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Politics and Economy:
Transcript: Rick Karr Interviews FCC Chairman Michael Powell
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RICK KARR: Chairman Powell, a lot of the stuff we heard yesterday [at the Richmond FCC hearing, February 27, 2003] seems to suggest that we have a really sort of diverse, healthy democratic media right now. Do we really need to change the rules, the ownership rules?

POWELL: I don't that anything we're contemplating is not going to leave a diverse, healthy media in place. But we have to do things that are reflective of the reality of the media marketplace, and we have to do things that comply with the law. On the first point, I think we have to continually look at our rules to make sure that they are legitimate in light of changes in the market.

Almost every rule that's being considered here pre-dates cable television, pre-dates direct broadcast satellite television, pre-dates the Internet. And I think the courts have become suspect of the choices we make, because we have sort of willfully disregarded those things in making our judgments.

So, what's really at stake here is to take account of those changes, and to follow Congress' mandate to review the rules thoroughly, and produce a result that works. We're as committed as we've ever been to the goals that a healthy and diverse media produce.

RICK KARR: I heard you mention in there marketplace realities. I heard you mention the law. Didn't hear you mention however, the things a lot of people seemed to be concerned about yesterday in Richmond, which is the public interest.

POWELL: I don't think so. That's exactly what I meant to say. As I concluded, I think that the goals that we are attempting to produce are the same as they ever were. I'll spell them out. But that's the public interest. Competition, diversity and localism are important components of the media. It is in the public interest to preserve those goals.

What we're really arguing about is the technical discussions that go on in Washington, and what's the best way to maximize and achieve those objectives. There are lots of different vehicles available to policy makers to try to achieve those goals, and that's what we're working through.

But I can assure you, I don't think there's any failed commitment to continue to pursue those goals, and to continue to preserve the public interest in this regard.

RICK KARR: There was an interesting question yesterday. A woman in the audience asked, "I'm an average citizen. What can I do to help give the commission empirical data to help the commission to make it's decisions?"

POWELL: Well, the input of individual citizens is invaluable. They can file comments and express those views on the record. And we can use them. Part of what they have to count on is us to be their surrogate. I don't think that the average consumer can probably individually produce the kinds of data that the court insists we have.

I'd like to be clear. I've never said that we need exclusively empirical data. I think there's an enormous amount of qualitative and subjective analysis that will take place here. But what I'm dealing with is an O for five record in the courts, partly because there's a belief that we are dealing only with individualized testimony, and that the courts have said, "Show me. Show me that the market really does do that when this happens. Show me that that will be the result."

And so, the exhaustive 12 studies that we've done, and other empirical evidence we've tried to collect, basically, are necessary to validate any rule. So, I think that if you believe in some rules, and some continued regulation, you'd better get the empirical data.

But it's too much to ask that any individual citizen is going to be in their own right able to do that. But that's why we serve the public for them, to do that for them.

RICK KARR: You've been portrayed quite a bit in the media as a free marketer, as a sort of-- economic libertarian, I guess. Do you think that's a fair portrayal?

POWELL: The latter, no. The former, yes. I'm as much of a free marketer as I think every leader in this country, Republican and Democrat, has been. America is a free market country. American capitalism has probably produced more consumer welfare than any other system embraced in the world. And so, I sort of happily accede to that.

But the suggestion that I'm libertarian, I disagree. I wouldn't be in government if I didn't believe government had a valuable role to play. And as an antitrust lawyer, I've blocked many a transaction. I've ruined the days of many a corporation.

And by the way, corporations don't like the free market. It's not a pro-corporate view, necessarily. If they had their way, they'd never have to compete. If they had their way, they'd never have to face the hot breath of competition and invasion, and a disruptive market.

So, I believe in the market, because I think it's the best way to get dialogue between consumers and producers. But I also believe that markets fail. And government has to intervene. I also think that corporate activity can harm individuals, and government ought to do something about that. I personally believe in ideological temperament. I'm fairly moderate.

But I do believe in the market, as do, I think, most of our country's leaders. And I believe that it is a valuable mechanism to consider when trying to find the best welfare for consumers.

RICK KARR: How does the limited nature of spectrum and licenses for broadcast television play into that market idea? Despite the fact that it's a relatively small portion of the population that gets over-the-air television exclusively, it's still a limited resource. So, how does the market interact with that?

POWELL: It is a limited resource. A very good question. And I think it's been the cornerstone of the way people have approached the way to regulate television. But I think one of the things we have to come to grips with is increasingly, the vast majority of Americans are not watching television using the very air waves you're referring to.

Eighty-six percent of the American populace watches television over cable or direct broadcast satellite, to which they pay subscription fees, to which there is no over-the-air spectrum involved.

Yes, we can talk about what shows are popular. And many of the shows that are popular come from broadcast networks, but they're being watched over a medium that doesn't make use of those infrastructure.

We do worry about those 15 percent. But as we start to go into the future, we're gonna worry about this spectrum issue, because I think TV has shifted dramatically, that the vast majority of us pay for TV. And to the extent we want to preserve free over-the-air TV, I think we have to be very concerned about its continued economic viability as it competes with cable and direct broadcast satellite.

I think one of the things you heard at that hearing that often gets lost, -- if the great resource is free, over-the-air TV, and the government isn't going to subsidize it, we'd better make sure it remains economically viable, or it's not going to be here to talk about.

A lot of these networks, if they chose to, could put a substantial amount of their programming on cable and forget the spectrum. You can have it back. There's a reason the NBA season now, almost has to be exclusively watched over cable. Hockey games, football games-- networks increasingly cannot afford to purchase and maintain that program under their business model.

So, I care a lot about free over-the-air TV. But I also am watching the trends, and I think I am concerned about its continued economic foundations, if we're not careful-- and treating the public trust model, which is all about the air waves, is fine up to a point. But it ignores the reality of the change that's gone on-- among the American citizen, and the American consumers.

RICK KARR: We have two different economic interests, though, when we talk about free, over-the-air broadcast television, because we have on one hand, the networks, two of the big four, are gonna lose--


RICK KARR: --a lot of money this year. For the past 15 years or so, they've been having a tough time economically.

And then, we have local stations which are running margins, 30, 40, 50 percent. Everyone we've spoken to says, "That's an incredibly profitable business."

Bottom line, from those who oppose lifting say the 35 percent cap is, these are big companies with deep pockets, the networks, that want to get in on the very profitable game, and don't want to have to change their own business model. You think that's an accurate assessment of the situation?

POWELL: Well, it's interesting. I mean, in some ways, your own question sort of belies the problem. If the networks are the ones having the problem, and the network ownership cap is about-- loosening the restrictions so that they have a better opportunity at revenue that will continue their viability, that's an almost all right argument for looking at the cap carefully.

The facts you postulated might be a strong argument about why not to lift local rules. Since they're already profitable, why do they need more relief? But I do think that if the facts, as you put them, are correct, that the networks are the ones struggling-- it would just seem to me appropriate that you would look first as to whether the constraints are part of the fact that's contributing to that.

Now, I'm not prepared to argue that. I haven't concluded that. But I do think that's the way we look at things. But I want to be very clear for you and your viewers. What the commission doesn't do is try to make people money. I mean, our industry is fascinating, because it's filled with billion dollar self-interested greedy companies. You know, and I don't-- I don't listen very long to any company's pleas about its personal viability.

By the way, the market lets people get killed. If you really are a believer in the market, like I do, you also let the market kill off companies that are not effective and can't adapt. They're not particularly happy about that aspect of the market, but I think it's a natural part of the system.

So, it isn't really about them, it about consumers. And I think that the only way you should worry about the economics of free over-the-air television is, is whether it will effect the continued viability of that medium for consumers. For citizens.

And if it isn't, and consumers and citizens are gonna increasingly be on paid platforms, then we have to begin to sort of migrate the regulatory framework to be more focused on a wider variety of platforms and sources.

I often worry that because there's almost a religious quality, the fight over free over-the-air television that we'll all be-- you know, on the front deck of the Titanic, singing our principles as it slips below the waves-- true to form to the end. But at the end, there's still an end. And that's one of the things that worries me.

RICK KARR: When you make decisions about things like this, do you distinguish between news and information programming and entertainment programming, and the effects that rules will have on the two kinds of programming, and how do you weigh them, relatively?

POWELL: We do indeed. And you really have pointed out what makes it so hard to make policy in this area. Because I think that when you get to the arguments about democracy and citizenship, you tend to get down to the focus on news-- critical information, political information, to which we make informed choices.

But it's also important to remember that the vast majority of programming that's on television in a given moment, in a given day, is entertainment. I don't know what the effect is on democracy if Friends gets on versus The Sopranos at a given hour. I suppose one could make the argument.

But you know, it's very difficult to sort that wheat from the chaff. But we do try to do that. You know, in our studies we go out and look very carefully at formats, and news quantity, and to the extent we can, look at the quality.

But that's a very slippery slope, because one person's sludge is another person's-- you know, adequate information. Which becomes very difficult in a free democracy that's diverse.

I worry about Citizen Kane, but you also better worry about King George. And I don't think the American public, in their First Amendment rights, want to substitute my values for those of a corporate citizen either.

And I think the government shouldn't necessarily-- in the name of the First Amendment, trample on the First Amendment in another way by filtering what people see, and the way they see it.

So, I get very nervous when we talk about the structure of rules, people say, "Well, that's why TV's indecent." Or, "That's why TV is violent." Because I think that's the beginning suggestion of-- then, the government should determine which shows are too violent, and not violent enough.

I don't know about you, but I have a difficult time distinguishing whether Schindler's List or Saving Private Ryan is an acceptable form of violence, or whether Bugs Bunny and the Roadrunner are not. And I don't know that three of five unelected regulators ought to be the ones making that decision for the public.

RICK KARR: I heard an activist, a community activist, who'd shown up yesterday, say-- "You know, what we're doing is we're watching a government body trying to make a decision based on a history that hasn't been nearly as diverse as the history we have now.

Now that we have dozens, if not hundreds, of channels of television in the home, now that we have the Internet, are any of the standards we had in the past adequate to figure out where we should be going now?"

In other words, this activist was arguing, "Shouldn't we have 30 or 40 companies providing this instead of seven or eight companies controlling the vast majority of the audience, on cable and broadcast."

POWELL: Well, I think I would first-- not having heard the activist directly, but I think I would agree with part of what the individual is saying, which is I do think that we have kind of an explosion in number of outlets and diversity, and that we have to come to grips with that. And I would agree that we need new tools.

I mean, I think that if there's only one message-- I am less concerned with what specific outcomes we achieve. I hope we achieve a very specific set of new tools and methodology for me, and future chairmen, and future commissioners to effectively use-- that would be judicially sustainable, that allow you to make those judgments.

And I think the way we looked at in 1960 or 1950, or 1970, which is what most of these rules are based on, that we replace that with something that's more faithful to the current realities.

But should there be 30 owners? I mean, there's one problem we're always gonna have here. And I think that everyone will just have to sort of grapple with in their own way.

Which is-- television is private and commercial. It could be different. We could have the BBC, like they do in the U.K.-- virtually every other democracy deals with this in a very different way. It chooses to have government-sponsored television.

But as long as television is commercial, and it's dependent on free over-the-air advertising, and the way you get free over-the-air advertising is you have to deliver the most eye balls, and it doesn't matter how passionately those eye balls like the show, they just have to be raw numbers, then there's always this sort of bland quotient.

It will always play to the largest swath of audience possible. And I think that that's why you find more diversity on cable, and you find more diversity on DBS, because as you have more channels-- and pay subscription, consumers can express their preferences. I'm willing to pay for this, but not for that.

So, would there be 30 [owners]? There has to be-- the amount of revenue in the system has to be capable of supporting 30. Because there is no subsidization. So, you're going to get the number of network providers that the market will sustain.

By the way, I don't necessarily rest on the laurels of six [major media companies]. But I always giggle a little bit as an antitrust attorney, would I love to have six competitors in so many other markets in the United States?

I'd love to have six auto companies making cars in the United States. I'd love to have six home depot competitors in my local hardware, home improvement market, or six grocery stores.

I do agree with people who say, "Oh, well-- but TV's different. This is key to our messages." I agree. But I think part of what gives us anxiety is not that there are only six, but that they're big.

And-- a big versus smaller-- perhaps more radical or independent kinds of programming. I think that's a fair argument. But we should distinguish between whether we have enough of people, or whether we just have an anxiety about their size, and the power that they wield as a consequence of their size. But they do compete with each other. They do compete pretty heartily.

RICK KARR: Do you think that size matters? I mean, do you think that some of the people who are concerned about size are right to be concerned about the size of these companies?

POWELL: I think they are. But the only thing that I sort of encourage citizens to do is-- you have a right to be concerned, but you should also be intellectually honest, and count the benefits. You know, if we switch the discourse to broadband or something, you'd hear a lot of people talk about the digital divide.

Part of what they're talking about is if I live in rural Montana, I want to see the same great stuff they see in New York City. There are a lot of people would be very upset if they don't get HBO, or they don't get Sopranos, or they don't get some of the quality shows that some of that size is able to deliver. Or, even news programming.

Because we have strong evidence that a lot of times local independent-run stations cannot afford to bring quality local news. Sometimes when a larger entity takes over, their resources are available to put that back on the air.

The problem is, it's just not a simple question. You can't say big is always bad, and you can't say it's always good. But we have to weigh both the benefits and the burdens before you make a judgment.

And all I know is there's an enormous amount of product on TV today that is in part a consequence of the resources and size of some of the providers that I think the country would be sorely remiss without.

I'll just leave you with this name. Another democracy on this planet, whose TV system you would substitute for ours? We are the envy of the world in our medium, in its depth, diversity, breadth, information sources, indeed, most of our stuff is the source for the rest of the world. I think that's in part because we do enjoy the benefits of size.

RICK KARR: Is Finsin (PH) even on the table here? Some people in Hollywood are trying to get it on the table.

POWELL: You know my view about that-- it's very premature, because we've heard about people trying to get it on the table. The question is, it is not a part and parcel of the current proceeding. It is a separate distinct question than the structural ownership rules.

The proceeding we're doing now is specific to the statute, which says to look at the ownership rules. That's what's at issue in this proceeding. Any party or set of industries can petition the government to consider new rules. I'm not sure, I don't think that's happened yet. If it happens, I can only say that we'll give it consideration. But it is not part and parcel of the proceeding that you're covering, that you're hearing so much about.

RICK KARR: Thanks very much.

POWELL: Thank you.

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