public with a variety of viewpoints:" viewpoint diversity achieved through structural regulations including the ownership restrictions; outlet diversity which refers to a variety of delivery services; and source diversity, which refers to ensuring a variety of program producers and owners. Further Notice of Proposed Rulemaking, 10 FCC Rcd 3524, 3549 (1995)("1995 Further Notice"). The FCC has also questioned the conclusion that greater concentration of ownership produces more diverse content. "While this model may, indeed, promote diversity of entertainment formats and programs, we question whether it would act similarly with regard to news and public affairs programming." 1995 Further Notice, 10 FCC Rcd, at 3551.

9.      Second Report and Order, 50 FCC 2d at 1050, quoting Associated Press v. United States, 326 U.S. 1, 20 (1945).

10.      1995 Further Notice, 10 FCC Rcd, at 3550.

11.      Notice at 9.

12.      Notice at 7.

13.      Department of Justice and Related Agencies, Appropriations Act, 1994 Pub. L. No. 103-121, 107 Stat. 1167 (1993).

14.      H.R. Conf. Rep. No. 103-293, 103rd Cong., 1st Sess. 40 (1993).

15.      Unlike many instances where Congress enacts substantive legislation in a provision to an appropriations act, here Congress' intent is unambiguous. In the 1995 Appropriations Act, Congress inserted a provision identical to the one found in the 1994 fiscal year appropriation granting the Commission authority to amend its waiver policy

16.      Department of Justice and Related Agencies, Appropriations Act, 1995 Pub. L. No. 103-317, 108 Stat 1724, 1737-38 (1994). Although Congress did not repeat the legislative history from the previous year, Congress' prior expression of intent was valid then and still deserves deference today. The Supreme Court reasons in Metro Broadcasting v. FCC, that "[a]fter Congress has legislated repeatedly in an area of national concern, its Members gain experience that may reduce the need for fresh hearings or prolonged debate when Congress again considers action in that area."

17.     

18.      497 U.S. 547, 572 (1990)(citing Fullilove v. Klutznick, 448 U.S. at 502-503 (1980)). It was unnecessary for Congress to repeat its intent in 1995, when it had articulated its intent regarding an identical provision in the prior year. The Commission notes in 7 of the Notice that Congress did not include a similar provision in the 1996 Appropriations Act. However, this omission does not undermine prior statements of Congressional intent. While sometimes ambiguity arises in the area of legislative silence, where Congress makes its intent clear in legislation and accompanying conference reports over a period of years, a solitary omission in the current year is inconclusive and, therefore, has no significant effect. See e.g., Southern Packaging and Storage Co. v. United States, 588 F. Supp. 532, 549 (D.S.C. 1984). Absent clear Congressional language to the contrary, Congress' last positive expression of intent regarding the proper implementation of the waiver policy deserves the highest degree of deference. As the Court states in Metro, "[l]imiting our analysis to the immediate legislative history of the appropriations Acts in question 'would erect an artificial barrier to [a] full understanding of the legislative process....' One appropriate source is the information and expertise that Congress acquires in the consideration and enactment of earlier legislation."

19.      Id.

20.      In re Applications of Capital Cities/ABC Inc., Memorandum Opinion and Order, 11 FCC Rcd 5841, 5889 (1996)("Capital Cities Order").

21.      After examining claims including administrative and economic efficiencies and the continuation of minority training programs, the Commission stated that it did not find "Disney's public interest offerings sufficient to tip the balance in favor of granting [the] waivers." Capital Cities Order, 11 FCC Rcd at 5893.

22.      141 Cong. Rec. E-1571 (August 1, 1995).

23.      Telecommunications Act of 1996, 202. Entities can own a maximum of eight stations in markets with 45 or more stations, seven stations in markets with 30-44 stations, six stations in markets with 15-29 stations, or five stations in markets with 14 stations or fewer. Id.

24.      This may lead to a process of station swapping,

25.     where a conglomerate who decides to become a major newspaper voice in one market might swap some of its radio stations in that market in exchange for radio stations in a different local market. Encouraging corporations to swap radio stations or newspapers with other corporations in order to comply with cross-ownership rules on the local level is appropriate. Station swapping is already occurring as a result of the 1996 Telecommunications Act. See, e.g., Elizabeth A. Rathbun, Station Swaps Highlight Week in Trading; Broadcast Groups' Station Trades, vol.126, Broadcasting and Cable, no. 26, June 17, 1996, at 11. The corporations do not lose value in swaps, and local diversity can benefit. While the corporation may not benefit from all the economies it might receive were it able to own more outlets in one market, so long as other corporations are also not allowed such economies, the field is level and competition can flourish.

26.      See, e.g., Ron Weiskind and Adrian McCoy, Increasing Frequency: Since the Telecommunications Act, Players and Stations In the Pittsburgh Market Seem to Turn Over Faster Than You Can Stab Your Seek Button, Pittsburgh Post-Gazette, Nov. 17, 1996, at C2.

27.      Bill Ryan, the president and CEO of Post-Newsweek Stations comments that "[t]he [1996] telecom bill was supposed to create more and more competition. It hasn't. It promised to create more and more jobs. It hasn't." David Hatch, Telecom law fails the test, Electronic Media, Feb. 3, 1997, at 31. "Allowed to grab more properties, large television and radio station groups began gobbling up the media landscape. While the big got bigger, small independent radio owners began to flee big markets. 'A lot of good broadcasters decided they didn't want to play under the new order and left the industry,' said longtime industry observer Jim Duncan, president of Duncan's American Radio." Id. at 1. "Some of the law's critics have dubbed it the 'Big Owners Benefit Act of 1996.' They point especially to radio." Id. at 31.

28.      Neil Hickey, So Big: The Telecommunications Act at Year One, Colum. Journalism Rev., January-February 1997, at 24 ("So Big"). Not surprisingly, notes Neil Hickey, "virtually all the coverage of this unprecedented deluge of consolidations appeared on the business pages of newspapers (if it appeared at all) and on cable channels (CNBC, CNNFN) devoted to business news, and thus flew under the radar of most Americans." Id. at 25.

29.      Id.

30.      Time magazine editor Walter Isaacson candidly admits that "sprawling corporations owning news organizations. . .raises the specter of conflicting interests and a less diverse babble of journalistic voices. . . . [Individual press baron[s] can be insidious meddlers." Walter Isaacson, To Our Readers, Time, Oct. 21, 1996, at 20.

31.      See, e.g., Richard Zoglin, The News Wars; On TV and Radio, in Print and Over the Internet, News is Everywhere. But Are We Better Informed or Just Overwhelmed?, Time, Oct. 21, 1996, at 58 (arguing that the current explosion of news has not been accompanied by an increase in news gathering).

32.      See e.g., S. Rept 104-23, 104th Cong., 1st Sess., at 65 (additional views of Senator Burns).

33.      Notice at 12.

34.      Laurence Zuckerman, Don't Stop the Presses; Newspapers Balk at Scooping Themselves on Their Own Web Sites, N.Y. Times, Jan. 6, 1997, at D1.

35.      Id.

36.      At a minimum, subscribers to DBS must purchase or lease a satellite dish and a decoder to decompress the programming signals. Although decoder prices have dropped significantly in the last year, the average initial investment still hovers at approximately $200.

37.      NTIA, Minority Telecommunications Development Program, Report on Minority Commercial Broadcast Ownership, April 1996, p. 3.

38.      Id. at 20.

39.      Since 1985, the FCC's multiple ownership rules for broadcast services permitted non-minority owners to exceed the national ownership limits where they held non-controlling interests in minority-controlled stations and permitted minority owners to exceed the limits outright. Memorandum Opinion and Order, 100 FCC 2d 74 (1985). These rules, commonly known as the minority "bump-up" rules, provided much needed incentives for non-minority owners to help finance minority-controlled businesses and made minority-owned stations more attractive to financing institutions. By removing the national ownership limits for radio and increasing the number of radio stations a group owner can hold in a single, local market, Congress inadvertently removed these minority ownership incentives. See supra note 18. As a consequence, minorities and women now experience greater barriers to entry into the radio market, primarily for lack of available financing. Not only do financing institutions continue to discriminate against them, but non-minority owners no longer have an economic incentive to finance minority ownership.

40.      So Big, at 26. "The big conglomerated radio chains make it extremely hard 'for folks who are Black and Hispanic to have a place in radio. . . . Large corporations like [American Radio Systems Corp.] are such a dominant force that they can eliminate the small entrepreneur,'" maintains Andrew Langston, "owner of a small, independent African-American-oriented station (WDKX-FM) which he and his wife started from scratch in 1974." Id.

41.      In the Matter of Policies and Rules Regarding Minority and Female Ownership of Mass Media Facilities, MM Docket 94-149, 91-140 (released January 12, 1995).

42.      1996 Act, 257. In August 1996, the Commission issued a Notice of Inquiry seeking ways to eliminate market entry barriers for small businesses, including minorities and women. See In the Matter of Section 257 Proceeding to Identify and Eliminate Market Entry Barriers for Small Business, GN Docket No. 96-113, August 22, 1996 ("1996 Market Entry Proceeding").

43.      See Comments of Black Citizens et al. In the Matter of Policies and Rules Regarding Minority and Female Ownership of Mass Media Facilities, MM Docket Nos. 94-149 and 91-140, FCC 94-323 (released January 12, 1995), at p. 32.

44.      Comments of the Office of Communication of the United Church of Christ, 1996 Market Entry Proceeding, at 2, note 2 (citing "Capital Formation and Investment in Minority Business Enterprises in the Telecommunications Industries," NTIA, April 1995).

45.      While Black Citizens et al. recommend that the Commission not liberalize the waiver policy, if it were to be relaxed, we propose that one way for a waiver applicant to show significant offsetting benefits would be to adopt an incubator program similar to the one described in section IV.

46.      See section 1.B. supra.

47.      1996 Act, 202(d).

48.      WSB Inc. v. Federal Communications Commission, 85 F.3d 695, 701 n.15 (1996)("The 'presumptive waiver rule' is 'based on the fact that a very large number of broadcast outlets and separate voices will remain in these large markets, thereby preventing any single outlet or firm from obtaining undue economic power or undue sway over the public opinion.'")(citing 4 FCC Rcd, at 1751).

49.      Notice at 11.

50.      Notice at 12.

51.      See 47 C.F.R. 73.355, note 2.

52.      To assist with enforcing this restriction, Black Citizens et al. urge the Commission to require all waiver applicants to disclose JSAs and LMAs to which they are a party. Licensees who hold waivers should also be prohibited from entering into such agreements without Commission approval.

53.      Congress clearly intended that "waivers . . . be granted only in the top 25 markets where at least 30 independent broadcast voices remain in the market . . .". 1994 Appropriations Act, supra note 13 and accompanying text.

54.      Id.

55.      The importance of these technologies as distribution outlets for local programming and as fora for debate on local issues is yet to be seen. At this point, there is little indication that they will become media of mass communication as opposed to more narrowly focused media. Section 202(h) of the 1996 Act provides for biennial review of the Commission's cross-ownership rule and will give the Commission an opportunity to revisit these findings if warranted and to determine whether the technologies are at that time ubiquitous and local enough to be counted.

56.      The Commission also asks whether other daily newspapers which are published in the radio station's community should count as an independent voice. Notice at para. 12. Markets with competing local daily newspapers of general circulation are rare, but an exception to general rule excluding non-broadcast media might be made in those markets since diversity of viewpoint is not as severely threatened. Therefore, we propose that a daily newspaper not count as an independent voice, unless it is separately owned, directly competes with the newspaper to be sold, and has a substantial geographic overlap in subscribership with the other daily newspaper at issue.

57.      Waivers should not be granted to a licensee who also owns a television station in the local market. This proceeding only considers the newspaper/radio cross-ownership restriction waiver policy. For television stations, the old policy remains in effect.

58.      Commission precedent in evaluating cross-ownership waiver requests should inform this standard. For example, the Commission has refused to grant waivers absent "highly unusual facts," News America Publishing, Inc v. FCC, 844 F. 2d 800, 803 (1988), or "extraordinary circumstances," Metropolitan Council of NAACP Branches v. FCC, 46 F.3d 1154, 1163 (1995).

59.      Meaningful public notice and participation is crucial, especially if the FCC is going to rely on objections by members of the public to the waiver request to help guide its decision about whether the waiver benefits or harms the public interest.

60.      Notice at 10.

61.      The Commission originally proposed the concept of an incubator program in 1992 in the context of relaxing national and local radio ownership rules, Revision of Radio Rules and Policies, NPRM, MM Docket No. 91-140, 7 FCC Rcd 6387 (1992), but the concept was never implemented. The Commission also sought comment on the incubator concept in its 1995 review of minority and female ownership. Policies and Rules Regarding Minority and Female Ownership of Mass Media Facilities, NPRM, MM Docket NO. 94-149 and 91-140, FCC 94-323 (released January 12, 1995) ("Minority and Female Ownership NPRM"). The Commission reasoned that these programs would operate as [arrangements] whereby existing broadcasters share their talent, experience and financial resources with minorities and [women] . . . seeking to enter the mass media industry in exchange for regulatory concessions such as relief from certain multiple ownership restrictions.

62.      Minority and Female Ownership NPRM at para. 16. The Center for Media Education ("CME") and the United Church of Christ ("UCC") filed comments and reply comments in that proceeding.

63.      See Comments of Black Citizens for a Fair Media, et al., May 17, 1995 and Reply Comments filed July 10, 1995. CME and UCC endorsed the incubator concept and urged the Commission to adopt structural safeguards. For example, eligibility should be linked to a net worth cap; "incubation" must include both financial and technical assistance for the newcomer; the existing broadcaster should incubate the newcomer for one year before having its waiver approved; the newcomer should be required to own its station for a specified minimum period; and the newcomer's station must be of comparable value to competing broadcasters.

64.      See e.g., Capital Cities Order, at 5848 ("previously granted waivers are not automatically granted with the subsequent transfer of stations, however, Disney's assumption of control of CC/ABC requires it to re-justify any waivers previously granted. . .").

65.      Second Report and Order, 50 FCC 2d at 1076.

66.      Id. at 1085.

67.      Id. at 1084.