Diversity debate shapes media ownership discussion at FCC

by Joelle Tessler, CQ Staff

During the steamy summer of 2006, Washington's local television stations devoted much of their news coverage to a string of 14 murders that led police to declare a state of emergency in the city. Two killings drew particular attention: the shooting of wheelchair-bound African-American activist Chris Crowder, who was preparing to run for mayor, and the stabbing of Alan Senitt, a white Jewish activist from Britain who was working for former Virginia Democratic Gov. Mark Warner.

The coverage may have been thorough, but it wasn't seen as balanced, according to a Howard University study. Some African-American residents of the nation's capital told the researchers they saw bias in the coverage. One black resident told them that newscasts portrayed Senitt's slaying as "so tragic, and reporters emphasized his work in the community," while providing comparatively little attention to Crowder's activism.

The episode underscores the skepticism that many minorities feel about the way white-owned, mainstream media cover their communities, said Carolyn Byerly, an associate professor of communications at Howard and co-author of the study. Washington, a city with a majority African-American population, does not have a single black-owned, full-power broadcast television station. Neither does Atlanta, New Orleans or New York City.

"Participation in the political process occurs through deliberation, and that occurs through the media," Byerly said. "So ownership matters in terms of the ideas that circulate."

It is against this backdrop that the Federal Communications Commission this year embarks on the process of reviewing and potentially easing media-ownership rules. The last time the FCC tried to relax restrictions on media ownership, in 2003, a federal appeals court struck down the deregulation as "arbitrary and capricious." The court found that the agency failed to justify eliminating its "only policy specifically aimed at fostering minority television station ownership."

This time, the Republican-controlled FCC will have to tread gingerly to satisfy the court's directives and avoid a backlash from the new Democratic majorities in Congress. The FCC is under a congressional mandate to review media-ownership rules every four years.

Among the hot-button issues are concerns that consolidating ownership in the hands of large broadcasting companies will reduce the number of minority-owned outlets and lead to the kind of bias that the Howard University critics saw in coverage of the Washington murders.

Boosting minority and women ownership of broadcast outlets has been the U.S. government's policy for almost three decades, since the FCC adopted a landmark 1978 statement on minority ownership and Congress reaffirmed the goal in the big telecommunications overhaul of 1996.

Many media executives and free-market advocates dispute the premise that ownership diversity equals programming diversity. If there is demand for content that appeals to minorities, they argue, the market will step up to meet it, especially in an age when unregulated media such as the Internet, cable TV, and satellite radio and television provide a range of news and entertainment choices for all segments of the population.

"We are living in a golden age of media, with more choices than ever," said Adam Thierer, senior fellow with the Progress and Freedom Foundation, a free-market-oriented think tank. "If there is a demand, the free market will meet it, and it is meeting it."

Free-Market Agenda

The media-ownership deregulation of 2003 was engineered by Chairman Michael Powell, a staunchly free-market Republican who used the GOP majority on the FCC to overhaul the rules.

Among the regulations the FCC relaxed were bans on a single company owning more than one TV station in small and medium markets, and more than two stations in large markets. Under Powell, the FCC also voted to eliminate a cross-ownership ban on one company owning a broadcast TV or radio station and a daily newspaper in the same market.

The drive to ease the rules was the product of intense lobbying by big media companies seeking to get bigger and a free-market ideology at the FCC. But the agency's actions triggered an intense public backlash that sparked broad opposition across the political spectrum. Lawmakers in both parties warned that media concentration would threaten a diversity of views. After public-interest groups took the FCC to court, the 3rd U.S. Circuit Court of Appeals tossed out many of the rules in 2004.

But the industry landscape has shifted since 2003, as traditional media giants struggle to retain audiences and advertising dollars in a world of 24-hour cable news, satellite radio programming and unlimited online choices.

Some big media companies, such as Tribune Co., are considering splitting off divisions, while others, such as Clear Channel Communications Inc., are selling properties. Still, the industry continues to lobby for relaxed ownership rules, arguing that current regulations prevent them from achieving the scale they need to compete in today's new media environment.

FCC Chairman Kevin J. Martin shares his predecessor's deregulatory bent. Martin has said he hopes to revisit the newspaper-broadcast cross-ownership ban, and many experts expect another attempt to ease local TV ownership limits.

The backlash against the 2003 deregulation, however, leaves Martin under pressure to proceed more cautiously than Powell and to listen to public opinion. So the FCC is holding hearings across the country and has commissioned a series of studies on issues at stake in the process, including minority ownership.

Ownership and Content

The FCC has been criticized for neglecting minority ownership in the past. The 3rd Circuit, for example, took the agency to task for trying to eliminate a rule intended to give minorities a chance to bid on failing - and therefore more affordable - TV stations. Public-interest groups say relaxed local TV ownership limits would confirm again that the issue is not a high priority for the agency.

S. Derek Turner, research director for the public interest group Free Press, argued that increased media concentration makes it harder for minority owners, who tend to own just a few stations with limited reach, to compete for programming and advertising dollars with large corporate chains. Free Press blames media consolidation for a 40 percent decline since 1998 in the number of minority-owned broadcast television stations. Overall, minorities own less than 3.3 percent of all U.S. full-power TV stations, according to a Free Press analysis of FCC data.

Mark Cooper, director of research at the Consumer Federation of America, said more consolidation would also create economic pressure that could squeeze out small minority owners with limited capital, who may find it hard to resist the temptation to sell stations - and even harder to raise the money to buy stations - as big corporations bid up prices.

Advocates for increasing ownership by minorities say those owners are more likely to provide news coverage and public affairs coverage that address issues relevant to minority audiences - creating better-informed and more involved citizens.

"If you want people to participate in our society and have a voice, you need diversity in the marketplace of ideas," said Leonard Baynes, a law professor at St. John's University in New York who specializes in communications law. "How do minorities participate in the process if the issues are shaped by someone else?"

Harold Feld, senior vice president for the public interest law firm Media Access Project, said minority owners are less likely to present minorities as stereotypes in news and entertainment programming, which can play an important role in shaping public perceptions.

Michael Copps, one of two Democratic FCC commissioners, argues the government should actively promote more minority ownership instead of lifting media-ownership restrictions.

One proposal that public-interest groups and media companies back is reviving a program to let anyone selling a media property to a minority bidder defer capital gains taxes. The tax credit created in 1978 was repealed in the mid-1990s after Republicans won congressional majorities, in response to allegations that big, mainstream media investors were recruiting minority partners to get the benefit.

While public-interest groups say the tax credit was a good program that was abused, free-market proponents argue that it illustrates the risks of government meddling to shape market outcomes. James Gattuso, senior fellow at the conservative Heritage Foundation, says government should limit itself to ending barriers to entry and expanding ownership opportunities. He contends lifting broadcast-ownership caps would encourage programming diversity since companies owning more stations in a market may target smaller audiences, rather than just a mass audience.

In addition, free-market proponents and media executives insist that large corporate owners will provide news and entertainment content relevant to minority audiences where they have market demand for such programming. But media companies can only produce diverse content if they are free to expand their holdings enough to compete in the new media marketplace, said Tribune Vice President Shaun Sheehan.

Former FCC Chairman Richard Wiley is among those who think boosting minority ownership and deregulation aren't mutually exclusive. For instance, government could let companies that create "incubator" programs to mentor minority executives exceed the ownership caps or claim tax benefits. The National Association of Broadcasters (NAB) offers scholarships, fellowships and training to groom minority executives.

Providing access to capital is another key to boosting minority ownership levels. Clear Channel recently joined the NAB and the public-interest group Minority Media and Telecommunications Council (MMTC) in hosting a conference that offered financing guidance to minority entrepreneurs interested in bidding on stations the company is selling.

Meanwhile, all eyes are on the FCC. "There is a scandalous under-representation of minorities in the media industry," said MMTC Executive Director David Honig. "In the long run, it is up to the FCC to address the problem."

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The media's job is to interest the public in the public interest. -John Dewey