The Inherent Paradox in the FCC Media Ownership Rules & Latest NOI

by on May 26, 2010 · 0 comments

There’s an inherent paradox in the Federal Communications Commission’s (FCC) media ownership regulations and the new Notice of Inquiry that the agency has just launched looking into those rules. Like everything else the FCC has been doing lately, this NOI poses hundreds of questions about the topic at hand. In this case, the agency is interested in knowing what the impact of its byzantine regulatory regime for media ownership has been. Complicating matters even more is that fact that the FCC wants people to provide detailed answers about the impact of these rules on amorphous values like “diversity” and “localism.” So, the agency asks, what has been the impact of the local TV ownership rule, the local radio ownership rule, the newspaper/broadcast cross-ownership rule, the radio/TV cross-ownership rule, the dual network rule, and so on, on the marketplace, competition, diversity, localism, etc.

But therein lies the fundamental paradox of the FCC’s inquiry and the media ownership regulations in general: So long as the rules are preemptive and prophylactic in character, we will never get clear answers to the questions the agency poses. By definition, the agency’s media ownership rules make experimentation with new business models illegal. It is per se criminal to enter into combinations that the agency has presumptively divined to be counter to “the public interest,” whatever that means.   Thus, we can never get definitive answers to the questions the agency poses when “the marketplace” isn’t a truly free marketplace at all.  It is a regulatory construct artificially constrained in countless ways.

So, what’s the answer here? In a word: Antitrust. While I’m no fan of over-zealous antitrust regulation, it has one huge advantage over the media ownership regime that the FCC enforces: It doesn’t preemptively seek to determine supposedly sensible market structures or ownership patterns. The threat of antitrust intervention can be a very dangerous thing, and wrecking-ball style antitrust interventions are rarely sensible, but at least the DOJ and FTC aren’t turning the regulatory dials on a massive media marketplace industrial policy the way the Federal Communications Commission does with its media ownership regulations.

The final, and perhaps most insulting paradox within the FCC’s new NOI is the way the agency meticulously documents the troubles that many traditional media operators find themselves in today, especially newspapers and broadcast radio operators.  The agency cites a litany of statistics and bad news anecdotes about how these players are losing revenues, advertisers, staff, and readers / listeners at an alarming clip.  But never once does the Commission stop to ponder whether it itself is responsible for any of this mess!  It would be wrong to suggest that we’d live in some sort of media nirvana if all the media ownership rules went bye-bye. But those rules certainly haven’t helped matters any and, moreover, they come on top of the countless other regulations that the Commission imposes dealing with business practices, technical standards, advertising restrictions, programming mandates, speech controls, etc. etc.

Meanwhile, in a separate proceeding still ongoing, the Commission has been pondering the “Future of Media” and has brought through a parade of “public media” advocates to its workshops on the matter. The majority of the participants have suggested that private media is failing and, you guessed it, lots more public media is the solution.  So, with one hand government suffocates private media markets and with the other it begins reaching into our pockets for public media subsidies!  What a racket.

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