The FCC Showdown

On October 22, 2003, the FCC held a hearing on localism in Charlotte, NC. FCC chairman Michael Powell probably wished he’d stayed home.

There was a kind of “Showdown at the OK Corral” feeling to the whole thing, with nearly 350 witnesses—everyone from fundamentalist Christians to independent film producers and songwriters—making strange bedfellows as they ranted and raved at the FCC commissioners. At times it seemed that all they had in common was their anger.

For the FCC, whose deliberations over licensing and market share rarely attract anyone but the wonkiest political insiders, being at the center of the storm was a new experience. And the Charlotte hearing was supposed to be about localism, supposed to give broadcasters in the area a chance to explain how they were working to preserve local programming and news. So where did all the anger come from? In order to understand that, you have to go back to last winter, when the FCC proposed to make a dramatic change to its media ownership rules for broadcasters—including raising the cap on ownership of the national viewing audience from thirty-five to forty-five percent.

In what now appears to have been a monumental misstep, Powell announced that the FCC only had enough money for one public hearing, leading dissenting commissioners Michael Copps and Jonathan Adelstein—who would vote against the new rules—to organize opposition across the country. Suddenly, the FCC and its decision-making process were leading on the evening news. Despite the opposition, the FCC pushed forward and narrowly passed the new rules in June on a 3-2 vote. The new rules and the lack of public input provoked a maelstrom of controversy. Everyone from National Rifle Association executive vice president Wayne LaPierre to musician Billy Bragg stood up to decry the relaxing of ownership regulations. “These big media conglomerates are already pushing out diversity of political opinion,” LaPierre complained to the “Austin-American Statesman”.

Then, on August 20, as political opposition in Congress reached a fever pitch, the FCC announced that it was embarking on a new initiative to study localism in broadcasting. Hearings would be held in six locations and would focus on how broadcasters are serving their local communities. Cynics said the planned hearings were political farce, and that the FCC was just giving big media companies a platform for defending the higher ownership caps by boasting about their commitment to localism. With all of the unexpressed anger out there, it was no wonder that in Charlotte the commissioners faced a rehashing of the debate on the new ownership rules, and it’s clear that whatever the FCC tries to put on the agenda at the next hearing—scheduled for San Antonio in January 2004—the commissioners are going to get an earful.

The dangers for independent film and video makers and producers are many right now. Powell’s laissez faire approach to regulation could well lead to cross-ownership of film and cable delivery companies and further consolidation in the industry. Most problematic is the very real possibility of vertical integration. A handful of companies could conceivably own studios, cable companies, video/DVD rental stores, and movie theaters, allowing for absolute control over the future of the market. We’ve already seen vertical integration in the music industry. Clear Channel, the most audacious of the high-profile corporate media giants, has been accused of using its ownership of ticket distributors, major concert venues, and a dominant ownership of airwaves to ensure artists use all three of its services. No airplay unless you use its ticket service. No ticket service unless you use its venue. The film and video corollary should be obvious.

Along with vertical integration comes the possibility of monopsony (the flip side of monopoly, when there is no real competition between companies that will actually purchase a given product or service) through further consolidations. With relaxation of ownership regulations, independent film and video makers and producers could see their markets—and their ability to charge a fair price for their work—disappear.

So where’s the good news? Well, the FCC and the issues around consolidation finally have the public’s attention. Constituencies with varied and competing interests have now come together to oppose consolidation and create grass-roots support for localism and diversity of voice. While many independent artists have portrayed the hearings as an empty gesture, the rule changes—and by extension Powell himself—are more vulnerable than it may seem. The 3-2 vote by the commission makes the rule susceptible to court challenge and there’s a very real chance that Congress will be successful in overturning the new forty-five percent ownership cap.

The Congressional efforts indicate the breadth of public anger over the changes. While no one pretends that the hearings themselves will result in the voiding of the rules passed to date, the FCC is not doing this for fun. The commission is at least conscious of appearing to be interested in what the public has to say. Media coverage is keeping the issue front and center, and when hearings unfold in Santa Cruz, California, Rapid City, South Dakota, Portland, Maine, and Washington, DC this year, you can bet that the press will be watching.

For the first time in a long time, artists and independents have a real opportunity to contribute to the debate. Unfortunately, we may be squandering it. For all the noise that opponents of consolidation are making, there is little discussion of where we should go from here, little discussion of how the FCC should figure in the brave new world of media delivery.

A fundamental problem is that the FCC has been using rules generated in the 50s and 60s, based on models that, in technology terms, are hundreds of generations old. There is no longer one mechanism for transferring a particular medium. Television channels compete with other television channels, but also with cable and satellite. With this change there has also been a shift in the standard for evaluating whether to implement a rule that will constrict the free market. The law says that the FCC must look at “public interest, convenience, and necessity.” Traditionally, the FCC has regulated emphasizing a perceived public interest—i.e. diverse ownership of broadcast organizations, but the Court of Appeals for the DC Circuit seems to be erring on the side of the free market, telling the FCC that in order to regulate at all it must show empirical proof that a new regulation is “necessary,” and that without it, American’s constitutional rights will be curtailed.

The court’s statements were music to Powell’s ears, but he misstepped by not defining what the public interest was in the new ownership rules he supported. In short, he brought the anger down upon himself by passing rules before defining what the public good will be under his FCC. This series of hearings on localism are his first steps in creating that definition, and if we don’t take this opportunity to create a new model for defining public good, Powell’s actions show that it will be defined for us.

Those of us working to preserve competition, choice of voice, and localism, must look ahead rather than backward. The landscape is new and the emerging mediums do allow for the possibility of richer competition. We have the attention of the commission and the public, but we must aggressively act to define the public interest. I encourage the independent community to connect, if you haven’t already, with organizations like the Writer’s Guild, AIVF, Consumer Federation of America, and the Media Access Project to bring added strength to your efforts and to ensure that those with a stake in reversing the current trend are focusing on the long-term policy remedies, not just politics.

At the writing of this article, there are five more hearings scheduled, and we—both the independent community and the general public—have got to be there. The rules that will really affect the work of independent film and video makers and producers have not yet been passed, but they are on the way. Rules that allow for the consolidation of film and video outlets may not garner the same widespread opposition as the rules allowing for broadcast and news ownership. The independent community has the opportunity to set a new model for public good in the modern age. And all of us must work now to frame the debate and create a clearly defined public good that protects the competitive marketplace and offers a wide spectrum of consumers for a variety of voices in film and video. It’s okay to be angry, but if we don’t come to the table with new definitions of public good, we may win the battle but lose the war.