On June 2, the Federal Communications Commission will vote on
whether to modify or even repeal its restrictions on ownership of
broadcast stations. Opponents argue that changes to these rules
would reduce diversity in an already concentrated market - warning
that big media "monopolies" are already limiting what Americans see
They are mistaken. Despite many mergers in the media industry in
recent years, Americans today actually enjoy more diversity and
competition in the media than at any other time in history, thanks
to cable TV, Internet, the licensing of new broadcast stations and
Rather than media monopolies, consumers face a bewildering and
unprecedented amount of choice. Instead, the real danger to
Americans is that outdated and unnecessary FCC restrictions will
limit improvements in media markets and technologies, limiting the
benefits that they can provide.
Media Marketplace Driving Review
A variety of regulations are at issue - including rules limiting
how many television stations can be owned by networks, how many TV
stations a company can own in a particular market, and common
ownership of TV and newspapers in the same city.
Most ownership restrictions, imposed on TV and radio license
holders by the FCC, are decades old, dating back as far as 1941,
though they have been frequently modified. There are six such rules
formally being reviewed by the FCC in the current proceeding. They
- The Local TV Ownership Rule, which prohibits
TV networks from owning TV stations that reach more than 35 percent
of television households. Originally adopted in 1941, the rule was
most recently modified in 2000, when the cap was raised from 25
- The Local TV Multiple Ownership Rule, which
limits firms from owning more than one TV station in a market, or
two if there are at least eight other stations and no more than one
of the commonly-owned stations is one of the four biggest in the
- The Radio/TV Cross-Ownership Ban, which limits
the number of radio stations that can be owned by a TV station
owner in the same market, using a sliding scale based on the number
of broadcast stations in the market.
- The Dual Television Network Rule, which
prohibits any of the top four networks - CBS, NBC, ABC or Fox from
acquiring any of the others.
- The Newspaper/Broadcast Cross-Ownership
Prohibition, which bars a joint ownership of a TV or radio
station and a newspaper in the same market.
- The Local Radio Ownership Rule, which limits
the number of radio stations in a market that can be commonly
owned, using a sliding scale based on the number of other stations
in the market.
The current proceeding marks the first time the FCC has
conducted an across-the-board review of its ownership rules
(although many have been reviewed separately in recent years).
There are many reasons the Commission has taken up this challenge.
First, two national and local TV rules have been challenged by U.S.
appeals courts, which have ordered the FCC to modify or provide
justification for them. More generally, the FCC is required by the
Telecommunications Act of 1996 to review all its rules every other
year, and eliminate those found not to be necessary.
But lastly - and most importantly - the top-to-bottom review was
required because of the vast changes in the media marketplace in
recent years, and in the decades since many of the rules were
initially adopted. At no time was this made clearer than during the
recent Iraq war. Americans following that conflict could choose
from a half dozen or so news networks - including three 24-hour
news channels on cable.
In addition, nearly limitless news was available on the Internet
- from which Americans could follow reports from everything from
Matt Drudge to Al-Jazeera TV. And they were doing so in large
numbers: according to Pew Research, a majority of Americans with
Internet access got information about the Iraq war online. Almost
one out of every six said the Internet was their primary source of
Compare this to the situation a generation ago - when Vietnam
War coverage meant catching one of the half-hour network news
reports, supplementing newspaper or magazine coverage. Or the 1991
Gulf War, in which only one network - CNN --- provided 24-hour
coverage, and the Internet was virtually unknown.
On the local level, similar increases can be seen, with
Americans in most cities and towns enjoying remarkably more choice
of media outlets than ever before. In Washington, D.C., for
instance, channel changers could only surf four TV stations in
1960. Today, there are 15, plus some 150 cable channels. And 300
more on DBS. Radio stations in 1960 numbered 20 twenty. Today,
there are 50 broadcasting, plus 100 more on radio, and thousands
available by Internet.
Critics, however, point out that the existence of many outlets
doesn't necessarily mean more owners. NBC, MSNBC, and msnbc.com are
clearly not independent from each other. Media firms today tend to
own many outlets - putting broadcast, cable, print and even
Internet outlets under the same roof. But despite this expansion of
media holdings, ownership concentration has not increased. A study
released by the Federal Communications Commission last fall found
the number of separately owned media outlets (including broadcast,
cable and newspaper outlets) skyrocketed in most cities between
1960 and 2000-growing more than 90 percent in New York, for
Moreover, the ability to own multiple media outlets can provide
substantial benefits to consumers. Most directly, it can help make
resources available to provide quality programming. It can provide
valuable synergies. NBC, for instance can use overlapping resources
and expertise to provide news via broadcasting, cable and Internet
media - increasing the quality of each - and increasing it's
ability to compete with competitors such as CNN and Fox.
Even joint ownership of the same media in the same market (i.e.,
owning multiple TV or radio stations in the same market) can
provide consumer benefits. For instance - though counter-intuitive
- common ownership can actually increase content diversity. The
reason is simple - while owners with only one station each may all
compete for a lowest-common-denominator market, owners with several
stations each are able to target niche markets with different
programming on each station. This principle is shown in cable TV -
with its cornucopia of targeted channels. There is also evidence it
has been at work in radio - where the number of radio stations
formats increased after ownership limits were relaxed in 1996.
Eliminate Rules Entirely
The case for changing the FCC's ownership rules is clear. They were
written in a different era, and don't reflect the diversity and
competitiveness in today's media marketplace. And, they are likely
hurting consumers, by limiting the ability of media outlets to use
resources as effectively as possible. The best course would be for
the FCC to eliminate the rules entirely (in which case competition
would still be covered antitrust regulation, as it is for most
other businesses). It is more likely, however, that the
commissioners - in the face of populist rhetoric -- will ease the
rules, but leave them substantially in place. Such reform could be
an important step forward, but also a missed opportunity to
completely free media markets from these unnecessary