September 08, 2003

Why the FCC Needs a New Chief

Something positive (at least temporarily) has come
from the shameless arrogance and naked servicing of
the corporatist media giants by Calm 'Em Powell's son,
Michael, the _resident's FCC chief. The US electorate
(right and left) has (at least temporarily) had its
eyes opened to one very serious problem...


By Thane Peterson

Why the FCC Needs a New Chief
Michael Powell's ill-advised efforts to help Big Media
united left and right alike. After such a fiasco,
resignation is the honorable option
Enough already. Michael Powell should resign as
chairman of the Federal Communications Commission.
Ever since President Bush named him FCC head in
January, 2001 (he had been a minority GOP commissioner
for three-and-a-half years under Bill Clinton), Powell
has tried to push through new rules that would allow
more ownership concentration in American media. His
efforts have been a bit like Silent Tom Smith trying
to saddle Seabiscuit with a 250-pound jockey.

Powell's No. 1 policy initiative has been repeatedly
rebuked. Over the summer, the House of Representatives
voted to roll back his regulatory easement. On Sept.
3, a U.S. Appeals Court in Philadelphia blocked
Powell's rule changes. And on Sept. 4, a Senate
committee joined the House in moving to halt a key
part of Powell's plan, which would raise the market
share of TV stations that one company can own from 35%
to 45% of U.S. households.

Powell has generated unprecedented opposition across
the political spectrum, from the conservative National
Rifle Assn.. to the liberal National Organization for
Women. By the FCC's own count, it has received some 2
million calls, faxes, e-mails, and letters opposing
the changes. This is failed leadership.

STAYING PUT. An FCC spokesman says Powell has no
plans to resign and directed me to a prerecorded
appearance on John McLaughlin's TV show One on One,
broadcast on Sept. 7. On the show, Powell forcefully
reaffirmed that he plans to stay on.

He should reconsider, and if he doesn't, President
Bush should ask for his resignation. "He has not
appeared efficient or effective," says Mark Cooper,
research director of the Consumer Federation of
America, which is calling on the FCC to revisit and
rewrite its proposed ownership changes. "He hasn't
been able to get anything done."

The Sept. 3 Appeals Court decision surprised even
Powell's harshest critics. The court still has to
decide on the merits of the legal challenge to the
rules, which would make it far easier for media giants
such as Disney (DIS ), AOL Time Warner (AOL ), and
News Corp. (NWS ) to continue expanding into new
markets and businesses. Says Celia Wexler, research
director of the Washington (D.C.)-based
public-interest group Common Cause: "The court
understood that if the NRA, NOW, Common Cause, and all
the other [disparate] groups oppose the [rules
changes], it means there really is a problem."

WORKING VACATIONS. This isn't an antibusiness issue.
The problem is Powell himself. At best, he has a tin
ear for public relations, at worst, he seems to go out
of his way to antagonize friend and foe alike. For
instance, before the FCC passed the media
consolidation changes on June 2, he refused to make
public the 250-page FCC document that formed the
justification for the move. He also held only one
public hearing on the media rules changes. Later, he
sought to justify that by saying that public hearings,
at about $20,000 each, were too expensive.

Imagine that -- major changes in the rules governing
media ownership of newspapers, radio, and TV, and the
champion of the effort says a public airing of the
merits of the case is too expensive. This rings a tad
hollow, given that FCC commissioners and staffers
accepted $2.8 million in freebie trips over the last
eight years from the industry, according to the Center
for Public Integrity, a nonpartisan Washington (D.C.)
research organization. The favored destination for
these "research" forays: Las Vegas. The trips
continued at least through mid-June, the center says,
though Powell has since promised to end the practice.

Michael Copps and Jonathan Adelstein, the two
Democrats on the commission, were so incensed that
they began holding ad hoc hearings around the country
on their own (most of which Powell refused to attend).
A firestorm of opposition erupted.

MASS MAILINGS. Powell tends to minimize the breadth
of the anger he has stirred up. He isn't giving
interviews these days to print media, his spokesperson
says, but he said in a recent C-Span appearance that
"three-quarters" of the 2 million missives opposing
his rule changes were from one group, the NRA, which
had its more fervent members each send in five
postcards, one to each commissioner. Even if that's
true, it means 300,000 NRA members opposed the issue,
as well as 500,000 non-NRA-ites.

That's probably more opposition than the FCC has ever
gotten before. It typically gets about 5,000 calls and
letters on controversial issues, the FCC says.

Powell never mentioned the outpouring of calls and
e-mail aimed at members of Congress. Common Cause and, an Internet-based liberal advocacy group
started by two Silicon Valley entrepreneurs, each say
300,000 people griped to their senators and
representatives via their Web sites. MoveOn also
collected 207,500 signatures on a petition to stop the

TIPPING THE SCALES. One reason for public anger is
the shoddiness of the FCC's research. Powell proudly
noted in his C-Span appearance that the FCC studied
the issues for 20 months and did "12 empirical
studies" of media concentration before coming up with
its new rules. Trouble is, most of the FCC studies
were so poorly designed and inconclusive that they
don't illuminate much of anything (see BW Online,
5/30/03, "Stop the FCC's Covert Operation").

Just as poorly thought-out is Powell's new "diversity
index." In an attempt to assuage critics who fear the
new rules will squash local news coverage, Powell came
up with a scale that purports to measure to measure
"news diversity" in various markets. But an analysis
by the Consumers Federation and the Consumer's Union
(publisher of Consumer Reports magazine) found it full
of "flawed analytic thinking" and "riddled with
internal contradictions."

For instance, the consumer groups note that in the
Tallahassee (Fla.) area, the proposed FCC index gives
the suburban Thomasville Tribune newspaper
(circulation 10,000) equal weight to the Tallahassee
Democrat (circulation 50,000), and twice as much
weight as the local CBS affiliate, which has 50,000
viewers per day and 59% of the local TV market. In the
New York City area, Shop at Home Inc., the Dutchess
Community College TV station, and Multicultural Radio
Broadcasting, owner of three small local radio
stations, each counted for more than The New York

POPULIST GROUNDSWELL. Even without the relaxed rules,
big media just keeps getting bigger. Both Viacom (VIA
), which owns CBS, and News Corp., which owns Fox,
already surpass the FCC's cap on TV station ownership.
The FCC gave them a waiver pending passage of its new
rules. And the media-consolidation boom shows no sign
of abating. Witness NBC-parent General Electric's (GE
) bid to buy Vivendi's (V ) media assets, which
include Universal Studios (see BW Online, 9/5/03, "Why
GE Went for a Little Glitz"). The media behemoths
still hope to beat back opposition with a big-buck ad
campaign and the slogan, "America Says: Don't Get
Between Me And My TV."

That won't wash. The populist groundswell, from both
the left and the right, against greater media
concentration is real. And leaders of both parties
have good reason to oppose the FCC's plans.
"Politicians fear that it will give the media even
more leverage over them," says Joseph Turow, a
professor at the University of Pennsylvania's
Annenberg School for Communication.

So, to recap: Powell refused to make a public case for
the merits of his proposal. Then, he skewed the data
to try to fool people. Plenty of other
telecommunications policy experts have the political
skills to handle the FCC job less contentiously than
Powell. He should leave, before he's shown the door.


Peterson is a contributing editor at BusinessWeek
Online. Follow his weekly Moveable Feast column, only
on BusinessWeek Online
Edited by Douglas Harbrecht

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Posted by richard at September 8, 2003 01:56 PM