**STATEMENT OF**

**COMMISSIONER ROBERT M. MCDOWELL**

*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*

Mark Twain warned us over a century ago, \"If you don\'t read the
newspaper you are uninformed. If you do read the newspaper you are
misinformed.\" Of course, Mr. Twain had no other media than newspapers
at his fingertips to glean information, opinion and, more importantly,
material for his witticisms. The 21^st^ Century's chaotic explosion of
information from broadcast radio and television, cable TV, satellite
radio and TV, the Internet and many other voices and outlets would have
given Twain an ocean of material to use to skewer his targets with his
satire. Without question, however, he would have had a blog; and I'm
sure it would have been one of the most popular blogs on the Internet.
If he were alive today, perhaps his cheerful disdain for newspapers
would have led him and his readers to bypass the papers altogether. And
that's a point at the heart of today's order: if consumers and content
providers *want* to bypass the media technologies of yesteryear in favor
of new media, they *can*. And *they are*. In fact, the evidence in the
record tells us that if you are under 30, you are probably not reading a
traditional newspaper or tuning in to your local broadcasters. You may
never do so, at least not in the way the over-30 crowd does. It is
precisely this type of paradigm shift that Congress and the courts have
charged the Commission with weighing heavily as we revise our media
ownership rules.

But before I delve into the substance of today's order, let's take a
moment to examine how we got here. The current proceeding began at my
very first open meeting as a Commissioner, 18 months ago. This
proceeding has been unprecedented in scope and thoroughness. We gathered
and reviewed over 130,000 initial and reply comments and extended the
comment deadline once. We released a Second Further Notice in response
to concerns that our initial notice was not specific enough about
proposals to increase minority and female ownership of stations. We
gathered and reviewed even more comments and replies in response to the
Second Notice. We traveled across our great nation to hear directly from
the American people during six field hearings on ownership in: Los
Angeles and El Segundo, Nashville, Harrisburg, Tampa-St. Pete, Chicago,
and Seattle. We held two additional hearings on localism, in Portland,
Maine and here in our nation's capital. In those hearings, we've heard
from 115 expert panelists on the state of ownership in those markets and
we've stayed late into the night, or early into the next morning, to
hear from concerned citizens who signed up to speak. And I want to thank
all of those who turned out to express their views.

We also commissioned and released for public comment ten economic
studies by respected economists from academia and elsewhere. These
studies examine ownership structure and its effect on the quantity and
quality of news and other programming on radio, TV and in newspapers; on
minority and female ownership in media enterprises; on the effects of
cross-ownership on local content and political slant; and on vertical
integration and the market for broadcast programming. We received and
reviewed scores more comments and replies in response. Some commenters
did not like the studies and their critiques are part of the record.

So, during my entire term as a Commissioner, we have been reviewing this
matter. But our review did not begin last year. The previous round began
in 2002. At that time, the Commission received thousands of formal
comments and millions of informal comments. The Commission held four
localism hearings across the country to gather additional evidence. The
FCC also produced twelve media ownership working group studies. We all
know that the 2002 review ended badly for the Commission -- with both
the legislative and judicial branches reacting through a Congressional
override of the national ownership cap, and a reversal and remand from
the Third Circuit in the *Prometheus* case. By the way, while the court
threw out almost all of the Commission's order, it concluded that,
"reasoned analysis supports the Commission's determination that the
blanket ban on newspaper/broadcast cross-ownership was no longer in the
public interest."

But our story didn't begin in 2002 either. In 2001, the FCC issued a
rulemaking focused on the newspaper-broadcast cross-ownership ban -- a
concept that has been around since at least 1975. Comments and replies
were gathered there too. That proceeding sprouted up as the result of a
June 2000 report from a Democrat-controlled FCC, which found that the
ban may not be necessary to protect the public interest in certain
circumstances. That report was the result of yet another proceeding,
which commenced in 1998. The 1998 proceeding stemmed from a 1996
proceeding; which was sparked by legislation; which was engendered by an
overwhelming and bi-partisan vote of a Republican-controlled Congress
and signed into law by a Democrat President.

In my 17 years of being in and around the FCC, I can't think of any
issue that has been examined more thoroughly. I can't remember any
proceeding where the Commission has solicited as much comment and given
the American people as much opportunity to be heard.

A point that gets lost in the emotion surrounding this debate is that
the directly elected representatives of the American people, the
Congress, enacted a statute that contains a presumption in favor of
modifying or repealing the ownership rules as competitive circumstances
change. Section 202(h) states that we must review the rules and
"determine whether any of such rules are necessary in the public
interest as the result of competition. The Commission shall repeal or
modify any regulation that it determines to be no longer in the public
interest." This section appears to upend the traditional administrative
law principle requiring an affirmative justification for the
modification or elimination of a rule, and it is crucial for everyone
involved in this debate to recognize this important presumption. It is
also important to remember that Section 202(h) is the most recent set of
codified instructions we have from Congress. If Congress passes
legislation to the contrary, and the President signs it into law, I will
work tirelessly to ensure that its intent is carried out. In the
meantime, however, Section 202(h) is our legal mandate. We also have a
duty to pursue the noble public policy goals of competition, diversity
and localism. Today's order accomplishes all of the above.

However, while the FCC races ahead over a twelve-year period like "a
runaway glacier," as one analyst put it, the private sector has been
busy working around the obstacles constructed by the outdated
regulations of yore. Is it any wonder that most of the energy,
creativity, capital and growth have been focused on areas that are
*less* regulated? That's what our record shows. The ironic truth is: in
many cases, media consolidation has actually become media divestiture.
Companies such as Disney, Citadel, Clear Channel and Belo actually have
been shedding properties to raise capital for new ventures. They are
directing new capital investment toward new media ventures. That's where
America's eyeballs are looking; so that's where the ad dollars are
flowing. The Hollywood writers' strike is all about the concept of
following the eyeballs and ad dollars and getting fairly compensated as
a result. Just to illustrate the point, over one-third of Americans go
online to get their news. As the FCC's own research shows, by July 2006,
107 million Americans viewed video online and about 60 percent of U.S.
Internet users download videos.[^1] YouTube alone requires more
bandwidth than the *entire Internet* did in 2000. Unregulated new
media's numbers are growing. Heavily-regulated traditional media's
numbers are shrinking.

This new media frontier is especially promising for people of color and
women. The rise of so-called "niche" markets is benefiting people who
have been underserved in the past. The low barriers to entry and low
capital requirements to get started have spawned a plethora of minority
and women oriented new media outlets such as: NetNoir.com, a minority
owned online destination that connects people interested in African
American culture and lifestyle; or iVillage.com, which provides daily
hot topics for women; or Women's eNews.com, an online source for news
and perspectives of particular concern to women. While this new era is
in its infancy, and we have a long way to go before it matures, I am
optimistic that the media ownership debates of the early 21^st^ Century
will one day fade into obscurity as technology and competition advance.

Before I go further, let me offer a personal observation. Both of my
parents were journalists. They met after World War II at the University
of Missouri's famed School of Journalism where my mom was on the
faculty. She went on to become a reporter for the *Chicago Daily News*
at a time when almost no women held such jobs. She later worked for the
*Washington Post* and was there when the cross ownership ban went into
effect in 1975. So I found it especially remarkable, when I was sorting
through her belongings after she passed away in 2005, to find a book
entitled *The Fading American Newspaper*. I've read through it and I've
come across some timely quotes. Here's one: "As journalism migrates into
new areas of communication, its practitioners, too, are on the move. The
commerce in information flourishes and quickens its tempo, new skills
are developed, and the major problem for the newspaper journalist is to
keep his readers from migrating, too." So when was this book written?
2005? 1975? No, it was written in 1960 by a former editor and journalism
professor. But the point is that there is not a general concept before
us in this proceeding that hasn't been debated for decades.

Even though the newspaper industry was already facing challenges in
1960, it has undergone dramatic change in the 32 years since the
newspaper-broadcast cross ownership ban went into effect. Now we have
five national networks, not the three I grew up with. Today we have
hundreds of cable channels cranking out a multitude of video content
produced by more, not fewer, but *more* independent voices than existed
32 years ago. Now we have two vibrant satellite TV companies, telephone
companies offering video, cable overbuilders, satellite radio, the
Internet and its millions of websites and bloggers, a plethora of
wireless devices operating in a robustly competitive wireless market
place, iPods, Wi-Fi, and much more. And that's not counting the myriad
new technologies and services that are coming over the horizon such as
those resulting from our Advanced Wireless Services auction of last
year, or the upcoming 700 MHz auction, which starts next month.
Certainly, more voices and more delivery platforms exist today than in
1975.

Consumers have more choices and more control over what they read, watch
and listen to than ever. As a result of this cacophony of voices
competing for consumer's attention, at least 300 daily newspapers have
shut their doors forever in the last 32 years because people are looking
elsewhere for their content. Newspaper circulation has declined year
after year. Since just this past spring, average daily circulation has
declined 2.6 percent. Newspapers' share of advertising revenue has
shrunk while advertising for unregulated online entities has surged.

Some argue that newspapers are making plenty of money. For many papers,
that's absolutely true, for now. As gross revenue declines year after
year, publishers cut costs to retain margins. After a while, such
cost-cutting slices into the heart of the news-gathering operation: the
newsroom and its reporters. As a result, the ability to cover more news
diminishes. Some respond by arguing that newspapers and broadcasters
should therefore live under *more* regulation than what exists today.
But who among them is offering to find ways to pay for the high costs of
their mandates? How is such a command-and-control regulatory regime
supposed to generate the funds needed to support such capital-intensive
endeavors?

With all trend lines showing newspaper top-line income falling fast, the
ultimate fate of this platform is obvious: newspapers, as we know them,
will cease to exist sooner rather than later under existing regulations.
They may disappear some day anyway, regardless of what we do today. But
why should stale government industrial policy hasten their demise? While
I agree with many of the critics of today's order that it is not the
FCC's job to "save the newspapers," or any other industry for that
matter, at the same time is it our job to leave in place an outdated
regulation that results in the *elimination* of independent voices? With
a regulation in place that is linked to the silencing of so many local
community voices, is the cross-ownership ban still in the public
interest, or is it a millstone around the neck of a drowning industry?
The statute demands an answer.

Despite a strong de-regulatory statutory presumption mandated by
Congress and an order from the Third Circuit essentially giving a green
light to lifting the ban altogether, today's order is quite modest. The
order creates a presumption in favor of lifting the ban only in the top
twenty media markets where there is tremendous competition in the
traditional media sector. Even then we only allow a combination outside
of the top four TV stations and only when at least eight independent
major media voices remain in the that market. Outside of the top twenty
markets, our rule establishes a negative presumption against permitting
the combination. In only two special circumstances will we reverse the
negative presumption: first, if a newspaper or broadcast outlet is
failed or failing; and second, when a proposed combination results in a
new source of a significant amount of local news in a market.

Where neither of these circumstances exists, we establish a four-prong
test to determine whether the negative presumption is rebutted. This
test is not pocked with loopholes as some have suggested; quite the
contrary. To determine if the presumption is overcome, we will
consider: 1) whether cross-ownership will increase the amount of local
news disseminated through the media outlets in the combination; 2)
whether each affected media outlet in the combination will exercise its
own independent news judgment; 3) the level of concentration in the
Nielsen DMA; and 4) the financial condition of the newspaper and
broadcast station, and if the newspaper or broadcast station is in
financial distress, the putative owner's commitment to invest
significantly in newsroom operations.

Lastly, we will not require divestiture of existing combinations that
were grandfathered in conjunction with the 1975 rule or that were
granted permanent waivers of the rule. Under both Democrat and
Republican chairmen, the Commission previously determined that these
combinations were in the public interest and thus warranted a waiver
under the prior rule. We should not reverse course here as we modernize
our rule. In addition, the Order grandfathers existing combinations
operating under temporary waivers where those combinations involve one
newspaper and one broadcast property in the same market. These
combinations have achieved synergies that have resulted in service to
their communities in the public interest. Requiring divestiture would be
disruptive to the individual owners, employees and to the communities
that rely on their service.

Today's order also may create new opportunities for women and people of
color. Under the current rule, minority businesses may not own a
newspaper and station in the same market. Now they can after appropriate
Commission review. Under our narrowly-tailored rules, a modernization of
the ban will create a rising tide that has the potential to float all
boats.

In the meantime, all Americans, and the rest of the world, are migrating
toward the boundless promise of new media for their news, information
and entertainment. The best news is that all Americans will benefit from
this new paradigm because new technology empowers the sovereignty of the
individual, regardless of who you are. As future policymakers examine
these issues in the years to come, I would urge them to continue to
examine the important public policy implications of this new era in the
context of these undeniable facts.

Accordingly, I support today's order.

[^1]: News Release, FCC, *FCC Adopts 13^th^ Annual Report to Congress on
    Video Competition and Notice of Inquiry for the 14^th^ Annual
    Report* 4 (Nov. 27, 2007).