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March 31, 2014 at 6:02 AM

FCC should curb TV media consolidation by closing loophole

Watch what the Federal Communications Commission does on Monday. For the first time in years, the panel should move to slow down media consolidation by closing a loophole that has allowed a handful of the nation’s largest broadcasters to skirt laws limiting station ownership.

No surprise, the broadcast industry is vehemently opposed to ending the practice of Joint Sales Agreements, but this sort of business tactic (covered in-depth by The Wall Street Journal) has diminished local ownership and allowed a small number of big players to control the flow of information over huge swaths of the country.

Local television news is at risk of becoming more about profits for out-of-town corporate bosses than about informing communities with quality news. Why should viewers care about any of this? The fewer owners there are in broadcast news, the fewer perspectives will be featured on the public airwaves. Some argue it makes business sense for the industry to combine operations to be more efficient. But at what cost? With consolidation, women and minority ownership has dropped.

The Seattle Times weighed in on the JSA issue in a March 3 editorial, and encouraged the FCC to follow the advice of the U.S. Department of Justice’s anti-trust attorneys:

Federal attorneys advised the FCC to better scrutinize every deal that comes before its five-member panel. The regulators should force companies to report when they operate multiple stations jointly in the same market, as they already do for the U.S. Securities and Exchange Commission.

“Failure to account for the effects of such arrangements can create opportunities to circumvent FCC ownership limits and the goals those limits are intended to advance,” Justice Department officials wrote.

Consolidation shrinks newsrooms and deprives viewers of in-depth journalism that speaks truth to power. The FCC has failed miserably to protect the integrity of the public’s airwaves through promoting competition, local ownership and diverse viewpoints.

Broadcasters have been using Joint Sales Agreements (JSAs) to operate multiple stations in main markets, according to this Wall Street Journal report. The FCC limits stations to one full-power station in each market. But as Free Press explains in this blog post, “companies like Gannett, Nexstar, Raycom, Sinclair and Tribune have set up shell corporations that they then sell some of their stations to — while maintaining control of much of the content and revenue. The letterhead may have a different logo but behind the scenes it’s just one company pulling the strings. JSAs allow one station to sell ads for a competing station, but these deals almost always end up as de facto consolidated ownership.”

Within the FCC, there is a division between those who think JSAs help to keep stations open and others who point to real numbers showing minority ownership has shrunk in recent years. Below, watch a March 26 exchange between FCC Commissioner Ajit Pai and FCC Chairman Tom Wheeler:

On the issue of curbing JSAs, Wheeler is right. The FCC should close the loophole. That might lead to more truly diverse ownership and programming.

“There’s a potential that a local group can actually come in and pick up a license and represent the interests of a local community,” says Ravi Kapur, a journalist and principal of KAXT Channel 1 in San Francisco and WRJK Channel 22 in Chicago. “There are different viewpoints in Seattle and San Francisco. You want people (working for those stations) to represent the sensibilities of those areas.”

Kapur says JSAs and shared service agreements linked to well-financed media giants makes it harder for independent station owners like him to enter the market and to compete.

But even if the FCC cracks down on joint sales agreements, industry insiders warn it does not mean that minority ownership will suddenly increase. Wheeler’s desire to hold an incentive auction and sell off spectrum currently owned by TV stations to wireless broadband carriers could further eviscerate minority ownership, as Kapur wrote about in this Oct. 26, 2013 guest column.

Harry A. Jessell of TVNewsCheck wrote a thoughtful column on Friday arguing TV broadcasting has become “a business for behemoths with negotiating clout.”

(T)he notion that tightening up the ownership rules will free up stations that minorities and women will rush to buy and that broadcasting will experience a era of true programming diversity is pure fantasy…

The real obstacle to entering the broadcasting business is not the lack of stations to buy, but money. And I just don’t see investors and banks lining up to back new small entrants who think they can make a go of it. The business has gotten too tough.

He’s probably right, but I’d like to think that where there’s a will there’s a way. Independent, minority and women-owned stations could help to fill a void that is often overlooked by mainstream media. For instance, Kapur says his stations have survived because they feature programming that meets demand and is relevant to various demographics and ethnic groups.

For more in-depth research, read the Free Press report, “Cease to Resist: How the FCC’s Failure to Enforce Its Rules Created a New Wave of Media Consolidation.”

Comments | Topics: fcc, free press, joint sales agreements


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