June 21, 2011

June 21, 2011 | Commentary on Regulation

Regulators Should Keep Noses Out of Media Shakeout

Humility is a characteristic in short supply among regulators. Whatever the problem, they assume the solution demands a bigger role for them.

That’s why the Federal Communications Commission’s “Future of Media” report, released on June 9, was so surprising. Widely expected to be a manifesto for a larger government role in the media marketplace, the long-awaited report instead called for government restraint.

Yes, while there are plenty of problems in media today, the authors concluded that the “government is simply not the main player in this drama.”

The report is the culmination of a project begun by the FCC in December 2009, charging a working group of journalists, entrepreneurs, scholars and government officials -- led by Steven Waldman, the former editor-in-chief of Beliefnet.com -- with answering two questions: 1) Are citizens and communities getting the news, information and reporting they want and need?, and 2) is public policy in sync with the nature of modern media markets?

The media landscape has changed dramatically in the past few years. The Internet and other emerging communications technologies has changed the way news is disseminated and received. Traditional outlets, such as newspapers and broadcasters, are on the ropes.

Blizzard of Information

This doesn’t indicate a dearth of information. To the contrary, there’s a blizzard of information available that is unmatched in human history. The rapid changes, some argue, have shortchanged some areas, such as local reporting.

The FCC report takes an optimistic view, and justifiably so. Detailing the tremendous benefits of the media revolution, it maintains that markets have and will continue to largely fill any news gaps.

There are no guarantees, and gaps do remain, especially in local news. What, if anything, should government do about them?

At the time the project was launched, the momentum of the debate pointed to an interventionist answer. Activists were pushing the FCC toward increased mandates on broadcasters. In a 2008 proceeding on “localism,” the commission proposed more intensive review of broadcast content at the time of license renewal, mandatory community advisory boards for each station, a requirement that stations’ main studio be physically in the local community, and more.

Rejecting Intervention

Meanwhile, pressure was building for federal funds to aid struggling newspapers and other traditional sources of news hard hit by the rise of new communications delivery systems.

The working group’s report soundly rejected both approaches. In today’s media world, it concluded, struggling local broadcasters need fewer mandates, not more, and it explicitly called for withdrawal of the proposed “localism” rules. Citing free speech concerns, it also urged deletion of the moribund “Fairness Doctrine” from the FCC’s books.

Nor did the working group provide any support for media subsidies, saying government cannot “save” journalism. In fact, it urged that existing subsidies in the form of grants to broadcasters through the Corporation for Public Broadcasting be limited to 15 percent of a station’s revenue to “reduce the odds that the state could financially pressure media.”

There are areas of concern. The report, for instance, urges that government advertising dollars be directed toward local forms of media to help support local news.

Such a policy comes at a cost. Not only would taxpayers end up getting less for their dollar, but having government use its considerable economic clout to help favored media would invite the sort of abuse the report warns about so forcefully.

Recalling 1940s

The report has disappointed proponents of FCC intervention. Commissioner Michael Copps, the FCC’s most stalwart advocate of regulation, adopted a wistful, almost nostalgic tone. “I do wish,” he said on June 15, “the report had focused a little more attention on what proactively reform-minded FCCs, like the ones we had back in the 1940s, can do when they put their minds -- and majority vote to it.”

That view is not shared by the majority of the commissioners. It does illustrate how out of touch some policymakers are with today’s reality, as well as the reality of the past. The 1940s were a time of limited news choices, with a few big newspapers and a carefully capped number of radio stations to choose from. And the regulatory system of the time was hardly the stuff dreams were made of, with the “FCCs of the 1940s” exercising tight control over the tone and content of the news, sometimes for political ends.

It is one of our society’s greatest accomplishments that we no longer need, nor do we have, such a system. And it’s to the credit of the FCC and its working group that they have, at least for now, rejected a return to those days.

James Gattuso is senior research fellow in regulatory policy at The Heritage Foundation.

About the Author

James L. Gattuso Senior Research Fellow in Regulatory Policy
Thomas A. Roe Institute for Economic Policy Studies

First appeared in Bloomberg