Diversity or Economics? FCC Weighs Rules

Broadcasters say they need less regulation to thrive. Critics complain the only diversity left on the airwaves is the variety of Britney Spears songs heard at any given time. So the Federal Communications Commission has begun reviewing its rules on radio station ownership to determine if and how they should be changed.

The rules governing station ownership have been significantly relaxed in the last two decades, with the last major revision coming as part of the Telecommunications Act of 1996, which eliminated the cap on how many stations one company can control nationwide.

In announcing that it will review its guidelines, the FCC said it will weigh the public interest. But skeptics say the commission has usually kowtowed to industry desires in the past and probably will again.

“There’s been very few times the FCC has tried to clamp down or show teeth to broadcasters,” said Titus Levi, assistant professor of communications at USC Annenberg School for Communication, adding that broadcasters will get exactly what they’re looking for again if they’re the only ones the FCC hears from when it takes public comment on the rules changes. This is where the Media Access Project comes in.

The project, a Washington, D.C., law firm that specializes in public access and telecommunications, plans to argue that consumers are being hurt by consolidation in the radio industry and that the FCC needs to take a harder look at station sales that limit competition.

“That precludes the citizens from a local area from getting opinions and information from different sources,’ said Cheryl Leanza, Media Access Project deputy director. “When one company owns many different media outlets, those individuals tend to get their information strained through one filter.”

Before 1996, the largest radio company owned fewer than 100 stations in the U.S. Now the biggest, Clear Channel Communications, owns nearly 1,200 stations from coast to coast, about one out of every 10 in the country. Among those are eight stations in Los Angeles, the maximum the 1996 regulations allow in a market this size.

Owners Say That Listeners Benefit

Radio executives contend that deregulation and the resulting consolidation of ownership help listeners because the newly enlarged media companies have more resources to pay for news coverage, improve service and sweeten promotions and giveaways, among other benefits.

If the rules are tightened, any companies with more stations than the new rules allow would probably not have to divest themselves of stations, said Robert Ratcliffe, deputy chief of the FCC’s mass media bureau.

“Generally the commission considers that a very harsh outcome,” Ratcliffe said.

In fact, few expect that any new rules coming out of the process will be more restrictive.

“[FCC Chairman Michael K. Powell], being a fairly libertarian-type regulator, believes the best thing to do is back off on the regulation and see what the markets come up with,” Levi said.

The current review arises, in part, from the FCC’s need to resolve several pending cases of radio station sales.

The agency examines every transaction and flags any that raise concerns about reduced competition and diversity of ownership. Some of those cases have been on hold for a year or more, and the agency wants to clear them up and clarify how it will deal with future sales, Ratcliffe said. The agency said it will decide those cases within three months but gave no time frame on the comprehensive rules evaluation.

What remains clear is that the last revision spurred mergers resulting in a few companies amassing vast rosters of stations across the country, including Los Angeles. At the time, advertising rates were down, and the National Assn. of Broadcasters pleaded with the FCC for regulatory relief.

“It created some super groups, and it happened a lot faster than any of us thought would happen,” Levi said, calling Los Angeles a lucrative market that the major groups “have wanted to get their claws very deeply into.”

As the biggest benefactor of deregulation, Clear Channel said it will see what the FCC comes up with. “We have a pretty full plate right now,” said Pam Taylor, spokeswoman for Clear Channel. “We’d be positioned to take advantage of whatever they decide.”

Diversity in Ownership May Not Affect Content

Another of the big players--Infinity Broadcasting Corp., the radio subsidiary of media giant Viacom Inc.--owns seven radio outlets locally (including both AM all-news stations, KNX and KFWB) and one TV station.

“Infinity’s strategy has always been having a major presence in the major markets,” said Dana McClintock, vice president of communications, adding that the New York-based company “has been arguing for deregulation in the industry for years.”

In announcing the review, the FCC said it “intends to be more responsive to current marketplace realities, while continuing to address its core public-interest concerns of promoting diversity and competition.”

Ratcliffe said that means the commission will have to figure out if raw numbers--such as the eight-station maximum--should be the sole criterion for determining ownership limits.

Questions include whether there is any difference between one company owning the top eight stations in a market or the eight with the smallest audiences, or if advertising should be considered, limiting a company’s control in a market so as not to squeeze out smaller competitors vying for the same income.

The FCC has noted that ownership diversity might not lead to more content diversity, suggesting when announcing its intent to examine the rules that a single owner with multiple stations in a market “has a commercial incentive to air more diverse programming to appeal to all substantial interests.”

According to the Media Access Project’s Leanza, the diversity of voices has already been eroded. “People are becoming more aware, as they travel around the country, it’s becoming more and more identical,” she said. “That’s because the same company owns all the stations they’re listening to....

“It certainly is cheaper to produce hundreds of radio stations that sound identical. The point is we lose a critical component of democracy.”