Media consolidation to ripple across US, feeding giants

A Congress uproar is brewing after the Federal Communications Commission made a controversial decision to loosen media ownership regulations, supporting and empowering media moguls such as the Murdoch family, while restricting diversity. Under the previous Republican administration, an attempt to unravel the same regulations was unanimously down voted by 400 to 20 and quashed by the Supreme Court – with Congress members acknowledging the political minefield that would spawn as a result of loosened regulations. The difference this time around is that President Trump has crafted his own FCC.

The long-awaited move means a wave of consolidation will sweep the industry, as a way of asserting wider political influence over an increased footprint and targeting younger generations. The regulations themselves have been blamed for the shrinking newspaper industry, preventing backing from media giants, rather than a direct result of the changing face of media to a mobile-first world.

The other side of the coin argues that restricting local TV stations from owning local newspapers, or newspapers from owning TV stations – both of which have struggled in the internet era – has “cost journalism jobs and forced local broadcast stations onto unequal footing with our national pay TV and radio competitors,” according to a statement from the National Association of Broadcasters.

FCC Chairman Ajit Pai called the 1970s regulations “utter nonsense” and added, “it makes no sense to place regulatory roadblocks in the way of those who want to purchase a newspaper.” While floundering print newspaper firms and broadcast TV stations could be saved from extinction by loosening the chains of media buying, these same roadblocks have fueled the growth of the internet and prevented public sources of news and information being controlled by just a handful of rather political companies.

It could also be that the relaxation of media ownership rules might be bound up with redefining cable as part and parcel of that new consolidated media landscape. Rather than rules which say that an organization may not own the main newspaper and broadcaster in a single territory, the new FCC regulations will allow this, but potentially on the condition there remains a loud dissenting voice within the same territory. That is to say as long as one TV service, or one major newspaper or one radio station (or one of the major internet portals) are not owned by a single conglomerate that can push a single political agenda, then cross ownership is fine.

Opponents to the decision have been vocal, with US Senator Bill Nelson said to Reuters the move “will pave the way for massive broadcast conglomerates to increasingly provide local viewers with nationalized cookie-cutter news and corporate propaganda that’s produced elsewhere.”

Commissioner Jessica Rosenworcel also said, “We are not going to remedy what ails our media today with a rush of new consolidation, where a handful of companies control our public airwaves. Consolidation will make our stations look less and less like the communities they serve.”

Another pro-FCC stance this week, according to AT&T, Comcast and Verizon, is that billions of dollars extra in broadband investments will be brought about following the decision. It’s worth noting that Pai was once an attorney for Verizon, and a handful of current Commissioners have had dealings with the three US giants.

Critics also argue that the move will speed up the $3.9 billion takeover of Tribune Media by Sinclair Broadcast, which has received backlash from multiple organizations, public interest groups and independent networks (see separate story in this issue).

President Trump’s agenda, which is intent on deregulating the US media and communications industries to worryingly fragile states, has been pushed hard by the Pai-era FCC. In the wake of a similar unraveling of net neutrality regulations, the FCC has said it will reveal its net neutrality proposal this week – having digested 22 million public comments since its initial proposal three months ago. We don’t expect the proposal to hold back, as it is clear Pai wants to unravel regulations on ISPs in a move that will stifle innovation and harm budding US startup companies in the US. Pai, of course, will claim the opposite.

In addition, the FCC has now approved the ATSC 3.0 IP-based broadcast standard, enabling broadcasters to deliver better quality and more personalized content. However, the rush to roll out ATSC 3.0 has been criticized, with the Coalition to Save Local Media saying it “could force consumers to purchase new equipment to receive broadcast programming and raise consumer costs.”

Meanwhile the FCC has said it will prepare its Net Neutrality ruling for a vote in December which will introduce new rules whereby ISPs would only need to be transparent about their practices. In this new world, it would be up to the Federal Trade Commission to enforce consumer protection and competition rules.13