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 Remarks  by  Commissioner  Jonathan  S.  Adelstein 
 Northern  California  Hearing  on  FCC  Media  Ownership  Rules  San  Francisco  City  Hall 
 April  26,  2003 

 Citizen  Kane  for  the  21  st  Century? 
 The  Defining  Moment  for  Media  Ownership 

 Thank  you  for  that  warm  welcome.  Its  a  real  breath  of  fresh  air  to  get  outside  Washington,  especially  back  to  the  Bay  Area,  to  hear  your  views  about  media 
 consolidation.  This  hearing  gives  your  voices  the  opportunity  to  join  the  emerging  national  dialogue  on  an  issue  that  impacts  everyone  who  lives  here. 

 Im  especially  thankful  to  the  Media  Alliance  for  the  legwork  in  setting  this  up,  and  for  the  leadership    and  cosponsorship    of  a  number  of  the  Bay  Areas  leading 
 institutions  of  higher  learning    the  USF  Media  Studies  Department;  the  UC  Berkeley  Graduate  School  of  Journalism;  the  Hastings  Law  Schools  Communication  and 
 Entertainment  Law  Journal;  and  the  Stanford  University  Communication  Department    my  alma  mater,  I  might  add. 

 The  FCC  is  about  to  make  historic  changes  to  our  media  ownership  rules  that  will  affect  each  of  us  as  media  listeners  and  viewers.  The  current  rules  are  designed  to 
 prevent  individual  companies  from  gaining  too  much  control  over  what  we  see,  hear,  and  read. 

 The  public    thats  all  of  you    own  the  airwaves.  We  at  the  FCC  are  responsible  for  overseeing  the  airwaves  in  your  interest    not  in  the  interests  of  the  corporations  that 
 profit  by  using  them.  Thats  not  just  the  moral  thing  to  do    its  the  law.  Im  afraid  that  we  are  about  to  forget  that. 

 If  we  make  the  tragic  mistake  of  allowing  too  much  further  media  concentration,  we  wont  be  able  to  undo  it.  Once  companies  merge,  the  FCC  never  asks  them  to  undo  it. 
 You  cant  put  the  toothpaste  back  in  the  tube.  The  FCC  could  unalterably  change  the  face  of  the  American  media  for  generations  to  come.  This  proceeding  is  so  big,  it  feels 
 like  were  going  to  straight  to  the  Superbowl  without  having  even  begun  the  regular  season. 

 The  current  FCC  media  ownership  rules  are  grounded  in  the  three  basic  public  policy  goals  that  form  the  foundation  of  American  broadcasting    competition,  diversity, 
 and  localism.  They  now  make  it  difficult  for  one  company  to  own  both  a  newspaper  and  a  television  station  serving  the  same  community.  They  also  cap  the  number  of  television 
 or  radio  stations  that  one  owner  can  control  in  a  single  area,  as  well  as  the  number  of 
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 television  stations  that  one  company  can  own  nationwide.  Another  rule  bars  the  four  major  TV  broadcast  networks  from  merging  with  one  another. 
 All  these  rules  are  now  up  for  grabs.  The  decisions  we  will  soon  make  will  have  profound  implications  for  our  culture  and  our  society.  They  will  affect  the  diversity  of 
 voices  that  are  heard  across  this  country  and  in  each  of  our  communities  every  day. 
 Regretfully,  many  Americans  have  heard  nothing  at  all  about  the  potential  rule  changes.  I  hope  we  can  change  that,  and  thats  why  Im  here. 

 But  its  almost  too  late. 
 FCC  Chairman  Michael  Powell  has  vowed  that  nothing  will  stop  the  agency  from  overhauling  these  rules  by  June  2.  He  even  dismissed  recent  Congressional  requests  for 
 more  information  and  more  time.  Earlier  this  month,  a  bipartisan  group  of  fifteen  Senators,  including  your  own  Senator  Barbara  Boxer,  asked  the  Chairman  to  hold  off  on 
 any  changes  until  the  FCC  discloses  more  detail  about  its  proposed  rules  so  that  Congress  and  the  public  can  have  an  opportunity  to  respond. 

 A  similar  letter  followed  from  the  Congressional  Hispanic  Caucus,  which  is  concerned  about  protecting  and  promoting  minority  ownership  in  media,  as  well  as  the 
 impact  of  media  consolidation  on  the  Latino  community. 
 The  Chairman  cast  aside  these  Congressional  requests,  announcing  he  will  go  forward  full  steam  ahead  despite  these  mounting  concerns.  So  June  2d  will  become  the 
 defining  moment  for  American  media  ownership  rules. 
 This  issue  is  as  important  as  any  other  the  country  faces,  apart  from  war  and  peace,  but  the  network  media  arent  covering  it.  Its  critical  for  us  to  hear  from  the  public 
 before  then.  But  to  comment  on  the  vital  issues  at  stake,  the  American  public  and  its  representatives  in  Congress  need  more  information.  Many  rumors  are  swirling  around 
 the  Capital  about  the  use  of  a  so-  called  diversity  index  and  other  approaches  the  FCC  could  take  to  overhaul  these  rules.  Given  that  June  2  is  now  only  37  days  away,  many 
 people  are  understandably  bewildered  about  what  framework  they  will  face  on  June  3rd. 
 Since  we  are  charged  with  serving  the  public  interest,  the  FCC  should  never  be  afraid  of  public  comment.  It  only  strengthens  the  ultimate  product.  It  could  help  us  avert 
 unintended  consequences.  Perhaps  most  importantly,  public  comment  on  a  new  plan  is  required  by  law,  as  the  Office  of  Advocacy  of  the  US  Small  Business  Administration 
 recently  alerted  Chairman  Powell. 
 Chairman  Powell  has  stated  that  the  public  had  every  opportunity  to  comment  on  a  notice  the  FCC  sent  out  last  year.  The  problem  is,  now  that  we  are  crafting  a  new 
 proposal,  the  public  has  never  had  opportunity  to  comment  on  the  specifics.  On  an  issue  of  this  magnitude,  the  FCC  has  a  legal  and  moral  obligation  to  provide  the  public  with 
 more  specific  information  before  sealing  it  into  federal  regulations. 
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 Thats  why,  as  a  backstop,  I  recently  asked  the  Chairman  to  alert  the  public  to  at  least  the  broad  outlines  of  the  plan  in  an  open  forum.  I  even  suggested  we  could  hold  a 
 public  briefing  soon  to  accommodate  his  June  2d  timeframe,  despite  my  concern  about  a  rush  to  judgment.  Even  something  like  this    which  would  fall  short  of  the 
 Administrative  Procedure  Acts  full  notice  and  comment  procedures    would  go  a  long  way  toward  helping  the  public  understand  what  is  happening  within  the  confined  walls  of 
 the  FCC.  He  rejected  my  proposal,  along  with  the  others. 
 The  stakes  of  this  proceeding  couldnt  be  higher.  The  mass  media  shapes  our  thoughts,  decisions,  and  values  more  than  we  might  imagine.  Since  our  media  ownership 
 rules  were  established,  Americans  have  more  forms  of  media  than  ever.  But  does  the  availability  of  a  greater  number  of  channels  necessarily  translate  into  a  greater  number  of 
 diverse  voices  for  accessing  local  news  and  information?  Im  not  so  sure. 
 I  think  our  local  communities  are  better  served  by  hearing  many  voices  discussing  the  issues  of  the  day  on  various  outlets  --  rather  than  a  handful  of  giant  voices 
 booming  loudly  across  a  range  of  media  outlets  they  own.  Diverse  views  fuel  our  public  debate  and  strengthen  our  democracy.  We  need  more  voices  in  the  nations  media,  but 
 not  from  one  ventriloquist. 
 A  big  issue  before  us  is  allowing  a  single  company  to  own  a  variety  of  different  forms  of  media  outlets,  which  is  currently  addressed  by  our  cross-  ownership  rules.  If  the 
 FCC  jettisons  these  rules,  what  would  it  put  in  their  place?  I  happen  to  believe  that  a  properly-  crafted  framework  for  assessing  viewership  across  media  in  a  particular  local 
 market  could  serve  as  a  proxy  for  cross-  ownership  rules.  But  any  gauge  of  diversity  the  FCC  employs  must  recognize  the  singular  importance  of  the  media  in  civic  discourse,  and 
 protect  against  too  much  concentration. 
 Because  the  media  isnt  like  other  consumer  goods.  Unlike  cereal  or  ketchup,  mass  media  has  viewpoints  attached  to  it.  Control  of  the  media  affects  the  vibrancy  of 
 what  the  Supreme  Court  has  called  the  uninhibited  marketplace  of  ideas.  It  affects  the  very  health  of  our  democracy.  The  Supreme  Court  has  said  that  the  FCC  may  not  abridge 
 the  right  of  Americans  to  have  access  to  ideas  and  to  creativity. 
 Critics  say  that  loosening  the  media  ownership  rules  will  unleash  media  giants  to  intensify  their  grip  on  the  news  business,  drive  local  voices  off  the  air,  and  block  a  variety 
 of  political  viewpoints  from  reaching  the  airwaves. 
 While  consolidation  can  have  positive  effects,  such  as  economies  of  scale,  our  job  is  to  protect  the  public,  not  corporations  that  naturally  seek  efficiencies.  And 
 consolidation  carries  tremendous  risks,  like  the  loss  of  localism.  Television  and  radio  stations  in  the  U.  S.  are  licensed  to  serve  individual  communities,  both  as  outlets  for  local 
 expression  and  local  artists  and  as  sources  of  local  news  and  information.  The  public  deserves    and  the  laws  require    programming  that  serves  the  unique  needs  of  local 
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 communities.  Consolidation,  on  the  other  hand,  often  leads  to  the  homogenization  of  programming. 
 Evidence  shows  that  television  and  newspapers  are  by  far  the  most  important  sources  of  local  news  and  public  affairs  information.  Newspaper  magnate  William 
 Randolph  Hearst  understood  the  key  power  of  local  news  outlets.  You  here  in  the  Bay  area  know  a  bit  about  Mr.  Hearst  and  the  power  of  local  media.  When  asked  why  he 
 preferred  concentrating  on  newspapers  with  their  limited,  regional  appeal,  rather  than  spending  more  energy  on  motion  pictures  and  their  worldwide  audience,  he  pithily 
 replied,  I  thought  of  it,  but  I  decided  against  it.  Because  you  can  crush  a  man  with  journalism,  and  you  cant  with  motion  pictures. 

 We  may  be  on  the  verge  of  creating  a  21  st  Century  Citizen  Kane,  or  maybe  a  handful  of  them. 
 Ive  heard  the  arguments  made  by  those  seeking  to  abolish  the  newspaper-television  cross  ownership  rule  that  common  ownership  is  needed  for  newspaper 
 companies  to  stay  afloat,  or  to  produce  better  quality  news.  But  we  need  to  question  if  mergers  are  the  only  way  to  accomplish  this.  If  efficiencies  are  gained  by  merging  a 
 newspaper  with  a  TV  station,  then  wouldnt  the  same  benefits  come  from  a  joint  news-gathering  agreement  between  the  two  entities?  That  arrangement  could  at  least  preserve 
 separate  ownership  and  separate  editorial  and  managerial  control    which  would  help  to  ensure  diverse  viewpoints.  We  should  decide  if  some  of  the  claimed  efficiencies  can  be 
 gained  short  of  an  outright  merger. 
 Even  assuming  newspapers  are  cash-  strapped,  as  some  claim,  what  does  this  tell  us?  To  me,  it  means  there  is  slim  hope  that  any  new  newspapers  will  get  created.  That 
 means  we  better  tread  very  carefully  with  ownership  of  the  precious  few  daily  newspapers  that  still  exist. 

 If  you  dont  think  changes  in  these  rules  can  affect  you,  tune  into  todays  radio.  In  1996,  Congress,  not  the  FCC,  relaxed  the  rules  governing  who  can  own  radio  stations, 
 prompting  an  unprecedented  wave  of  consolidation.  In  the  first  year  after  the  Act  passed,  more  than  2100  of  the  approximately  11,000  commercial  radio  stations  in  the  U.  S. 
 changed  hands.  And  most  of  these  stations  were  sold  to  companies  that  already  own  stations,  many  of  them  former  competitors  in  the  same  markets.  Radio  conglomerates 
 now  centralize  broadcasting  from  remote  headquarters  and  pump  homogenized  playlists  to  stations  across  the  country.  The  largest  radio  station  group  owns  1,240  stations,  up 
 from  40  before  the  rule  change. 
 A  town  in  North  Dakota  called  Minot  felt  the  effects  recently.  When  a  train  carrying  ammonia  derailed  and  released  a  noxious  cloud  of  gas,  police  sought  to  alert  the 
 community  to  steer  clear.  So  the  police  called  the  local  radio  stations,  all  six  of  which  are  owned  by  Clear  Channel  Communications.  But  the  company  had  pared  down  its  local 
 operations  and  nobody  was  there  to  pick  up  the  phone.  Three  hundred  people  were 
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 hospitalized.  For  that  community,  the  loss  of  localism  and  diversity  in  the  media  affected  every  resident  in  a  very  tangible  and  devastating  way. 
 Ive  compared  the  experience  of  the  radio  industry  to  the  canary  in  the  coal  mine.  Miners  would  send  a  canary  down  first  to  see  if  it  survived  before  they  dared  enter.  Wed 
 better  examine  the  health  of  this  canary  carefully  before  we  take  any  steps  that  might  lead  to  consolidation  in  other  media  outlets  like  TV,  cable  and  newspapers. 

 Whats  the  rush  to  make  major  changes  now?  The  FCC  should  focus  on  putting  in  place  a  workable  structure,  one  that  survives  scrutiny  by  the  courts,  and  then  over  time 
 adjust  the  levels  to  allow  for  greater  consolidation  after  its  proven  that  the  initial  levels  didnt  hurt  the  public.  The  law  provides  a  structure  for  the  FCC  to  review  these  media 
 rules  periodically.  Why  not  focus  now  on  implementing  a  workable  structure,  and  then  work  towards  greater  loosening  in  the  years  to  come,  as  we  learn  more  about  the 
 implications  of  greater  consolidation  on  localism  and  diversity. 
 The  FCC  should  proceed  with  enormous  caution.  Our  rules  are  intended  to  prevent  a  Citizen  Kane-  like  figure  from  amassing  too  much  control  of  the  media  and 
 dominating  civic  discourse.  But  caution  and  speed  tend  not  to  mix  well  in  any  context,  and  particularly  not  when  the  safeguards  of  our  democracy  are  concerned. 

 As  we  proceed  at  lightning  speed  now  towards  June  2d,  I  hope  that  Chairman  Powell  will  provide  the  public  with  an  inkling  of  whats  to  come,  so  that  we  can  debate 
 the  effect  of  any  concrete  proposal  he  discloses    thats  what  a  public  rulemaking  proceeding  should  be  all  about. 

 Each  of  you  here  today  should  be  a  part  of  that  dialogue.  I  cant  emphasize  enough  the  importance  of  your  participation.  If  we  are  to  craft  media  ownership  rules 
 that  best  serve  the  public  interest,  we  must  hear  from  the  public,  and  thats  why  Im  here  to  listen  to  you. 

 So  lets  get  to  it  and  begin  our  discussion. 
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