SEPARATE STATEMENT OF

COMMISSIONER MICHAEL K. POWELL

*Re: 1998 Biennial Regulatory Review -- Review of the Commission's
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section
202 of the Telecommunications Act of 1996.*

The majority of the rules we review today are old. The National
Ownership Cap rule was first adopted in 1941. The
Newspaper/Broadcast[^1] and Cable/Television Cross-Ownership[^2] rules
were adopted in the 1970s. Though some of these rules have been modified
slightly over the years, their predicates have remained the same,
namely, that networks and stations enjoy tremendous market power that
can lead to anticompetitive effects. Moreover, the goals of our
structural rules also remain largely unchanged: (1) to guard against
ill-effects in advertising and programming markets, (2) to promote
diversity in programming, and (3) to promote locally-originated content.

Time does not stand still, however, and the highly concentrated video
entertainment, news and information markets of the past, with their
attendant limited programming offerings, have changed dramatically.
Congress' recognition of this dramatically changed and changing
landscape stands behind the Biennial Review process where we are charged
to "determine whether any of such rules are necessary in the public
interest as a result of competition."[^3] My dissatisfaction with the
present review is its stubborn refusal to fully consider the competitive
landscape today and validate that these structural rules still serve
their stated purposes---particularly in light of significant evidence
that the rules are unnecessary to protect competition (and may even be
causing competitive harm) and that diversity and localism are prospering
as a consequence of new venues and greater capacity available to
consumers. For these reasons, I concur in part and dissent in part from
this *Order*.

I. GENERAL CRITIQUE OF STRUCTURAL BROADCAST REGULATIONS

Before turning to my critique of particular rules, I first will sketch
the breadth of change that should compel a more fulsome review of the
rules than is represented by this Biennial Review. Second, I will
generally outline the government's stated interest in these rules and
challenge some of their underpinnings in light of the dramatically
altered video landscape.

## *[The Video Marketplace: Take the Mask off the Old Lone Ranger]{.underline}*

"Return with us now to those thrilling days of yesteryear."[^4] A time
when there were three television networks that dominated the land (NBC,
CBS and ABC). A time when there were only six television stations. A
time before cable television, before direct broadcast satellite (DBS),
before VCRs, before the Internet. It was a time of highly concentrated
video markets in which only one medium---television---reigned. It was a
time of nascent video advertising markets, and of very limited program
sources. In this era, there were few around to curtail the power of
these rustlers. There was only one Lone Ranger to discipline the
dominance of the "Network Gang of Three." But "who was that masked man?"
"A fiery horse with the speed of light, a cloud of dust and a hearty
'Hi-Yo Silver.'" The FCC!

Today, over fifty years after *The Lone Ranger* television show filled
the bubbled screens of our black and white sets, the Lone Ranger rides
again in an episode entitled *The 1998 Biennial Regulatory Review of the
Commission's Broadcast Ownership Rules.* So much has changed since the
days that Tootsie Roll, "America's favorite candy," and General Mills
brought to Americans the Ranger and his companion Tonto. Yet, the
nostalgic FCC Ranger cannot bring itself to take full cognizance of this
change and face whether it is time to retire the mask and let other
forces do the job. Instead, we continue to sprint ahead kicking these
rules forward, while being chased by a growing multitude (of new media,
of economic change, of logic).

By any measure, the market, and thus the foundation of the FCC's
structural ownership rules, has changed dramatically in ways that should
lessen the dangers we purport to address that are associated with market
dominance. The actor Clayton Moore starred in *The Lone Ranger*
television series from 1949 to 1956. Mr. Moore passed away just last
year, and in his name I couch my argument for a more thorough
examination. Simply put, there is *MORE*, more of everything:

> *MORE Broadcast Networ*ks: In the 1940s and 1950s there were only
> three networks (NBC, CBS and ABC). Today, those three are joined by
> Fox, WB, UPN, and PAX to yield seven networks competing for
> programming and advertising dollars.
>
> *MORE Broadcast Stations*: Most households live in a television market
> served by eleven or more local stations. In 1946 there were only six
> stations nationwide.[^5] Today there are over 1,600.[^6]
>
> *MORE Video Outlets*: Today approximately 81 percent of all Americans
> subscribe to either cable, DBS, or another multi-channel service
> provider, rather than receive their signal free and over the air.[^7]
> That is, the invention and ubiquitous deployment of cable and DBS
> services have given advertisers, programmers and Americans substantial
> alternatives to broadcast. These systems offer viewers a plethora of
> options unimagined when many of the rules reviewed in the *Order* were
> adopted. The average cable subscriber has 54 channels available to
> him.[^8] The average DBS subscriber has hundreds of channels available
> to her.[^9] Additionally, 50% of Americans have access to the
> Internet.[^10] Moreover, the ubiquity of VCRs, DVD players and other
> video medium offer consumers additional entertainment, news and
> information sources. And, more recently the Internet is adding yet
> another. Most importantly, there is no end in sight to this trend.
>
> *MORE Programming*: There are more sources of programming than any
> time in history. There are 170 cable networks and seven broadcast
> networks.[^11] The programs are also more diverse than in the "golden
> age of television," when Americans sat around watching the same basic
> shows. It was inconceivable in days of old that there would be
> channels dedicated to news 24 hours a day like CNN or Fox News. Or,
> that there would be channels dedicated not only to sports, like ESPN,
> but single sports like the Golf Channel. Or, that hundreds of movie
> channels would be available on their televisions, many on demand, with
> hundreds more titles in their local video store. Even on pure
> broadcast stations, there are more sports, movies, drama, and national
> and local news than at any time previously.

With so much more in the market, one can expect to find more competition
and more diversity. Advertisers have many more choices to display their
products. And, consumers have many more options to choose from as
sources for entertainment, information, and news. If, as I believe, the
good and plenty of outlets and programming is fertile ground for a
healthy marketplace, there is clear reason to question why such forces
(where consumers and producers interact) will not produce competitive
prices, competitive opportunities for programming, and robust options
for viewers. Yet, the Commission continues to place unsupportable faith
in the concept that such things can only happen by government fiat and
not by the natural forces of the market.

## *[To Question the Rules is not to Question the Venerable Goals of Broadcast Regulation]{.underline}*

The goals of our broadcasting rules are laudable. They seek: (1) to
constrain undue economic power, (2) to promote diversity and (3) to
promote locally originated programming. There may have been a time in
which such objectives could not be achieved without regulatory
intervention (though I question it). But, surely these values are not
incompatible with market forces, or market failures in the classic
sense. Thus, one does not abandon these objectives by calling on the
Commission to consider if the rules are necessary at all or in their
present form, particularly in the face of substantial evidence that they
are unsupported by the facts, and that they may actually in some
instances harm producers, suppliers and consumers. For an outstanding
overview of the current market conditions and public harms being caused
by some of our structural rules, I would direct the reader to *Old Rules
and New Rivals: An Examination of Broadcast Television Regulation and
Competition*,[^12] by Michael L. Katz, which is included in the record
of this proceeding.

*[Broadcast Economic Power in the Video Market]{.underline}*

Video producers make money by inducing viewers to watch their products.
If one follows the broadcast model, the product is free to viewers and
revenue is generated through advertising. The game here is to get the
most eyeballs you can, regardless of the type of program. Where one can
charge for subscribers, as can cable, DBS and MMDS, you can make money
both through advertising and by inducing viewers to pay for programming.

If the video market was highly concentrated, leaving few avenues to
reach audiences, that unquestionably could result in harm. For instance,
as is assumed by many of our broadcast structural rules, if a
broadcaster enjoyed undue market power it could theoretically raise
advertising rates to non-competitive, monopolistic levels, thereby
harming advertisers. Similarly, if broadcasters (individually or
collectively) could monopolize audiences they could harm suppliers of
programming by demanding uneconomically low program prices.

Yet, again, if one notes the dramatic change in the market (which the
majority only does superficially) one can see how questionable many of
the suppositions are that undergird our ownership rules. For example,
television networks have lost a substantial share of the national
viewing audience. Between 1952 and 1991, the prime time ratings of the
three major networks fell from 75 to 37.5, and by 1998 had fallen
another 25 percent to 28.3 percent.[^13] Are today's broadcast shares
large enough to allow broadcasters to unilaterally raise advertising
rates without constraint? This is just one question that deserves review
if we wish to continue to justify ownership restraints on our fear of
the impact on advertising markets.[^14]

Additionally, there has been an explosion of media outlets to which both
advertisers and programmers may turn, lessening the ability and
incentives of broadcasters to unilaterally dictate rates. With regard to
cable service, 67 percent of all Americans subscribe to this medium and
nearly 97 percent have cable available.[^15] Another 12.5 percent
subscribe to DBS, which is virtually available to 100% of Americans
within the continental U.S.[^16] Consequently, advertisers now have
other options from which to choose in reaching a national audience. In
the vernacular of antitrust, there are substitutes. If a network or
station owner attempted to extract monopoly rents, advertisers would
have other options for reaching consumers. Moreover, other medium may
prove more attractive to advertisers who can more carefully tailor their
messages to particular demographics on media like cable or DBS. At a
minimum, there is reason to question the blind assumption that
advertisers would be harmed without the protections of our ownership
rules, given the increased availability of other outlets.

The proliferation of other distribution outlets has also constrained
broadcast program purchasers from depressing the prices program
suppliers get. In fact, with more outlets, high quality programming can
"shop" for the highest rents. This explains the trend we see toward
cable and DBS capturing marquee programming such as sporting events, top
movies and increasingly major news, history, public affairs, and arts
programming. Indeed, contrary to what should be predicted if network
concentration were substantial, programmers are able to command a
premium for shows like *E.R.,*[^17] NFL Football,[^18] and NHL
Hockey.[^19] In short, it is hard to defend the assumption that
broadcasters have sufficient market power to command monopoly rents for
advertisements or to deflate prices for programming. Surely, one sees no
evidence to justify a standing structural rule, rather than rely on
antitrust enforcement.

*[Diversity in the Market]{.underline}*

Diversity is also an admirable goal, yet, it is an elusive concept. It
has come to mean many things. Limiting ownership concentration does one
obvious thing; it increases or maintains the number of different owners.
Limiting ownership and allowing more owners has three primary diversity
effects: For one, there are more broadcast properties and more ownership
opportunities available for more people. Protecting opportunity is one
way of promoting minority and female ownership. This is sometimes called
"source diversity."[^20] I will not discuss this point in this
statement. Second, more owners might mean more from which to choose.
Viewers will be able to see the different programming choices of
different owners, and it is hoped that these programs will vary in
content and style. This is what we often call "program diversity." The
third point is a subtle variation on the second. Proponents often urge
rules to promote not just different program genres or styles to capture
viewer interest, but different "viewpoints." That is, by the fact that
owners are different people or institutions, one might expect to see
different perspectives that are "antagonistic" to those of other
programmers. Let me first make some general observations about the
number of distinct program choices available to consumers.

It is said, "beauty is in the eye of the beholder."[^21] The same could
be said for television. It is difficult and perhaps constitutionally
impermissible for government to impose its conception of worthiness or
beauty on viewers.[^22] Yet, it is understandable to craft rules that
promote the widest swath of programming choice to match the infinite
variety of interests of the American consumer. Whether your taste runs
to WWF wrestling (perhaps the most popular programming on television
today), the symphony, sports, comedy, news, drama, feature film,
cartoons, music videos, history, public affairs, or shopping, the video
marketplace has more of it, in more colors and flavors, than ever
before.

To make my point I highlight a powerful and persistent trend in
programming---movement from broadcasting to narrowcasting. In the early
period of television, broadcasting was the primary means of receiving
video content (excluding the movie theatre). Broadcast is a medium that
provides one signal to many people. That is its central virtue, but also
its central limitation. Because it can only serve up one program at any
given moment in time, it has to find a program that appeals to the
broadest possible audience. This is particularly the case since
broadcasting is solely advertiser supported. Thus, almost by its nature,
broadcast has trouble being diverse---that is, serving a more narrow,
particularized community of interest is difficult, both in technical
terms (the signal goes everywhere) and in economic terms (to remain
viable a station must maximize eyeballs, *i.e*, aggregate interests).
When broadcasting dominated video programming the challenges of program
diversity were quite acute.

Cable, and later DBS, brought to the marketplace a new medium that had
characteristics that clearly enhanced program diversity and choice. A
cable system offers subscribers multiple channels. A subscriber that
hungers for sports might watch a channel dedicated to that genre
(*e.g*., ESPN, Fox Sports). A history buff the same (*e.g*, History
Channel). A movie fanatic the same (*e.g*., HBO, Showtime, Cinemax). A
news and public affairs junkie the same (*e.g.,* CNN, MSNBC, Fox News,
C-Span), and WWF fans can watch all day and night to their hearts
content. A system operator can offer this diverse programming
economically because he draws both from advertising and subscription
revenue. Subscription fees also allow a program producer to gauge a
viewer's preference. Programs that are strongly desired are more
valuable and thus more can be charged. (This is why there are tiers and
programming packages offered.) Additionally, the technical nature of the
system allows for this variety. Because cable is not hindered by
interference problems, like broadcasters, the system can be upgraded
continually to increase capacity and thus provide more channels.[^23]
The importance of cable, DBS and other systems is not just to increase
video competition. These mediums also have ushered in greater diversity,
for they can program to distinct parochial interest on a daily basis in
a manner that is challenging for broadcasting. The ability to program to
a wider variety of interests is what, in part, accounts for the fact
that the majority of Americans (nearly 80 percent) subscribe to some
multichannel service.

Of late, the trend toward tailored programming is getting finer with the
advent of digitalization and the Internet. Perhaps the penultimate
expression of diversity is the ability to program for a single
individual's unique interest. The video landscape is moving in this
direction. On the Internet one clearly sees the trend: "My Yahoo" and
"My AOL" for example. Products like WebTV, AOL TV, Geocast, and
<Excite@Home>, all promise to enhance traditional television product
with personalized, tailored content. These trends show clearly that the
breadth of unique and different programming has exploded and is growing
exponentially. Under the weight of such trends, I cannot begin to see
how one can claim the loss or fear of loss of diverse programs and
choices for consumers.

### 

###  

### 

### *[Viewpoint Diversity]{.underline}*

The strongest proponents of diversity in programming will insist that it
is not multiple, different choices that matter, but "viewpoint
diversity." Given the facts of the marketplace, I believe this to really
be the crux of the government's purported diversity interest. The goal
is not simply to provide choices that appeal to diverse interests. The
proponents want shows that are "antagonistic to each other."[^24] The
first problem with this conception is that it is unclear that a market
that produces programming that serves the interests of a broad and
varied audience does not also represent a sufficient number of
"viewpoints" from which consumers can choose.

Secondly, I question what the concept means for the vast majority of
programs consumers watch. Is NBC's *Friends* antagonistic to WB's
*Dawson's Creek?* Is ABC's *Who Wants to be a Millionaire* antagonistic
to CBS' *Touched by an Angel*? Or, is ABC's *Monday Night Football*
antagonistic to Fox's *Football Sunday*? It's hard to see the relevance
of this concept. Perhaps, the viewpoint interest is reserved for public
affairs and news programs, where issues might be presented and debated.
But, here, too, one questions its meaning. Local news programs rarely
editorialize, or pick political candidates, or take stands on major
issues such as abortion or gun control. The reason is simple enough:
because consumers do not pay to watch, broadcasters make money by
reaching the largest possible audience. They rarely take the kind of
risks that might endear them to some in the viewing area and raise the
ire of others. They are not in the "antagonizing" business. Moreover, I
am not sure why we are certain "antagonistic" programs do not sell. I
see plenty of evidence of opinionated programming: *Crossfire*, *Face
the Nation*, *Hardball*, *Larry King Live*, and why not *Jerry
Springer*, for examples. Are we to believe all of this would vanish
absent our structural ownership rules?

I also fail to see how ownership restrictions in themselves do much to
promote the goal of antagonism. Different owners may have different
perspectives, but they probably have more in common as commercial
interests than not, for each must compete for maximum audience share to
remain profitable. Moreover, the ownership class may include different
people, but it is hard to see how that ensures that they are different
in their viewpoints. We do not and could not possibly insist there be
Republican owners and Democratic owners, pro-gun and anti-gun owners,
etc. I would suggest some amount of "antagonism" sells. Controversy and
conflict are the stuff of good story. If different viewpoints are to be
found, I think they will be the products of the commercial market much
more than by our rules and our adherence to the high-brow ideal we used
to defend them.

### *[Localism]{.underline}*

Finally, I would like to say a brief word about localism, which is often
subtly distinguished from diversity in general. The principle is that
the government favors locally originated programming because that is the
programming most likely to serve the interests of those viewers and
listeners in the community of the licensed station. The majority of
stations are affiliated with a national network. Because the
broadcasting business seeks to maximize viewers, there has always been
concern that a powerful network would force local stations to carry
their national program, theoretically to the detriment of local viewers
and local interests. For decades, the Commission has pursued rules
intended to ensure networks do not dominate local stations and their
programming preferences.[^25]

One central failing of regulations intended to promote localism is that
they assume that such programming would not flower if networks and
stations were too large. One is hard pressed, however, to see why, in a
healthy marketplace, if the public values local programming, producers
would not supply it. If a local audience desires a program, and is
willing to watch the program, that program will attract advertising
dollars and thus a station or network will have an incentive to produce
and provide that show. Indeed, since most consumers purchase advertised
product in their local towns and communities, advertisers---even
national ones with local franchises---would favor programs that appeal
to local audiences.

I remain struck how often we simply assume that such programming will
vanish if we do not require it. Of course, if consumers do not want
certain kinds of local programming and it is not provided as a
consequence, there is no justification for the government to compel it.
Where government attempts to promote the messages and images that it
prefers, even where consumers themselves do not, we are no longer in
America and the First Amendment has been abandoned.[^26]

II\. CRITIQUE OF THE BIENNIAL REVIEW

I will now turn and address the specifics of today's *Order*. The
Commission has taken steps today to modify some of its broadcast
ownership rules in an attempt to make our regulations more consistent
with current marketplace conditions. While I support these steps, I
believe they are too limited in scope and reflect a continuing
reluctance to examine in a meaningful way the legacy of our broadcast
regulations. As a result, I concur in part and dissent in part to the
*Order* released today. I will address the rules to which I dissent or
concur below.

Before doing so, I wish to state my approach to the Biennial Review of
structural ownership rules. Since our charge is to examine whether a
rule continues to serve the public interest in light of competition, I
feel it imperative to always fully examine the state of the video
market---market share, number of competitors, competitive effects, ease
of entry and inefficiencies---and challenge the continued validity of
prophylactic ownership rules in light of this examination.[^27] I
believe the clear bent of the biennial review process set out by
Congress is deregulatory, in recognition of the pace of dramatic change
in the marketplace and the understanding that healthy markets can
adequately advance the government's interests in competition and
diversity. Thus, contrary to the approach of the majority, I start with
the proposition that the rules are no longer necessary and demand that
the Commission justify their continued validity. Against that backdrop,
I turn to today's decision.

[National Television Ownership Rule and UHF Discount]{.underline}

I respectfully dissent from the majority's conclusion that, based on the
record before us, the national ownership cap still serves the public
interest. The *Order* contains no meaningful examination of the market
or the state of competition, a glaring omission given Section 202(h)'s
directive to consider whether competition obviates the need for such
rules. This is particularly disturbing, since serious questions have
been raised (but not adequately addressed) as to whether this rule is
substantially related to the stated government interests of protecting
local competition and promoting local diversity, and evidence has been
presented that the rule may actually cause harm to the public
interest.[^28]

In the Notice of Proposed Rulemaking, we asked for comment on the effect
of the rule on competition in the national advertising and program
production markets. We also asked about the effect of the rule on
existing television networks and the formation of new networks. These
points of inquiry go to issues of competition in the national markets.
One would expect to see an examination of market concentration,
advertising and programming price effects, etc. The *Order*, however,
lacks any meaningful discussion of either of the national markets or the
formation of new networks. If it had, it would have noted the
substantial change that has occurred offering greater competitive
discipline and substantially increased diversity. *See* Section I,
*supra*.

Instead, the *Order* validates the rule on two other grounds: It states
that (1) additional time is needed to assess the impact of the local
ownership rule changes made last August;[^29] and (2) expresses concern
about the growing number of large group owners and the potential for
disruptive restructuring. None of these articulated reasons address the
national programming or advertising markets, or the rules' impact on new
or existing networks.

Indeed, the justifications appear to focus almost exclusively on
competition and diversity at the *local* level.[^30] It is not intuitive
why national ownership restrictions have any meaningful impact on local
competition or local diversity. We have very detailed rules limiting the
number of stations one may own in a given local market. Thus, no matter
how many stations one owns nationally, he cannot increase concentration
in the local market, by operation of our local ownership rules. Indeed,
these rules were modified less than a year ago to reflect our present
views on local competition and diversity. Consequently, I fail to see
the relationship between the national cap and the stated government
interest in local competition and diversity. Further, the *Order* does
not offer a meaningful explanation. I would note that on many previous
occasions the Commission has itself squarely expressed doubt about the
linkage between the national cap and its stated goals.[^31]

Not only are the stated rationales for retaining the rule in its current
form not persuasive, but the *Order* lacks any meaningful discussion of
the potential harms posed by the rule. For example, the study completed
by Professor Michael Katz raises the possibility of some non-trivial
harms associated with this rule. The study finds that the rule: (1)
limits economies of scale associated with common ownership, thus raising
costs and reducing incentives to invest in over the air television; (2)
blocks the expansion of particularly well-run station groups; and (3)
limits the ability of broadcast networks to own stations, an arrangement
that would improve coordination and lower the risks associated with
investing in high-quality, innovative programming.[^32] These harms are
not small concerns to an industry in the midst of remaking itself in
digital form and for whom every day the number of competitors increases
while total viewership declines.

These concerns are also strikingly similar to those raised by the
Commission in its decision to modify the Dual Network Rule. In the
Notice of Proposed Rulemaking in that proceeding, also issued today, the
Commission reviews with some specificity the current economies of the
network broadcasting market. As noted in the *NPRM*, networks are in the
business of producing mass audiences, and the size of that audience is
facing continuing erosion from cable and DBS. The *NPRM* finds that in
order for networks to be economically viable they must be "larger rather
than smaller as measured in terms of affiliated stations and the viewers
produced and sold to advertisers."[^33] In the dual network context, the
Commission finds that contract negotiations between program producers
and networks are extremely complex and, as a result, the costs of these
contracts are high. Integration allows for lower costs and better
allocation of risks.[^34] The NPRM also points to the amount of
integration that has occurred in this market after the repeal of our
financial interest and syndicated exclusivity rules (fin/syn) as
reflective of the difficulty in negotiating contracts.[^35]

I would argue that these same economic costs and efficiencies accrue to
a network's affiliate relationships as well. Contract negotiations
between networks and affiliates are also complex and the costs high. And
as in the case of the fin/syn rules, I would point to the number of
networks that are either closing in or at the cap as evidence of the
difficulty and costs associated with contracting with affiliates.[^36]
For those companies that are at the cap, these costs are a direct result
of our rules. But the *Order* not only fails to analyze these costs, but
also whether the costs associated with the rule are justified on the
basis of our interest in preserving competition in the national
programming or advertising markets, or even competition or diversity at
the local level.

The *Order* also states that a change in the cap may well influence the
bargaining positions between broadcast television networks and their
affiliates, and that we should proceed cautiously, particularly given
the restructuring that may be taking place concurrently on the local
level. However, we do not have evidence of a massive restructuring
taking place at the local level. Only 42 applications for duopolies in
local markets have been filed since we modified our local ownership
rules, and 19 of those reflect purchases of television stations that the
buyer already programs through local marketing or time brokerage
agreements. And, while I am sensitive to the shifts currently taking
place in the network/affiliate relationship, I am unconvinced that these
concerns necessarily implicate issues of diversity and competition at
the local level. Protecting one group of station owners over another for
its own sake is not a valid function of government. Nonetheless, I would
have liked to hear much more about the impact on local stations and how
that impact undermines the public interest in an NPRM that would more
comprehensively examine the 35 percent audience reach cap.

In short, the Commission's decision is deficient in several ways. It
fails to fully examine the video market and consider the changes in that
market. It merely assumes a valid link between a national limit and
local competition and diversity, despite fairly substantial evidence to
the contrary. And, it fails to consider the public interest harms that
may flow from the rule. I believe there is more than enough on the
record of this proceeding to call into question whether the public is
being served by the 35 percent audience reach cap, and I would have
supported a Notice to examine more thoroughly the possibility of its
modification or repeal. Further, I support the Commission's decision not
to amend the UHF discount. Any action on the discount should be
considered in conjunction with a thorough analysis of the cap.

[Newspaper/Broadcast Cross-Ownership Rule]{.underline}

I also must respectfully dissent from the majority's conclusion that the
newspaper/broadcast cross-ownership rule continues to serve the public
interest. While I welcome the decision to issue an *NPRM* to look at the
impact of the rule in particular circumstances, I am disappointed that
the Commission appears unwilling to engage in a broader debate about the
continuing validity of this 25-year-old rule, which has never been
modified. This rule raises significant First Amendment concerns, and, as
a result, requires rigorous analysis in support of its continuing
validity. To my mind, the *Order* falls short of that bar, and I cannot
conclude that the rule continues to serve the public interest as a
result of competition.

As I predicted in my separate statement to the *NOI*, the pivotal issues
in this entire proceeding evolve around the issue of diversity. Nowhere
is this more the case than in the analysis surrounding the
newspaper/broadcast cross-ownership rule. With respect to this rule, the
Commission relies heavily on its goal of promoting "viewpoint
diversity," which looks specifically at the amount of "local"
programming in a market. While the *Order* considers the effect of the
rule on competition, it limits its discussion to whether meaningful
efficiencies derive from existing combinations. A more thorough
competitive analysis would also discuss, for example, the relationship
between the advertising markets for broadcasting and newspapers and the
substitutability of the television and newspaper products. If they are
the same products, then the Commission should justify its decision to
permit television duopolies but not newspaper/television combinations in
local markets. If they are different products, then the Commission
should justify why it will continue to apply a complete ban on
cross-ownership between the mediums, based simply on their character.

The heart of the newspaper/broadcast cross-ownership rule is the
Commission's belief that these two mediums are the only two suited to
providing content oriented toward the local community.[^37] This *Order*
retains that thesis by rejecting the proposition that the explosion in
alternate sources of programming obviates the need for the rule. It
finds that: (1) "new outlets" (DBS/MMDS) are not substitutes for
newspapers or broadcasters on the local level; and (2) that cable is a
poor substitute because it is not required by law to provide locally
originated content, even though some systems do. By contrast, the
*Order* places faith in broadcasting, because broadcasters are required,
pursuant to their public interest obligations, to provide programming
responsive to the needs of the local community, and newspapers, even
though they are not required to, typically cover local issues. From
these observations, the *Order* concludes that broadcast television and
newspapers continue to be the dominant source of local news and public
affairs information in any given market. Let me address each of these
two propositions.

As configured today, it is true that most satellite and wireless based
video providers offer primarily national programming. The central reason
for this is technical. Satellite technology has had difficulty beaming
unique programming into local communities from hundreds of miles in
space. The technology is changing, however, and with spot beam
technology DBS providers are pursuing localized carriage. Indeed, they
fought aggressively to modify the Satellite Home Viewer Act to allow
them to carry local broadcast signals, feeling that it was a competitive
disadvantage not to have local content.[^38] Some companies appear to be
pursuing a satellite service that would include multiple channels of
tailored 24 hour local programming, including weather, sports, traffic,
arts and community affairs. Thus, as competition increases in providing
national programming content (broadcast, cable, DBS, MMDS, Internet)
carriers will naturally push into local content to differentiate their
offerings. It is clear, in my view, that content as an important
competitive offering. So, while I would concede that these services
provide limited local programming today, it is clear that video
competition is driving them to provide localized content and they should
not be dismissed as viable alternatives out of hand.

The majority's rejection of cable as a viable medium for local content
is more baffling. The fact is that many cable systems are offering local
programming, perhaps for more concentrated periods than broadcast
television. News Channel 8 in our own area offers just one example.
Cablevision's New York Metro service offering local news, weather,
traffic, sports and community affairs is another. Most cable systems
offer community PEG channels. Many systems offer local high school
sports, such as the Home Team Sports channel. HTS is apparently valuable
enough to consumers that it costs extra to have access to it. Moreover,
cable systems are operated locally, just as stations are, and I see no
real impediment to them offering local services if their community
wishes to have them. In fact, local cable systems are regulated by local
franchises that often extract local community services as a condition of
receiving a local franchise. Broadcast stations have no local regulatory
oversight. Despite all of this, the Commission turns a blind eye,
refusing to survey the breadth of local cable programming and dismissing
the argument by holding that because federal law does not mandate local
content, we cannot count on such systems providing it.

The Commission, however, repeats the same error I note in Section I. It
seems unwilling to recognize that localism sells. There are a bevy of
commercial motivations for offering such fare: advertisers want to
target groups with similar demographics and interests. National
programmers want to differentiate their products. Multichannel systems
want to increase the value of subscription fees. I find it a bit
remarkable we will not look to or credit competitive content, where
there is not a regulation compelling it, when reviewing the market to
see if competition has obviated the need for a regulation! Moreover, the
*Order* refuses to consider local content in cable systems, because it
is not required, but in direct contradiction is unobstructed in
crediting regulation-free local newspaper coverage because that medium
"typically" covers local issues. This is unquestionably arbitrary
analysis.

In defending this rule, the Commission again trumpets the value of
"antagonistic voices," or "viewpoint diversity." I question generally
some aspects of this governmental interest, which I discussed more fully
in Section I. I would only add a few points. For one, I do not see how
one can demonstrate that newspapers, by their very nature, are
antagonistic to broadcasters and, thus, their combination would
frustrate our stated goal. I have not observed or been shown any
particular give and take between these two mediums. I don\'t believe we
have even genuinely examined this proposition. Surely, one can
hypothesize that if a local paper and local station combined, there may
be some homogenization of news and information. But, one can equally
imagine that the combined resources may allow for greater and more
efficient coverage of local events that could not be covered by the two
individually. (There is some evidence of this where certain combinations
have been grandfathered). Second, I would note that a broadcast station
is the most likely candidate to take views antagonistic to another
station, since they directly compete for audience share. Yet, we allow a
single entity to own two broadcast stations in many markets, if enough
"voices" remain in the market. I do not see why newspaper/broadcast
combinations could not be regulated the same way.

Based on the above considerations, I cannot support the conclusion that
the newspaper/broadcast cross-ownership restrictions continue to serve
the public. I would support a proceeding that would look critically at
how the significant and far reaching changes in the video marketplace
since 1975 have eviscerated the need for what is an extremely
prohibitive regulation.

# *[The Cable/Broadcast Cross-Ownership Rule]{.underline}*

I also dissent from the *Order's* decision to retain the Cable/Broadcast
Cross-Ownership rule. The rule is 30 years old, and, as in the case of
the rules discussed above, I believe there have been sweeping and
pervasive changes in the local video programming market that warrant a
more critical analysis of the benefits associated with this rule than
has been undertaken in the context of the instant *NOI*. I believe that
many of the harms, such as channel positioning, asserted in the context
of this rule may be adequately addressed by other rules the Commission
regularly enforces. For example, I would observe that even if one were
concerned that cable might have an incentive in favoring its own local
station on its cable system, the "must carry" rules would largely deny
it the ability to do so.

Finally, I find it ironic that the majority is concerned that it will
lose an "antagonistic voice" if a local cable system is co-owned with a
broadcast station, but is unwilling to count that same voice as viable
in the broadcast/newspaper cross-ownership context. For all of the above
reasons, I would have supported a rulemaking to more adequately and
thoroughly examine whether this rule is still necessary to promote the
public's interest.

[The Dual Network Rule]{.underline}

I concur in the *Order's* conclusion that the Dual Network Rule as it
applies to UPN and the WB may no longer serve the public interest and
the decision to issue an *NPRM* to evaluate possible modifications to
the rule. While I would support an *NPRM* that would also consider
repeal of the current rule as it applies to the top four networks, I
believe that the record supports this more limited *NPRM* as an adequate
first step. I look forward, however, to continuing to review this rule
in our upcoming biennial reviews.

[Local Radio Ownership]{.underline}

I also concur in the decision today to retain the current local radio
ownership rules. However, I am unconvinced that the further proceeding
contemplated by the *Order* is warranted, nor do I believe, as a general
matter, that consolidation in the industry has threatened local
competition and diversity in a manner inconsistent with the intent of
Congress.

The *Order* contemplates a Notice of Proposed Rulemaking (NPRM) to
address several radio market issues. One issue is how to harmonize the
counting methods we use to determine both the size of the market and the
number of stations in the market that count toward the cap. To the
extent that this NPRM addresses what may be an arbitrary distinction
between counting methods, I support its issuance.

The NPRM will also ask whether the Commission should adopt a different
(and more restrictive) method for determining the relevant "market"
because our current definition may be "producing unintended results that
are contrary to Congress' intent." My single greatest problem with the
proposed action here is one of statutory interpretation. The effect of
its proposal would be to shrink markets and thereby substantially limit
the number of stations that one could own. When Congress adopted its
radio ownership provision, Commission regulations defined these markets
in a particular way. That way was the law of the land. The Arbitron
market definitions were in existence, but they were not used for
regulatory purposes, and Congress did not specifically incorporate them.
I believe that it is disingenuous to suggest at this late date that only
by changing the market definition to Arbitron can we effectuate what
Congress "really meant." I believe proper statutory interpretation would
lead one to conclude that Congress set its numerical limits against the
market definition that prevailed in regulation at the time, and not a
definition that had not been used for this purpose previously.[^39]
Moreover, if Congress did not mean to set the appropriate level of
concentration, or the acceptable level of diversity, what on earth are
the numerical market levels meant to do?

III\. CONCLUSION

In conclusion, I do not believe that the Commission has justified its
decision that the 35 percent audience reach cap, the newspaper/broadcast
cross-ownership rule or the cable/broadcast cross-ownership rule
continue to serve the public interest as a result of competition as
Section 202(h) requires. With respect to each of these rules, I would
have supported further proceedings to more thoroughly evaluate the
pervasive changes that have occurred in the video marketplace, and
whether these rules continue to achieve the goals for which they were
intended. I think such an analysis is critical in light of the
challenges facing the broadcasting industry, especially the reality that
the technical advances in digital capabilities will allow more and more
platforms to deliver video programming. This Commission must look
forward if it is to foster, and not stand in the way of, the digital
revolution that is occurring across all of the communications
industries. The approach taken by the Commission today, however,
continues to look to "the days of yesteryear," to justify its rules. It
is time to take the mask off this old Lone Ranger and look more deeply
into the face of change.

ADDENDUM

The purpose of this Addendum is to address material that was added by
the majority to the item after its adoption and after the preceding
statement was completed. Specifically, the facts in paragraph 28 and the
analysis contained in the last four sentences in paragraph 30 were
circulated two weeks after the item was adopted. As a procedural matter,
I am concerned that the changes, which I believe are substantive, have
been inappropriately added after the item's adoption on May 26, 2000 and
may change the adoption date of the item to no sooner than June 13,
2000, well past the statutory deadline.[^40] In any case, I will respond
to the newly added material below.

The majority now maintains that elimination [or]{.underline} relaxation
of the national cap rule would lead to "the consolidation of ownership
of all or most of the television stations in the country in the hands of
a few national networks."[^41] This apocalyptic pronouncement is without
foundation. As the *Order* itself points out, large numbers of stations
are currently owned by group owners and there is not even a hypothesis
proffered as to why such major commercial interests would suddenly sell
their full complement of stations to the networks.[^42]

While it may be a valid hypothesis that network-owned stations have an
incentive to clear the majority of their network programming, it is far
from clear that they would not also have economic incentives to program
local content that would attract both viewers and advertisers. Clearly,
competitive video service providers believe local content is key to the
success of their product.[^43] Moreover, every station, regardless of
ownership, is required to serve its local community, a point relied on
by the majority in distinguishing broadcasters from other providers of
programming,[^44] Thus, network-owned stations could not, arguably, run
national programming exclusively.

The majority also now for the first time says that we should be
concerned that there is a loss of an outlet for non-network programming
sources, but I am not sure that this concern comports with the facts. Do
the current network owned and operated stations have higher clearance
rates for network programming? Do they serve their local communities
with less local content than affiliated stations? Do national
programmers find themselves blocked from distributing their product
through stations owned and operated by the networks? Who knows? We
certainly have not bothered to look.

The majority is correct in noting that Congress chose not to eliminate
the cap, but only to liberalize it in the 1996 Telecom Act. But Congress
also clearly instructed the Commission to continually evaluate market
and competitive conditions to determine whether rules remain in the
public interest. Failing to have done so fully, it cannot glibly escape
its responsibility by deferring, without more, to a judgment Congress
made four years ago and one that Congress specifically directed us to
continually revisit.

[^1]: Amendments of §§ 73.34, 73.240 and 73.636 of the Commission's
    Rules Relating to Multiple Ownership of Standard, FM, and Television
    Broadcast Stations, Docket No. 18110, *Second Report and Order in
    Docket 18110*, 50 FCC 2d 1046 (1975), *recon.,* 53 FCC 2d 589
    (1975), *aff'd sub nom. FCC v. National Citizens Committee for
    Broadcasting*, 436 U.S. 775 (1978).

[^2]: Amendment of Part 74, Subpart K, of the Commission's Rules and
    Regulations Relative to Community Antenna Television Systems, and
    Inquiry into the Development of Communications Technology and
    Services to Formulate Regulatory Policy and Rulemaking and/or
    Legislative Proposals, Docket No. 18397, *Second Report and Order*,
    23 FCC 2d 816 (1970), *recon.*, 39 FCC 2d 377 (1973).

[^3]: Telecommunications Act of 1996, Pub. L. No. 104, 110 Stat. 56
    (1996).

[^4]: This is the opening line of the television series *The Lone
    Ranger* which ran from 1949 to 1950, 1954-56. *See
    \<*<http://www.geocities.com/TelevisionCity/7286>\>.

[^5]: *See* Warren Publishing, Inc., Television & Cable Factbook:
    Services Volume No. 68, 2000 Ed., at I-45.

[^6]: According to the FCC\'s most recent broadcast station tabulation,
    there were 1,616 television stations (VHF, UHF, and educational)
    licensed on September 30, 2000. *See* Station Totals prepared by
    Mass Media Bureau, Audio Services Division (rel. Nov. 22, 1999) at
    \<http://www.fcc.gov/mmb/asd/totals/bt990930.html\>.

[^7]: According to the FCC\'s sixth annual report on the competitive
    status of markets for the delivery of video programming, a total of
    80.9 million households subscribed to multichannel video programming
    services (i.e., cable and noncable MVPDs) as of June 1999, up 5.5%
    over the 76.6 million households subscribing to MVPDs in June 1998.
    This subscriber growth translates into a 3.2 percentage point
    increase in multichannel video programming subscribership to 81.4%
    as of June 1999, *i.e*., 99.4 million U.S. homes with at least one
    television divided by 80.9 million households subscribed to
    multichannel video programming services. *See* Annual Assessment of
    the Status of Competition in Markets for the Delivery of Video
    Programming, CS Docket No. 99-230, Sixth Annual Report \["*1999
    Report*"\], 15 FCC Rcd 978, ¶¶ 6, 19 (2000).

[^8]: The *1999 Report* noted 98.6% of all cable customers subscribed to
    systems with capacities of 30 channels or more, and 64.2% of all
    subscribers were served by systems with capacities of 54 or more
    channels in October 1999. *Id*, ¶ 23. In addition, 4.8% of all
    subscribers are reportedly served by systems with capacities of 91
    or more channels. *Id.*

[^9]: The 1999 Report noted DBS operators DirecTV and EchoStar offer up
    to 350 channels of video programming and serve more than ten million
    subscribers. Id., ¶ 69.

[^10]: It is currently estimated that roughly 50 percent of American
    homes possess a personal computer and nearly 50 percent have
    Internet access. *See, e.g.,* Consumer Electronics Manufacturer
    Association, U.S. *Consumer Electronic Industry Today*, 1999 Ed., at
    5 (\"Computers now are in almost half of all American households, 45
    percent, and some 60 percent of those homes have two machines in
    use.\"); Christine Doherty, *Online Market Is Hotting Up*, Sunday
    Business Post, May 14, 2000 (currently \"49 percent of Americans
    enjoy internet access from their homes\"); Business Wire*,
    Internet-Connected Households Soar to 60 Percent in 2000*, Mar. 28,
    2000 (consultancy notes \"majority of U.S. household, approximately
    60 percent, will have personal Internet access in the year 2000\").

[^11]: The 1999 Report noted a total of 171 basic, premium and
    pay-per-view cable networks. See 1999 Report, supra inote 6, ¶ 25.

[^12]: Michael L. Katz, *Old Rules and New Rivals: An Examination of
    Broadcast Television Regulation and Competition* ("*Old Rules and
    New Rivals*"), Sept. 1999.

[^13]: *Id.* at 11 (citing Paul Kagan Associates, *The Economics of TV
    programming and Syndication,* 1999 at 21-22).

[^14]: I would add that I have always questioned why the FCC should
    concern itself with advertising rates. We do not regulate
    advertising and the price impacts there do not have a secondary
    effect on viewers in a manner cognizable by the Communications Act.
    The antitrust statutes adequately address advertising concerns as
    they do generally for all markets.

[^15]: *1999 Report*, *supra.* Note 6, ¶¶ 19-20

[^16]: *Id.* ¶ 15.

[^17]: See id. ¶ 26. See also Kyle Pope, Network Makes \$850 Million
    Deal with Warner Bros., Wall St. J., Jan. 15, 1998, at B1 (NBC
    strikes \"a record \$850 million deal to keep the nation\'s
    top-rated show, ER); Peter Kaplan, NBC Pays Top Dollar to Keep No.
    1-Rated \"ER\" on Board, Wash. Times, Jan. 15, 1998, at B6 (same);
    Brian Lowry, NBC\'s Prescription for Success: Keep \"ER\" TV, L.A.
    Times, Jan. 15, 1998, at A1 (same).

[^18]: See, e.g., NFL Buyers, Sellers Could Butt Heads on Rates,
    Multichannel News, Jan. 26, 1998, at 28 (\"Fox Broadcasting, ABC,
    CBS and ESPN will shell out a combined \$17.6 billion across eight
    \[NFL\] seasons.\"); John M. Higgins, Cable Operators Blast ESPN for
    NFL Megabid, Broadcasting & Cable, Jan. 19, 1998, at 10 (Of \$17.6
    billion total, ESPN \"agreed to pay \$600 million per season for 18
    Sunday night games\"); MSOs Await Bill as ESPN Grabs NFL,
    Multichannel News, Jan. 19, 1998, at 1 (same).

[^19]: See Disney Offer Would Triple NHL\'s Current TV Deal, Palm Beach
    Post, Aug. 6, 1998, at 8C (Walt Disney Co. offered \"to pay the
    \[NHL\] almost \$600 million for exclusive U.S. broadcast rights for
    five years\". . .the deal \"would triple the amount Fox Sport and
    ESPN \[paid\] the league\" under the prior deal).

[^20]: Source diversity refers to "promoting a variety of program or
    information producers and owners." *In the matter of 1998 Biennial
    Regulatory Review---Review of the Commission's Broadcast Ownership
    Rules and Other Rules Adopted Pursuant to Section 202 of the
    Telecommunications Act of 1996,* Notice of Inquiry, MM Docket 98-35,
    rel. Mar. 13, 1998, ¶ 6.

[^21]: Apparently, \"beauty is in the eye of the beholder\" is a
    misinterpretation of the following aphorism by Plato:

    > \"Remember how in that communion only, beholding beauty with the
    > eye of the mind, he will be enabled to bring forth, not images of
    > beauty, but realities (for he has hold not of an image but of a
    > reality), and bringing forth and nourishing true virtue to become
    > the friend of God and be immortal, if mortal man may.\"

    See Quoteland.com
    \<[http://www.quoteland.com](http://quoteland.com/)\>.

[^22]: *See United States v. Playboy Entertainment Group, Inc*., 529
    U.S. \_\_\_, 2000 WL 646196, at \*13 (2000) (Asserting that the
    Constitution exists to grant the people, rather than the Government,
    the ability to evaluate moral, artistic, and intellectual content.)

[^23]: Bear, Stearns & Co., Inc., Byte Fight!: Cable TV & Broadband
    Report (rel. Apr. 2000), at 59 (With hybrid fiber optic-coaxial
    upgrade, \"\[a\] cable operator with 750 MHz system can ultimately
    offer the equivalent of 240 channels (both analog and digital) while
    having 50 MHz, or the equivalent of 80-100 digital channels held in
    reserve.\" With eventual digitalization of cable plant, operator
    \"will be able to offer the *equivalent of 1,100-1,600 digital
    channels*\") (emphasis added).

[^24]: "The First Amendment 'rests on the assumption that the widest
    possible dissemination of information from diverse and antagonistic
    sources is essential to the welfare of the public . . .'" *Order*
    (quoting *Associated Press v. U.S.*, 326 U.S. 1, 20 (1945)).

[^25]: One example is the "right to reject rule." *See generally,* 47
    C.F.R. § 73.658.

[^26]: *See Playboy*, 2000 WL 646196, at \*13 (Stating that \"these
    judgments are for the individual to make, not for the Government to
    decree, even with the mandate or approval of the majority.\")

[^27]: I believe the guiding principles articulated in Commissioner
    Furchtgott-Roth's separate statement have merit.

[^28]: *See* *Old Rules and New Rivals*, *supra* note 11.

[^29]: *Review of the Commission's Regulations Governing Television
    Broadcasting; Television Satellite Stations Review of Policies and
    Rules*, 14 FCC Rcd 12903 (1999).

[^30]: The *Order* finds that applications for duopolies under our new
    local television ownership rule were only filed this past November
    and, as a result, they should monitor developments under this new
    rule prior to making any changes to the national television
    ownership reach cap.

[^31]: *See, e.g., Amendment of Multiple Ownership Rules*, 100 FCC 2d
    17, 37 (1984) (noting irrelevance of national rules to diversity in
    local markets). *See also Old Rules and New Rivals supra* note x, at
    61 *(*discussing Department of Justice opinion in 1983 that
    eliminating the national multiple ownership rules would raise little
    risk of adverse competitive effects in any market).

[^32]: *See Old Rules and New Rivals, supra.,* note 12, at ii-iv.

[^33]: Amendment of Section 73.658(g) of the Commission's Rules -- The
    Dual Network Rule, Notice of Proposed Rulemaking, FCC #00-213,
    Adopted Jun. 8, 2000, Rel. Jun. 20, 2000, at ¶ 12.

[^34]: *Id.*, at ¶ 18.

[^35]: *Id.*, at ¶ 15.

[^36]: CBS is currently at 40 percent audience reach, FOX at 35 percent,
    PAX at 34 percent and Tribune at 29 percent. *See* *Special Report
    Top 25 Television Groups*, *Broadcasting and Cable,* Apr. 10, 2000,
    at 72-98.

[^37]: *See* Amendment of §§ 73.34, 73.240, and 73.636 of the
    Commission's Rules Relating to Multiple Ownership of Standard, FM,
    and Television Broadcast Stations, Docket No. 18110, Second Report
    and Order in Docket 18110, 50 FCC 2d 1046, 1057-58 (1975).

[^38]: *See*, *e.g.*, *Audio Notes*, Audio Week, Nov. 15, 1999,
    *available in* 1999 WL 7563749 ("CEA Pres. Gary Shapiro . . . said
    CE companies 'have long believed that the ability of DBS subscribers
    to receive local network signals is critical to the success of the
    home satellite market.' "); *Capitol Hill*, Warren's Cable
    Regulation Monitor, Nov. 29, 1999, *available in* 1999 WL 6826333
    (DirecTV and EchoStar planned to provide local broadcast network
    channels to their customers as soon as President Clinton signed SHVA
    into law).

[^39]: "It is a commonplace of statutory construction that the specific
    governs the general*," Morales v. Trans World Airlines,* 504 U.S.
    374, 384-385 (1992) (citing, *Crawford Fitting Co. v. J.T. Gibbons,
    Inc.*, 482 U.S. 437, 445 (1987).

[^40]: Section 5003, Pub. L. 106-113 Stat. 1501 (1999). *See also*
    Dissenting Statement of Commissioner Harold W. Furchtgott-Roth.

[^41]: *See* *Order,¶* 30.

[^42]: The Commission's *Order* at the Appendix indicates that the top
    25 group owners own 527 of the over 1600 television stations
    operating today. The average number of stations owned by the top 25
    group owners is 21. NBC owns 13 stations, ABC owns 10, Fox owns 23
    and the newly merged Viacom/CBS owns 35, but is subject to
    divestiture conditions to come into compliance with the 35% cap.

[^43]: *See* p. 15, *infra.*

[^44]: *See* p. 14*, infra*.