Just Because the FCC Can Regulate Broadcasting, Should It? 

When you have been representing broadcasters in Washington for as long as I have, you see cycles in regulation of the industry.  I was reminded of how long the FCC has been on a deregulatory cycle in reading today’s Washington Post obituary of former Democratic FCC Chair Charlie Ferris, who headed the FCC many decades ago when I interned there and when I later started to work in private practice representing broadcasters.  One line in the Post article in particular stood out – where Ferris was said to have “argued that unless regulations were ‘improving the market,’ they ‘were nothing but a nuisance.’”  Since the administration of Chairman Ferris, the FCC has generally moved forward to implement that philosophy of eliminating unnecessary regulation, with only occasional consideration given to the reinstatement of certain regulations (efforts that were often unsuccessful).  With the spate of recent rulings from the FCC, one questions whether the direction that Chairman Ferris pointed the FCC is now being slowed or reversed at a time when the market may well be crying out for an increase in the speed of that deregulation.

The obituary itself quoted one media observer as suggesting that the deregulatory direction in which Ferris took the FCC might not have been entirely successful, based on a persistent lack of minority ownership of broadcast properties, and “’a shortage of local, professional, accountable reporting’ in many communities.”  But are those failings ones that are attributable to the deregulatory trends of the FCC, or greater marketplace forces that have strained not just broadcasting but all traditional media?  In reading the media headlines in the last few weeks, one can’t help but conclude that the latter is more likely the cause, and that another quote from Chairman Ferris cited in the article has never been more appropriate, as he warned broadcasters: “If you cannot compete with new technologies, you will be overcome by them.”  As we’ve argued in this blog before (see for instance our article here reflecting on the warnings of another former Chairman, Ajit Pai), given the slew of new technologies available to consumers, imposing new rules on a broadcast industry flooded with new competition for audience and revenues simply does not make sense.

To conclude that it is deregulation, not marketplace forces, that is decreasing localism is to ignore the media marketplace generally.  Just this week, the primary public radio operator in the Washington DC market shuttered its digital local news service and laid off a significant number of news employees, citing the need to retrench to its audio reporting because “too many media companies fail by trying to be all things to all people, leaving their value proposition diluted and weakened.”  In other words, there is too much competition to be successful with this local digital news site, which the public broadcaster acquired only a few years ago. 

Local newspapers, including those that are run by nonprofits or wealthy individuals who made promises to revive local journalism, have also been cutting back on that local journalism as the economic winds in their face have overwhelmed their noble intentions.  In the radio world, each of the three largest commercial radio companies have been through bankruptcy proceedings, and other smaller companies similarly have had to restructure their operations, as the advertising revenues that once were available to support their operations go to competitors that did not exist 25 years ago (our article about the Pai speech reviews competition in local markets, noting that well over half the local advertising revenues in every market, that once supported local broadcasters and newspapers, now go to non-local digital media giants).

In light of these nationwide trends, what should the FCC be doing?  Seemingly, they should be following the guidance of Chairman Ferris, and eliminating regulations unless they can be shown to clearly benefit the marketplace.  Instead, we are concerned that the reverse may be taking place.  We have written about the FCC questioning its repeal of the main studio rule, the FCC majority’s decision to reject any attempt to allow more broadcast consolidation in local markets to allow stations to bulk up to compete with digital media giants and, most recently, the return of FCC Form 395-B gathering employment data that cannot, for constitutional reasons, be used to enforce FCC affirmative action policies and thus seemingly is nothing but, to use the words of Chairman Ferris, “a nuisance” to broadcasters.  We understand that there are on the horizon proposals to reinstate the prohibition on two FM stations serving the same area duplicating their programming despite the lack of any evidence that, in the many years that the rule has been gone, that there has been any widespread rush to eliminate unique programming on commonly owned local stations.  Similarly, there is now an item on circulation among FCC Commissioners that apparently will impose on stations nationwide a requirement to have any buyer of program time on a station, including local churches, business owners, and ethnic programmers, to complete an extensive questionnaire to be included in the station’s public file to show that the programmers are not representatives of foreign governments – imposing paperwork obligations on thousands of stations merely because a handful of stations have sold program time to representatives of the Russian or Chinese governments. 

Is this re-regulation really necessary?  Just because the FCC can regulate broadcasters, should it do so without an extensive record that the new regulations will directly bring about some public interest good?  Imposing new paperwork requirements on broadcast stations that are already challenged by the economic tides of the media industry seemingly flies in the face of the deregulatory trends over the last 40 years since Chairman Ferris was in office.  We hope that the FCC moves cautiously in trying to turn back the dial to a time when broadcasters and newspapers dominated the media marketplace.