Commentary: FCC ruling is right

By Chris Charron, Group Director

The ruling by the Federal Communications Commission to loosen media ownership rules is overdue, given how technology has expanded the range of available media sources. Media companies should prepare to exploit the new rules.

We can't understand all the sudden fuss about Monday's decision by the FCC to loosen media ownership rules. Have critics been asleep for the past 20 years?

• Media choices are more numerous than ever. In 1960, when some of the FCC regulations in question were written, U.S. consumers could watch six TV stations, read 4,500 magazines and listen to 18 local radio stations. Today, the average American can choose from more than 100 TV channels, 18,000 magazines, dozens of radio stations, 20 million Web sites and 2,400 Internet radio stations.

• More choice means more diversity of views. The multitude of cable, satellite and Internet choices has led to a broad range of media viewpoints. Take Iraq war coverage: The six major news networks had a range of viewpoints on war events--with ABC the most critical and Fox the most supportive--a far cry from the well-documented liberal media bias of the past. Viewers seeking a global perspective could even sample the BBC or Al-Jazeera, online or via satellite.

• A free market is a powerful check against bias. A media conglomerate that chooses to bias its reporting is foolish. Consumers vote with their feet--or eyeballs--by changing the channel. Advertisers can do the same if they find programming disagreeable--as Procter & Gamble did when it pulled ads from the Dr. Laura Schlessinger radio show. Media companies have enough trouble today competing for audiences and ad dollars without accusations of bias.

• Public service should be publicly funded. Face it: Media is a business. Public service ceased being a priority for media outlets long ago. Most still understand that it's good for business, but many are faced with the daily challenge of turning a profit in an environment of fragmenting audiences, ballooning content creation costs, and competitive ad sales. If Congress wants to treat media as a public trust, perhaps it should boost PBS' funding levels to put it on par with the BBC.

Making the most of the new regulations
It's time to stop fretting about cross-media ownership and turn it into a successful strategy. Three of the new regulations will change how media companies operate: One, networks can now own TV stations that reach 45 percent of consumers, up from the earlier limit of 35 percent. Two, in cities with enough media diversity, a single company can own a newspaper and a TV station--a formerly prohibited combination. Three, the new law permits more duopolies--that is, ownership of two or more TV stations in the same market.

Here's what media companies should do now:

• Networks should seek to dominate the top eight markets. Already, the big four TV networks own their affiliates in the top four markets: New York, Los Angeles, Chicago and Philadelphia. As a bulwark

		Related story FCC eases rules on media ownership The commission's vote rests in part on the influence of the Internet and other technology.

• They should also romance satellite. So far, networks have been unable to persuade cable operators to pay for their HDTV feeds, but that could change with dominance of more markets. If Comcast won't pay, go to DirecTV--especially when its new owner, Fox Network parent News Corp., takes over. A DirecTV offering with all the local HDTV channels in the top eight markets would boost satellite sign-ups, jump-start cable HDTV and reassure Congress that looser network ownership rules have actually benefited consumers.

• Diversified media companies should build regional strength. To fend off the rising power of the networks, newspaper/TV companies like Tribune, Hearst Communications, Media General, Gannett and Landmark Communications must swap properties. For example, Hearst should bid for The Boston Globe to go along with its Boston TV station, and Landmark could acquire LIN TV's two-station Norfolk, Va., setup as a companion for its Norfolk Virginian-Pilot. Newspaper-TV combinations enable cross-promotion and shared content creation costs.

• Advertisers should ask for local bundles. Neither the paper nor TV news reaches the whole audience--but together they get a lot closer. Car dealers, supermarkets and other local advertisers should insist on bundled deals with ads on the cross-media owner's newspaper, TV airtime and Web site.

© 2003, Forrester Research, Inc. All rights reserved. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.