CARPOOLING ON THE INFORMATION SUPERHIGHWAY
Newspaper reporters sporting high-8 cameras
competing with television news organizations?
That scenario is not here yet, but it may be
soon. 1
So began a piece headlined "Look for television in
tomorrow's newspaper" in Broadcasting & Cable about a year
ago. The story went on to outline the following developments
in the print world:
~ At Knight-Ridder, some reporters were by spring 1993
using high-8 cameras for still photography. "The
quality is said to be a bit 'coarser' that normally
found in print."
~ "If technology currently being tested in Boulder,
Colo., makes it to the product stage," the story
continued, "those Knight-Ridder reporters could be
shooting full-motion video for a newspaper
downloaded via cable TV systems."2
Just what was being tested in Boulder? The article
described the newspaper chain's on-going experiments with
futuristic technology:
The product being developed at Knight-Ridder's
Information Design Laboratory is a newspaper
"tablet" similar to a computer notebook weighing
just over one pound. The tablet could be plugged
into a communications "dock" such as a cable hook-
up, and loaded with the latest edition of one or
more publications, then removed and read later.
The reader could interact with the tablet screen,
touching a story summary to get the
full text, pressing an advertisement to get more
information on the product, enlarging the type,
developing a customized index of stories or
"clipping" a story electronically. The news could
be delivered as print, audio or even full-motion
video.3
Roger Fidler, the tablet's designer expected to have a
full test of the tablet by 1995--even though he predicted
that cost, capacity and transmission time would be barriers
to widespread use of the tablet "for some time."4
As I read the story about the tablet newspaper of the
future, I was struck by how far technology has come, and how
quickly. I also was struck by how far we have yet to
travel--as Fidler conservatively estimated the speed with
which the newspaper "tablet" will achieve widespread use.
And I was reminded how often technology and the marketplace
race ahead of--and are hampered by--the law and policy of
another era.
And while it seems like only yesterday that the Federal
Communications Commission adopted rules barring cross-
ownership of newspapers and broadcast stations in the same
market, in truth it's well past time for those rules to go.
Methodology
In 1975 the FCC banned future acquisition by a single
party of both a broadcast station and a daily newspaper in
the same market and ordered owners of some, but not all, such
existing combinations to divest themselves of one of their
co-located media.5 The United States Supreme Court, in FCC
v. NCCB,6 upheld the regulations--overruling a controversial
Court of Appeals decision that would have required the
Commission to adopt a sweeping divestiture order.7 Now,
almost 20 years later, the Congress has indicated its
willingness to have the Commission relax its cross-ownership
rules with respect to major market radio.8 And the
Commission itself has found reason to waive the newspaper-
television cross-ownership ban in a case involving perhaps
the most powerful media owner in the world and the nation's
largest market.9
This study will trace the adoption of the FCC's
newspaper-broadcast cross-ownership rules. It will consider
the justifications on which the Commission based the rules
and on which the courts allowed them to stand. It will look
at changes in technology and economics since the adoption of
the cross-ownership rules. And it will suggest why the rules
are now ripe for repeal.
The Origin of the Newspaper-Broadcast
Cross-Ownership Rules
The FCC's newspaper-broadcast cross-ownership rules make
owners of daily newspapers ineligible to build or buy radio
or television stations whose specified service contours
encompass the city in which the newspaper is published.10
They prohibited renewal of broadcast licenses to parties who
acquire co-located dailies.11 In addition, they required
divestiture of print or broadcast properties in specified
communities where the publisher of the only daily newspaper
owned the only local radio and/or television station(s) and
no substantial news programming reached the community from
another market.12
At the same time, however, the rules left most
newspaper-broadcast combinations already in existence when
they were adopted untouched. Less-than-monopoly combinations
were grandfathered unless they were subsequently sold or
denied license renewal on grounds of anticompetitive abuses
violating the Sherman Act.13
The rules seemed logically to be based on a finding
by the FCC that there was something wrong with newspaper-
broadcast cross-ownership. Yet the same rules that banned
any prospective cross-ownership did nothing to break up most
existing combinations. If cross-ownership was an evil, why
didn't the Commission do away with all existing combinations?
On the other hand, if cross-ownership created no problems, or
perhaps resulted in benefits, why did the Commission order
even a few co-located properties to be sold and prohibit all
future combinations? From the beginning, the rules were
controversial, vulnerable to challenge for their
inconsistency, both for what they tried to do and for what
they failed to do.
The Origin of the Cross-Ownership Rules
What prompted the adoption of the 1975 newspaper-
broadcast cross-ownership rules? Did the Commission act
after gathering evidence of abuse by broadcast licensees who
owned daily newspapers in the same markets? That seems not
to have been the case. The push for cross-ownership rules,
if anything, may have been politically motivated.
Whatever the behavior of individual licensees,
concentration of ownership has been presumed undesirable in a
nation at least sentimental about encouraging a competitive
ideological and economic marketplace. Over the years the FCC
has implemented a number of rules limiting ownership of
broadcast stations in the name of promoting diversity of
ownership both locally14 and nationally.15 During the
1960s, when both ends of the political spectrum had declared
war on some nebulous monolith called "big media"16 the
Commission might well have found acceptance for limits on
newspaper-broadcast cross-ownership on the basis of the
conventional wisdom alone. Largely from popular presumptions
about the influence of "media barons,"17 rather than from any
convincing evidence of abuse, the FCC's cross-ownership
proposals arose.18
However, the 1970 proposal for restrictions on
newspaper ownership of broadcasting stations was not the
first such proposal by the FCC. There had been concern over
newspaper ownership of broadcast stations for almost half a
century before the FCC adopted rules banning local newspaper-
broadcast cross-ownership. When the Congress debated the
Radio Act of 1927, there were questions about the fairness of
allowing one newspaper in a city to own a radio station if
rival newspapers did not. The debate was not over whether
newspaper ownership of radio would diminish diversity of news
sources, because at the time radio was seen not primarily as
a news competitor, but as a means of promoting the licensee's
newspaper business to the disadvantage of print rivals in
what were then cities with fiercely competing dailies.19
During the Great Depression, there was a rapid
decline in competition in the newspaper business and a rapid
expansion of newspaper owners into broadcasting. Radio had
emerged in publishers' eyes as a rival for advertising and a
drain on readership. Congress began to pressure the FCC to
look into limits on newspaper-broadcast cross-ownership.20
The FCC's concern with newspaper-broadcast cross-
ownership manifested itself in a dissent to a 1936 licensing
decision. Dissenting Commissioner Irvin Stewart took pains
to make it clear that he was not proposing a ban on all
grants of licenses to newspaper publishers. However, he felt
that Commission needed "squarely" to face the issue of
whether licensing a broadcast station to a publisher served
the public interest, convenience and necessity.21
Subsequently, in 1938 the FCC ordered its Engineering
Department to study newspaper-broadcast cross-ownership. The
Engineering Department reported that it had found too much
varietyin newspaper-radio combinations to recommend any
generalrule against cross-ownership. Further, the report
suggested that only in individual cases where the FCC found
evidence that a cross-owner had abused its power should
Commissioners consider cross-ownership to be an adverse
factorin a decision on whether to renew a license.22
The 1941 Newspaper Inquiry
In March 1941, despite the earlier recommendations
of its Engineering Department, the FCC adopted an order aimed
at determining facts on which it might base general rules
concerning newspaper ownership of broadcast facilities.23 A
month later, the Commission announced that all applications
filed by newspaper owners for construction permits or
approval of station purchases would be kept on hold until it
had formulated such rules.
Why did the FCC go ahead with the rulemaking despite
its own staff's recommendation against such a move only three
years before? Several factors may have prompted the
Commission to act. First, FM and television were under
development, and newspaper publishers were investing heavily
in both. The Commission may have worried that it would have
to make numerous licensing decisions involving applications
for cross-ownership of both services and wanted to have some
general policies on which to base its decisions. Perhaps
more important, Franklin Roosevelt was reportedly disturbed
by the way some newspapers were treating him. Roosevelt had
been severely criticized by major newspapers during his 1940
re-election campaign; a majority of publishers had endorsed
his opponent. It was rumored he was unhappy with what he
considered efforts to sabotage his fireside chats by powerful
newspaper-affiliated stations in the Midwest.24
There is some speculation that, under pressure from
the White House, the FCC was trying to force the Congress to
act on this politically hot topic. Earlier opinions of an
FCC staff attorney and the federal courts suggested that the
FCC had no authority to prohibit newspaper ownership of
broadcast stations unless Congress amended the Communications
Act of 1934.25
Newspaper publishers protested the FCC's inquiry,
arguing the Commission lacked the power to bar newspapers
from owning broadcast stations. The American Newspaper
Publishers' Association unsuccessfully petitioned the FCC to
end the inquiry. A Tennessee publisher refused to testify at
FCC hearings on the inquiry until a federal court ordered him
to appear. While upholding the Commission's right to conduct
an investigation and to call witnesses, the Court of Appeals
for the District of Columbia warned the FCC that it did not
have the power under the Communications Act to exclude
newspaper publishers as a class from broadcasting.26
The FCC's hearings in the 1941 Newspaper Inquiry
lasted intermittently for more than a year. Extensive
testimony concerned Constitutional problems that would be
raised by rules against newspaper-broadcast cross-ownership,
should a general rule excluding newspaper publishers from
obtaining licenses be adopted. Such a general exclusion, it
was argued, would violate First Amendment guarantees of
freedom of the press.27
Moreover, there was little evidence of abuse by
commonly owned newspapers and radio stations. The FCC sent
investigators into communities to look for news bias. A
similar study was independently conducted under the auspices
of Columbia University. The only real problem that either
found was that in some small towns newspapers that owned
radio stations refused to print the program schedules of
rival stations.28 Ultimately, in January 1944, the FCC
closed the record and dismissed the proceedings without
adopting any cross-ownership rules.29 For over thirty years
thereafter, the FCC
continued to decide whether to grant newspaper owners'
applications for broadcast stations on a case-by-case basis.
The first job the FCC had was clearing the backlog of
applications left pending while it conducted its Newspaper
Inquiry. Despite its concern over cross-ownership, in the
Commission's decisions in these cases, cross-ownership seemed
to be decisive only in those comparative proceedings where
there was no other basis to find one applicant superior.30
During the television station licensing gold rush of
the 1950s, it became the FCC's standard policy to disqualify
a newspaper publisher from consideration for a license only
on the basis of past anticompetitive behavior.31 At least
one critic of FCC licensing practices during the 1950s
suggested licensing decisions concerning newspaper applicants
too often hinged on the political affiliations of the
newspaper, rather than any consistent FCC policy or record of
past abuse.32
Newspaper-Broadcast Cross-Ownership Revisited
In 1970, the FCC, then headed by Richard Nixon's
appointee Dean Burch, would revisit the issue of newspaper
ownership of broadcast stations in a general rulemaking.
The renewed interest in cross-ownership came as part of a
Commission effort to change its rules on multiple ownership
of broadcast stations. The Commission had for years
prohibited the same licensee from owning more than one
station in the same service--AM, FM or TV--in the same
community. However, despite that so-called "duopoly" rule,
about 1600 combinations of stations in different services in
the same community had come into being by 1968.
In 1970 the Commission adopted new rules aimed at
fostering diversity by banning future combinations of AM,
FM and/or TV in the same community.33 The new "one-to-a-
market" rules were aimed not so much at fostering economic
competition as at "promoting diversification of programming
sources and viewpoints."34
We are of the view that 60 different licensees are
more desirable than 50, and even that 51 are more
desirable than 50. In a rapidly changing social
climate, communication of ideas is vital. If a city
has 60 frequencies available, but they are licensed to
only 50 different licensees, the number of sources for
ideas is not maximized. It might be the 5lst
licensee that would become the communication channel
for a solution to a severe local social crisis. No
one can say that present licensees are broadcasting
everything worthwhile that can be communicated. We
see no existing public interest reason for being
wedded to our present policy that permits a licensee
to acquire more than one station in the same area.35
The FCC's renewed interest in diversity came once
again at a time when the White House harbored concerns over
media coverage. Richard Nixon had more than once during his
public life criticized the press for what he considered
hostile treatment. Now, with Vice President Spiro Agnew as
point man, the Nixon administration was taking on media with
new vigor. However, support for more stringent ownership
controls came not just from Nixon's FCC Chairman, Dean Burch,
but from outspoken liberal Democrat Nicholas Johnson, a
Commissioner appointed by Lyndon Johnson, and other
Commissioners more moderate than either Dean Burch or Nick
Johnson.
Chairman Burch criticized the one-to-a-market rules, on
the grounds that his colleagues were taking the wrong
approach to the problems of media concentration. Chairman
Burch said top priority ought to be given to newspaper-
television cross-ownership:
In the Washington metropolitan area there are 37
aural services: in New York, 59: in Chicago, 61,
and so on. There is a plethora of aural services in
all significant markets. Thus, while separating TV
from AM or FM might make a contribution in a few
cases, it is clearly far from the heart of the
problem. The plain fact is that the Commission has
labored for over two years, received reams of
comments, heard extensive argument, only to bring
forth a rule which applies to areas of ownership
least needing attention, if at all.
Clearly, the media cross-ownership matter warranting
the most attention is that of VHF-TV and the daily
newspaper. There are only a few daily newspapers in
each large city and their numbers are declining.
There are only a few powerful VHF stations in these
cities, and their numbers cannot be increased.
Equally important, the evidence shows that the very
large majority of people get their news information
from these two limited sources. Here then is the
guts of the matter. As far as I am concerned, if
there is any threat of undue concentration, and I
have of course reached no final conclusion on this
score, it does not lie in cross-ownership of AM-FM-
TV.
. . . Let's face up to the fact that if we are going
to inquire into concentration, we should have
started at the most obvious point.
I have heard. . . views concerning the stability of
the newspaper owner--that such an owner does not
"traffick" and does a better job of serving as an
outlet for local expression. These factors and many
others have to be explored in the proceeding, and,
as I stressed, I remain openminded on the issue. My
point here is simply that that is the issue.
. . . . I join in that portion of the action which
looks belatedly to consideration of the heart of
this problem. . . .36
The belated action to which Burch referred was the proposal
of further amendments to the duopoly rule issued by the
Commission when it adopted the one-to-a-market rule. The
proposed changes would prohibit cross-ownership of daily
newspapers with broadcast stations in the same community.
The Commission also proposed to require sales to split up
all existing local newspaper-broadcast combinations.37
The Commission noted that the Antitrust Division of
the Department of Justice had been influential in proceedings
leading to the adoption of the one-to-a-market rule. The
Antitrust Division would continue to make its influence felt,
in innovative and controversial ways, as the Commission
considered the proposed cross-ownership ban.
Antitrust Division License Challenges
After the Commission proposed cross-ownership rules
in 1970, it all but let the proposal die. By the spring of
1974, the five Commissioners who had expressed strongest
interest in the cross-ownership proposal (Johnson, Burch,
Kenneth A. Cox, H. Rex Lee and Robert Bartley) all had left
the FCC.
The Antitrust Division of the Department of Justice had
encouraged the FCC to adopt proposals limiting newspaper
ownership of broadcast stations in comments filed when the
proposal was first announced.38 When the proposal languished
in the early 70s, the Antitrust Division was instrumental in
reviving it. In an apparent attempt to force the Commission
to get on with its rulemaking, the Antitrust Division
embarked on a series of challenges to broadcast license
renewal of stations cross-owned with daily newspapers in
selected markets--using a hybrid public interest-antitrust
law argument.39
While the Commission was not persuaded that it should
deny any of the challenged applicants' license renewals, the
petitions filed by the Antitrust Division had their
anticipated effect. They forced the Commission to take up
its 1970 newspaper-broadcast cross-ownership proposal. With
Antitrust Division petitions to deny pending in four
markets, the Commission held oral arguments on the proposals
in the summer of 1974.40 Before the Commission adopted its
rules in 1975, the Antitrust Division, keeping the pressure
on, would challenge licenses of nine renewal applicants in
all.41
As had been the case when the FCC considered rules on
newspaper-broadcast cross-ownership thirty years earlier,
during its 1941 Newspaper Inquiry, written comments and
hearings on the cross-ownership rules produced no conclusive
evidence one way or the other. The Commission considered
four issues:
(1) In the absence of rules on newspaper-broadcast
cross-ownership, how concentrated had the ownership
of newspapers and broadcast stations become? To
what degree could diversity of media ownership be
expected to increase or decrease if the
Commission's proposals were adopted--or,
alternatively, if no rules were adopted?
Elaborate attempts were made to measure the existingd
egree of media concentration or diversity. Three studies
commissioned by the broadcast industry indicated that a mind-
boggling array of competitors hawked their media wares in
every American market,42 and that, even in the absence of
rules, cross-ownership had declined and would continue to
decline.43 Critics countered that any decline in cross-
ownership reflected merely an increase in the total number of
broadcast stations and that lists of diverse media available
to most Americans were inflated in light of the limited
degree to which national media provide local news and
advertising alternatives.44 In the end, the Commission was
unimpressed by the industry's media "counts," which it found
relatively useless.45 On the other hand, proponents of
divestiture failed to convince the Commission that there was
an "urgent" need to break up most existing newspaper-
broadcast combinations.46
(2) What effect, if any, did newspaper-broadcast cross-
ownership have on media content--particularly on
coverage of local news and public affairs?
More testimony, much of it anecdotal, was offered
about cross-ownership's effect on content than on any other
issue.47 Broadcasters talked about the efforts they made to
diassociate the news operations of commonly owned broadcast
stations and newspapers.48 Citizen groups complained of
abuses and failures of cross-owned media.49 Empirical
studies of the effects, good and bad, of newspaper cross-
ownership on the quality and quantity of broadcast programs
were submitted, but they were inconclusive.50 TheCommission c
oncluded neither that newspaper-broadcast cross-
ownership enhances nor that it inhibits news coverage or that
newspaper owners as a whole are better or worse public
trustees than other broadcasters.51
(3) What was the effect, if any, of newspaper-broadcast
cross-ownership on advertising rates?
Two studies were submitted purporting to show the
effects of newspaper-broadcast cross-ownership on local
advertising rates. They cancelled each other out.
The first concluded that, other factors being equal,
newspaper-television cross-ownership increased newspaper flat
line ad rates by ten percent and television prime time rates
by fifteen percent.52 The second study attacked the
methodology used in conducting the first and found cross-
ownership had no effect on advertising prices.53 The
Commission was unable on the basis of these two conflicting
studies or its own research54 to reach any conclusion on the
impact of cross-ownership on advertisers.
(4) What would be the likely consequences of a
divestiture order?
Two studies filed by the newspaper industry
predicted that ordering publishers to divest themselves of
broadcast stations they had acquired prior to the rulemaking
would severely reduce the market value of affected properties
and the number of locally owned broadcast stations.55 Other
testimony indicated that even across-the-board divestiture
would not significantly increase the total number of
potential media sales or glut the market in media
properties.56 The Commission, even though it decided to
frame its divestiture order narrowly to avoid working undue
hardship on existing licensees, concluded that pessimism
about the consequences of more extensive divestiture was
probably exaggerated.57
In sum, there was no conclusive testimony on any of
the four issues. Though the Commission had gathered
evidence "substantial" enough to support almost any decision,
it had not proved that any theories about either positive or
negative effects of newspaper-broadcast cross-ownership.
But the FCC decided that "even a small gain in
diversity" would justify cross-ownership rules.58 So it
adopted a total prohibition on future licensing of broadcast
stations to those who published daily newspapers in the same
market. At the same time, the FCC decided to grandfather
existing cross-owned combinations in all but the most
"egregious" cases.59 It ordered divestiture of broadcast or
newspaper operations only in a few small markets where the
same owner owned the only daily newspaper and the only radio
and/or television stations. Given the lack of compelling
evidence supporting any general cross-ownership rule, had the
Antitrust Division not been breathing down the FCC's neck in
renewal proceedings, perhaps the FCC would have ended the
rulemaking as it had the 1941 Newspaper Inquiry--with no
action at all.
It seemed illogical that the same set of facts that
might have justified either a total prospective ban or only
very limited divestiture could possibly have justified both.The Court of
Appeals, when it heard arguments in the case,
ordered the FCC to adopt a general divestiture order
consistent with its total prospective ban.60
However, the United States Supreme Court in 1978 upheld
the FCC's apparent inconsistencies and overruled that part of
the Court of Appeals' decision that would have required the
Commission to adopt divestiture orders as broad as its
prospective ban on future cross-ownership.61 In FCC v.
NCCB, the Supreme Court held that where an agency decision
is "primarily of a judgmental or predictive nature. . . .
complete factual support in the record. . . is not possible
or required."62 According to the Supreme Court, the
Commission was free to reach inconsistent conclusions on the
basis of the same set of predictions and, if expedient, to
adopt them all.
It is clear that in the Supreme Court's view, the FCC
had authority to adopt a rule limiting the eligibility of
newspaper owners for broadcast licenses, even though the
FCC's statutory power under the Communications Act is limited
to regulating only wired and wireless communications, not all
media, and even though the First Amendment prohibits
government action abridging freedom of the press. The
Supreme Court noted, as it had in other First Amendment
challenges to FCC regulations, that Congress had created a
regulatory agency to license broadcast facilities because
spectrum space is limited. Thus, given the Commission's
broad discretion in issuing licenses, it did not exceed its
authority by adopting rules aimed at maximizing
diversification of control of mass media, of which the
broadcast frequencies its licenses are only one element.63
The Commission might have no authority to discriminate
against newspaper publishers as a class.64 However, nothing
prevented the FCC from treating newspaper owners as it might
other media owners whose combined holdings might restrict the
free flow of competitive ideas in the local marketplace. The
ban on future licensing of broadcast facilities to newspaper
publishers in the same market did not unconstitutionally
single out newspaper owners for discriminatory treatment. It
simply subjected them to the same kinds of restrictions as
faced existing broadcast licensees under the FCC's duopoly or
one-to-a-market rules.65
Moreover, in promoting diversity of media ownership,
the Supreme Court ruled, the FCC was trying to promote
freedom of expression, not to abridge it.66 The FCC had
violated neither its statutory limits nor the constitutional
rights of newspaper owners or broadcasters in adopting the
cross-ownership rules.
The Case for Repeal of the Cross-ownership Rules
Much has changed since the Supreme Court decided FCC v.
NCCB in 1978. There is some speculation that were the
Supreme Court the cross-ownership rules today, it might
decide differently than it did in 1978.67 Despite such
interesting arguments, however, it is likely that the legal
underpinnings of the cross-ownership rules are as firm today
as they were in 1978.
Despite the Court's approval of the rules, the
evidence that led to the adoption of the rules was never
compelling. Predictions about the future technology of
newspapers favor a repeal of the newspaper-broadcast cross-
ownership rules. They stand as a roadblock in the
information superhighway.
There's no question that the cross-ownership rules
accomplished what was aimed. Over time, they have
substantially reduced the number of co-located newspaper-
broadcast combinations. In 1973, before the rules went into
effect, over sixteen percent of broadcast stations were owned
by the publishers of co-located newspapers. In a little more
than a decade after adoption of the cross-ownership rules,
the percentage of broadcast stations with local newspaper
affiliations had declined to about four percent. Nationally,
however, the number of television-newspaper affiliations
increased over the same period--from less than 21% in 1973 to
almost 29% by 1988. Despite the ban on local combinations,
the interest of companies in owning both print and broadcast
has increased over the years since the cross-ownership rules
went into effect. Thus, two significant trends have emerged:
a steady increase in overall cross-ownership of newspapers
and television and a marked decline in local cross-ownership
of daily newspapers and television.68
The marked decline in local cross-ownership is easy
enough to explain; the FCC has banned the creation of new
combinations and forbidden the sale of existing combinations
since 1975. But why the national trend toward more cross-
ownership?
As is graphically illustrated by reports of newspaper
photographers armed with video cameras, it makes sense in a
world of converging technologies to look beyond technology in
defining one's business. A company in the business of
providing news and selling advertising used to identify
itself along technological lines. It printed newspapers. It
published magazines. It made newsreels. It produced news
broadcasts for radio, television or, eventually, cable. Even
if it did all of those things, it did them through separate
divisions or operations whose interests rarely collided.
The media world is changing. Walt Disney labels itself
a "software" company now. It, like many other producers of
entertainment, is learning to look beyond the technological
identity of film or television or computer programs to the
underlying substance of what it does and, more important,
what it envisions itself doing in the coming century.
So it is, and so it should be, with companies in the
business of collecting and disseminating news. It might be
nice to think that multiple dailies competing with multiple
broadcast stations in the same market would produce a
diversity of opinions and coverage that ideally would better
serve the interests of a democracy in the free flow of
information than would cross-owned, co-located news and
broadcast operations. The fact of the matter is that few
markets now support competing dailies, and they are not
likely to resurge.69 Given the uncertain future of
broadcasters on the information superhighway, their
expansion of local news and public affairs programming is
unlikely absent increased economies that will most likely
result from multiple uses of their local news product.
Such economies are exemplified by the recent creation of
local news channels as a result of retransmission consent
negotiations under the 1992 Cable Act. Few broadcasters were
able to bargain for cash payments in return for cable's
retransmission of their signals. However, a fair number have
bargained for cable channels on which to air expanded local
and regional news.
One such channel will be operated by a Spokane,
Washington broadcaster whose properties include KXLY-TV,
KXLY(AM) and KXLY-FM and who will now add KXLY extra!, a
local cable channel, to its line-up. The cable channel will
serve not only Spokane, but also approximately 16,000
additional households in such small northern Idaho towns as
Coeur d'Alene and Post Falls--towns too small ever to support
their own television stations. In addition to simulcasts and
rebroadcasts of KXLY-TV news programs, KXLY extra! will
provide news and talk programs originating on KXLY(AM) and
KXLY-FM and expanded local and regional news coverage
specifically designed for north Idaho and not included in any
of its Spokane broadcasts.70
Other local news expansions growing out of (or as in the
case of KXLY extra! at least helped along by) retransmission
consent include a regional news service to be put together by
four Pacific Northwest stations owned by the Providence
Journal, a news and talk channel planned for San Francisco by
Chronicle Broadcasting, and news channels that Cox
(Pittsburgh, Charlotte, N.C., Orlando, Florida and Atlanta)
and Times Mirror (Dallas, Austin, St. Louis and Birmingham,
Alabama) are trying to start up in their respective broadcast
markets.71
It might be pleasant to reminisce about the "lonely
pamphleteer" as the embodiment of First Amendment ideals.
But lonely pamphleteers--and small, independent newspaper and
broadcast owners--will not be able to afford futuristic
technologies or extensive single-use newscasts. Even
companies the size of Knight-Ridder are conservative in their
estimates of how fast multimedia tablets may replace or join
traditional newspapers. But it is only large companies that
can capitalize on feeding and refeeding full motion video,
for example, to several different media that will have the
resources to try to develop such technologies. Local
newspaper-television combinations in 1994, unlike their
predecessors in 1974, may well enjoy economies and incentives
to produce more local news because of growing opportunities
for them to use the same video, for example, in both
broadcast and multimedia applications.
Broadcasters, like newspaper publishers, face daunting
costs if they are to invest in new equipment to stay
competitive. Right now, if the FCC continues on its
projected schedule for the transition to HDTV, broadcasters
must find ways of multiplying revenue sources so they can
afford to make substantial investments in new technologies.
If there had been good reason to adopt the cross-
ownership rules in 1975--evidence of news or advertising
abuse at the hands of co-located dailies and television
stations, for example--there would be good reason to hesitate
before abandoning those rules, even in the name of
technological advancement or economies of scale. However,
nothing in the record in either of the FCC's two extensive
inquiries into the effects of cross-ownership turned up
evidence of problems that would militate against repeal of
the newspaper-broadcast cross-ownership rules.
If the concern is about encouraging diversity of
opinion and freedom of expression, it is disturbing that
throughout the history of the FCC's and Congress' concern
with newspaper-broadcast cross-ownership, laws and rules to
prevent newspaper owners from obtaining broadcast licenses
seem to have been motivated in large part by politicians'
desires to shield themselves from the attacks of the press,
rather than from a genuine concern about the free flow of
information. Never was that more apparent than in 1988, when
the FCC's attempts to reconsider its cross-ownership rules
were blocked with legislation introduced by Senator Edward
Kennedy. Kennedy reportedly wanted to force Rupert Murdoch
to sell the Boston Herald, co-owned with Fox's Boston Channel
25. Under Murdoch's ownership, the Herald had been harshly
critical of Kennedy.72 The inclination of politicians from
Roosevelt on to try to use FCC licensing to muzzle perceived
media enemies is one good reason to do away with FCC
licensing powers that might sway publishers to go easy on
politicians.73
Recent action by both the Congress and the FCC
indicates that the time may be ripe for repeal of the cross-
ownership rules. In October 1993, the Congress cleared the
way for the FCC to institute a liberal waiver policy
concerning newspaper-radio cross-ownership. The new law
would allow the FCC, if it finds that the public interest
will be served, to grant cross-ownership waivers in the top
25 markets, provided that at least 30 independent broadcast
voices remain after the waiver. The Congressional action was
in response to requests by several companies with both
newspaper and broadcasting interests. According to reports,
the House-Senate conference committee that recommended the
changes "was swayed by rapid changes in the media world that
have decreased concerns about undue concentration involving
newspapers and radio stations."74
Moreover, Rupert Murdoch, forced to sell the New York
Post in 1988 after Fox Television became the licensee of New
York station WNYW, was able to win an unprecedented permanent
FCC waiver of the cross-ownership rules to regain control of
the Post after unsuccessful attempts to keep it afloat by
owners who had succeeded Murdoch.75 The competitive
problems of the Post may focus the attention of Congress and
the Commission on the possibility that cross-ownership
of the television stations and newspapers of tomorrow--once
presumed an evil--may in fact be a social benefit.
Allowing newspapers and broadcast stations to form
local partnerships may help insure not just their survival,
but their incentive to provide local news and to finance
technological innovations. If the video cameras of a co-
located television station can feed the multimedia tablets of
a cross-owned newspaper, both may have more incentive to
invest in new technologies. Ultimately, this ability to
carpool may allow today's newspapers and broadcast stations
to drive on the information superhighway of tomorrow.
NOTES
1. Geoffrey Foisie, Look for television in tomorrow's
newspaper, Broadcasting & Cable, Apr. 19, 1993, 72.
2. Id. at 74.
3. Id.
4. Id.
5. Second Report and Order, Multiple Ownership,
500 F.C.C.2d 1046 (1975).
6. 98 S.Ct. 2096 (1978).
7. NCCB v. FCC, 555 F.2d 938 (D.C. Cir. 1977).
8. Peter Viles, Congress may open door for increase in
paper-radio crossownership waivers, Broadcasting & Cable,
Oct. 25, 1993, 36.
9. Elizabeth Sanger, Murdoch now owns the Post,
Newsday, Oct. 2, 1993, 12.
10. The degree to which a broadcast station's signal is
subject to fading and interference is expressed in terms of a
station's service area. Thus, the FCC's ownership rules
prohibited overlap of service contours. 47 C.F.R.
73.3555(d).
11. The FCC's Rules have been consolidated since the
1975 order went into effect. While it was part of the FCC's
applicable rules and regulations, the prohibition on renewal
was contained in 47 C.F.R. 73.35(c), 73.240(c),
and 73.636(c) (1977).
12. This provision of the rules was eliminated once
the compliance period had passed. It was previously contained
in 47 C.F.R. 73.35 n. 8, 73.240 n. 8 and 73.636 n. 8
(1977).
13. Second Report and Order, Multiple Ownership, supra
note 5, at 1088.
14. 47 C.F.R. 73.3555(a), (b) and (c).
15. 47 C.F.R. 73.3555(e).
16. It is interesting that within the Commission itself
the strongest support for the cross-ownership proposals came
from its conservative and liberal political extremes.
Chairman Dean Burch was a former Goldwater presidential
campaigner and a Nixon appointee. Nicholas Johnson,
appointed by Lyndon Johnson, had often offended bothbroadcasters and his
colleagues with his outspoken criticism
of the establishment. See n. 17, infra.
17. Nicholas Johnson, The Media Barons and the Public
Interest, Atlantic, June 1968, 43-51.
18. First Report and Order, Multiple Ownership Rules,
22 F.C.C.2d 306, at 335-36 (Chairman Burch, concurring and
dissenting.)
19. 67 Cong. Rec. 12353 (1927) (remarks of Senator
Dill), cited by Daniel W. Toohey, "Newspaper Ownership of
Broadcast Facilities,: Federal Communications Bar Journal 20
(1966): 44.
20. Christopher H. Sterling, "Newspaper Ownership of
Broadcast Stations, 1920-68," Journalism Quarterly 46 (Summer
1969): 230, citing John H. Dunn, "Government Efforts of
Separate Press and Radio Ownership: 1937-44," (Master's
thesis, University of Wisconsin, 1948).
21. Port Huron Broadcasting Co., 5 F.C.C. 117 (1938).
In this licensing decision, the Commission denied a
construction permit to the president of a newspaper, finding
that another applicant would add a new voice to information
services in the area because he had no other media interests.
22. Sterling, supra note 20, at 230, citing Harry P.
Warner, Radio and Television Law (Albany, N.Y.: Matthew
Bender, 1948), 206-7.
23. Order No. 79, F.C.C. Mimeo No 48496, Mar. 20, 1941,
cited by Toohey, supra note 19, at 48.
24. James F. Foley, "The Newspaper-Radio Decision,"
Federal Communications Bar Journal 7 (Feb. 1944): 12. See
also Sterling, supra note 20, at 230, and Toohey, supra note
19, at 47.
25. Toohey, 47.
26. F.C.C. v. Stahlman, 75 App. D.C. 176 (1942).
27. Toohey, at 49-50, citing Notice of Dismissal of
Proceedings, Newspaper Ownership of Radio stations, 9 Fed.
Reg. 702 (1044).
28. Id. at 49.
29. Id. at 49-50.
30. Sterling, 235.
31. Belleville News-Democrat, 4 RR 1043 (1950), citedby Toohey, 52.
32. Sterling Quinlan, The Hundred Million Dollar Lunch,
Chicago, J. Philip O'Hara, 1974, at 19-20.
33. First Report and Order in the Matter of Amendment
of Sections 73.35, 73.240 and 73.636 of the Commission Rules
Relating to Multiple Ownership of Standard, FM and Television
Broadcast Stations, Docket No. 18110, 25 Mar. 1970, 22
F.C.C.2d 306 (1970).
34. Id. at 307.
35. Id. at 311.
36. Id. at 335-36.
37. Further Notice of Proposed Rule Making, Docket No.
18110, 22 F.C.C. 339, 340-46 (1970)
38. Id. at 340-41.
39. U.S. Deputy Assistant Attorney General, Antitrust
Division, Letter to Secretary, FCC, 11/28/73. Petition to
Deny Renewal Application in the Matter of Cowles
Communications, Inc., Des Moines, Iowa, for Renewal of
Licenses of Stations KRNT, KRNT-FM, and KRNT-TV, Des Moines,
Iowa, File Nos. BR-515, BRH-2813, and BRCT-246, 1/2/74.
Petition to Deny Renewal Applications in the Matter of
Pulitzer Publishing Co., St. Louis, Missouri, File Nos. BRCT-
30 and BR 641, and Newhouse Broadcasting Corp., St. Louis,
Missouri, for Renewal of License of KTVI(TV), St. Louis,
Missouri, File No. BRCT-520, 1/2/74. Petition to Deny
Renewal applications in the Matter of Midwest Radio-
Television, Inc., Minneapolis, Minnesota, for Renewal of
Licenses of Stations WCCO, WCCO-FM, and WCCO-TV, File Nos.
BR-659, BRH-2496 and BRCT-49, Before the FCC, 3/1/74.
Petition to Deny Renewal Applications in the Matter of
Stauffer Publications, Inc., Topeka Kansas, for Renewal of
Licenses of Stations WIBW, WIBW-FM and WIBW-TV, File Nos. BR-
573, BRH-1316 and BRCT-181, 5/1/74. Petition to Deny Renewal
Applications in the Matter of KSL, Inc., Salt Lake City,
Utah, for Renewal of Licenses of Stations KSL, KSL-FM and
KSL-TV, 9/3/74. Petition to Deny Renewal Applications in the
Matter of McClatchy Newspaper for Renewal of Licenses of
Stations KMJ, KMJ-FM and KMJ-TV, Fresno, California, File
Nos. BR-7, BRH-538 and BRCT-166, 11/1/74. Petition to Deny
Renewal Applications in the Matter of KHQ, Inc. for Renewal
of Licenses of KHQ, KHQ-FM and KHQ-TV, Spokane, Washington,
File Nos. BR-76, BRH-117 and BRCT-147, 1/2/75.
40. Oral Argument, Multiple Ownership, Docket No.
18110, 3 vols. (July 1974).
41. See n. 39, supra.
42. Second Report and Order, Multiple Ownership, supra
note 5, at 1059-61, 1073-74, 1093-94.
43. Id.
44. Id. at 1061.
45. Id. at 1074.
46. Id. at 1076.
47. Lorna Veraldi, Newspaper-Broadcast Cross-Ownership:
Antitrust Law and Regulatory Policy, 158-91 (Master's thesis,
University of Utah, 1976).
48. Id. at 165-66.
49. Id. at 182-87.
50. Second Report and Order, supra note 5, at 1073,
1093. See also NCCB v. FCC, 555 F.2d at 957, citing
Respondent's Brief, p. 9.
51. Second Report and Order, 1075.
52. Id.
53. Id. at 1073-74, 1093-94.
54. NCCB v. FCC, 555 F. 2d at 959 n. 70.
55. Second Report and Order, Multiple Ownership, supra
note 5 at 1072, 1093.
56. United States Dept. of Justice, Comments, Multiple
Ownership, Docket No. 18110 (5/18/71):
Broadcast licenses are merely one of a large
number of income producing properties on the
market at any given time. Potential investors
in income producing properties do not limit their
analysis to available broadcast licenses. . . . In
this much expanded market, another twenty sources a
year will hardly change the supply.
57. Second Report and Order, Multiple Ownership, supra
note 5 at 1072.
58. FCC v. NCCB, 98 S.Ct. at 2108, citing Second Report
and Order, at 1076, 1080 n. 30.
59. Second Report and Order, Multiple Ownership, at
1078.
60. NCCB v. FCC, 555 F.2d 938 (D.C. Cir. 1977).
61. 98 S.Ct. 2096 (1978).
62. Id. at 2122.
63. Id. at 2112-14.
64. Id. at 2115.
65. Id. The court contrasts the clearly
discriminatory tax imposed only on newspapers, on the basis
of their circulation, invalidated in Grosjean v. American
Press Co., 297 U.S. 233 (1936).
66. Id. at 2115-16.
67. James C. Goodale, The FCC as Player in the Media
Game, New York Law Journal, 10/1/93, 3.
68. Herbert H. Howard, Group and Cross-Media Ownership
of Television Stations: 1988. Washington, D.C.: National
Association of Broadcasters (1988), 4-14.
69. Ben H. Bagdikian, The Media Monopoly. Boston, MA:
Beacon Press, 1992, at 122-24.
70. Rich Brown, KXLY-AM-FM-TV-CABLE set to debut,
Broadcasting & Cable, Mar. 14, 1994, 18. KXLY licensee,
Morgan Murphy Stations, is affiliated with newspapers
(Evening Telegram Company) outside Spokane. Broadcast
Yearbook, Washington, DC: Broadcasting Publications, 1991, A-
50.
71. Steve McClellan and Rich Brown, TV stations go for
the channels, Broadcasting & Cable, Sep. 13, 1993, 8-10.
72. Hollings, Kennedy stir up hornet's nest over cross-
ownership, Broadcasting, Jan. 11, 1988, 42.
73. For an interesting discussion of the apparent
hiatus Senator Kennedy enjoyed from criticism while
Rupert Murdoch was awaiting FCC approval of the Post waiver
by the FCC, see, e.g. Douglas Feiden and Alan Mirabella, Post
waiver bashing, Crain's New York Business, July 12, 1993, 6:
No sooner did the New York Post receive its waiver from
the Federal Communications Commission than it declared
open season once again on its long-time nemesis, Sen.
Edward Kennedy. . . . The Post had been on better
behavior while the FCC was considering giving Mr.
Murdoch a waiver from the law that prohibits cross-
ownerships of media outlets in a market.
74. See note 8, supra.
75. See note 9, supra.
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