InBiz Blog

The Federal Communications Commission adopted three proposals yesterday. The first has measures to encourage media to be more responsive to local communities. The second rule attempts to increase diversity in media, through financing mechanisms, a diversity guidebook, and other minor measures. The third measure allows a newspaper to also own a radio or television station in the 20 largest markets.

The second rule applies mainly to small businesses, as defined by the SBA. The SBA small business size standard is $6.5 million in annual sales/receipts for radio stations or networks, $13 million for a television station, and a maximum of 500 employees for a newspaper publisher. I am not an expert on the media, but I wonder how realistic it is for a radio or television station of that size or smaller to compete in the major media markets, even if financing opens up somewhat.

In addition, the third measure facilitates the trend toward the consolidation of media ownership and seems to contradict the spirit and purpose of the first two measures passed by the FCC. Dissenting FCC Commissioner Michael J. Copps agrees:

"Women and minorities own low single-digit percentages of America’s broadcast outlets…. We are told to be content with baby steps to help women and minorities—but the fine print shows that the real beneficiaries will be small businesses owned by white men. So even as it becomes abundantly clear that the real cause of the disenfranchisement of women and minorities is media consolidation, we give the green light to a new round of—yes, you guessed it—media consolidation."

On December 17, Rep. Edward Markey released a Government Accountability Office (GAO) preliminary letter on media ownership issues, including diversity, in 16 media markets. The GAO letter references a Free Press study that shows that 5% of commercial television stations are owned by women and 3% are owned by minorities. These numbers are low, but in reality are slightly higher than the market share of women and minorities in the economy overall (4.2% for women and 2.9% for minorities). The problem is not specific to the media sector.

As we note in the Introduction of our 50-state study, the primary reason for the low and declining market share of WBEs and MBEs is not due to competition from white male-owned privately-held companies, but rather from publicly-held corporations. This is even more exaggerated in the media sector. According to the Census Bureau 2002 Survey of Business Owners, publicly-held corporations had a market share of 74.2% in Publishing (NAICS 511) and 73.5% in Broadcasting (NAICS 515). The market share of publicly-held corporations in all industries is 61.1%.

Commissioner Copps, again:

"Powerful companies are using political muscle to sneak through rule changes that let them profit at the expense of the public interest. They are seeking to improve their economic prospects by capturing a larger percentage of the news business in communities all across the United States."