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Thursday, December 06, 2007

House Subcommittee Questions FCC On Media Ownership

By Radio INK - Dec. 6, 2007
WASHINGTON -- December 5, 2007: The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing Wednesday focusing on media ownership and other issues before the FCC, with FCC Chairman Kevin Martin and all four Commissioners in attendance.

Commerce Committee Chairman John Dingell (D-MI) in his opening statement reiterated the points he made in his letter to Martin earlier this week, saying he's seen "too much sniping among the Commissioners" and adding, "We've heard too many too many tales of short-circuited decisionmaking processes."

"The FCC appears to be broken," Dingell said. "The victim of this breakdown is a fair, open, and transparent regulatory process." He said it would be "intolerable" to let the situation continue and added, "This is why I've asked the Subcomittee on Oversight & Investigation of this committee to review how the agency is conducting its business."

As Martin began his prepared testimony, he stated that he is committed to "a robust marketplace of ideas" that is focused on "competition, diversity, and localism." He then ran down the FCC's efforts in the current media-ownership proceeding, citing the six public hearings, 10 commissioned studies, and extended public comment periods in the proceeding, then moved on to the rationale behind what he called his "relatively minor" proposal to loosen the newspaper-broadcast cross-ownership ban in the top 20 markets.

Martin cited past and pending personnel cuts at major-market newspapers to support his point that the newspaper industry is struggling and said, "We cannot turn a blind eye to the financial condition in which these companies find themselves." Allowing cross-ownership "may help forestall erosion" in the industry by allowing newsgathering and other costs to be shared.

On ownership diversity, Martin pointed to the FCC's recent revision of the low-power FM rules and said he has circulated an order that is designed to "promote diversity by increasing and expanding broadcast-ownership opportunities for small businesses, including minority- and women-owned businesses."

That order, he said, adopts most of the Minority Media and Telecommunications Council's proposals and those of the FCC's own Diversity Committee.

FCC Commissioner Michael Copps began his testimony by saying the FCC is "lurching dangerously off-course" and "giving short shift to pressing problems."

He said Martin's proposal is not a "moderate relaxation" of the newspaper-broadcast ban, but an opening for cross-ownership waivers in all markets. The conditions for a waiver, he said, "are as tough as a bowl of Jell-O," then got a laugh when said, "I have about as much confidence that a proposed combination will be turned down as I do that the next commission meeting will start on time."

Copps repeated his oft-stated desire for a new localism proceeding and called Martin's scheduled December 18 vote on his ownership proposal "an unseemly rush to judgment."

Adelstein began, "No issue on our agenda has more far-reaching consequences for the future of our democracy than this one," and cited the "bipartisan chorus of opposition to media consolidation." He echoed Copps' point that the waiver guidelines are too loose, though he said they amount to a "wet noodle" rather than Jell-O.

When the questioning began, Subcommittee Chairman Ed Markey (D-MA), asked whether the waiver requirements for markets below the top 20 is a "high hurdle, or just a speed bump." Martin said he intended the requirements to be a hurdle and said, "I absolutely would be willing to work with [the other Commissioners] on finding language to make them feel more comfortable that this is a high hurdle."

Later, Rep. Chip Pickering (R-MS) asked if the waiver conditions constitute a loophole that would "allow someone to drive a truck through." Martin responded, "It's not true that it is a loophole you can drive a truck through." He said the FCC has always allowed waiver filings, though the presumption under the new rules would be that newspaper-broadcast cross-ownership waivers in smaller markets would be against the public interest.

The waiver conditions would also take financial distress into account, he said -- "as we traditionally have in waivers" -- as well as the properties' willingness to "start new news -- if they're willing to create a new local news voice."

Copps, however, said, "This is a loophole. These factors that we are going to consider are so generic, they're so porous -- maybe it's the new media-ownership sponge, I don't know what it is -- but they scare the heck out of me."

Adelstein said that even if a property promises just "10 minutes more of news a year" or "one half-hour special," that would qualify for a waiver, and added, "I can't imagine a more porous standard."

Martin responded, "We did not say that would qualify for a waiver. That's not what the order says. What we said is, you can apply for a waiver, and these are the criteria we would consider. We did not say that you would qualify for it."

But Adelstein insisted, "The waiver standard says 'more news.' That's the only standard -- 'more news.' So what is 'more news'? There's no definition if it's five minutes, 10 minutes, or 50 hours. So theoretically, under that standard, 10 minutes can qualify."

Subcommittee Ranking Member Fred Upton (R-MI), who in his opening statement expressed support for further deregulation of radio ownership, asked why Martin hasn't supported radio deregulation. "The numbers are in," Upton said, "and we know that the [radio] industry is doing far worse today than at any time in the past. Isn't this the same situation you're trying to address for newspapers?"

Martin responded, "The most significant difference in what was occurring in the radio market and the newspaper-broadcast cross-ownership ban is that the radio market and the radio owners received some significant amount of ownership relief in 1996." In contrast, the newspaper-broadcast ban has been in place since 1975.

Reps. Hilda Solis (D-CA) and Charles Gonzalez (D-TX) both addressed ownership diversity, and Gonzalez asked Martin about the biggest obstacles to minority ownership and how the FCC plans to address the issue. "The two biggest obstacles are access to capital and access to new stations," Martin said. The FCC is addressing that, he said, by identifying where new stations are available; opening other broadcast avenues, such as LPFM; and waiving some rules for new entrants to the industry, including allowing expired construction permits to designated entities and changing the equity-plus-debt rule so other broadcasters can help finance new entrants. Martin also noted that the commission has unanimously supported the return of the minority tax certificate.

Solis raised the issue of private equity ownership in media and "transparency on who the owners really are" in those cases. "What steps will you take to make that known?" she asked. Martin said the same rules for ownership attribution apply to private equity owners as to any other, but Copps said, "Private equity is transforming the media-ownership environment."

Copps went on, "Instead of publicly held corporations, which you can at least track, and file 10(K) forms with the SEC, you have these private money funds which don't have to file. I can't find out who owns what." He said, "How can I do my job of protecting the public interest if I can't even find out who owns what?"

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