The Role of Local Video in the Modern Video Marketplace

Local content has long been an important part of the video marketplace; promoting the development of local content has been a central regulatory and statutory goal. Promoting localism – both as a good in itself and as a means to promoting competition and diversity – has long been a cornerstone of the FCC’s approach to video regulation. And protecting local television against competition from imported distant signals gave rise to policy, judicial, and legislative decisions that define much of the current regulatory framework governing the video industry. Indeed, one could characterize local broadcaster channels as the basic “unit” of the video marketplace – arguably both the relevant statutes and FCC regulations do just this. But despite its historical importance, localism seems a fleeting concern today. Much of the modern video industry is focusing on Internet-based modes of production, distribution, and consumption – and it is doing so largely outside the reach of regulators and with little concern for localism values. And participants in the traditional video industry – both on the consumer and production/distribution side – are following along this path. This paper considers the role of localism is the modern video marketplace: whether it is really being lost, whether this loss is lamentable, whether we should do anything to preserve or promote localism in the modern video marketplace, and, if so, whether and how we can do so. The paper’s primary two contributions are its consideration of the ways in which localism may be important in the modern video setting and development of potential ways to promote localism in this setting. It proceeds in three parts: the role of localism over time, from the FCC’s early regulatory efforts to the modern setting; localism’s virtues, considering ways in which localism may be important in the modern setting; and then turning to localism’s future, to ask whether localism needs to be promoted in the modern video marketplace and to consider ways of doing so. Each of these sections is discussed in slightly more – but still general – detail below. The discussion of localism over time starts in the 1950s with the FCC’s mantra of “localism, diversity, competition,” its efforts to promote these virtues with UHF broadcast, and the subsequent tensions this created between FCC policy and the nascent cable industry. It then turns to the regulatory and statutory framework that emerged in FCC rules and the Copyright and Cable Acts – a framework that, generally, ensured favorable treatment for local broadcasters on non-broadcast media, in exchange for a relatively modest oversight of those media. It then turns to the modern setting to consider what role local content plays in the modern – and future, presumptively Internet-oriented – video marketplace. The next section considers localism’s virtues. Again, it starts by returning to the FCC’s longtime mantra of “localism, diversity, competition,” reviewing subsequent critiques of the premise that localism supports values of diversity and competition – indeed, subsequent evidence demonstrates that promoting local ownership can come at the expense of diversity and competition. It then considers localism in the modern setting, identifying unique values that localism supports, or values that localism supports uniquely well. These are placed into two general categories: ways in which localism promotes important democratic values, and in which it produces important content. “Democratic values” include, for instance, encouraging interest in and facilitating access to the media industry, serving as a laboratory for media formats and as a “farm team” for new media participants, and providing an important platform for minority-, foreign-language, and otherwise underrepresented programming. And important local content includes, for instance, news and information programming, emergency information, and local political and commercial information (especially through advertising). Critical among consideration of these content concerns is the “search” and “discovery” functions of local programming. The final section – which is the hardest to capture at this general level of detail – looks to localism’s future, asking whether the place of local video content in the emerging video marketplace should be protected and, if so, how. It begins with skepticism, asking whether content with localisms’ virtues is really being lost – or rather whether the market is merely adapting to new technologies – and, relatedly, whether, to the extent such content is being lost, the market will develop new mechanisms to fill the void. Despite this skeptical start, there are some forms of local content that are both valuable and unlikely to be produced in the new, Internet-based, video marketplace. For instance, emergency information services, local political programming, and “search” and “discovery” of new information, are unlikely to translate to or be replicated by emerging platforms. In response to these concerns, a number of approaches to preserving and promoting the development of local content are considered – along with challenges to them. Chief among these approaches, this paper explores incentive- and quid-pro-quo models to encourage the development of local programming and the favorable carriage of that programming. For instance, it considers the use of incentives for carriage local programming and beneficial spectrum swaps for producers of local programming. In considering such approaches, this paper pays special attention to the myriad ways in which the existing regulatory regime – often as the result of efforts to promote localism – is ossified or may slow the development of the video marketplace. This leads to consideration of ways to promote local video content with the secondary goal – as part of a quid-pro-quo model – of addressing such ossification and other regulatory impediments to the video marketplace.