**Remarks of**

**Michael K. Powell**

**Chairman**

**Federal Communications Commission**

**At the**

**Media Institute**

**March 27, 2003**

**\[as prepared for delivery\]**

**I.** **INTRODUCTION**

> Good afternoon, I want to thank The Media Institute for having me here
> today, it is always a great pleasure to be among fellow unapologetic
> defenders of the First Amendment. I cannot imagine a more appropriate
> time in history than now to discuss the media as an avenue to inform
> our citizenry and the FCC's appropriate role in promoting that end.
> Over the course of the last year and a half, the media has brought the
> world unprecedented sights, sounds and information from the tragedy
> and heroism of September 11^th^ to the current war in Iraq.
>
> During this time of War, the images over our televisions, the sounds
> over our radios, the ink on our newsprint and the words and images
> over the internet are testaments to many of the core values of our
> great nation and any true open democracy. Indeed, by embedding over
> 500 reporters around the world with military units, we are seeing a
> degree of media coverage never before experienced in any previous war.
> The real-time pictures and reports are a result of remarkable
> developments in communications technology and the breadth of media
> platforms. It is both thrilling to see the power of the medium and its
> reach as well as shocking to be brought so close to the horrors of
> war.
>
> It is in times like these that we are reminded of the importance and
> vibrancy of a well-equipped free press and the cherished values we
> seek to promote in our electronic media policies. Preserving a diverse
> media that is competitive and serves our global and local community
> remains as vital today as it has ever been.
>
> Broadcast ownership policies have long been an important tool in
> promoting these goals. Rules governing ownership structure as a means
> for promoting diverse output is preferred to regulating that content
> directly. The First Amendment makes that an uncomfortable---indeed
> unauthorized---place for government officials to tread. For the most
> cherished of our constitutional protections frowns heavily on
> government controlling the messages we see and hear.
>
> Ownership restraints serve as a useful, though not precise, proxy for
> promoting diverse viewpoints among the electronic media. Preserving an
> adequate number of independent owners/editors increases the
> probability of a wider range of viewpoints in the coverage and
> treatment of issues of significant public importance.

**II. BROADCAST OWNERSHIP RESTRAINTS ARE AT RISK**

> This ownership approach to promoting diverse viewpoint is at serious
> risk, however, for the FCC has repeatedly failed to adapt its
> approaches to market reality, technological change, consumer
> preferences, or the law.
>
> Most broadcast ownership rules in effect today in 2003, were
> promulgated between 1940 and 1975. In this earlier era, the FCC was
> successful in crafting limiting rules based primarily on reasonable
> assumptions and assertions about the nexus between ownership and
> content viewpoint. These rational explanations were generally accepted
> as adequate by the judiciary without much empirical proof.
>
> The success of this approach was due to the nature of the media at the
> time. In those days, electronic media was limited to broadcast
> television and radio. The medium was heavily concentrated, with just
> three networks dominating the television airwaves. News was vital, but
> offered by appointment and in small doses. In 1960, the so called
> "Golden Age of Television," broadcasters aired a total of 3 ½ hours of
> local and national news in snippets throughout the day. This was in
> New York City, the largest media market in the country. Under such
> circumstances, it was quite easy to accept as an act of faith the
> alleged harms of further consolidation among the already scarce
> sources of news and information.
>
> As time passed, however, changes in the media landscape rendered many
> of these premises for regulation and the alleged dangers of further
> consolidation substantially less obvious or certain.
>
> The continuing proliferation of more outlets and new media platforms
> was accompanied by a virtual explosion of diverse and varied content.
> In the last 40 years the number of media outlets has swollen nearly
> 195% and the number of media outlet owners has increased by 139%.
> There are more broadcast networks and new cable and satellite networks
> with an abundant range of programs. It simply has become more
> difficult to just assert that an ownership restriction is essential to
> promoting diverse viewpoints, where so many outlets and owners thrive.
>
> Yet, despite these massive changes, the FCC has continued to hue close
> to its original line in justifying the continuation of its rules. It
> failed to recognize (as did many advocates of strong media regulation)
> that these changes would require more compelling explanations than the
> standard off-the-shelf ones and would demand more rigorous proof of
> its assertions in the face of so varied a media landscape.
>
> As the years passed occasionally a rule was repealed or killed off by
> the court, but the ownership rules continued to glide along more out
> of inertia than propulsion.
>
> The 1996 Telecom Act was a sea change. Congress significantly relaxed
> many of the existing broadcast ownership rules, expressing skepticism
> about their continued importance. More importantly, however, Congress
> directed the Commission to review its rules every two years. The FCC
> would no longer have the discretion to preserve rules based on airy
> claims or inaction. It would now be forced to justify its policies
> based on contemporary reality and marketplace change.
>
> The real bombshell, however, was the standard the Commission is
> required to use in examining its venerable rules. Congress shifted the
> burden to the FCC, rather than the industry, to demonstrate the need
> for a rule. If we cannot conclude a rule is necessary, we are
> commanded to modify or eliminate it. And, we will have to do this
> exercise every two years.
>
> This was a momentous departure. For decades the Commission had in
> essence required *proponents* of deregulation to prove why the rule
> was no longer necessary. Now, the *FCC* has the obligation to prove a
> rule is in fact necessary---indeed one of my colleagues interprets the
> law to mean we must prove a rule is indispensable to the public
> interest. The congressional bias is for deregulation and the standard
> for maintaining a rule is an enormous hill to climb.
>
> There has been only one biennial review to date and it did not fair
> well. The Commission made an effort to keep the burden on those
> seeking repeal of a rule. It also interpreted the statute to give the
> FCC discretion not to review a rule at all, or to continue its
> operation with only cursory assertions of its continued value.
>
> When the review hit the court, the result was sobering. The court
> roundly rejected the FCC's view of Congress' intent, holding Congress
> clearly expressed a preference for deregulation and placed the burden
> on the Commission to prove a restriction's worth. It wielded its sword
> most violently at the Commission's failure to offer much explanation
> at all for retaining some rules, striking dead the cable/TV cross
> ownership rule to leave no doubt as to the seriousness of our
> obligation.
>
> The stark result is this: Any hope we have of preserving the use of
> ownership rules as a way of promoting our diversity goals, will rest
> on the FCC's ability to offer significantly more compelling
> explanations of the rules it employs. If we fail, the rules will be
> gone in a year. In making our choices, we cannot ignore the new
> breadth and depth of the media marketplace when placing limits on
> broadcast owners. Ignoring other sources of viewpoints in a market is
> hazardous to the health of a reasonable broadcast regulatory regime.
>
> If we resort to passion, histrionics, intuition and the cries of
> Chicken Little to keep the current regime as it is, the rules will not
> stand for long. The noise-makers must join in a commitment to finding
> solutions. We need compelling proposals and defenses of those
> proposals, not the usual alarmist political attacks employed to
> prevent change. If no changes are made, we will have given over the
> choice to the courts.
>
> I have seen this bad movie too often. The plot is the same. Having
> been warned by Congress and warned by the Courts, some nonetheless
> press stubbornly against the grain---overplaying their legal hand,
> leaving the public interest without a dime.
>
> Choosing to ignore the more plausible readings of the statute, the
> Commission's inconsistencies and lack of proper analysis doomed the
> last biennial review, and perhaps raised the bar higher than it needed
> to be.
>
> The Commission overreached twice in setting EEO obligations. Twice the
> rules were overturned as unconstitutional. Thus, for years, employees
> did not enjoy the fruits of these rules only the cold comfort of our
> good intentions. Worse yet, the damaging constitutional precedent
> penned in those cases have further setback governmental efforts to
> promote race and gender diversity, *in all contexts*, not just
> broadcasting. \[Now we must look to other ways to promote minority and
> female opportunity---which is why I strongly support Sen. McCain's
> Ownership Diversification Bill and urge its passage and I intend to
> initiate a new Commission effort to find creative ways to promote
> opportunity.\]
>
> Recently, the insistent march to push the public interest standard bar
> dramatically higher in reviewing mergers, resulted in a court decision
> finding that the mere approval of a broadcast application subsumes any
> affirmative public interest inquiry for a license transfer.
> Many\--zealous to the end\--lay blame with overreaching courts. But
> the blame rests squarely too with those irresponsibly pushing too hard
> against the law.
>
> Against this backdrop, we will wrestle once again with the graying
> broadcast ownership rules in the current biennial review. Our
> concerted goal is to learn from our mistakes and embrace the necessary
> changes that will preserve a reasonable broadcast ownership structure
> that is contemporary and is faithful to Congressional intent.
>
> We are working very hard to provide more rigorous evidence and
> rationales for the choices we make. We have commissioned a dozen
> academic studies to offer strength to our decisions. What is truly
> unique about this undertaking is that for the first time, the
> Commission is looking at these issues through the eyes and ears of the
> American public, and not the personal tastes of appointed government
> officials. We are taking greater account of the breadth of voices and
> viewpoints, so as not to be vulnerable to the accusation we have
> ignored genuine sources of information. We are working to bring
> greater coherence and consistency to our rules and we hope to clarify
> our goals and our methods through a simpler regime that still protects
> our essential ideals. This is a tall order, but we have what we need
> and are committed to success.

**III. THE PUBLIC INTEREST CASE FOR CHANGE**

> The case for change, however, is not merely a response to an
> unfavorable court ruling or two. There are compelling public interest
> reasons to change as well.
>
> [First]{.underline}, It is important for us to rebuild our media
> regulatory regime in order to get a coherent and internally consistent
> set of rules that more correctly reflect the media landscape and the
> rich and varied ways consumers and citizens get there information. If
> we adopt rules that do not peer through the eyes and listen through
> the ears of consumers and see how they obtain news and information,
> then it is questionable whether we are truly acting in their stead, or
> merely using their name in vein to promote some other agenda.
>
> [Second]{.underline}, change may be imperative if we want to preserve
> free over the air television. Free television itself serves a very
> important public interest, yet its future is not guaranteed. Broadcast
> TV offers important content to citizens without charge. It can be
> accessed from virtually any location. And, it is vital in emergency
> situations---be it weather or terrorist attack.
>
> Yet the market trends are against free TV. By our last cable
> competition report, over 85% of households subscribe to cable or
> DBS---opting to pay for television. Pay TV has enormous market
> advantages. It has access to two sources of income---advertising and
> subscription. Cable and DBS have much more channel capacity, allowing
> them to offer greater quantity and variety of content at all times of
> the day. And, multi-channel platforms are closer to offering the
> personalization and interactivity that consumers are coming to expect
> in the internet age. Changes in our rules may give TV a fighting
> chance to adapt, respond and survive.
>
> [Third]{.underline}, while many view big as always antithetical to the
> public interest, scale and efficiency are becoming more vital to
> delivering quality news and public affairs. The world is getting
> smaller. We are all part of a global community as well as a local
> community. It is increasingly imperative to have a larger perspective
> on matters of public interest, whether it be health issues (as in the
> recent case of a deadly pneumonia from Asia), political issues (the
> fate of Tony Blair), economic matters (oil prices and the effect at
> the pump), or terrorism and military threats. And, news events now
> move at a sweeping pace, breaking faster and spreading farther than
> ever before. This complex world requires ever more sophisticated news
> gathering and delivery capability. The scale and resources necessary
> to do it are increasing.
>
> At the same time events in our local community remain essential. As
> the cost and sophistication of news and public affairs rises it is
> important to bring new assets to ensuring the local community is
> covered. It may be that allowing newspapers to enter the local TV
> market will bring the local classifieds, the Metro section, the local
> movie schedule, and editorial opinion to television, enhancing the
> local character of that medium and stimulating its vibrancy. One of
> our studies found that newspaper owned broadcast stations produced
> almost 50% more local news, and received significantly more awards for
> local news excellence than other affiliates. In light of this data, it
> is hard to see how a complete ban on newspapers owning TV stations
> serves the public interest.
>
> [Fourth]{.underline}, Digital Migration. Media is itself changing as a
> new digital world unfolds. Voice, video and data can now travel
> effectively on many more platforms and will begin to accelerate the
> proliferation of information. As this becomes possible the consumer is
> demanding greater personalization and control of his programming
> choices, using the computer tools integrated in his watching and
> listening devices. We see the internet itself becoming an essential
> source of important content. ABC news has just launched the first 24
> hour broadband broadcast. Satellite radio is in the market offering
> hundreds of channels of diverse (ad free) content. Indeed, my
> colleague Jonathan Adelstein, a music lover, just got the system and
> raves about it. MP3 players like the Ipod are rapidly becoming the
> critical source for music and audio applications. And personal video
> recorders are revolutionizing the way we watch TV.
>
> Opponents of change often want to dismiss these new sources as less
> effective or immature. I say rather than reject them we should be
> trying to drive them, in order to unleash new sources of media content
> and information and give greater access to mass communication. These
> tools have made their weight felt. War protestors and supporter alike
> have used the medium to organize and convey messages as never before
> seen.
>
> We should allow sufficient flexibility for providers to bundle assets
> and products to distribute new applications that consumers may desire,
> rather than pre-configuring the media ownership model solely for a
> traditional broadcast world.
>
> [Fifth]{.underline}, Diversity itself. More capacity may allow
> producers to respond to increased customer fragmentation and
> competition for viewers and listeners. More capacity increases the
> ability to program more choices and more niches that appeal to an
> increasingly diverse population.

**IV. CONTENT AND A FIRST AMENDMENT WARNING**

> Whenever media ownership debates unfold, it isn't long before every
> perceived ill and every dissatisfaction with what we see and hear on
> television and radio is paraded out as a consequence of too much
> concentration.
>
> If you listen you can hear it now. It is suggested that concentration
> is to blame for indecent or course television programs---ignoring that
> the media was substantially more concentrated in the supposedly clean
> 1950s. It is argued that TV has become too violent. It is argued that
> quality of television has declined and that TV is too bland and
> homogenized because of corporate conglomeration.
>
> I do not doubt at all that there are pitfalls to big media, nor do I
> doubt that there are benefits. But, I do not think concentration
> itself is the root cause of the quality of content we see today, I
> think that fierce competition is.
>
> A monopolist has the luxury occasionally of putting aside what sells
> in order to air content that might be less appetizing (even if
> nutritious) because its audience is captive. Such was undoubtedly the
> case in the era of Cronkite and Murrow. But, where choice abounds in a
> competitive market, one can ill-afford not to give "em what they
> want." Today, if you do not capture a viewer's attention and hold it,
> he simply clicks his remote control to find something that does. Or,
> he turns off the TV and turns on the Playstation or Xbox. Or, he
> strays to the computer to surf the net. Or, he picks up a paper, book
> or magazine. Or, he listens to music on his MP3, radio or stereo. Or
> puts a DVD in to watch a movie. Or, god forbid, unplugs entirely and
> goes out to take a walk with his kids.
>
> My warning is this, while we are right to concern ourselves with
> Citizen Kane, we should not use that concern to justify the
> resurrection of King George. Our founding fathers said little about
> commercial owners of news and print, but they reserved the top spot on
> the bill of rights to condemn the government from foisting its values,
> preferences, viewpoints or tastes on a free people. This is where the
> gravest constitutional danger lies.
>
> It is said that the public interest is not just what interests the
> public. I respect and share the sentiment. But, the danger of this
> aspiration, when invoked in regulatory policy, is that it implies a
> justification to require that the public accept by law, what it is
> uninterested in accepting by choice. Such a view surely keeps Mr.
> Jefferson from a restful slumber. Those committed to his cherished
> commandment should remain vigilant watchman in the current battle over
> broadcast ownership.

I thank you, again for inviting me to be with you today.