**DISSENTING STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN**

*Re: 2006 Quadrennial Regulatory Review -- Review of the Commission's
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section
202 of the Telecommunications Act of 1996; 2002 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; Cross-Ownership of Broadcast Stations and Newspapers; Rules and
Policies Concerning Multiple Ownership of Radio Broadcast Stations in
Local Markets; Definition of Radio Markets; Ways to Further Section 257
Mandate and To Build on Earlier Studies; Public Interest Obligations of
TV Broadcast Licensees*

Unprecedented media consolidation in recent years has allowed giant
multinational media conglomerates to dominate growing numbers of local
news markets from coast to coast. These media giants have swallowed up
locally owned newspapers, TV and radio stations across America. This has
presented challenges to both our culture and our democracy by
undercutting the American tradition of a local press, rooted in and
responsive to their own communities.

Central to our American democracy is a rich and varied supply of news
and information. An informed citizenry requires the "uninhibited
marketplace of ideas," where there is an open exchange of communications
regarding music, news, information and entertainment programming over
the public airwaves. Broadcasters, along with newspapers, still produce,
disseminate, and ultimately control the news, information, and
entertainment programs that most inform the discourse, debate, and the
free exchange of ideas. As the Supreme Court has observed, "it is the
right of the public to receive suitable access to social, political,
esthetic, moral and other ideas and experiences."[^1] That right is
enshrined in the First Amendment to the U.S. Constitution.

By moving forward now with relaxation of the newspaper-broadcast
cross-ownership rule, the majority ignores the repeated pleas of the
American people and their representatives in Congress. There is no
time-sensitive issue that compels us to act today. In fact, we were
asked by leaders in Congress, including our oversight committees, to
defer today and conduct a more inclusive process. That we are moving
forward when the voices that matter are asking us to refrain defies the
imagination.

The FCC has never attempted such a brazen act of defiance against
Congress. Like the Titanic, we are steaming at full speed despite
repeated warnings of danger ahead. We should have slowed down rather
than put everything at risk.

The reasons for Congressional concern were underscored by the frantic
scramble to make major policy changes at the last minute to this item.
Late last night, there was a brand new proposal to provide waivers to 42
newspaper-television combinations. And not until early this morning, we
learned of massive changes to the waiver standards -- an issue of grave
concern to me and a number of leaders in Congress. The majority argues
this item is the product of long and careful deliberation. But after an
odyssey through the Commission and the Courts, massive changes and new,
previously unseen waivers were adopted in the dead of night on the eve
of a vote. That hardly inspires confidence that this was an open,
transparent and deliberative process.

The choices made by the majority are stark. The only entities asking for
relief are the very media giants we are charged with overseeing. As we
were reminded on Capitol Hill, the law does not say we are to serve
those who seek to profit by using the public airwaves. The law says we
are to serve the public interest. And the public has repeatedly told us
they are not interested in further media consolidation.

Traveling across the country, we have heard this message in community
after community. It is a nonpartisan chorus. Americans from all walks of
life and all political perspectives, whether right or left and virtually
everybody in between, do not want a handful of companies dominating
their primary sources of news, information and entertainment. American
distrust of the concentration of power is as old as our nation itself,
and is rooted in the American spirit.

The millions of Americans who have spoken up scored a solid victory in
forcing the majority to back away from further changes to the
Commission's remaining TV and radio ownership rules. Nevertheless, by
rolling back the cross-ownership rule, today's decision will open a
nationwide bazaar of consolidation that flies in the face of
overwhelming public sentiment. Today's decision says to all those people
who spoke to us across the country, in churches, synagogues and city
halls, "you were wrong. We here inside the Beltway somehow know what is
best for you \-- better than you know for yourselves." It is a big
mistake for big government to say big media is good for you.

Well, I for one believe in the people who pleaded for us to stop further
media consolidation. They have extensive experience in the field,
devouring media at an enormous rate. The statute governing media
ownership is unusually broad in allowing us leeway to define the public
interest. Of course, the FCC cannot make these decisions solely by
popular opinion, but we walk a dangerous course when three out of five
unelected bureaucrats overrule the American people, a much better judge
and jury.

People understand what study after study confirms. Despite the growth of
other media delivery systems, broadcasting and newspapers are still the
most pervasive of all platforms. When people look for local news and
information, they turn to their local newspapers and TV stations. For
example, 89 percent of people say traditional media are their most
important sources of news and current affairs.[^2] Free over-the-air
broadcasting licenses are scarce, and broadcasters still have an
enormous impact on the free exchange of ideas.

This debate is fundamentally about priorities. As we solicited the views
of citizens across the country, we did not hear a clamor for relaxation
of the cross-ownership rules. We only hear that from media company
lobbyists inside the Beltway.

The public is concerned about the lack of responsiveness of their media
outlets to what is happening in their local communities, their local
artists, their local civic and cultural affairs. They are concerned that
people of color and women own too few outlets to have their unique
voices heard over the airwaves. They are furious about the level of
sexual, violent and degrading material they are seeing and believe media
consolidation has something to do with it. And they want us to address
the public interest obligations of broadcasters first.

That is why I have insisted that we address and implement improvements
to localism and diversity of ownership [before]{.underline} -- not after
-- we address the media ownership rules.

To get it right, I called for an independent, bipartisan panel to guide
us on a course to implement improvements in the level of ownership of
media outlets by women and people of color. Many members of Congress and
leading civil rights organizations joined that call. And I have
demanded, along with many members of Congress, that we finalize the
Localism Report and implement real improvements in the responsiveness of
media outlets to local concerns first.

Instead, today we are offered half-measures, setbacks and draft
proposals in place of real improvements to diversity and localism. While
there are a few useful ideas put forth, for the most part these are
half-baked gestures clearly intended as cover for the media
consolidation agenda. Rather than take this in order, and address these
lingering crises first, the Commission moves obsessively to allow more
consolidation, notwithstanding congressional and public concern.

Most troubling, we are not dealing with the problems created by past
media consolidation -- loss of localism and diversity -- before allowing
even greater concentration. Allowing newspapers to merge with broadcast
outlets only takes more opportunities out of circulation for local
owners, women and people of color. And it even further raises the
already exorbitant price of station ownership, the biggest barrier to
new entrants and aspiring local owners.

The proposal, though portrayed as "modest," is fraught with substantive
problems that should have been addressed through more thoughtful
Commission consultation and negotiations. The majority's decision
actually opens the door to dominant local newspapers buying up broadcast
outlets in every market in America and potentially of any size.

Even if the proposal were limited to the top 20 markets, that would
account for 43 percent of U.S. households, or over 120 million
Americans. But the details reveal loopholes that would permit new
cross-owned combinations from the largest markets down to the smallest
markets, potentially affecting every American household.

There was an effort to tighten the waiver standards, but only very
little progress was made, and the implications remain unclear.
Unfortunately, we were not shown these changes until the last minute,
with little time to respond or offer improvements. Those suggestions we
offered were rejected. Despite these eleventh hour changes, the
Commission historically has been so lax in granting waivers, even under
the current stronger standards of a blanket prohibition on
cross-ownership, there is little encouragement that the new waiver
language will help. It will be open season for consolidation in markets
of all sizes for those who engage in mergers that test our determination
to hold the line on these waiver standards.

Exhibit A of a failed waiver process is what occurred just last night at
the Commission. After all the time and debate that has occurred over
this rule, we learned late last night, on the eve of this morning's
vote, that the Commission would grant waivers to six new
newspaper-broadcast combinations, and 36 grandfathered stations, for a
total of 42 new waivers. I doubt my colleagues in the majority engaged
in much deliberation on how the public interest was served in those
communities, ranging from Myrtle Beach, South Carolina to Phoenix,
Arizona. Yet this late-night decision will affect the people of these
communities profoundly on a daily basis for years to come. Anybody who
thinks our processes are open, thoughtful or deliberative should think
twice in light of these nocturnal escapades.

Exhibit B is a newly devised Chinese menu of ways to create
newspaper-broadcast combinations in markets outside of the Top 20. Under
the draft that was circulated around dawn, there are now at least three
ways to merge a newspaper with a broadcast outlet in non-top 20 markets.
Now, in addition to the rebuttable presumption factors announced in the
Chairman's November 13^th^ press release, there will be a strong
presumption in favor of more consolidation if a proposed combination
meets our existing failing stations standard or results in a new source
of local news in the market. I have serious questions about these new
proposals. For example, I have real doubts about the Commission's
willingness to enforce the seven-hour weekly news requirement. Also,
such a requirement could have a negative impact on the total amount of
news through the media. As a study from Free Press and Consumer Union
has shown, while the newspaper-broadcast combinations increase its news
output -- in this case, seven hours per week -- news production
market-wide diminishes. The Commission should more closely examine this
proposal to ensure that it will produce the desired effect.

These loopholes in the Order also undercut the assertion that the
proposal would prevent a newspaper from buying one of the top-four rated
stations in the same market. That protection does not apply in markets
below the top 20, and can be dismissed with the wave of the Commission's
hand in the larger markets. In reality, under this proposal a newspaper
could buy any TV station in any city, no matter how large.

A main public interest justification for newspaper-broadcast
cross-ownership has been the claim that relaxing the rule would create
more local news. A path-breaking study by leading consumer
organizations, using the FCC's own data, demonstrated that claim to be
wrong. They found that the data underlying an FCC-sponsored study
finding more local news by cross-owned stations actually reveals that
there is less local news in those markets as a whole, taking into
account all news outlets. It remains unclear exactly why the overall
level of local news available diminishes. Perhaps it is because other
outlets choose not to compete with the local leviathan or maybe they
lose equal access to the newspaper's investigative and news resources.
But the fact is the Commission's own data reveals the other outlets in
those cities reduce their news coverage more than the cross-owned
outlets increase it. So not only is less news produced in the market,
but an independent voice is silenced when the dominant local newspaper
swallows up a broadcast outlet. We should have examined the root causes
of this problem and addressed it before relaxing the cross-ownership
rule.

We also failed to study the relationship between inappropriate
programming for children, such as excessively sexual or violent
programs, and the concentration of media ownership. A 2005 report found
that 96 percent of all the indecency fines levied by the FCC in radio
from 2000 to 2003 (97 out of 101) were levied against four of the
nation's largest radio station ownership groups. The remaining
11,000-plus stations were responsible for just four percent of all FCC
radio indecency violations, a fraction of their national audience share.
While the radio report did not prove a causal link between ownership
concentration and broadcast indecency, I believe the Commission has an
obligation to study and understand the relationship between media
concentration -- station ownership and program ownership -- and
indecency before we permit more consolidation. Further, a study last
year by the Parents Television Council found that, in the midst of an
unprecedented wave of media consolidation between 1998 and 2006,
violence on TV during the evening hours of 8:00, 9:00 and 10:00 grew by
45, 92 and 167 percent, respectively. Commissioner Copps and I requested
a full FCC field hearing to explore the relationship between media
consolidation and the rising volume of material inappropriate for
children in the media, but not one was held.

For many years, the underpinnings of the Commission's public interest
analysis with regard to media have been to promote localism,
competition, and diversity. Yet it is clear from the record that this
decision undermines all of these goals. As a result of
newspaper-broadcast cross-ownership, there is less local news in the
market as a whole and there is less competition for stories and ideas
since two competing entities become one. There is also less diversity,
as a voice in the market is lost, and broadcast outlets are taken even
further out of reach of women and people of color.

The ostensible reason to ignore all of these detrimental consequences
was the importance of saving the newspaper industry that would otherwise
wither on the vine. As many have pointed out, we are not in the business
of guaranteeing newspaper profits. Perhaps if we were, we would better
understand why relaxing the cross-ownership rule is not the right
prescription for addressing real issues and opportunities newspapers
face as the internet rapidly becomes the means of distribution for news.
The record shows that news content is still largely generated by
newspapers and TV stations, even though the means of distribution are
changing with the emergence of broadband.

In fact, the newspaper industry is quite healthy, with profit margins of
around 20 percent, exceeding the average of S&P 500 companies.[^3] The
problem for newspapers is that those margins and revenues are declining,
and Wall Street looks askance at the trends, despite the huge continued
cash generation of newspapers. The problem is that broadcasters are also
seeing slow growth or revenue declines, again despite very healthy, if
shrinking, margins. Wall Street analysts have recognized what the
majority apparently missed. You cannot address the financial problem of
shrinking margins of newspapers by combining them with broadcast outlets
that also have shrinking margins. The real challenge for both outlets is
to better monetize their news-gathering functions from the growing
audience who views them for free on the Internet.

In the final analysis, we could have achieved a bipartisan agreement on
a reasonable process to finalize the media ownership proceeding that
addressed the many concerns raised by the public, leading consumer
advocates and Congress. I worked to achieve that goal by offering to
follow the bipartisan path laid out by Members of Congress and the
Senate Committee on Commerce, Science and Transportation.

Sadly, that was a road not taken, and Members of Congress have clearly
signaled there will be consequences for this breakdown of deference and
cooperation. We ran so many red lights it would make Mario Andretti
blush. It is now up to Congress and the courts to address the pileup
that resulted. With the encouragement of the American people, who are
certain to share the outrage over this decision, I certainly hope and
believe that others will have the final word on this issue.

Finally, I want to recognize and thank the many groups and individuals
who have provided me with important counsel during this difficult
proceeding: Free Press, Media Access Project, Consumers Union, Institute
for Public Representation, Consumer Federation of America,
Communications Workers of America, the Writers' Guilds of America, the
Media and Democracy Coalition and the tens of thousands of volunteers
and members of the public who have reached out to this Commission to
express their concerns.

[^1]: *Red Lion Broadcasting Co. v. F.C.C.,* 395 U.S. 367, 390; 89 S.Ct
    1794, 1807 (1969).

[^2]: *See Further Comments Of Consumers Union, Consumer Federation Of
    America And Free Press at 111 (Oct. 22, 2007) (noting that these
    findings are from an FCC-commissioned survey of media usage by
    Nielsen Media Research, Inc.) (also noting that while a full 46
    percent of respondents use TV, radio and/or newspapers but no
    alternative media, a mere 1 percent of respondents use cable or the
    Internet, but none of the traditional media).*

[^3]: *See Further Comments of Consumers Union, Consumer Federation of
    America and Free Press at 48 (Dec. 11, 2007).*