TERENCE SMITH: With demonstrators protesting outside and inside the hearing room...
PROTESTERS: Mass deregulation of mass communication is the end of democracy.
TERENCE SMITH: The FCC voted three to two along party lines to approve the most sweeping changes in the nation's media ownership rules in a generation. Before the vote, Commission Chairman Michael Powell took note of the opposition.
MICHAEL POWELL: I have heard the concerns expressed by the public about excessive consolidation. Though generalized worries do not clearly suggest specific answers to the specific issues the commission must address, they have introduced a note of caution in the choices we have made.
TERENCE SMITH: Specifically, the new rules state that in the largest cities, one company may own up to three television stations.
Nationally, a company can own stations that reach 45 percent of U.S. households, up from 35 percent.
One company can own a broadcast outlet and a newspaper in the same city, ending the rule against cross-ownership in all but the smallest markets.
The outnumbered Democrats on the commission argued that the new rules mean a single company could conceivably own up to three television stations, eight radio stations, the cable television system and cable TV stations, and the only daily newspaper in a single city.
The senior Democratic commissioner, Michael Copps, argued that today's decision will recast the media landscape for years to come.
MICHAEL COPPS: This path surrenders to a handful of corporations awesome powers over our news, information, and entertainment. On this path, we endanger time-honored safeguards and time-proven values that have strengthened the country, as well as the media.
TERENCE SMITH: Republican Commissioner Kathleen Abernathy dismissed fears of what she called a "mythical media monopoly."
KATHLEEN ABERNATHY: It is simply not possible to monopolize the flow of information in today's world. Indeed, the fall of communism in the 1980s and the end of military dictatorships in the 1990s shows that diverse viewpoints cannot be suppressed even by authoritarian governments, much less by private companies.
TERENCE SMITH: Democrat Jonathan Adelstein said the public response to the new rules has been overwhelmingly lopsided.
JONATHAN ADELSTEIN: Judging from our record, public opposition is nearly unanimous, from ultra- conservatives to ultra-liberals and virtually everyone in between. We have received about three- quarters of a million comments from the public in opposition to relaxing our ownership rules -- a new record -- and only a handful in support.
TERENCE SMITH: Some of that comment apparently came in response to a television ad sponsored by the advocacy group, moveon.org.
COMMERCIAL ANNOUNCER: Republicans on the FCC plan to get rid of an important regulation so Rupert Murdoch can buy more TV stations, radio stations, newspapers, giving him control over much of the news you hear. This monopoly is no game.
TERENCE SMITH: On Capitol Hill, lawmakers have split mainly along party lines, with Republicans supporting the commission majority. But today there was critical comment from both sides of the aisle, including Republican Senator Trent Lott of Mississippi.
SEN. TRENT LOTT: I do think this is a mistake. Maybe I come at it from a different point of view of others that think it is a mistake. I think the 35 percent national ownership cap is high enough. If it moves up to 45 percent, where will it go from there?
TERENCE SMITH: Legislation has been introduced in both the Senate and House that would overrule the commission and return the ownership cap to 35 percent.
In addition, consumer groups and some media companies have announced plans to challenge the rulings in court.
TERENCE SMITH: To explain the new ownership rules, we're joined by the commission's chairman, Michael Powell. Commissioner Powell, welcome to the broadcast. Would you make the case for these rules and the action taken today particularly in regard to how it would stimulate competition among media organizations, since that was one of the goals that the commission set for itself.
MICHAEL POWELL: Yeah, I think it's important to note, I have to say at the outset that one of the reasons for the rules is because Congress set up a regime in 1996 obligating the commission to review them every two years, and the court has taken a very strenuous view requiring the commission to prove why a rule was necessary. All the rules that we had until today had been struck down and were unenforceable, so by today's action trying to build a stronger foundation for the preservation of the rules and modifying them slightly, I believe we've reinstated meaningful limits that will operate in the marketplace.
On another note, I think there are many areas where there is going to be strong public interest benefit as a consequence of our choice because we will make a free over-the-air TV somewhat more competitive with the continued stresses they face with cable television, for example. In recent years, a majority of Americans have now moved to pay television. Eighty-seven percent of all Americans get their news, entertainment and information from cable or satellite. That has put an increasing fragment... that has caused an increasing fragmentation of viewers and medium-supported solely by advertising increasingly is looking for opportunities in order to ensure their competitiveness with cable.
The result of that is so that more and more quality program can stay on free TV and not find its way to cable. A citizen is hard pressed to see any sports season anymore on television. They see it on cable. I've been concerned by the growing creep of quality programs and series to pay television formats.
TERENCE SMITH: But how does it increase the competitiveness among those if one company can own more stations nationally, 45 percent versus 35 percent, or more outlets, news, print and broadcast in a given large city? How does that stimulate competition?
MICHAEL POWELL: It stimulates competition if you consider all the medium that are competing for the eyes and ears of that consumer. You can't just look at it narrowly in terms of the companies that are affected by these specific rules, specifically broadcast companies.
If you own a television station in the local Washington D.C. area, you are competing with the cable company. I think that, increasingly, that cable company has a source of revenue from advertising, it has subscription revenue. It's increasingly difficult to secure the kind of compelling content that consumers want unless you can deliver more consumers with the properties that you own.
And so we believe that small but modest increases in ownership opportunities at the local level would increase the ability for those stations to compete against cable, against satellite, against the Internet, against satellite radio and against all the many consumer devices that are increasingly delivering news and information to citizens.
TERENCE SMITH: Now, another goal that the commission set for itself was to encourage localism, which certainly includes local news coverage. How does this do that?
MICHAEL POWELL: You know, it's interesting -- localism is a cherished value in the United States, and I think we've always tended to operate on the assumption that that local station would have to be completely owned and operated in that local market. I still think generally that's true. One of the things the record indicated to us was that in many cases network-owned stations were actually producing 50 percent more local news than local affiliate stations were.
And indeed when we looked at quality of broadcast, we looked at awards that had been given out by news associations and journalistic associations, something like 200 to 300 percent more network-owned stations were winning quality awards for their compelling news, local news content. So part of the justification for allowing slightly more network ownership in local markets is we believe that they would bring more local news content of a higher quality to more local markets.
TERENCE SMITH: Is it likely then in your view that as some critics have complained that big media will get bigger as a result of this?
MICHAEL POWELL: I think there’s been a strong focus on "the big media," meaning usually the networks. I think the networks only have a modest opportunity to get bigger. The 35 percent ownership rule translates only into less than 3 percent of stations nationwide. Under our new limit, they would not likely control more than 5 percent of stations nationwide so while there will be an opportunity to get slightly bigger, there's still a pretty significant limitation on how far they can go. They can never buy any of the top four stations in a given market. And so I think that while we have permitted some new opportunities, they've been accompanied by some pretty meaningful limitations.
TERENCE SMITH: In the hearing today, there was mention of some 750,000 comments that the commission received on this and Commissioner Copps said that 99.9 percent of those were opposed to it. What does that say to you?
MICHAEL POWELL: Well, I don't know how accurate that is. I don't think anybody has ever conducted a truly meaningful survey of what we received but I will concede the point that we had strong amount of e-mail and news that expressed concern. You have to look at what we heard.
If you pulled any one of these post cards out of our bins, what you would have read is that there's a general anxiety or concern about consolidation. Many of the comments were I'm not for monopolization of the media; I'm against excess consolidation of the media. So am I, and I think so are my colleagues.
The key is what constitutes excessive and what constitutes healthy, and I think that's a difficult and subtle judgment. I think the commission has attempted to strike that balance in this proceeding. Just to put an emphasis on it, I think it's important for viewers to understand we eliminated not one single rule. And at least with respect to the radio rule, we actually tightened the rule. And for the four remaining rules, we modified them slightly. I think that's going to increase the possibility that they're sustained in court and that we continue to have a vibrant set of media limitations.
TERENCE SMITH: You mentioned the Internet a few minutes ago. But how does it increase diversity of viewpoint if half a dozen large companies own the most popular Internet Web sites, those to which most people go?
MICHAEL POWELL: Well, the thing is, I think that the government has an obligation to try to ensure that the consumers have plenty to choose from. I don't think it's a government question to interfere with the choices that they choose to make out of that abundance.
You know, we've heard the statistic over and over in this debate that five companies control everything, own everything, monopolize everything. Those are real poor uses of words because they actually own only about 25 percent of all the channels, but they happen to command 80 percent of the viewership. So what we're saying is even though you don't monopolize the amount of channels, you happen to be the popular channels. And I think that as long as consumers have choices and can go other places, I'm not very comfortable with the suggestion that government officials should try to limit the choices that those citizens have made. So if they're popular, why exactly is that a public policy problem has been my concern with that.
TERENCE SMITH: Finally, commissioner, put on your practical political hat for a moment and tell us what you think the prospects are that Congress will override what the commission did today?
MICHAEL POWELL: Well I think it's hard to say. I'm not particularly of the view that I think Congress is actually likely to pass legislation in this area because the truth is most of what we did today flows directly from statutory provisions in the Congress. I think it's understandable that many members will be concerned and we'll hear concerns about bits and pieces of the six major rules that were reviewed here.
At the top of the hour you showed some opposition to one of the six rules. But at the end of the day there are 535 legislators. I have been in a difficult situation because I've heard from many of them. A good number of them are also for liberalization. And, indeed, many in statements today wanted us to go dramatically farther. So I don't know. It's possible. But I would welcome it if that was their choice.
The legislature reflects in a much better than the commission does the will of the majority of Americans. And I think that if a majority of Americans have a strongly held enough view about a different kind of regulatory environment, it's healthy to allow the legislator to create that environment. But at the moment as a regulator I'm obligated to work under the foundations that they have already created.
TERENCE SMITH: Commissioner Michael Powell, thank you so much for joining us.
MICHAEL POWELL: Thank you for having me.