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Text as Prepared for Delivery

Address to the Media Institute
By Commissioner Kevin J. Martin
Washington, DC
December 11, 2001

Introduction
Good afternoon, and thank you for inviting me to speak with you today.  It is a particular 
pleasure to be invited to speak to the Media Institute, which has had such an impact on 
my career and my "thinking" regarding media regulation.
I grew up as the fourth child in a family five, and the First Amendment was rarely 
adhered to in my house when I was young; my voice was definitely stifled by my 4 
siblings.  So, I truly appreciate every opportunity to exercise my Constitutional rights.
I did not realize at the time that this would be the most important preparation for my 
experience as the fourth of five Commissioners.  Debate about which items will or will 
not be placed on the Agenda, for example, can be strikingly similar to who controls what 
television channel will be watched or radio station listened to in the car.
But, my experience as a child taught me perhaps the most important lesson regarding free 
speech.  For even when I was able to garner the attention of my parents, I quickly learned 
that unless I had something unique to say, competing voices would soon drown mine out.
And therein lies the most important premise underlying all of the government's role in 
media regulation:  while the First Amendment protects one's right to speak, it does not 
guarantee that you will be listened to, and competition among voices is ultimately the 
best method of ensuring that the most unique and important information is ultimately 
heard.
It is in that vein that I would like to speak to you today regarding our history of broadcast 
regulation and how the competitive landscape - the increasing number of voices available 
because of new technologies to garner people's attention - should be effecting those 
rules.
Historical Perspective 
Since the emergence of radio as a means of communication in the early 20th century, 
government has regulated the airwaves through the issuance of licenses in order to 
preserve "the public interest."  Congress passed the Radio Act of 1927, declaring that the 
airwaves are in fact a public resource, and a scarce one at that, and should therefore be 
regulated by the government.  While the available spectrum would grow with time and 
advances in technology, the underlying presumption has always been that spectrum is a 
scarce resource, and that presumption has been used to justify its greater regulation of 
broadcasting, including content restrictions, licensing procedures, and ownership 
regulations.  
The regulating of the public airwaves and the issuing of licenses would prove to be a 
weighty responsibility.  In order to grant licenses, regulators would have to create some 
guidelines by which to do so.  Congress bestowed this obligation on the Federal Radio 
Commission and later its successor, the FCC. 
By thus empowering the Commission, Congress gave the Commission the ability to 
define, and subsequently redetermine again and again, what the public's interest was to 
be.  This is, in my humble opinion, a very lofty task for any regulator to undertake.
The Commission's unique role in regulating broadcasters was upheld by the Courts in 
1969 in Red Lion Broadcasting Co. v. FCC.   That decision deemed that inherent 
differences between modes of media communication require differences in the First 
Amendment standards applied to each.  In the broadcasting world, the Court deemed that 
the free speech rights of the viewing public outweigh, and essentially are more important 
than, the First Amendment rights of the broadcasters themselves.  The Court based its 
conclusion that certain broadcast regulation withstands First Amendment scrutiny in part 
on: 
The scarcity of broadcast frequencies, the Government's 
role in allocating those frequencies, and the legitimate 
claims of those unable without governmental assistance to 
gain access to those frequencies for expression of their 
views .. 
Times and technology are no doubt significantly different than they were thirty years ago.  
In keeping with the Commission responsibility to protect the public interest, we must 
reevaluate the FCC's media regulations in the context of the current marketplace.
The Changing Marketplace
The vast majority of the Commission's existing ownership regulations were implemented 
in the context of a very different era.  It was a time when most Americans relied on three 
free, over-the-air networks for television programming.   Cable television was in its 
infancy, and DBS was a distant dream.  The Internet was yet an obscure network-in-
progress within the defense department.  Today, by contrast, we have an astounding array 
of options from which to get our news and entertainment-hundreds of television 
channels, thousands of radio stations, millions of Internet websites, and movies on 
demand from our living rooms.  Since 1975, for example, 
? Radio
? Radio stations have increased from 7,785 to 12,932 stations.
? Radio programming has diversified from 15 to between 90 and 95 distinct 
formats, with Spanish often cited as the fastest growing format.
? Satellite digital radio has been born, proposing to dramatically alter the way 
Americans listen to radio and the programming available to them.
? TV
? Licensed television stations have increased 76%.
? The "Big Three" networks have become seven, yet their collective viewership 
has declined.
? Television programming has skyrocketed.  In 1999, there were 147 basic 
cable networks, 43 premium networks, and nine pay-per-view networks.  In 
the last two years these numbers have only increased, with digital platforms 
increasing both capacity and service options, such as video-on-demand.
? The number of households paying for TV increased from 17% to 86.4%, with 
88.3 million households pay for TV by subscribing to a multi-channel video 
programming distributor.
? Newspapers
? The number of daily newspapers has declined from 1,756 to 1480 (in 2000), 
but circulation has declined only slightly, from 62.1 to 59.4 million.
? Meanwhile, the number of weekly newspapers-targeting niche audiences 
and discrete communities-has increased, and their circulation has doubled 
(and 80% of these papers are free!).
? Internet
? The Internet was born-and quickly grew up.
? Today, an estimated 166 million Americans have access to the Internet, with 
over 8.75 million sites representing a blinding array of diverse content as well 
as outlet opportunities.
These statistics indicate how much the media marketplace, and thus the foundation of 
many of the FCC's content regulations and ownership restrictions, has changed.  
Consumers have a much richer diversity today.  They have more voices from which to 
choose their entertainment, information and news.  And advertisers similarly have many 
more outlets through which they can capture the audience's attention.
Today's Challenges
In light of these dramatic changes in the marketplace today-many of which are still 
occurring-how should the Commission treat broadcast regulation?
First, it is time for the Commission to recognize that the nature of broadcasting may no 
longer be so uniquely situated as to be un-deserving of full First Amendment protections.
Second, we need to reexamine the Commission's ownership restrictions.  In this regard, I 
commend Chairman Powell for his leadership in initiating several proceedings that ask, 
for example, how the Commission should be examining radio ownership and whether the 
newspaper/broadcast cross-ownership restriction should continue.
In the past, the Commission has used prophylactic rules in its application of media 
ownership restrictions.  The costs and benefits of such structural rules, however, need to 
be re-examined to determine whether prophylactic guidelines ruling media ownership 
continue to be the best way to preserve the public interest.
On one hand, structural rules allow for administrative ease both for the regulators and 
those whom they regulate.  Certainly, bright-line rules allow us at the Commission to 
assess applications more easily and in a more timely fashion than would be possible 
otherwise.  In addition, the industry also is well served by knowing exactly what the rules 
are and what the decisions regarding applications are likely to be.
On the other hand, bright-line rules can be problematic, in that they are by nature going to 
be either over- or under-inclusive.  Moreover, the determination of any "magic" number 
of stations or media outlets that a certain organization can own will by its very nature be 
an arbitrary one.
With this background in mind, I make the following five suggestions as to how we should 
approach these pending reviews: 
1. We should define the market more broadly. 
For instance, is the relevant product market for considering a radio license 
transfer only radio advertising?  Don't advertisers today consider radio stations, 
newspapers, and television acceptable substitutes?  Do viewers consider cable and 
DBS substitutes?  Should these products comprise separate markets, or are they 
more accurately part of the multi-channel video market?
2. With respect to competitive analyses, we should be wary of duplicating the 
efforts of the competition experts.  
The FCC's responsibility to promote competition is always central to a 
finding that a proposed merger is in the public interest.  When neither the DOJ nor 
the FTC looks at a proposed merger (because, for instance, the dollar amount is 
too low to require an HSR filing), perhaps the FCC's analysis should include a 
comprehensive competitive assessment of the proposed merger effects on the 
market.  But when either DOJ or FTC reviews a merger and declines to proceed, 
we should give significant weight to such a determination.
3. Where we have structural ownership limits in place, we need to presume that 
mergers that meet these limits are in the public interest.  
Particularly when these limits are not merely the result of our own 
determination, but rather expressly mandated by Congress, they should provide, at 
a minimum, a guide for any public interest analysis.  Such limits should help 
make our review easier, not more complicated.
4. Where we do not have applicable structural ownership rules, we must provide 
guidance regarding how the Commission will conduct case-by-case analyses.
I believe it essential to establish certain presumption as to what we believe 
the public interest to be, and to specify broadly what factors the Commission will 
consider in making its decisions.  To interested parties, this information is 
essential.  I also believe good, efficient government requires it.
5. Finally, we need to critically evaluate our traditional thinking on how 
ownership consolidation affects localism and diversity.  
For instance, evidence suggests that consolidation actually enhances 
program diversity by encouraging owners to create programming that targets 
niche markets, rather than producing bland programming that has the greatest 
chance of capturing the greatest number of viewers or listeners.  Whether 
increased consolidation has the same impact on viewpoint diversity, however, is 
still an open question.  It does appear that mergers may preserve the ability of 
media companies to offer local content-particularly local news-by enabling 
local broadcasters or publishers to stay in business rather than selling out to a 
national company.   
Conclusion
The media landscape has changed, and it is time that the FCC recognize these changes 
and react accordingly.  Our rules must be relevant to be effective.  The issues we face in 
several of our pending proceedings are no doubt challenging, but we can and must rise to 
the occasion. I look forward to working with my colleagues at the Commission, and with 
you in the industry, to fashion appropriate rules for the 21st century media marketplace.
Again, thank you for having me here today.
  	See Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969).
  	Id., at 400-401.
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