Broadcasters Wary of an Obama FCC

Yesterday’s sweeping Democratic victory likely means more trouble for TV broadcasters in Washington, according to the industry’s lawyers and lobbyists and communications policy mavens.

With Barack Obama in the White House and a larger Democratic majority on Capitol Hill, industry reps fear Congress and a reconstituted FCC may push for local programming quotas, more children’s programming requirements, restrictions on product placements and mandates for free air time for candidates.

The Democrats have historically been less enthusiastic about policing broadcast indecency, they point out, but many would like nothing better than to bring back the fairness doctrine to muzzle their many right-wing critics on radio.

And broadcasters can forget about looser ownership restrictions, they say. The challenge will be to keep the Democrats from tightening them to encourage more diversity in media ownership, one of their oft-stated policy goals.

“It’s not going to be pretty,” says one long-time broadcast lobbyist.

“There is very legitimate reason to worry about an Obama FCC and what it means for the future of broadcast and all media,” says Adam Thierer, a senior fellow at the Progress and Freedom Foundation, a conservative think tank.

“Specifically, what I fear is not the same thing that some others fear like a revival of the fairness doctrine. What I fear is a lot of backdoor regulation through proceedings like localism or the revival of the personal attack rule or community advisory boards for broadcasters.”

The big change will be at the FCC.

The Democrat minority at the five-person agency will become a majority next January when Republican Chairman Kevin Martin resigns and fellow Republican Commissioner Deborah Tate steps down as her term expires.

Obama will tap one of the sitting Democratic commissioners, Michael Copps or Jonathan Adelstein, to run the agency until the new president gets around to nominating (and the Senate gets around to confirming) a new permanent chairman — a process that could take several months.

Neither Copps nor Adelstein is good news for broadcasters, the lobbyists say.

Both have vigorously opposed all efforts to loosen broadcast ownership rules and have championed new public service programming obligations for broadcasters.

They contend that media consolidation is limiting the diversity of voices in media and they believe the American public is getting less than it should from broadcasters in exchange for the valuable spectrum.

The Democratic duo has also gone along with Martin’s crackdown on broadcast indecency, Copps most enthusiastically.

When the new chairman arrives, the broadcast reps figure he or she is likely to share much the same regulatory philosophy as Copps and Adelstein and much the same do-more attitude toward broadcasting.

Most also believe it is also an ominous sign that some of Obama’s key advisers on broadcasting and cable issues are the same people who ran the FCC during the Clinton administration.

Those advisers are led by Julius Genachowski, an Obama classmate at Harvard Law and fundraiser who was FCC general counsel under Chairman Reed Hundt. They include Hundt himself and Bill Kennard, who succeeded Hundt as chairman. Genachowski introduced Obama to Hundt and Kennard.

Neither Hundt nor Kennard was broadcasting-friendly.

Hundt, in particular, fought a long and bitter battle with broadcasters to impose kids programming quotes on TV stations. He would probably have gone further in heaping on public service obligations if he could have.

On the other hand, Hundt and Kennard presided over a good deal of media consolidation in the wake of the Telecommunications Act of 1996 and they put into place the policy that will lead to TV stations’ analog-to-digital conversion in February.

Not everybody thinks a return to the Hundt-Kennard philosophy would be so bad.

“The Clinton administration had a business-oriented FCC,” says one lawyer. “They had certain issues like kidvid that they wanted, but they also recognized that people actually had to make money to operate. You could have an FCC like that, which may not be too bad.”

Some lobbyists chagrined by a Democratic takeover of the FCC concede that a McCain-driven FCC chairman might have been worse.

McCain chaired the Senate Commerce Committee, which oversees broadcasting and cable matters, from 1997 until 2001 and again from 2003 until 2005. All the years were marked by conflict between McCain and broadcasters.

Much of the friction flowed from McCain’s belief that broadcasters should pay for their digital spectrum.

He once called the grant of digital channels to broadcasters “the great American rip-off,” believing that broadcasters would never return their analog spectrum.

McCain also saw broadcasters as big obstacles to his efforts to reform campaign financing.

In a move that some broadcasters felt was punitive, McCain introduced a bill that would have reduced station license terms from eight years to three.

“This has not been an election where one candidates seems to be vastly better than the other” for broadcasters, says a broadcast attorney.

One broadcast lobbyist thinks broadcasters will be better off with Obama “only because you know where McCain’s from on the issues. At least you’re starting off with somewhat of a fresh slate with the Obama folks. There’s not that instinctive ‘let’s go after the broadcasters.’ “

He also argues that the Obama administration’s focus on new technology may help broadcasters. “They’ll actually recognize the power of the new media.”

Broadcasters certainly won’t miss Kevin Martin.

When he assumed the chairmanship in March 2005 after four years as a commissioner, broadcasters expected that he would go after broadcasters for indecency, but they didn’t expect him to join Copps and Adelstein in a series of highly regulatory moves.

Under Martin’s watch, the FCC required stations to file detailed quarterly reports listing the kinds of local programming they air, mandated PSAs for DTV education and extended children’s educational programming minimums to stations’ DTV channels.

The agency also launched a rulemaking that could result in local programming mandates and force stations to ascertain the interests of community groups.

Martin called for legislation that would permit the FCC to deal with violent content in the same manner as it treats indecent broadcast programming.

And Martin joined with the FCC’s Democratic commissioners calling for action on product placement in TV advertising and the use of video news releases by TV stations.

Martin’s one deregulatory action involving broadcasters — the relaxation of the newspaper-broadcast ownership restrictions in the top markets — was so feeble that broadcast and newspaper lobbyists wondered why he even bothered.

“I think everybody is going to be very happy when he [Martin] gets the hell out of town,” says a broadcast rep.

The PFF’s Thierer calls Martin “an unmitigated disaster. He is, by far, the most regulatory-minded, interventionist Republican chairman of the past quarter century,” he says.

So, now the lobbyists are bracing for an Obama FCC.

“An Obama administration would definitely push stricter broadcaster controls on ownership and take more aggressive efforts on diversity, says James Gattuso, senior fellow for regulatory policy at the Heritage Foundation.

“The question is what would an Obama administration do on localism: Would an Obama FCC pursue the moveon.org agenda of strong regulation to enforce local news and content?” he asks.”Or would it side more with minority or smaller broadcasters who point out that the cost of regulation would fall disproportionately on minority- and women-owned stations.”

Like most broadcast reps, Gattuso also believes the new FCC will be less aggressive in anti-indecency enforcement. “You could swear a little bit more.”

A perennial element of Democratic communications policy has been free airtime for political candidates as part of a larger effort to some of the money out of politics.

But one source points out that the Democrats may be having second thoughts about tampering with campaign funding, now that they have demonstrated that they can generate hundreds of millions of dollars in grassroots fundraising through the Internet.

They currently have an advantage over the Republicans that they may not want to give away, the source says.

Most of the talk about what Obama will do in the parochial world of communications is just that — talk.

What little he has said came last June in Broadcasting & Cable, when Obama provided the best insight yet on his thinking about broadcasting and cable.

In the e-mailed Q&A, he expressed concern about media consolidation.

“The ill effects of consolidation today and continued consolidation are well-documented — less diversity of opinion, less local news coverage, replication of the same stories across multiple outlets, and others,” he said. “We can do better.”

On his watch, he said, the Department of Justice and the Federal Trade Commission would be more vigilant to examining proposed media mergers.

And he reiterated his support for legislation that would undo Martin’s loosening of the broadcast-newspaper crossownership rule, despite its limited scope.

Asked about regulation of indecent and violent content on TV, Obama said he preferred technological solutions that empowered parents to controll what their children watched and did not favor extending indecency regulation to cable and satellite.

Of course, much will depend on who heads the FCC.

For a short while, it may be a familiar face. Come January, when Martin resigns, Obama is expected to name either Copps or Adelstein to temporarily head the agency until a permanent chairman is nominated and confirmed.

The latest conjecture gives Adelstein the edge.

The South Dakota native is close to former Senate Majority leader Tom Daschle (D-S.D.), whom he advised on telecommunications policy for seven years. Daschle, one of the Obama’s presidential campaign’s co-chairs, could become White House chief of staff.

Copps’ chief benefactor, former Sen. Ernest Hollings (D-S.C.), is no longer part of the Washington scene. However, Copps has his own following on the Hill and among public interest groups.

Picking Adelstein is also complicated since his FCC term has technically expired and the Senate has not yet confirmed him for another. That could all easily and quickly change when the Democratically-controlled Congress convenes next year.

Whoever gets the job will be running the agency with a 2-1 Democratic majority.

Republican Tate is not expected to get Senate approval for a second term and so would leave in January with Martin. That would leave Robert McDowell as the commission’s sole Republican for the interim.

Some Hill insiders put Adelstein on the list of candidates for permanent FCC chairman.

But at the top of that list is Genachowski. After leaving the FCC, Genachowski was a top executive at Barry Diller’s IAC/InterActive Corp. He is now a managing director of Rock Creek Ventures, an investment firm focusing on digital media and commerce.

“The job is his if he wants it,” says one campaign insider.

But some observers believe that Genachowski will aim for a bigger role in the Obama administration.

He could, for instance, become the administration’s “chief technology officer,” a newly created position that would focus primarily on broadband deployment.

If Genachowski doesn’t take the FCC job himself, he is apt to play a major role in selecting who does get it.

Other top contenders:

• Scott Harris, a communications attorney at Harris, Wiltshire & Grannis. He was chief of the FCC’s International Bureau under Hundt.
• Don Gips, group vice president for corporate strategy, Level 3. He was chief of the FCC’s International Bureau and later served as a chief domestic policy adviser to former Vice President Al Gore, who was Hundt’s patron. Like Genachowski and Harris, Gips raised over $500,000 for Obama.

Other candidates who have surfaced:

• Larry Strickling, who handled a variety of policy matters for the campaign and headed the Common Carrier Bureau under Kennard.
• Blair Levin, a telecommunications analyst at Stifel Nicolaus. He served as Hundt’s chief of staff.
• Karen Kornbluh, policy director on Obama’s Senate staff. She worked for both Hundt and Kennard.
• Danny Sepulveda, legislative assistant on Obama’s Senate staff, who worked on the campaign getting the candidate’s economic message out. He’s handled telecommunications issues for Obama and formerly advised Senator Barbara Boxer (D-Calif.).
• Paul Margie, a partner of Scott Harris’and former legal adviser to Copps. He also advised Senator Jay Rockefeller (D-W.Va.) on telecom issues. That connection will be especially helpful if Rockefeller takes over the Senate Commerce Committee in January.

The next FCC chairman could also be a complete surprise, as Hundt was in 1993.

“In a new administration there are often names that come from out of the blue, campaign types who aren’t part of the inside the Beltway crowd,” says Andy Schwartzman of the Media Access Project, a communications advocacy group.

Most veteran FCC watchers believe Obama is trouble for broadcasting.

But some are hopeful, especially given the alternatives of more Martin or McCain.

“Maybe on a couple of issues we’ll actually get a better hearing from an Obama FCC,” concedes Thierer. “I have a hard time believing that, but you never know — maybe on some of the speech issues if the right guys are in control.”

Dennis Wharton, the principal spokesman for the industry’s principal lobby, the National Association of Broadcasters, says the new administration has to understand that the TV has changed.

“If the goal of the Obama team is to put more expensive regulations on broadcasters, the outcome will be more migration of major sporting events like the Super Bowl and World Series to pay cable, and less innovative programming on broadcast television,” he says.

“What part of free and local would an Obama administration not like?”