Supreme Court Rejects Media Ownership Case–What’s Next?

It was no surprise yesterday that the Supreme Court announced it would not be reviewing the Third Circuit Court of Appeals decision overturning the FCC’s media ownership revisions from 2003. Neither the agency nor the Bush Administration had the heart to re-fight the battle that Michael Powell waged to get these meager revisions through given the backlash it created two years ago.

So, where do we go from here? It’s pretty obvious. Media ownership reform will, once again, become a piecemeal, incremental process with each rule being considered individually over time. The FCC could have taken that path before, but Powell and staff opted for a more principled approach to the issue. He rightly viewed the media world not as a collection of distinct entities, outlets, and technologies, but rather as a big bucket of bits that were all increasingly commingling. Acknowledging the reality of media and technological convergence, Mr. Powell’s FCC decided to take a comprehensive approach to reforming this hodgepodge of confusing media ownership restrictions.

The problem was, by doing so, Powell had created a very juicy target for the media critics to go after. They were able to paint the reform effort as a radical gutting of all the media ownership rules even though the FCC’s revision of the rules only moderately relaxed the existing regulations–and even retained or strengthened some of the rules under consideration.

Again, that didn’t make any difference to the Chicken Little media critics, who used the bundling of the rules as an ideal opportunity to paint a “sky-is-falling” scenario should any of these rules be relaxed.

Of course, looking back just two years later, this all seems so silly now. Compared to the gloom-and-doom predictions we heard and read back then, today’s headlines about the media industry all scream one consistent message: Traditional media providers and outlets are in big trouble. A recent issue of The Wilson Quarterly featured a cover story / symposium on “The Collapse of Big Media.” The Christian Science Monitor recently ran a story entitled, “Newspapers Struggle to Avoid Their Own Obit,” which was ironic since the CSM is currently undergoing major changes and is rumored to be considering a switch to an all Internet-based format. In an editorial entitled “Death to the Networks,” Broadcasting and Cable magazine posits that several of the traditional TV networks may be extinct within the next few years. And in late May, The Wall Street Journal published a survival guide for traditional media entitled, “How Old Media Can Survive in a New World.” But the subtitle of the story didn’t sound an optimistic tone. It read: “The Digital Revolution Threatens to Push the Traditional Newspaper, Television, Music and Advertising Industries Into the Dustbin of History.”

What has happened over the past few years to lead to such a stunning reversal of fortunes for traditional media? As I argue in my new book, Media Myths: Making Sense of the Debate over Media Ownership, the Age of Scarcity has given way to the Age of Abundance. The code words for our new media environment are customization, personalization, choice, competition, and, above all, abundance. Citizens now enjoy more news and entertainment options than at any other point in American history or human civilization. If there is a media “diversity” problem today it is that citizens suffer from “information overload” because of all the choices at their disposal. The number of information and entertainment options has become so overwhelming that many citizens struggle to filter and manage all the information they can choose from on any given day.

Of course, these developments were well underway when the FCC ownership revisions were announced, but many still feared that the old media giants would just buy up everything in sight and stifle the new forms of competition and choice. That fanciful scenario never developed, of course. Indeed, since the time of the AOL-Time Warner deal, old media operators have done a stunning about-face and engaged in DE-consolidation maneuvers to get back to basics and salvage some value out of deals gone wrong. As a result, beyond the gradual disintegration of AOL-Time Warner, we have seen divestiture moves or spin-off proposals by many large media operators over the past year, including: Viacom, Clear Channel, Disney, Emmis Communications, Liberty Media, and Cablevision just to name a few.

Anyway, none of these new realities make a difference to the media critics who continue to argue that little has changed in our modern media marketplace and, therefore, the FCC should just continue business as usual. But business as usual is not really an option for the FCC because the courts have consistently held that most of these ownership rules cannot be justified as they currently stand. Whether it’s the broadcast audience caps, the newspaper cross-ownership rules, the cable ownership caps… whatever… the courts have always said the FCC needs to find a good excuse for keeping the old limits intact. It’s not enough for the agency to create imaginary bogeymen; they need to show actual harm to consumers to justify such limits. And no such harm is ever cited by the agency.

So, something’s gotta give. I suspect that as we embark on this protracted, rule-by-rule approach to media ownership reform, each regulation will be slightly tweaked to give media operators a bit more freedom. For example, the 30% horizontal cable ownership cap currently being considered by the agency could jump to 40% in an attempt to satisfy the courts, who said in the Time Warner v. FCC decision that a 60% cap was probably more warranted. That’s the incremental game that the new FCC under Kevin Martin will probably engage in to avoid the wrath of both the courts on one hand, and the media critics on the other.

At the end of the day, however, we have to step back and think about how silly all of this is. After all, we really DO live in a world of media convergence and growing competition for our eyes and ears from myriad outlets and technologies. The Powell FCC really was on to something when they tried to deal with these rules in a comprehensive fashion. If all media is coming together and increasingly in competition with each other, why not deal with these rules in such a comprehensive fashion?

The answer, as Michael Powell found out, is that it is just too darn political sticky to do so. Too many groups out there have an axe to grind with the media and all too often they want to grind that axe on the stone of Big Government. So, if you give them a big enough target, the Chicken Little crowd will come out in force and fight ANY relaxation of the rules to the death. But, if you break up the rulemakings into smaller proceedings and take the incremental approach, you’re more likely to have some success in gradually reforming this illogical patchwork of media ownership rules. Whether any of the old media giants will survive long enough in this new competitive landscape to see that day come is a different story.

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