No Matter How You Slice it, Pai Is Right

So very, very close. If not for Democratic FCC Commissioner Mignon Clyburn, the creaky and counterproductive newspaper-broadcast crossownership rule would today be headed for the regulatory junk heap along with the leap frog rule, the fairness doctrine and the PTAR.

FCC Chairman Tom Wheeler was willing to nix the rule that prohibits common ownership of TV or radio stations and daily newspapers in the same market if all five commissioners agreed, according to Commissioner Ajit Pai. In effect, Wheeler handed each of the commissioners a veto.

Clyburn chose to use it, and so Wheeler and fellow Democrat Jessica Rosenworcel went along and voted to keep the crossownership rule as well as to tighten up the local TV ownership rules.

News of the vote leaked a couple of weeks ago, but the order with the details and rationale was not released until yesterday.

In a statement attached to the order, Pai, one of the two Republicans commissioner strongly in favor of scuttling the crossownership rule, blasted the process and the Clyburn veto.

“As someone who has been on the losing end of more 3-2 votes than I care to remember, I am baffled by this new requirement for unanimity,” he said.

“We’ve been told for years by the FCC’s leadership that 3-2 votes are what democracy is all about.  Except, I guess, when it isn’t.

“As a result, we end up keeping a rule on the books that almost no one at the FCC actually believes make sense any longer.  This is a shame because our regulations should always be shaped only by the facts and law — not crass political considerations.”

Pai doesn’t say what those “crass political considerations” are, but I think I know. They are the blowback that the FCC believes will come from liberal Democrats in Congress and in interest groups should it tamper with the rule.

The rule has become an inviolable symbol of liberal opposition to media consolidation. What impact the rule actually has on diversity of views and free and open discourse in our society doesn’t seem to matter anymore. As I said in my July 8 column, it’s liberal orthodoxy.

We can’t fault Clyburn entirely for the 41-year-old rule having survived another run through the rulemaking mill. By insisting on unanimity, Wheeler was, you could argue, passing the buck. He can now tell people that deep down he realized that perpetuating the rule is as mindless as most people think, but that he felt he had to defer to Clyburn.

Tellingly, Wheeler did not issue a statement explaining his vote, which would have put his personal stamp on the order. At least Clyburn had the guts to do that.

Frankly, I cannot do a better job of vivisecting the FCC order than Pai did in his 14-page statement. I recommend it.

Newspapers are in serious trouble, he says. “That’s why it makes no sense to discourage investment in newspapers and the journalism they support. In this day and age, if you are willing to invest in a newspaper, we should be thanking you, not imposing regressive regulations.

“Our action (or, to be more accurate, lack of action) is particularly unfortunate because broadcasters are well-situated to partner with newspapers. The reason is simple. Investments in newsgathering are more likely to be profitable when a company can distribute information over multiple platforms.”

The order offers what it calls a “modest loosening” of the rule. It creates an exception for combinations involving newspapers or stations that have failed or are failing and it says it will waive the rule if the parties can show that a merger “would not unduly harm viewpoint diversity in the local market.”

Pai isn’t impressed by either concession. “By the time that a newspaper has failed or is failing, it might be too late to save and/or might not be an attractive investment opportunity for a broadcaster,” he says.

He was equally dubious about the waiver. “[W]e’ve seen this song-and-dance before. When the Commission adopted JSA restrictions two years ago, it set up a similar waiver process to preserve beneficial JSAs that it publicly touted when useful for defending its new policy.  But that process was a sham. For the entire time that the commission’s JSA restrictions were in effect, not one waiver request was granted. “

One thing Pai does not address is the order’s lame new argument for hanging on to the rule: that the incentive auction will transform broadcasting in “dramatic” and unknown ways.

“[A]ccordingly, it would be premature to change our media ownership rules in anticipation of the incentive auction’s impact at this time,” the order says.

What a great excuse for doing nothing — ever. The broadcasting businesses has been changing in dramatic and uncertain ways since the rule was first adopted in 1975, and it’s my bet that it will keep changing in dramatic and uncertain ways.

Coming up is ATSC 3.0, the Next Gen TV standard. When the FCC revisits the crossownership rule in 2018 as required by Congress, I suppose nervous Democrats then can say, well, we can’t mess with the rule until we see what impact the new standard has on the business. It’s always something.

Despite the noise generated by the crossownership rule, broadcasters are more focused on the local TV ownership rules, which have a more immediate and practical impact on their businesses.

By the same 3-2 vote, the FCC affirmed the existing duopoly rule that says one broadcaster may own only two stations in a market and then only if one is not among the four top-rated (a Big Four affiliate in most cases) and if there are eight other station owners in the market. The rule has the effect of barring duopolies in small markets.

The FCC also restored its ban on joint sales agreements, which broadcaster had been using to circumvent the duopoly rules. The ban had been vacated by a federal court.

Again, Commissioner Pai: “Despite the fact that numerous television stations across the country have participated in JSAs for many years, the commission still cannot find a single case in which one station in a JSA has exercised undue influence over another station or influenced a single programming decision of another station.

“The commission’s JSA analysis remains unjustified jabberwocky.”

I have only one gripe with the Pai statement. In making the point that the crossownership rules are outdated, he says they are “as timely as rabbit ears.” Perhaps, Pai hasn’t heard, but rabbit ears — indoor antennas — are in, and they will be more in if the FCC authorizes ATSC 3.0.

The Next Gen TV standard is badly in need of a champion at the FCC.

Ajit, do you want the job?

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or [email protected]. You can read earlier columns here.