The Federal Communications Commission (FCC or Commission) has released for public comment 10 economic research studies on media ownership that it had commissioned to provide data and analysis to support the policy debate on what ownership limitations are in the public interest. These studies also provide data and analysis useful to the on-going policy debates on how best to foster minority ownership of broadcast stations and on tiered vs. à la carte pricing of multichannel video program distribution (MVPD) services, such as cable and satellite television. The FCC also has released peer reviews of these studies that are required by the Office of Management and Budget. In addition, Consumers Union, Consumer Federation of America, and Free Press (Consumer Commenters) jointly submitted to the FCC very detailed comments on the 10 FCC-commissioned studies that included statistical results from re-running the models in those studies, applying the same empirical data to models revised to correct for alleged specification errors. Despite the lack of consensus on many issues, it appears that the following general statements can be made about the status of the data collection and analysis available to policy makers:
The Federal Communications Commission (FCC or Commission) has released for public comment 10 economic research studies on media ownership that it had commissioned to provide data and analysis to support the policy debate on what ownership limitations are in the public interest. These studies also provide data and analysis useful to the on-going policy debates on how best to foster minority ownership of broadcast stations and on tiered vs. à la carte pricing of multichannel video program distribution (MVPD) services, such as cable and satellite television.
The FCC's media ownership rules are intended to foster the three long-standing U.S. media policy goals of diversity of voices, localism, and competition. The current rules place certain limits on the number of media outlets that a single entity can own nationally and the number and type of media outlets that a single entity can own locally.1
In Section 202 of the 1996 Telecommunications Act, Congress instructed the FCC to eliminate several of its media ownership rules and to modify others, in some cases setting explicit numerical limits itself, in other cases instructing the FCC to conduct a rulemaking proceeding to determine whether to retain, modify, or eliminate existing limitations.2 Congress also instructed the FCC to perform periodic reviews of its media ownership rules to determine if they are "necessary in the public interest as the result of competition," and to modify or repeal any regulation it determines to be no longer in the public interest. The loosening of the media ownership restrictions has led to significant consolidation of ownership in the media sector.
As part of its periodic review and in response to rulings by the U.S. Court of Appeals for the District of Columbia Circuit, the FCC adopted an order on June 2, 2003 that modified five of its media ownership rules and retained two others.3 The new rules, most of which would have further loosened ownership restrictions, proved to be controversial, were challenged in court, and have never gone into effect. On June 24, 2004, the United States Court of Appeals for the Third Circuit (Third Circuit), in Prometheus Radio Project vs. Federal Communications Commission, upheld the FCC's findings that it would be in the public interest to further loosen many of the media ownership restrictions, but found:
The Commission's derivation of new Cross-Media Limits, and its modification of the numerical limits on both television and radio station ownership in local markets, all have the same essential flaw: an unjustified assumption that media outlets of the same type make an equal contribution to diversity and competition in local markets. We thus remand for the Commission to justify or modify its approach to setting numerical limits.... The stay currently in effect will continue pending our review of the Commission's action on remand, over which this panel retains jurisdiction.4
The Third Circuit also found:
In repealing the FSSR [Failed Station Solicitation Rule] without any discussion of the effect of its decision on minority station ownership (and without ever acknowledging the decline in minority ownership notwithstanding the FSSR), the Commission "entirely failed to consider an important aspect of the problem," and this amounts to arbitrary and capricious rulemaking.... For correction of this omission, we remand.5
The FCC adopted on June 21, 2006, and released on July 24, 2006, a Further Notice of Proposed Rulemaking that sought "comment on how to address the issues raised by the opinion of the U.S. Court of Appeals for the Third Circuit in Prometheus v. FCC and on whether the media ownership rules are necessary in the public interest as the result of competition."6 The Further Notice also initiated a comprehensive quadrennial review of all of its media ownership rules, as required by statute.7
The Further Notice did not present specific new rules for public comment. Rather, it discussed each rule that was remanded (the local television ownership limit, the local radio ownership limit, the newspaper-broadcast cross-ownership ban, and the radio-television cross-ownership limit) plus two additional rules (the dual network ban and the UHF discount on the national television ownership limit), and then invited comment on how to address the issues remanded by the court. It also asked commenters to address "whether our goals would be better addressed by employing an alternative regulatory scheme or set of rules."8 In addition, the Further Notice sought comment on, but did not discuss, the proposals to foster minority ownership that had been submitted by the Minority Media and Telecommunications Council (MMTC) in the 2002 biennial review proceeding that the Third Circuit had taken the Commission to task for failing to address in its June 2, 2003 Order.9 Two of the commissioners dissented in part from the order adopting the Further Notice,10 criticizing the lack of discussion of proposals to foster minority ownership,11 and the absence of specific proposed rules.12
On November 22, 2006, the FCC announced that it had commissioned (or had begun conducting internally) 10 economic studies as part of its review of the media ownership rules.13 The two commissioners who had dissented in part from the order adopting the Further Notice each issued statements raising questions about the transparency of the process by which the contractors were selected and the peer review process that would be used.14 On July 31, 2007, the FCC released the 10 studies, making them available on its website, and giving the public 60 days to submit comments (and then 15 additional days to submit reply comments).15 These studies consist of hundreds of pages of text and very large data sets. Concurrent with the public comment period, the studies underwent a peer review process that is required by the Office of Management and Budget (OMB) of all "influential scientific information" on which a federal agency relies in a rulemaking proceeding.16 The two dissenting commissioners issued a joint statement criticizing the shortness of the public comment period and raising questions about the peer review process.17 On September 5, 2007, the FCC released the peer reviews of these studies.18
On August 1, 2007, the FCC adopted a Second Further Notice of Proposed Rule Making19 that briefly described, and sought comment on, the proposals of the MMTC submitted in the 2002 biennial review proceedings, several additional informal MMTC suggestions, and the proposals by the Advisory Committee on Diversity for Communications in the Digital Age to foster minority and female ownership.
On October 22, 2007, Consumers Union, Consumer Federation of America, and Free Press (Consumer Commenters) submitted to the FCC very detailed comments on the 10 FCC-commissioned media ownership studies.20 The Consumer Commenters identify a number of alleged specification errors—some raised by the peer reviewers, some by the Consumer Commenters themselves—in the major statistical studies commissioned by the FCC, and then present statistical results from re-running the models in those studies, applying the same empirical data to models revised to correct for the alleged specification errors. These revised models yield very different statistical results that, according to the Consumer Commenters, demonstrate that loosening the media ownership rules would not be in the public interest.21
In aggregate, the ten economic studies relating to media ownership commissioned by the FCC22 perform two functions—data collection and data analysis.
Systematic data collection is needed because the Third Circuit decision requires "the Commission to justify or modify its approach to setting numerical limits"23 but there has been a dearth of systematic data available on which to base a justification of any specific proposed rule. The 10 FCC-commissioned studies, their peer reviews, and the critiques and revised models submitted by the Consumer Commenters, in aggregate provide a significant body of data and analysis on ownership characteristics and programming needed to perform the analysis required by the Third Circuit. Unfortunately, the databases on minority ownership and programming remain far less complete and clean, despite a heroic effort by an FCC staffer to construct a time series database for 2001-2005 from existing sources.
The data analyses performed in the ten studies tend not to reach strong policy conclusions. Typically, the analyses attempt to determine whether there is a statistical relationship between particular aspects of media ownership in a market (such as newspaper-broadcast cross-ownership) and particular market outcomes (such as the quantity of local news or local public affairs programming), holding other variables that might affect the market outcomes constant. Often, a statistically significant relationship between two variables is found with one particular model specification, but if a small change is made in the way the model is specified the relationship is no longer found to be statistically significant. This led many of the researchers and peer reviewers to emphasize that the statistical findings were not robust.24 Where relationships are identified, the researchers tend to emphasize that these demonstrate correlation, not causality. A few of the studies seek to test for such statistical relationships without holding other variables constant, thus overstating the magnitude of any relationships they find.
Three of the studies had findings suggesting that non-ownership variables, such as the demographics or commute time in a market, were better predictors of the amount or type of programming aired than were ownership characteristics. This led some researchers to suggest that media ownership characteristics may not be significant determinants of programming.
None of the studies presents statistical analysis of the relationship between ownership characteristics and minority programming. Although Study 2 collected data on many types of programming, including minority programming, and those data were used in Study 3 to analyze the relationships between various ownership characteristics and different types of programming, no results are shown for minority programming—though results are shown for Spanish language programming. The two studies directly addressing minority ownership—Study 7 and Study 8—do not address minority programming at all.
Perhaps what is most noteworthy about these 10 studies is that they highlight the large number of variables that may be relevant to a full analysis of media ownership issues. The following is a partial list of variables that the researchers identified as relevant to their analyses:
The studies showed that not all of these variables can be unambiguously defined and that, at times, data are not available to directly measure these variables, so proxy measures must be used.
The following is a brief snapshot of each study and its peer review.25
This study consists of a telephone survey that provides estimates of Internet and media usage patterns, opinions, and attitudes among adults in the United States. A sample of 141,324 phone numbers was selected, with survey data collection conducted from May 7-27, May 29-31, and June 1-3, 2007. There were 3,101 completed interviews, or 2.2% of the total sample; each of those completed interviews elicited responses to 43 questions. The questions included:
The same or similar questions were asked with respect to cable or satellite television channels, the Internet, daily local newspapers, weekly local newspapers, daily national newspapers, and broadcast radio. In addition, respondents were asked which one source they considered the most important, and which source they considered the second most important, for breaking news, for more in-depth information on specific news and current affairs topics, for local news and current affairs, and for national news and current affairs. Respondents also were asked for information on their highest level of schooling completed, household income, urban/suburban/rural location, race, age, and gender.
In addition, respondents were asked, "If you would be reimbursed, are there any channels you would be interested in dropping from your [cable] service? If yes, which channels would you be interested in dropping from your service if you could receive a reduction in the cost of your service?" and "Are there any channels that you would like to receive, but do not currently subscribe to because you would have to subscribe to a larger package of channels? If yes, which channels would you like to receive, but do not currently subscribe to because you would have to subscribe to a larger package of channels?" These questions do not relate to the media ownership proceeding, but could generate information that would be relevant to proposals by FCC Chairman Kevin Martin to allow cable television subscribers to selectively drop channels from tiered cable packages and have their bills reduced by the per-subscriber fees that the cable operator pays for those channels or to allow subscribers to purchase all cable channels on an à la carte basis.
Nielsen presents the data collected in the survey, but does not attempt to analyze the data or reach conclusions. Rather, it provides a very large data set that is available for researchers in and outside the Commission to use in their own analyses. Some of the findings are presented in Table 1.
Table 1. Most Important and Second Most Important Media Sources Used by Households for Various Types of News and Current Events Information
(% of households)
|
Media Source |
Most important source of Breaking News |
Second most important source of Breaking News |
Most important source for more in-depth information |
Second most important source for more in-depth information |
Most important source of local news and current affairs |
Second most important source of local news and current affairs |
Most important source of national news and current affairs |
Second most important source of national news and current affairs |
|
Cable News Channels |
35.1 |
18.9 |
30.1 |
19.5 |
11.2 |
12.6 |
38.5 |
19.5 |
|
Broadcast Television Stations |
28.9 |
26.3 |
20.1 |
22.7 |
38.2 |
20.2 |
23.3 |
19.4 |
|
Internet/Websites |
16.4 |
15.4 |
23.5 |
13.5 |
6.7 |
14.0 |
16.8 |
18.1 |
|
Radio stations |
8.2 |
16.3 |
5.5 |
10.5 |
7.2 |
18.6 |
5.7 |
10.0 |
|
Local Newspapers |
5.1 |
9.3 |
9.8 |
14.1 |
30.1 |
21.3 |
4.8 |
14.0 |
|
National Newspapers |
1.5 |
3.9 |
4.7 |
8.0 |
1.7 |
3.0 |
5.9 |
9.3 |
|
Other |
1.8 |
4.2 |
3.2 |
4.3 |
1.8 |
4.4 |
1.8 |
4.2 |
|
None |
1.8 |
3.1 |
1.7 |
3.5 |
2.6 |
3.1 |
2.4 |
3.0 |
|
Don't Know |
1.0 |
2.4 |
1.3 |
3.8 |
0.5 |
2.6 |
0.6 |
2.5 |
|
Refuse |
0.3 |
O.3 |
0.1 |
0.2 |
0.0 |
0.2 |
0.1 |
0.1 |
The peer reviewer, John B. Horrigan, Associate Director for Research at the Pew Internet & American Life Project, concludes that the Nielsen study represents a credible effort, but raises "two significant issues worthy of note." First, the low response rate to the survey as well as certain survey design concerns may have generated a sample that is more reflective of the behaviors and attitudes of well-educated and higher-income Americans than of the public at large. "Because high levels of income and education are positively correlated with interest in news and current affairs, this may have substantive consequences on the survey's result."26 Second, according to Horrigan, inclusion in the questionnaire of a question eliciting the specific Internet news sites watched, but not of analogous questions eliciting information on the specific broadcast, cable, or satellite news channels watched or the specific local or national newspapers read, may constrain the usefulness of the survey data to address questions that may be relevant for the media ownership proceeding. For example, he claims the survey design may limit the ability of analysts to explore whether the Internet is a substitute or complement to traditional media.
The main purpose of this study, which was performed by members of the FCC staff, was to assemble the most comprehensive possible data set concerning media ownership. These data were used by researchers to perform some of the other studies. The data cover the period 2002-2005, and update a 2002 Commission study that examined media ownership of various types (cable, satellite, newspaper, radio, and television) for 10 radio markets in 1960, 1980, and 2000, and expands upon that study by adding data on the availability and penetration of Internet access and by examining all designated market areas (DMAs), not just 10 markets. The focus of the study is data collection, not data analysis, although the effort generated many data tables that can provide the empirical basis for analysis.
The researchers' primary task was to combine multiple data sets and then consolidate these "metadatasets" to the DMA level. Data were collected on more than 1,700 television stations, 13,500 radio stations, 7,800 cable systems, and 1,400 newspapers across four years, for a total of more than 100,000 observations and more than 13 million data points. The authors provide the caveats that they were unable to know with certainty the accuracy of every observation and that the final results could only be as accurate as the underlying data sets that they combined. They believe the collected data give an accurate description of the various media for the four-year period.
The authors list five findings:
The appendix uses aggregate data from the FCC Form 323 on broadcast ownership to construct a time series for 2001 through 2005. The data show that for that period:
But the author of the appendix raises concerns about the reliability of the minority ownership data, which were constructed from "noisy" or incomplete data bases. In 2003, the biennial filing deadlines became staggered, tied to the anniversary date of each station's renewal application filing date, so the data no longer contain a single "snapshot" of minority and female ownership for all stations in the industry that could be used a benchmark for measuring industry ownership trends. In addition, stations whose licensees are sole proprietorships or partnerships comprised entirely of natural persons (rather than corporate or business entities) are exempt from the biennial filing requirement and need only submit such information voluntarily if they choose. Moreover, in the initial years of filing the new biennial forms, many stations failed to complete their forms correctly, resulting in their responses to a relevant question being omitted from an electronic ownership database. Review of station filings for 2001 suggests that the filings are not complete with respect to ownership information. Furthermore, review of the ownership report data from all periods and the literature suggests that these data contain significant errors. There is no verification of Form 323 data or quality control over the data.
The author concludes that Form 323 data are inadequate for the purpose at hand, but these data could be used to augment more reliable data. "At best, we have extensive samples or a virtual census of minority and female broadcast ownership data. We do not have an actual census, although perfect information on transactions and a perfect base year ... would result in a census. We do not have statistical random samples. In summary, the data contain noise due to errors in the databases that were used to construct the data."
Nonetheless, he compares the Form 323 data to data collected in the Census Bureau's Survey of Business Owners (SBO) for 2002. In doing so, he finds "that, for 2002, 95% confidence intervals contain our estimate of 184 Black owned commercial radio stations, our estimate of 36 Asian owned commercial radio stations, our estimate of 145 Hispanic owned commercial radio stations, our estimate of 6 Native American owned commercial radio stations, and our estimate of 5 Native Hawaiian owned commercial radio stations.... In light of the SBO data our estimate of the number of Minority owned TV stations is reasonable."
The peer reviewer, Robert Kieschnick, Associate Professor and Finance and Managerial Economics Area Coordinator at the University of Texas at Dallas, commends the authors "for the work that they expended in putting these data together as the source data are diverse and in some cases incomplete or subject to error." He finds the methodology and assumptions employed are reasonable and technically appropriate, the data used are reasonable, and the conclusions about the pattern of changes in media ownership appear to follow from the data.
This study analyzes the relationship between the ownership structure of television stations and the quantity and quality of certain television programming in the United States between 2003 and 2006. It focuses on seven types of programming—local news and public affairs, minority, children's, family, indecent, violent, and religious—identifying alternative definitions used for each of these programming types. It also uses two definitions of programming quality: the number of households who choose to watch a program as a share of households that have access to that programming (a market rating definition) and the number and length (in minutes and seconds) of advertisements included on the program, using the assumption that households do not like advertising and that program quality therefore decreases as the amount of advertising increases. The study uses the ownership data developed in Study 2. The major findings of the study are:
The peer reviewer, Lisa M. George, Assistant Professor of Economics at Hunter College of the City University of New York, finds that, "Overall, the study considers an interesting question with appropriate data and methods and should ultimately prove useful for policy purposes." But she has three general comments. With respect to the robustness of the analytical results, "While the regressions in the analytic portion of the study are consistent with standard econometric methods, the paper does not include specifications that would demonstrate the robustness, or reveal the fragility, of regression results." With respect to the relationship between the empirical estimates and conclusions, "the empirical analysis does not include cable television, yet the paper discusses cable television at great length. Similarly, the paper includes text and tables concerning viewership and ratings, yet no ratings data are included in the regressions. The regressions also consider only prime-time hours, yet this caveat is rarely mentioned." With respect to the theoretical assumptions about advertising, the peer reviewer claims "the assumption that advertising is inversely related to quality cannot be justified in light of existing economic theory. An important idea in the economics literature on two-sided markets is that advertising in media markets functions like a price. In other words, viewers "pay" for broadcast television with advertising minutes. Just as a better steak costs more than a lesser cut and thus commands a higher price, a better television program typically costs more than a weaker program and would be expected to command more not less advertising time."
This study, which is divided into four sections, each of which was performed by a member of the FCC staff, collects data on the size and scope of the news operations of radio and television stations and newspapers. It also analyzes the relationship between the nature of news operations and market characteristics, including ownership structure.
This section of the study examines the relationship between the ownership characteristics of broadcast television stations and the quantity of news and public affairs programming they broadcast, based on the scheduled news and public affairs programming of almost all full-power broadcast analog television stations in the U.S. for two weeks in each year, over the four-year period 2002-2005. It uses modeling techniques to control for unobserved market-specific, broadcast network-specific, and time-specific factors,28 and also to check for robustness of statistical results.
This section finds that certain ownership characteristics have a statistically significant impact on the quantity of news programming provided by stations, but most ownership characteristics do not have a statistically significant impact on the provision of public affairs programming. Specifically:
The author provides several caveats about the analysis. First, despite the use of more than 6,700 observations for more than 1,700 stations, the effective sample sizes are rather small for some of the variables of interest—for example, only 30 television stations are jointly owned with a newspaper (for 120 observations). Second, the analysis does not include cable channels and Internet news programming. The constant availability of news, weather, and sports programming on such cable channels as CNN, Fox News, MSNBC, the Weather Channel, and ESPNews, as well as Internet news programming, is likely to affect the audience interested in local broadcast stations' news shows, most likely reducing it. Third, the analysis does not distinguish between local and non-local news programming, even though the supply and demand factors involved may differ. Fourth, the analysis addresses the quantity of news programming, not its quality. Individual stations might choose to respond to demand for news programming by increasing the quality of programming provided, rather than the quantity.
The peer reviewer, Philip Leslie, associate professor of economics and strategic management, Stanford Graduate School of Business, identifies some "noteworthy strengths" of the data—there are a large number of observations, the panel structure allows for the use of various fixed effects to control for other factors that affect programming, and there is a high level of detail on programming and ownership. He also identifies "a few important limitations to the data," most of which are acknowledged in the study. He concludes that the data are valuable and should be taken seriously, but that while the limitations do not undermine the analysis, "they do lead me to question the broader relevance of the findings." One limitation that he identifies is the data include no information on the number of viewers for each station (or each television program), and consequently each station is weighed equally in the analysis. "Since we ultimately care about the impact on consumers, and some stations are more important to consumers than others, this presents a limitation on the data."
This section of the study examines the extent to which there is a relationship between the ownership characteristics of a radio station and the quantity of informational (news and public affairs) programming it broadcasts, using data from a sample of more than 1,000 radio stations and appropriate control variables. Airplay data were collected for six 20-minute segments for each station. The econometric technique used produces two sets of results that must be considered jointly: the change in the likelihood of airing news (or public affairs) programming, and the change in the amount of news (or public affairs) programming that is aired if the station airs news (or public affairs) programming at all. It is noteworthy that market characteristics, such as market size, length of commute time, the audience share that is male, the audience share that is minority, income levels, education levels, age distribution, etc. explain a greater amount of variation in the quantity of news and (especially) public affairs programming aired than station ownership variables. The findings related to station ownership include:
The peer reviewer, Scott Savage, assistant professor of economics at the University of Colorado, deems the methodology and assumptions reasonable and generally consistent with accepted theory and econometric practices, but "would like to see a much stronger justification for the important ownership variables of interest in the model and a clearer description of their expected signs. This would also help make the results discussion clearer." He finds "the dataset would have to be augmented by other measures of market concentration if the study really wanted to make concrete conclusions about economies of scope and market power effects. For example, does it necessarily follow that a 'large owner' with many in-market stations has more market share and market power than a 'small owner' with a single in-market station? More importantly, 'number of in-market stations' and 'total number of stations' may be endogenous when they depend on the unobserved preferences of radio listeners. Ultimately, more discussion and/or evidence is required to make causal claims."
This section examines whether ownership structure affects a radio station's propensity toward adopting a news format, using Arbitron data on the format choices of about 8,000 radio stations between 2002 and 2005 and employing the fixed effects regression technique to take into account non-observable factors that influence radio stations' format choices. Instead of examining actual radio broadcasts (as does section II of this study), this section considers a station's format and assumes that news format radio stations broadcast more news than stations with other formats. This allows the researcher to collect data over time and to observe the format ramifications of stations that undergo ownership changes. The format definitions used do not distinguish between local news programming and other news programming. Some of the findings of this section are:
The peer reviewer, Scott Savage, assistant professor of economics at the University of Colorado, finds the methodology and assumptions reasonable and generally consistent with accepted theory and econometric practices and the data of sufficient quality for the econometric model employed. But he finds that the study would benefit from a more explicit description of the model, more economic discussion of the choice of independent variables and their a priori expectations, and a discussion of the potential economic mechanisms that underlie the relationships uncovered in the data.
This section studies the effect of ownership characteristics on the news operations of newspapers, based on a sample of 134 newspapers in the largest 60 designated market areas (DMAs) for 14 randomly chosen days (with the constraint that each day of the week is included twice) in 2005. The local market is defined as the Metropolitan Statistical Area (MSA), rather than DMA, because the latter is geographically narrower and therefore more closely coincides with the circulation area of newspapers. The absolute amount of space allocated for news in the "general news" section of the newspaper is used as a quantity measure of news operations. Some of the findings of this section are:
The peer reviewer, Philip Leslie, associate professor of economics and strategic management, Stanford Graduate School of Business, finds that although the data come from multiple sources they are "mainly well explained," though focused on larger markets and thus not representative of all newspapers in the United States. Professor Leslie finds it "unclear how exactly the identity of which newspapers compete in which markets is assigned." He indicates that although restricting the definition of news operations to the quantity of news in the general news section of a newspaper is "potentially troublesome ... since it can arbitrarily exclude valid news content in other parts of the newspaper," nonetheless "there is no obviously right approach." He proposes that there be "some robustness checks on this issue." He also states that since the data do not include a source of exogenous variation in ownership structure, "it is less clear whether the analysis uncovers a causal effect or a mere correlation." Finally, Professor Leslie indicates that the data provided show a positive relationship between co-ownership of newspapers in the same market and the percentage of total newspaper space (news plus advertising) taken up by news, which he believes is "at odds with" the negative relationship between newspaper co-ownership and the absolute amount of news. But he provides no explanation why, a priori, one should consider these results at odds.
This very large study evaluates the effects of ownership structure on numerous different measures of program content,30 advertising prices, and listenership for (non-satellite) broadcast radio, using both descriptive and regression analyses. It relies on data from a number of different sources, including the database on radio station programming that the FCC commissioned Edison Media Research to construct in 2005 (Edison Database), station characteristic and demographic data from BNA Financial Network (BNAfn), ratings data from Arbitron, advertising cost data from SQAD, and additional demographic data from the U.S. Census Bureau. It performs analysis using market-level averages, station-level averages, and station-pair analysis. As a result, it has literally thousands of statistical results that researchers can cull through. Most of the regressions do not show statistically significant relationships between the ownership variables and programming variables being tested, which is not surprising given the breadth of variables covered.
Among the study findings are the following.
The peer reviewer, Andrew Sweeting, assistant professor of economics at Duke University, finds the econometric analysis simple and the specifications explained in a transparent way that should make the results straight-forward to replicate. He offers one general caveat—these results reflect correlations in the data between ownership and programming and there is no direct evidence of causal effects. Professor Sweeting also offers several specific caveats:
This study examines whether cross-ownership of a newspaper and television station influences the content or slant of local television news broadcasts, by comparing the late evening local news broadcasts of 29 cross-owned television stations located in 27 different markets with those of their major network-affiliated competitors in the same market, for three evenings in the week prior to the November 2006 election. In total, 312 late evening local newscasts were recorded for a total of 104 stations, and these recordings were coded and analyzed for local news content and political slant.
The study findings include:
The peer reviewer, Matthew Gentzkow, assistant professor of economics at the University of Chicago Graduate School of Business, finds the author's multiple regression analysis methodology reasonable, but initially was unable to replicate the results because of what was determined, after discussion with the author, to be two errors in the coding of the data set used to produce the original results. After correcting for these errors, the peer reviewer still could not replicate some of the results. He nonetheless concludes that "my impression from having worked with the data is that the corrections are unlikely to change either the direction or the statistical significance of the coefficients of primary interest."
Professor Gentzkow states "the data collected for this study represent a significant advance. The data give a rich, fine-grained picture of the news coverage of local television stations unlike anything that was available before. The sample selection criteria make sense, and maximize the power of the within-market comparisons the author makes. An obvious caveat is that the data cover only three days in November 2006. The differences found may or may not be similar to differences that would be found in other periods. The author acknowledges this issue clearly...."
Professor Gentzkow explains that coding the content of a news broadcast is challenging and inherently subjective, but states that the author focused primarily on measures such as minutes of news in particular categories that are well-defined, easy to interpret, and potentially replicable, though the procedure for identifying the partisan issues used to measure political slant was more subjective than some of the other measures.32
Professor Gentzkow raises one concern with the results as reported. All of the specifications of primary interest include both a main effect of the newspaper-cross-ownership variable and an interaction between this variable and the radio-cross-ownership variable. The conclusions as reported are based on the main effect coefficients without taking account of the interaction. This means that the reported differences apply only to the subset of stations that are not cross-owned with radio rather than to the sample as a whole.
This study examines the data collected in the 2002 Survey of Business Owners (SBO) to identify the extent of female and minority ownership in the radio, television, and newspaper industries in the United States, and to provide a direct comparison with the broader universe of U.S. businesses. It also makes a few recommendations regarding how the FCC should proceed in analyzing minority and female ownership of media enterprises. The authors emphasize that, due to the nature and quality of the available data, they are not able to reach strong conclusions, so their recommendations should be viewed more as points of discussion than prescriptive for policy.
The study finds:
The author makes the following recommendations:
The peer reviewer, B.D. McCullough, Professor of Decision Sciences at Drexel University, states that "The FCC should have contracted with the authors to do a full-blown study of the problem rather than simply conduct a small and perfunctory analysis." He states this issue requires sophisticated analysis that might show the extent to which the ownership disparity is explained by such relevant variables as education and industry experience. In the absence of such analysis, all the disparity is incorrectly attributed to the single factor of race or gender. Moreover, the minority categories are too aggregated—for example, Hispanics "lumps together Puerto Ricans, Mexicans, and Cubans, despite overwhelming evidence that these groups are remarkably dissimilar in terms of mean education, income, health, etc."
Professor McCullough questions the authors' claim that lack of access to capital is a primary cause of under-representation for minorities, since the analysis "does not include education, work experience, or any of a host of other variables." The actual assertion of "a link between race and access to capital would require a great deal of [additional] work."
With respect to the authors' recommendation that the FCC track and integrate information on minority and female into the main firm database, Professor McCullough states the authors "should have offered their considered opinion on how to define the variables they want collected."
The purpose of this study is to ascertain the impact of the relaxation of the television duopoly rule on minority and female ownership of television broadcast stations. In 1996, that rule was amended to allow the ownership of two television stations in certain markets, provided only one of the two was a VHF station, the overlapping signals of the co-owned stations originated from separate (though contiguous) markets, and the acquired station was economically "failing" or "failed" or not yet built. Because the FCC did not begin collecting data on the race and gender of broadcast station owners until 1998, the period studied was 1999 to 2006.
The study does not provide econometric analysis. Rather, it (1) identifies the transactions resulting in television duopolies that could not have occurred before the rule change and (2) determines the number of commercial broadcast television stations that were purchased or sold by minority or women owners in markets in which a television duopoly was introduced that could not have existed before the rule change.
The study finds:
In addition, the study presents, but does not analyze, a number of hypotheses about the relationship between the revised duopoly rule and minority/female ownership that have some logical appeal but remain untested and unproven. For example, it presents an argument made in 1992 by a minority broadcaster who was concerned that increasing ownership caps or loosening duopoly rules would reduce opportunities for minority ownership.33 That broadcaster claimed that relaxation of ownership rules in 1985 caused an increased demand for stations that were attractive as second television properties in a market, and the resulting sharp increase in station prices placed minority-owned stations in "double jeopardy"—they couldn't afford to trade up to the better facilities and the stations against which they were competing were rapidly becoming parts of large broadcast groups capable of bringing significant economies of scale to the market.
This argument, on its face, appears reasonable, but on its own does not demonstrate how significant the relationship is between the dual ownership rule and minority ownership. During the time period cited by the minority broadcaster, the FCC's old minority tax certificate program34 was in place and appeared to be successfully fostering the sale of broadcast properties to minority owners.35 The dual ownership rule was loosened in 1996, just one year after Congress eliminated the tax certificate program. The authors found that minority ownership has fallen significantly since 1999 (the first year that data on minority- and women-ownership were available). But they do not perform analysis that helps determine how much of that decline is attributable to the loosened dual ownership rule, how much to the elimination of the tax certificate program, and how much to other factors.
The peer reviewer, B.D. McCullough, Professor of Decision Sciences at Drexel University, states "This report is fatally flawed by a fundamental logical error that pervades every aspect of the analysis." Referring to a finding in the study that minority-owned stations were four times more likely to be sold in duopoly markets than in non-duopoly market, Professor McCullough states
In the context of their report, their obvious implication is that the existence of duopoly is the reason that minority stations were observed to be sold more frequently in duopoly markets rather than in the non-duopoly markets. This could only be logically inferred if the duopoly and non-duopoly markets were identical in all other respects, which the authors did not show because they could not show this.
Since the markets are not identical, some effort must be made to control for the differences between the duopoly and non-duopoly markets.... There exists a wide variety of statistical and econometric techniques to control for these differences, yet the authors employ not a single one.... The authors had access to the BIA database and could easily have made some effort to control for confounding variables. That the authors did not bother to control for confounding variables completely vitiates their analysis of minority-owned stations. The same is true for the "women-owned" portion of their report.
The authors do document that the number of minority- and/or women-owned broadcast stations changed during this time. Their error is to attribute this change solely to the relaxation of the duopoly rule, without consideration of any simultaneously occurring economic or demographic phenomena.
It may well be true that the Duopoly Rule relaxation was the cause of the decline in the number of minority-owned and/or women-owned broadcast stations, but the authors have not provided any evidence thereof.
There was another economic study addressing the television duopoly rule submitted in the proceeding. In its reply comments, the National Association of Broadcasters (NAB) included a December 2006 study entitled "The Declining Financial Position of Television Stations in Medium and Small Markets,"36 which provides financial data to support its contention that "a relaxation of this rule to permit co-ownership of television stations in smaller markets would provide needed financial relief to television broadcasters, and allow television stations to compete more effectively with cable operators and other multichannel video programming distributors." The study examines the profitability of television stations in markets 51-175 for the data years 1997, 2001, 2003, and 2005. It finds:
profit margins are already at risk today, especially for the lower rated affiliated stations. It is clear that overall these stations show declining profitability in the years examined. Furthermore, those stations located in the smallest of markets are also now at a stage where the average low rated station experienced actual losses. Declining network compensation coupled with increasing news expenses adds to the tenuous financial situation of these small market stations.
It concludes that: "As this study demonstrates, a relaxation of the television duopoly rule to permit common ownership of two stations in smaller markets would provide needed relief for these struggling stations, thereby increasing the strength of local television."
The NAB study is based on a selective choice of data. It uses only the financial data for odd-numbered years, omitting the data for even-numbered years when political advertising generally adds to the revenues of television stations without imposing comparable costs. Television station profitability tends to be higher in even-numbered years. Given that station revenues and profitability follow a relatively predictable cyclical pattern, it is appropriate to analyze data that incorporates the entire cycle, not just the predictably lower performance period in the cycle, to determine the real financial health of the industry. The NAB study therefore appears to be biased.37
This study examines the prevalence of vertical integration in television programming, presenting findings relating to whether integrated producers systematically discriminate against independent content in favor of their own content. It separately addresses prime-time broadcast programming and cable network carriage. Its focus is on the impact of vertical integration on independent programmers—whether broadcast networks discriminate against programming they do not have an ownership stake in and whether cable and satellite operators discriminate against cable networks they do not have an ownership stake in. It attempts to measure this by performing regression analysis on the ratings of, and advertising revenues generated by, in-house and independent programming carried by vertically integrated broadcast networks. If the ratings for and/or advertising revenues generated by their in-house programming is consistently lower than those of the independently produced programming that they carry, that would suggest that they favor their own programming, even when it is less sought out by viewers. Similar analysis is performed for cable networks, focusing on the number of subscribers and viewers of and on subscriber fees and advertising revenues generated by the vertically integrated and independent cable networks carried by MVPDs. This study does not address another issue related to vertically integrated cable or satellite providers—whether they use their position strategically by refusing to make their in-house "must have" programming available to competing distributors.38
The principal findings of the study are:
The peer reviewer, David Waterman, Professor, Indiana University Department of Telecommunications, generally finds the regression analysis used in the broadcast portion of the study to be a valid methodology. But he states, "the results of this regression must be regarded as suggestive rather than conclusive, at least in the absence of a more detailed vetting of the results' robustness to alternative model specifications. As the report acknowledges, program profits [rather than revenues] are the desired measure and meaningful cost measures are not available." He indicates that "there are large differences in prime-time program costs by program format (e.g., sitcom, variety, drama) as well as by network, that may not be captured by the model, and could thus bias or invalidate the results."
With respect to the cable portion of the study, Professor Waterman notes that "the overwhelming majority of 'independent' cable networks successfully launched in the period of the study are owned by affiliates of large media conglomerates who do not have cable system interests ... which implies that the financial resources or bargaining leverage in common to the large corporations which also own numerous other established networks, rather than vertical integration itself, may be the most significant advantage that successful cable network suppliers now have." He states that the study uses regression techniques that show vertical integration to have little or no positive effect on cable network performance. But "[i]n my opinion, this regression analysis, while interesting and suggestive, employs a methodology that makes interpretation of the results questionable." The primary measure of vertical integration in the study—the ratio of the total national subscriber base of the MVPD that owns the network to the network's national total of subscribers—has some desirable characteristics, but it is difficult to interpret because it combines in one functional form three separate aspects of vertical integration's potential effects: the fact of integration itself, the influence of MVPD size, and the variations of influence that integration may have over a network's life cycle. It therefore is difficult to understand the effects of integration per se.
Professor Waterman finds the models and estimation methods used in the analysis of the 11 basic cable networks with between 5% and 90% national market penetration are valid and the author's conclusions are reasonable. But he states that the study does not address the effects of vertical integration on the carriage of independently owned networks and does not consider whether the various integrated networks (or their non-integrated rivals) are carried on basic tiers or on generally less accessible digital tiers.
This is the FCC's fifth review of the radio industry. It is primarily a data collection exercise, presenting data on changes in the industry since passage of the 1996 Telecommunications Act, including trends in ownership consolidation at the national and local levels, ownership diversity, format diversity, satellite radio, radio industry financial performance, radio listenership, and radio advertising rates. It presents some hypotheses, such as the impact of radio ownership consolidation on radio advertising rates, but does not reach conclusions. Among its findings and hypotheses are:
The peer reviewer, George Ford, Chief Economist of the Phoenix Center for Advanced Legal and Economic Public Policy Studies, found the discussion of the descriptive statistics relies on established techniques and theoretical concepts. He found the study's interpretation of the trends in the financial indicators to be consistent with standard professional practice. "While others may have different interpretations of the trends, those used in this study are sensible and consistent with professional standards." He stated the data sources used are generally viewed as reliable and their use for this study is reasonable.
Dr. Ford has one substantive criticism: "In my opinion, the statistics do not support the argument that consolidation has slowed (though they are consistent with the argument). Consolidation need not be the consequence of stations sales; concentration arises only when such sales reflect a purchase by entities that already own radio stations."
The Consumers Union, Consumer Federation of America, and Free Press jointly submitted a 321-page document that, among other things, presents detailed criticisms of the 10 FCC-commissioned studies and provides the results of their own econometric models. These models were constructed by revising some of the econometric models in the FCC-sponsored studies to "correct for" perceived mis-specifications that either had been identified by the peer reviewers or by the Consumer Commenters themselves and were run using the data from the FCC studies.
The Consumer Commenters state that "One of the positive externalities of the 10 studies is the creation of a usable data set for the public to use to conduct policy analysis of its own." But once they perform their own analysis, the Consumer Commenters claim that:
Once definitions are corrected and policy relevant variables included in properly specified statistical models, there is no support in the FCC data to relax media ownership limits. In fact, the FCC's data show the opposite result. Newspaper-broadcast cross-ownership results in a net loss in the amount of local news that is produced across local markets by broadcast stations. The Commission has studied the impact of these mergers only at the station level, rather than at the market level. At the market level, cross-ownership results in the loss of an independent voice as well as a decline in market-wide news production. This finding obliterates the conclusions of the recent studies on cross-ownership as well as the basis for the Commission's argument for relaxing the rule in the Prometheus case.
The Consumer Commenters' studies were submitted during the comment period in the proceeding. The public was given 15 days to submit reply comments responding to the comments. Media General, Inc., submitted reply comments that included an appendix by Dr. Harold Furchtgott-Roth, entitled "Econometric Review," that raised methodological issues with, and challenged the conclusions of, the Consumer Commenters' studies but did not provide regression analysis of its own.39
The Consumer Commenters present a number of criticisms of the FCC studies. Some of these involve relatively narrow technical matters of model specification that are unrelated to whether the models address the right policy issues but may have significant implications for the statistical analysis.40 These criticisms should be addressed by expert econometricians capable of vetting their seriousness.41 Other criticisms raise fundamental questions about whether the models in the FCC-commissioned studies address the right policy issues or are constructed in a fashion that allows the statistical results to be unambiguously interpreted. Here are a few of the Consumer Commenters' policy-related criticisms.
The Consumer Commenters' most fundamental criticism is that, with the exception of Study 5 on radio ownership, the FCC-sponsored studies address the effect of cross-ownership on the local news output of the cross-owned stations, rather than the effect on the local news output in the entire market:
From the standpoint of the individual citizen, it is the total amount of available news and the diversity of independent voices offering that news in the entire market that matters. While in some cases there may be an increase in news output at the individual cross-owned station (although much of this is sports and weather), examining the question at the market level reveals a decline in the total output of local news for the market as a whole.
It is possible for cross-ownership to lead to increased local news programming by the cross-owned station, but decreased local news programming for the overall market. For example, cross-ownership might reduce the news production costs or increase the advertising revenues of the cross-owned station, thus fostering more spending by that cross-owned station on local news programming, but at the same time reduce the advertising revenues and news audience for competing stations, thus discouraging them from providing local news programming. The latter effect could be greater than the former, resulting in less total local news programming.
The Consumer Commenters claim that there are two very different types of stations that make up the category of television stations cross-owned with newspapers—those that were grandfathered at the time the cross-ownership rule was first adopted in 1975 and those that have been created subsequently through the waiver process.
TV-newspaper combinations with waivers involve the recent entry of a TV station into a cross-ownership situation. The owners bought the news operation, they did not create it. To claim that the behavior of the acquired stations reflects the effects of cross-ownership is simply incorrect—in the form of an error of confusing correlation with causation. Cross-ownership did not create the behavior. Since the grandfathered situations have been in place for a long period of time, it is much more reasonable to argue that the behavior of the TV stations in those combinations reflects the long-term effect of cross-ownership.
The waived cross-ownership situations have been created recently, primarily by the merger of highly rated TV stations in large, competitive markets with dominant newspapers. The acquired stations produced more news before they merged and, lacking time series data, the analysis claim, "benefits" of cross-ownership that just reflect the acquisition of a station that already did more news.... The stations that entered into cross-ownership combinations in recent years, subject to waiver, were in less concentrated, larger markets with higher market shares.
The newly minted TV-newspaper combinations are also likely to behave differently for another reason.... [B]ecause they are subject to a waiver, they are likely to be on their best behavior. If the waivers are made permanent by a change in the policy, their behavior may change, perhaps in the direction of the grandfathered stations.
The Consumer Commenters argue that since localism is one of the three primary goals of U.S. media policy, the FCC studies should focus on the impact of media ownership characteristics on local news and public affairs programming. But one key study, Study 4, Section I, "The Impact of Ownership Structure on Television Stations' News and Public Affairs Programming," does not address local news programming or local public affairs programming, but rather looks at the impact of media ownership characteristics on all news programming and all public affairs programming.
The Consumer Commenters, based in part on comments made by the peer reviewers, claim that some of the FCC-commissioned models fail to account and control for key station and market characteristics that may affect programming. These include:
The Consumer Commenters fault the FCC for failing to create an accurate census of the gender and race of broadcast licensees based on its own data and for allegedly commissioning two last-minute studies (Studies 7 and 8) in the absence of usable data on minority ownership. They state that the Commission's flawed data on minority and female ownership infected all of the major statistical studies of the broadcast media (Studies 3, 4.1, and 6) and claim that closer examination of corrected data shows that relaxation of media ownership limits reduces minority ownership.
The Consumer Commenters claim (at p. 14) that the authors of the two external studies of minority issues commissioned by the FCC "abandoned the FCC's data base and were forced to resort to other data bases. Our own efforts to construct an accurate census of minority ownership suggest that the FCC has missed between two-thirds and three-quarters of the stations that are minority/female owned."
According to the Consumer Commenters, the "main issue [with the two studies of minority issues] is the absence of usable data." The authors of Study 7 relied on a Bureau of Census count of firms to estimate minority ownership. But the Consumer Commenters claim that the authors should have counted stations, not firms, since on average minority-owned firms have fewer stations than majority-owned firms, so data on minority-owned broadcast firms as a share of all broadcast firms will overstate the actual representation of minorities in broadcast ownership.
The Consumer Commenters state that the authors of Study 8, which analyzes the impact of the FCC's duopoly rules on minority ownership, sought to build an accurate data base, but did not achieve that goal. Nonetheless, the Consumer Commenters state "the study is supportive of our independent findings. It finds that sales of minority stations were twenty times higher in duopoly markets than in non-duopoly markets. This corroborates the conclusion in our analysis that relaxation of ownership limits has already reduced minority ownership."
But the Consumer Commenters do not explain why they appear to have more confidence in the findings of Study 8, with which they themselves find fault, than in the findings of the other FCC-commissioned studies, other than that the Study 8 findings are in agreement with their own findings. That confidence appears to be misplaced for several reasons:
In analyzing the relationship between media ownership and media bias, the author of Study 6 ascribes slant to a media outlet by defining certain words or issues as Democratic or Republican and then counting the number of times the word is used or the issue is covered by stations. What is actually said or shown about the issue is not analyzed. The Consumer Commenters call this "contentless content analysis" and claim that academics and professional journalists have identified four major concerns with the methodology:
The Consumer Commenters argue that counting references to phrases or issues does not reveal how those phrases were used or issues portrayed. For example, the study categorizes the Iraq war as a Democratic issue. But during the week covered by the study, President Bush visited 10 states to hold press conferences with local candidates or give major speeches, speaking frequently about the war. Under the methodology used, news coverage of those presidential speeches was likely categorized as having a Democratic slant.
The Consumer Commenters also claim that, by choosing to analyze a single, special week—the week before the 2006 election—rather than the routine practice of building a database from randomly selected days to construct a two-week sample, the author risked using a non-representative sample that might be radically different from normal.
Also, the methodology used in Study 6 is an extension of the methodology used in the research of the peer reviewer of Study 6, and the Consumer Commenters argue that the peer reviewer therefore cannot provide an objective review.
The Consumer Commenters claim that Study 9 totally ignores several fundamental characteristics of the contemporary video industry, including:
The Consumer Commenters also claim that the broadcast data set used in Study 9 is biased against a finding of barriers to carriage for independents in two fundamental ways. First, they claim that independents are particularly disadvantaged in the category of new shows and pilots, but the Study 9 data set does not include short-lived shows, thus missing the fact that vertically integrated shows are given many more opportunities to fail. The average ratings of vertically integrated shows are thus likely lower than they are depicted in the data set. The Consumer Commenters allege that this undercuts any analysis that claims that vertically integrated programming and independent programming have equal ratings.
Second, Study 9 counts shows, not hours or time slots. Thus prime-time programming made up of two one-hour affiliated shows and two half-hour unaffiliated shows would be portrayed as equally divided between affiliated and non-affiliated, even though the affiliated programming was on-air twice as long. (The Consumer Commenters do not demonstrate, however, whether the unaffiliated programming tends to be shorter in length than the affiliated programming.)
The Consumer Commenters also focus on a data limitation conceded by the author of Study 9 and addressed by the peer reviewer: that use of revenues data, rather than profits data, due to the lack of data on costs, could lead to bias. The Consumer Commenters argue that the author chose to exclude news programming from his analysis, because it tends to be less costly to produce than scripted programming and therefore would skew the results, but did not exclude reality programming, which also is less costly to produce than scripted programming. But "when we know that independent programmers in prime-time are delivering low-cost reality shows, rather than high-cost scripted entertainment, revenues are a bad measure of short term profits."
The Consumer Commenters also have several criticisms of the cable programming carriage portion of Study 9—its failure to examine movies, which are an increasingly important component of cable programming; its failure to consider the tier on which programming is carried; and its failure to consider the role of broadcast networks, with must-carry/retransmission rights. They also question why the study excludes those cable networks that reach more than 90% or less than 5% of households.
The 10 FCC-commissioned studies, the peer reviews, and the comments and analysis submitted by the Consumer Commenters, in aggregate, provide a huge quantity of data, as well as points of analytical agreement and disagreement, that are helpful in the public policy debate on media ownership. Despite the lack of consensus on many issues, it appears that the following general statements can be made about the status of the data collection and analysis available to policy makers.
The 1996 Telecommunications Act instructs the FCC to periodically review its media ownership rules to determine whether they are still in the public interest, and to modify or eliminate the rules if appropriate. At the same time, the Prometheus decision requires the Commission to justify "with reasoned analysis" any explicit numerical limits in its rules.43 The 10 FCC-commissioned studies are intended to provide data and analysis that support such reasoned analysis.
Those studies and the additional data collection and analysis performed by the Consumer Commenters collectively provide policy makers and interested parties with far more detailed and accurate media ownership, viewer/listener preference, and programming databases than were previously available. However, the FCC staff, commissioned researchers, peer reviewers, and commenting parties have identified continued gaps both in data collection and in data analysis, especially with respect to minority ownership. On one hand, those gaps may render the current record insufficient for the FCC to perform reasoned analysis of some of the media ownership rules. On the other hand, the data collection and analysis performed to date provide very useful insights that may help guide and direct the public policy discussion.
There is one additional complication. The FCC is instructed to make a public interest determination, with diversity of voices one of the public interest goals, but there is no single understanding of what is meant by diversity of voices. Diversity might refer to, among other things, the number of different viewpoints on a particular subject, or the number of different issues that are addressed by media in a market, or the variety of programming offered in a market, or the number of different gatekeepers who determine what programming is provided, or some combination of these and other possible concepts of diversity. As will be discussed below, this could be of particular concern if FCC rules, particularly as they involve minority ownership, are reviewed by the courts.
Although three of the 10 FCC-commissioned studies attempted to collect data on minority and female ownership issues, and the Consumer Commenters attempted to supplement that data collection with their own effort, all the researchers (and the peer reviewers) agree that the FCC's databases on minority and female ownership are inaccurate and incomplete and their use for policy analysis would be fraught with risk. This may have significant policy implications.
In its Prometheus decision, the Third Circuit instructed the FCC to consider the impact of changes in its media ownership rules on minority ownership.44 Without accurate data on minority (and female) ownership, it is impossible to perform such analysis. For example, one of the interesting hypotheses raised in Study 8 that merits serious analysis is that loosening the television duopoly rule reduced opportunities for minority ownership because it increased demand for stations that were attractive as second television properties in a market, and the resulting sharp increase in station prices placed minority-owned stations in "double jeopardy" because they could not afford to trade up to better facilities and the duopoly stations against which they were competing became parts of large broadcast groups capable of bringing significant economies of scale to the market. A related hypothesis is that further loosening of the duopoly rule would further reduce opportunities for minority ownership. Although Study 8 did not properly test this hypothesis because it failed to take into account concurrent changes that might have affected minority ownership (such as elimination of the minority tax certificate program), even if it had been constructed properly its results would have been suspect because they, by necessity, would have been based on the only available data on minority ownership, which is recognized by all to be inaccurate and incomplete. The same problem arises with respect to the impact of each and every media ownership rule on minority and female ownership. It is possible that the Third Circuit would not approve any FCC media ownership rule until the Commission has developed a minority ownership database of sufficient accuracy to allow for reliable testing of the impact of the rules on minority ownership.
Congress and the FCC have long held that diversity of ownership fosters diversity of voices and have supported programs to foster minority ownership. However, any governmental measures to facilitate minority broadcast entry that are based on racial classification must satisfy the heightened constitutional standards that apply to governmental preferences for minorities under the Equal Protection Clause. The Supreme Court's ruling in Adarand Constructors, Inc. v. Peña45 requires that governmental measures based on racial classifications be analyzed using a "strict scrutiny" standard under which they would be deemed constitutional only if they are "narrowly tailored measures" that "further a compelling governmental interest."
It is easier to meet these standards if race is but one of several criteria for program eligibility and not a definitive criterion.46 Proponents of measures to facilitate minority broadcast entry have been concerned, however, that broadening eligibility for such programs to include all small businesses might fail to foster diversity because focusing solely on economic disadvantage fails to take into account the social disadvantage suffered by certain groups.47 For example, the children of established business people might qualify under the small business criterion. Proponents therefore have proposed constructing a definition of socially and economically disadvantaged businesses (SDBs) that would grant eligibility to individuals with social disadvantages stemming either from individualized factors or from membership in a class (such as a racial group) for which discrimination has inhibited entry and financing. In its August 1, 2007 Second Further Notice,48 the FCC sought comment on how to define SDBs in a fashion that would satisfy constitutional standards.
While it is not possible to predict what SDB definition would satisfy the courts, it is possible to review past court decisions and dissents to identify the type of information the courts might demand in support of any definition. For example, if a Supreme Court ruling were to follow the line of argument in a dissent, joined by two current Supreme Court Justices (Scalia and Kennedy), to the 1990 decision, Metro Broadcasting, Inc. v. Federal Communications Commission et al.,49 then any definition of SDBs that provides eligibility based on membership in a racial group, and not just on individual status, might require empirical evidence to demonstrate the nexus between membership in that group and the objective of the program.50 The dissent states:
The FCC assumes a particularly strong correlation of race and behavior. The FCC justifies its conclusion that insufficiently diverse viewpoints are broadcast by reference to the percentage of minority-owned stations. This assumption is correct only to the extent that minority-owned stations provide the desired additional views, and that stations owned by individuals not favored by the preferences cannot, or at least do not, broadcast underrepresented programming. Additionally, the FCC's focus on ownership to improve programming assumes that preferences linked to race are so strong that they will dictate the owner's behavior in operating the station, overcoming the owner's personal inclinations and regard for the market. (at pp. 618-619)
[O]ne particular flaw underscores the Government's ill fit of means to ends. The FCC's policies assume, and rely upon, the existence of a tightly bound "nexus" between the owners' race and the resulting programming.... Three difficulties suggest that the nexus between owners' race and programming is considerably less than substantial. First, the market shapes programming to a tremendous extent. Members of minority groups who own licenses might be thought, like other owners, to seek broadcast programs that will attract and retain audiences, rather than programs that reflect the owner's tastes and preferences.... Second, station owners have only limited control over the content of programming.... Third, the FCC had absolutely no factual basis for the nexus when it adopted the policies and has since established none to support its existence. (at pp. 626-627)
If this view were to gain the support of the majority of the Supreme Court, it would appear that if the FCC implements programs that provide preferences to SDBs, and some entities qualify as SDBs as part of a socially disadvantaged racial group rather than a socially disadvantaged individual, the burden would be on the Commission to demonstrate the nexus between favoring that group and the compelling government interest in fostering diversity of voices. As discussed earlier, there is no single understanding of diversity of voices. One possible meaning could be the diversity of issues addressed in local news and public affairs programming. A second meaning could be diversity in programming in the sense of an identifiable target audience. Whatever meaning of diversity is used, the FCC would have the burden to show that the broadcast ownership by members of the socially disadvantaged minority group affects programming in a fashion that fosters diversity.
But the FCC apparently has not collected the data needed to make such a showing. It does not have an accurate database on minority ownership. Nor, if diverse programming is a compelling government interest, has it established that diverse programming is not currently being sufficiently provided but could be expected to be provided in greater quantity by minority owners. The Courts might expect the FCC, for example, to have performed a survey to identify the types of issues that are of particular interest to socially and economically disadvantaged groups—perhaps issues of homelessness, housing, discrimination, lack of public transportation—and then to have collected data on the local news and public affairs programming of all broadcast stations to determine whether stations owned by the racial minorities included in the SDB definition adopted by the FCC offer significantly more programming that addresses those issues than non-minority-owned stations. No such data collection and analysis have been put forward.
The FCC's media ownership rules are applied when an entity proposes to make an acquisition that would increase its media holdings nationally or locally. In its June 2, 2003 order, the FCC reviewed the advantages and disadvantages of implementing bright line rules that incorporate specific limits on the number of media outlets a company can own in a local market (without regard to the market-specific share of the post-merger company) vs. implementing flexible, yet quantifiable rules that would allow for case-by-case reviews that take into account market-specific and company-specific market shares and characteristics. The Commission chose the bright-line approach, in large part because it identified regulatory certainty as an important goal in addition to the three traditional goals of diversity, localism, and competition.51 It stated:
Any benefit to precision of a case-by-case review is outweighed, in our view, by the harm caused by a lack of regulatory certainty to the affected firms and to the capital markets that fund the growth and innovation in the media industry. Companies seeking to enter or exit the media market or seeking to grow larger or smaller will all benefit from clear rules in making business plans and investment decisions. Clear structural rules permit planning of financial transactions, ease application processing, and minimize regulatory costs.52
After the Third Circuit remanded the FCC rules, then-chairman Powell reportedly stated in an interview that:
It may not be possible to line-draw. Part of me says maybe the best answer is to evaluate on a case-by-case basis. The commission may end up getting more pushed in that direction.53
Given that the Third Circuit explicitly gave the FCC the opportunity "to justify or modify its approach to setting numerical limits," it did not signal a preference for a case-by-case approach vs. a bright-line rule.
Currently, the FCC continues to use bright-line rules that set numerical limits. (Some of those limits are set by statute, not by FCC rulemaking.) But in its 2006 Further Notice, the Commission did ask, "whether our goals would be better addressed by employing an alternative regulatory scheme or set of rules."54 Several aspects of the data collection and analysis performed to date suggest that it might be difficult to construct bright-line numerical limits or that such numerical limits might not always be effective in fostering diversity, localism, and competition.
All of these factors suggest that the FCC might want to use the extensive data it has collected to analyze more fully the advantages and disadvantages of the case-by-case and bright-line limit approaches to reviewing acquisitions that increase an entity's media holdings.
There have been a number of proposals to require program networks to be made available—at both the wholesale level and the retail level—on an à la carte basis as well as bundled (as part of a wholesale package or a retail tier). One variation on those proposals would allow retail subscribers to opt out of receiving certain channels on a tier, and get a price reduction for the channels not received.57
Proponents of à la carte pricing argue that the industry-wide practice of offering only large bundles of advertiser-supported cable networks forces consumers to purchase networks they are not interested in receiving in order to obtain the networks they want. They further argue that household price sensitivity is greater for individual programs than for a large tier of programs, so tiering makes it easier for MVPDs to raise their prices. In addition, they claim tiered pricing does not take into account the intensity of demand for individual channels in the tier, so it is possible that channels that are highly valued by niche audiences will not be carried while general interest channels that attract a larger audience but are not as highly valued will be carried.
Proponents of tiering counter that tiering is the most cost-efficient way to offer programming and thus lowers retail prices, that it increases consumer benefits by allowing channel surfing, that it reduces the risks associated with introducing new cable networks, and that it helps support niche networks that could not generate sufficient revenues on their own. They claim that new, independent cable networks, in particular, would have an extremely difficult time making themselves known, and attracting an audience and advertisers, in an à la carte environment.
The 10 FCC-commissioned studies collected some data that are relevant to the debate about these à la carte proposals:
It is not surprising that non-Latino minority and religious programming, which have low audience ratings, are not widely available. The public policy issue is how best to serve audiences for such niche programming, to further the goal of diversity. As explained earlier, tiered pricing does not take into account the intensity of demand for individual channels in the tier, so it is possible that channels that are highly valued by niche audiences will not be carried while general interest channels that attract a larger audience but are not as highly valued will be carried. MVPDs typically offer mostly general interest and other large audience programming on their expanded basic tiers and make less popular programming available either as part of larger tiers that are available at higher prices or on an à la carte basis (that could consist of a single channel or several closely related channels).58 But data are not available on subscribers' intensity of demand for individual channels, so it is not possible to determine whether the tendency toward serving general audiences on basic tiers, and niche audiences on other tiers, increases or decreases overall consumer welfare. It is possible, however, to investigate how the market appears to be operating today.
The market shows that a small number of viewers can support programming if they are willing to pay enough for such programming. For example, although the audiences for non-Spanish foreign language programming, such as Korean language programming, are relatively small, as a result of the willingness of a threshold level of households to pay between $25 and $30 a month for a package of several Korean language channels, both DirecTV and DISH TV offer Korean language packages, as do some cable systems (though these offerings may not be available universally throughout the U.S.). The intensity of demand for non-Spanish foreign language programming appears to be relatively high in households that include members that speak little or no English or that have a strong desire to maintain cultural connections even as their children become more assimilated.
It is not clear whether the intensity of demand for other niche programming, such as non-foreign language minority programming and religious programming, is sufficiently great to support such an à la carte solution. The FCC does not have data available on the intensity of demand for such niche programming. But the absence of à la carte options (in the form of individual channels or very small, specialized bundles) for such programming suggests that the MVPDs do not expect the intensity of demand to be sufficient to support such programming (especially when taking into account the opportunity cost of using scarce channel capacity to serve these niche audiences). Those niches programs are most likely available on larger, higher priced tiers.
Subscribers to niche programming, such as Korean language programming, that is available as part of an à la carte option also must purchase the basic cable tier, because of the statutory requirement that all cable subscribers receive the local broadcast stations as well as any public, educational, and governmental channels required by the franchising authority.59 But they do not have to purchase any other cable networks.
That is not the case for households that seek niche programming that is not available on an à la carte basis. Some critics of the current system complain that it is unfair to require audiences for niche programming that is not available as part of an à la carte option to purchase tiers that are larger and more expensive than the expanded basic tier in order to receive that niche programming. But absent data on the intensity of demand for the various niche and non-niche channels it is not possible to determine whether those niche channels could survive in an à la carte environment or to demonstrate consumer welfare loss from the current system. And even if the current system does impose a consumer welfare loss on niche audiences, it is not clear how a regulation could be implemented to identify and require carriage of such niche channels.
| 1. |
For a detailed description and discussion of the FCC's media ownership rules, see CRS Report RL31925, FCC Media Ownership Rules: Current Status and Issues for Congress, by [author name scrubbed]. |
| 2. |
P.L. 104-104, § 202. |
| 3. |
Report and Order and Notice of Proposed Rulemaking, 2002 Biennial Regulatory Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, MB Docket 02-277; Cross-Ownership of Broadcast Stations and Newspapers, MM Docket 01-235; Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, MM Docket 01-317; Definition of Radio Markets, MM Docket 00-244; Definition of Radio Markets for Areas Not Located in an Arbitron Survey Area, MB Docket 03-130, adopted June 2, 2003 and released July 2, 2003 ("Report and Order" or "June 2, 2003 Order"). The Report and Order was adopted in a three to two vote. All five commissioners released statements on June 2, 2003, the day that the Commission voted to adopt the item, and also released statements that accompanied the July 2, 2003 release of the Report and Order. The Report and Order was published in the Federal Register on September 5, 2003, at 68 FR 46285. |
| 4. |
Prometheus Radio Project v. Federal Communications Commission, 373 F.3d 372, 435 (3rd Circuit 2004), (Prometheus). This decision also is available at http://www.ca3.uscourts.gov/opinarch/033388p.pdf, viewed on November 6, 2007. For a legal perspective on the Prometheus decision, see CRS Report RL32460, Legal Challenge to the FCC's Media Ownership Rules: An Overview of Prometheus Radio v. FCC, by [author name scrubbed]. |
| 5. |
Ibid., at 421. |
| 6. |
In the Matter of 2006 Quadrennial Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996; 2002 Biennial Regulatory Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996; Cross-Ownership of Broadcast Stations and Newspapers; Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets; Definition of Radio Markets, MB Dockets No. 06-121 and 02-277 and MM Dockets No. 01-235, 01-317, and 00-244, Further Notice of Proposed Rulemaking (Further Notice), adopted June 21, 2006, and released July 24, 2006, at para. 1 (footnote omitted). |
| 7. |
Section 629 of the FY2004 Consolidated Appropriations Act, P.L. 108-199, modifies Section 202 of the 1996 Telecommunications Act, instructing the FCC to perform a quadrennial review of all of its media ownership rules, except the National Television Ownership rule. |
| 8. |
Further Notice at para. 4. |
| 9. |
Ibid., at para. 5. |
| 10. |
"Statement of Commissioner Michael J. Copps, Concurring in Part, Dissenting in Part," June 21, 2006, available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266033A3.pdf, viewed on November 6, 2007, and "Statement of Commissioner Jonathan S. Adelstein, Concurring in Part, Dissenting in Part," June 21, 2006, available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266033A4.pdf, viewed on November 5, 2007. |
| 11. |
In footnote 59 of the Prometheus decision, the Third Circuit had instructed the FCC to address in its rulemaking process proposals for advancing minority and disadvantaged businesses and for promoting diversity in broadcasting that the Minority Media and Telecommunications Council (MMTC) had submitted in the proceeding in 2003. (Prometheus, 373 F.3d at 421.) |
| 12. |
Language in S. 2332, a bill approved by the Senate Commerce, Science, and Transportation Committee by unanimous consent on December 4, 2007, would direct the FCC to address these criticisms. The bill would modify Section 202 of the 1996 Telecommunications Act by adding three provisions that would (1) require the FCC to publish in the Federal Register any proposal to modify, revise, or amend any of its regulations related to broadcast ownership at least 90 days before voting to add the proposal, providing at least 60 days for public comment and 30 days for reply comments; (2) require the FCC to initiate, conduct, and complete a separate rulemaking proceeding to promote the broadcast of local programming and content by broadcasters, including radio and television broadcast stations, and newspapers, before voting on any change in the broadcast and newspaper ownership rules, and require the FCC to conduct a study to determine the overall impact of television station duopolies and newspaper-broadcast cross-ownership on the quantity and quality of local news, public affairs, local news media jobs, and local cultural programming at the market level; and (3) establish an independent Panel on Women and Minority Ownership of Broadcast Media to make recommendations to the FCC for specific Commission rules to increase the representation of women and minorities in the ownership of broadcast media, and require the FCC to conduct a full and accurate census of the race and gender of individuals holding a controlling interest in broadcast station licenses, provide the results of the census to the Panel, study the impact of media market concentration on the representation of women and minorities in the ownership of broadcast media, and act on the Panel's recommendations before voting on any changes in its broadcast and newspaper ownership rules. |
| 13. |
"FCC Names Economic Studies to be Conducted as Part of Media Ownership Rules Review," FCC Public Notice, November 22, 2006, available at http://hraunfoss.fcc.gov/ edocs_public/attachmatch/DOC-268606A1.pdf, viewed on November 6, 2007. The ten studies are: (1) "How People Get News and Information," by Nielsen Research; (2) "Ownership Structure and Robustness of Media," by C. Anthony Bush, Kiran Duwadi, Scott Roberts, and Andrew Wise, of the FCC; (3) "Effects of Ownership Structure and Robustness on the Quantity and Quality of TV Programming," by Gregory Crawford of the University of Arizona; (4) "News Operations," by Kenneth Lynch, Daniel Shiman, and Craig Stroup of the FCC; (5) "Station Ownership and Programming in Radio," by Tasneem Chipty of CRAI; (6) "News Coverage of Cross-Owned Newspapers and Television Stations," by Jeffrey Milyo of the University of Missouri; (7) "Minority Ownership," by Arie Bersteanu and Paul Ellickson of Duke University; (8) "Minority Ownership," by Allen Hammond of Santa Clara University and Barbara O'Connor of the California State University at Sacramento; (9) "Vertical Integration," by Austan Goolsbee of the University of Chicago; and (10) "Radio Industry Review: Trends in Ownership, Format, and Finance," by George Williams of the FCC. |
| 14. |
"Commissioner Michael J. Copps Comments on the FCC's Media Ownership Studies," FCC News, November 22, 2006, available at http://hraunfoss.fcc.gov/edocs_public/ attachmatch/DOC-268611A1.pdf, viewed on November 6, 2007, and "Commissioner Jonathan S. Adelstein Says Public Notice on Media Ownership Economic Studies is 'Scant' and 'Undermines Public Confidence'," FCC News, November 22, 2006, available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-268616A1.pdf, viewed on November 6, 2007. |
| 15. |
"FCC Seeks Comment on Research Studies on Media Ownership," MB Docket No. 06-121, FCC Public Notice, DA-07-3470, released July 31, 2007, available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-07-3470A1.pdf, viewed on November 6, 2007. The studies are available at http://www.fcc.gov/ownership/studies.html (viewed on November 6, 2007). Subsequently, the FCC released a public notice extending the comment period to October 22, 2007, and the reply comment period to November 1, 2007. See, "Media Bureau Extends Filing Deadlines for Comments on Media Ownership Studies," MB Docket No. 06-121, FCC Public Notice, DA-07-4097, released September 28, 2007, available at http://fjallfoss.fcc.gov/edocs_public/attachmatch/DA-07-4097A1.pdf, viewed on November 6, 2007. |
| 16. |
The OMB requirement appears in the OMB Peer Review Bulletin, 70 Fed. Reg. 2664. In these peer reviews, the reviewer is instructed to evaluate and comment on the theoretical and empirical merit of the information, by considering, among other things: (1) whether the methodology and assumptions employed are reasonable and technically correct; (2) whether the methodology and assumptions are consistent with accepted economic theory and econometric practices; (3) whether the data used are reasonable and of sufficient quality for purposes of the analysis; and (4) whether the conclusions, if any, follow from the analysis. The reviewer is instructed not to provide advice on policy or to evaluate the policy implications of the study. The peer review is not anonymous; the reviewer will be identified and the review will be placed in the public record. Also, the federal agency must assess whether potential peer reviewers have any potential conflicts of interest. The OMB requirement does not provide guidance on how the peer reviewers should be selected. |
| 17. |
"Joint Statement by FCC Commissioners Michael J. Copps and Jonathan S. Adelstein on Release of Media Ownership Studies," FCC News, released July 31, 2007, available at http://fjallfoss.fcc.gov/edocs_public/attachmatch/DOC-275674A1.pdf, viewed on November 6, 2007. |
| 18. |
The peer reviews are available at http://www.fcc.gov/mb/peer_review/peerreview.html, viewed on November 6, 2007. In addition, the FCC identified approximately 20 other submissions filed by commenting parties in the Media Ownership proceeding as containing scientific information on which it might rely in its rulemaking proceeding, and implemented a peer review process for these. Those peer reviews are available to the public at http://www.fcc.gov/mb/peer_review/reviews.html, viewed on November 26, 2007. I was asked by Jonathan Levy, Deputy Chief Economist of the FCC, to perform a peer review of one of those submissions, "Big Media, Little Kids: Media Consolidation & Children's Programming," a report by Children Now dated May 21, 2003, that was submitted to the FCC in 2006. My peer review is available at http://www.fcc.gov/mb/peer_review/ docs/prtpgoldfarb.pdf, viewed on November 26, 2007. |
| 19. |
In the Matter of 2006 Quadrennial Regulatory Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996; 2002 Biennial Regulatory Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996; Cross-Ownership of Broadcast Stations and Newspapers; Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations and Local Markets; Definition of Radio Markets; Ways to Further Section 257 Mandate and to Build on Earlier Studies, MB Docket Nos. 06-121, 02-277, and 04-228 and MM Docket Nos. 01-235, 01-317, and 00-244, Second Further Notice of Proposed Rule Making, adopted and released August 1, 2007 (Second Further Notice). |
| 20. |
In the Matter of 2006 Quadrennial Regulatory Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996; 2002 Biennial Regulatory Review; Cross-Ownership of Broadcast Stations and Newspapers; Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets; Definition of Radio Markets; Ways to Further Section 257 Mandate and to Build on Earlier Studies, MB Docket Nos. 06-121, 02-277, and 04-228 and MM Docket Nos. 01-235, 01-317, and 00-244, Further Comments of Consumers Union, Consumer Federation of America, and Free Press, October 22, 2007. |
| 21. |
The Consumer Commenters' submission also includes a weblink http://www.fcc.gov/ ownership/materials/newly-released/newspaperbroadcast061506.pdf to a 27-page internal FCC memorandum by then-FCC chief economist Leslie M. Marx, dated June 15, 2006 and entitled "Summary of Ideas on Newspaper-Broadcast Cross-Ownership," which they obtained through a Freedom of Information Act request and which they allege demonstrates that the FCC's process for commissioning media ownership studies was biased. The opening sentence of the memorandum states: "This document is an attempt to share some thoughts and ideas I have about how the FCC can approach relaxing newspaper-broadcast cross-ownership restrictions." At p. 14, the memorandum states: "In this section I discuss some studies that might provide valuable inputs to support a relaxation of newspaper-broadcast cross-ownership limits." (footnote omitted). Although Ms. Marx was no longer the chief economist when the FCC announced that it had commissioned the 10 media ownership studies (an August 21, 2006 FCC News Release announced that Michelle P. Connolly had been named FCC chief economist), several of the studies suggested in Ms. Marx's memorandum were among those later commissioned by the FCC. The memorandum lists a number of media ownership-related hypotheses that are of interest to policy makers and thus might merit analysis, but it also lists for each a finding that would support loosening the cross-ownership limits, thus suggesting a preferred outcome. The memorandum also provides a list of possible authors for the studies. |
| 22. |
The FCC identified and referred to these studies as Study 1, Study 2, etc. For ease of presentation, in this report the studies will be referred to by their study number rather than by their title. |
| 23. |
See footnote 4 above. |
| 24. |
Often, it is not possible a priori to predict the likely relationship between a specific ownership variable and programming market outcome. For example, on one hand one might expect the owner of multiple stations in a market to have diverse programming on those stations to attract as many total viewers/listeners as possible. On the other hand, one might expect the owner of those stations to offer the same type of programming on all the stations in order to take advantage of cost savings from economies of scale or scope. Given such potentially conflicting market incentives, it is not surprising that, in most cases, tests for a relationship between an ownership variable and a programming market outcome were not statistically significant. Still, a number of statistically significant relationships were identified, though different studies sometimes had different findings or, within a single study, a slight difference in how a model was specified yielded a different result, suggesting that the results were not very robust. |
| 25. |
This report presents, in summary fashion, the findings of a large number of data-intensive studies. In order to keep it from being encumbered by hundreds of footnotes, specific page citations are not provided for each finding. |
| 26. |
Also, high levels of income and education are correlated with Internet access. |
| 27. |
On September 11, 2007, Gregory Crawford was named chief economist of the FCC. See "Gregory Crawford Named FCC Chief Economist," FCC News, released September 11, 2007, available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/ DOC-276574A1.pdf, viewed on November 6, 2007. |
| 28. |
For example, it might be that news programming is especially popular in Washington, DC, where government is the major industry, so that all DC stations tend to provide a lot of news programming. But Washington, DC has more stations that are owned and operated by one of the four major broadcast networks than do other markets. Thus, if the statistical analysis were not to account for the high level of demand for news in Washington, DC, the results might overstate the relationship between network owned and operated stations and the amount of news programming provided. |
| 29. |
This relationship was statistically insignificant for one definition of news format used by the researcher and statistically significant for the other definition used by the researcher, but in both cases was negative. |
| 30. |
These measures include format counts, format concentration, percentage of station airplay devoted to music, percentage of station airplay devoted to news, percentage of station airplay devoted to sports, percentage of station airplay devoted to talk entertainment, percentage of station airplay devoted to advertising, advertisements by day part, percentage of station programming that is live, percentage of station programming that is network/syndicated and voice-tracked, number of syndicated programs, and number of on-air personalities. These various measures of programming are intended to provide information relevant to the wide variety of programming issues that have been raised by parties in the media ownership proceeding. |
| 31. |
Although most stations broadcast a 30 minute news program, some broadcast a one-hour news program, so the sum of total news and non-news content exceeded 30 minutes. |
| 32. |
It should be noted that the choice of a measure for political slant is the most controversial aspect of this study and that Professor Gentzkow has performed several studies of political slant in the media using the types of measures of political slant used by Professor Milyo. In the study, Professor Milyo states, "I follow Gentzkow and Shapiro in using speaking time of candidates as one metric for partisan slant. I also use several measures that are very similar in spirit to those employed by Gentzkow and Shapiro; in particular, time devoted to all candidate coverage, time devoted to issues favored by one party or the other, and time devoted to polls favoring one party or the other." Thus, some critics have claimed that Professor Gentzkow cannot provide an objective peer review. |
| 33. |
See Study 8 at p. 29 and also the source cited in that study, Harry A. Jessell, "Sikes Ready to Move on TV Ownership: Chairman Wants to Expand Number of Stations a Licensee May Own Both Locally and Nationally, Broadcasting, April 20, 1992, at p. 10. |
| 34. |
The FCC's minority tax certificate program used the market-based incentive of deferral of payment of capital gains taxes to encourage the owners of broadcast and cable properties to sell their properties to minorities. Tax certificates also were issued to investors who provided start-up capital to minority-controlled companies. |
| 35. |
See Statement of William E. Kennard, General Counsel, Federal Communications Commission, Before the United States House of Representatives Committee on Ways and Means, Subcommittee on Oversight, on FCC Administration of Internal Revenue Code Section 1071, January 27, 1995, at p. 10, indicating that between 1978 and 1994 the FCC granted approximately 390 tax certificates, of which approximately 330 involved sales to minority-owned entities—260 for radio station sales, 40 for television station sales, and 30 for cable television transactions. |
| 36. |
In the Matter of 2006 Quadrennial Regulatory Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996; 2002 Biennial Regulatory Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996; Cross-Ownership of Broadcast Stations and Newspapers; Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations and Local Markets; Definition of Radio Markets, MB Docket Nos. 06-121 and 02-277 and MM Docket Nos. 01-235, 01-317, and 00-244, Reply Comments of the National Association of Broadcasters, Attachment entitled "The Declining Financial Position of Television Stations in Medium and Small Markets," January 16, 2007. |
| 37. |
The NAB study is one of submissions that the FCC had peer reviewed. The peer reviewer, Robert Kieschnick, Associate Professor and the Finance and Managerial Economics Area Coordinator, University of Texas at Dallas, identifies "a number of concerns with the data reported and statements made about the reported data," and states "I do not see that the report provides sufficient information to reach its conclusion...." The peer review is available at http://www.fcc.gov/mb/peer_review/docs/prtpkieschnick.pdf, viewed on November 28, 2007. |
| 38. |
"Must have" programming refers to programming for which a significant number of MVPD subscribers have such a strong intensity of demand that they would not subscribe to an MVPD service that does not carry that programming. Although demand varies somewhat from geographic market to geographic market, examples of programming that often is categorized as must have are major sports programming and the programming of local broadcast stations affiliated with major networks. |
| 39. |
In the Matter of 2006 Quadrennial Regulatory Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996; 2002 Biennial Regulatory Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996; Cross-Ownership of Broadcast Stations and Newspapers; Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations and Local Markets; Definition of Radio Markets, MB Docket Nos. 06-121 and 02-277 and MM Docket Nos. 01-235, 01-317, and 00-244, Reply Comments on FCC Research Studies on Media Ownership, Media General, Inc., November 1, 2007, Appendix A. |
| 40. |
For example, Consumer Commenters claim that in Studies 3 and 4 the standard errors should be clustered by station or by market to account for non-independence; that in Studies 3, 4, and 6 market-time fixed effects should be included to relax the assumption that time period effects are equal across all markets; and that in Studies 3, 4, and 6 the models should be run with parent fixed-effects. |
| 41. |
The technical econometric criticisms of the FCC-commissioned studies will not be addressed in this report. Similarly, an analysis of the technical criticisms of the econometric analysis of the Consumer Commenters' filing falls to expert econometricians to perform. |
| 42. |
See footnote 39 above. |
| 43. |
Prometheus, 373 F.3d at 435. |
| 44. |
Although that instruction applied specifically to the FCC's elimination of the Failed Station Solicitation Rule, the language (provided at pp. 1-2 above) would appear to be applicable to all the FCC's media ownership rules. |
| 45. |
515 U.S. 200 (1995). |
| 46. |
For a detailed discussion of the legal issues surrounding governmental measures based on racial classifications, see CRS Report RL34269, Minority Ownership of Broadcast Properties: A Legal Analysis, by [author name scrubbed]. |
| 47. |
See, for example, the discussion of the proposed "Transfer Restriction of Grandfathered Clusters to SDBs," in the Second Further Notice at p. 12. |
| 48. |
Second Further Notice at ¶ 13. |
| 49. |
497 U.S. 547. |
| 50. |
This is not to suggest that evidence of such a nexus was the sole constitutional concern raised in the dissent. |
| 51. |
In the Matter of 2002 Biennial Regulatory Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996; Cross-Ownership of Broadcast Stations and Newspaper; Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets; Definition of Radio Markets Definition of Radio Markets for Areas Not Located in an Arbitron Survey Area, MB Docket Nos. 02-277 and 03-130 and MM Docket Nos. 01-235, 01-317, and 00-244, Report and Order and Notice of Proposed Rule Making, adopted June 2, 2003 and released July 2, 2003, at paras. 80-85. |
| 52. |
Ibid., at para. 83, footnote omitted. |
| 53. |
Frank Ahrens, "Powell Calls Rejection of Media Rules a Disappointment," Washington Post, June 29, 2004, at pp. E1 and E5. |
| 54. |
See footnote 8 above. |
| 55. |
See footnote 21 above. |
| 56. |
For example, a CRS report on programmer-distributor conflicts found that often a broadcaster involved in a carriage dispute owned or controlled more than one broadcast station in a small or medium sized local market. It appears that where a broadcaster owns or controls two stations that are affiliated with major networks, that potentially gives the broadcaster control (through its retransmission consent rights) over two sets of must-have programming and places a distributor, especially a relatively small cable operator, in a very weak negotiating position since it would be extremely risky to lose carriage of both signals. Or when a broadcaster owns or controls one station that is affiliated with a major broadcast network and a second station that is affiliated with a weaker broadcast network, it may be able to tie carriage of the major broadcast network to a demand that the cable operator also carry—and perhaps pay for carriage of—the signals of the weaker broadcast network, which otherwise the cable company would refuse to pay for or only carry for free as part of a must-carry arrangement. See CRS Report RL34078, Retransmission Consent and Other Federal Rules Affecting Programmer-Distributor Negotiations: Issues for Congress, by [author name scrubbed]. |
| 57. |
One further variation would favor non-commercial channels by only providing a price reduction for opting out of commercial channels. |
| 58. |
The tiering terminology that is used by the industry and by the FCC often differs from common usage. The basic tier consists of the local broadcast channels; the public, educational, and governmental (PEG) channels required by the local franchising authority; and perhaps a small number of cable networks. Typically, the basic tier consists of approximately 20 channels and is priced in the vicinity of $15-$20 per month. Fewer than 10% of cable subscribers choose the basic tier. The most popular tier is the expanded basic tier, which typically includes everything in the basic tier plus 30 additional cable networks, most of which are general interest networks. The expanded basic cable tier typically is priced at about $50 per month. Other (premium) tiers, available at higher prices, provide additional cable networks, digital programming and/or high definition programming. |
| 59. |
These requirements apply to cable service, not to satellite service. |