Don't touch that dial! The broadcast regulatory war will continue after this inauguration!

(This post contributed by guest author Guy Heston, whose professional career started with a broadcast position at a small radio station.  He has long enjoyed finding logical contradictions in the protestations of the rich and powerful.)

The National Association of Broadcasters must be drooling with anticipation. Breaking news—two Democrat appointees to the Federal Communications Commission, including the chairman, have announced their resignation, which will greatly enhance the NAB’s chances of achieving two signature items on its agenda, neither of which would be good for consumers.

The NAB has whined for years that the FCC has refused to adopt regulations that would force smart phone manufacturers to include FM radio reception on all phones, and further refused to relax regulations about media cross-ownership. I know these are not the most interesting topics for cocktail party conversations, but stay with me because they are indicative of what is likely to happen throughout the government with the incoming administration. You get to be for government regulations or against them at the same time, depending on whether or not they help your cause.

First let’s consider the FM radio reception issue. While it complains loudly and frequently about government regulations, the NAB is delighted to support a proposed federal regulation that would require all smartphones include a chip enabling over-the-air FM radio reception like your old transistor radio. The official talking point is that smartphone users should have access to terrestrial radio in the event of a local or national emergency just in case the internet breaks or something.

The FCC hasn’t been buying the talking point. Smartphone users already have reliable internet access to thousands of sources in the event of an emergency, including local radio stations. And if buyers feel strongly about it there are smartphones available for purchase that include the FM chip. Naturally, the chip isn’t free and adds to the cost of producing the phone, so why should consumers be forced to pay for it if they don’t want it? Now, with two new FCC appointees upcoming, consumers may have no choice. Although the law requires no more than three of the five FCC commissioners be from the same party, you can bet your Pandora app the commission will soon be controlled by corporate and NAB-friendly appointees.

I believe what the NAB really wants is to encourage you to listen to FM radio via a handy little icon on your phone. With roughly 30 million subscriptions to satellite radio and millions of others opting for Pandora, Spotify and iTunes, radio station owners are a bit antsy about all the competition. So much so that CBS, a media company founded on radio, has decided to spin off its radio division and let it sink or swim on its own. Lately CBS Radio has been laying off newscasters and reporters to lower costs in preparation for the spinoff.

But the FM chip issue pales in comparison to the FCC’s cross-ownership rules, which the NAB deems draconian regulations. In summary, the rules don’t allow the same company to run the local newspaper, radio and TV stations in any market in the interest of encouraging competition. Certain exceptions were famously made, so for instance Rupert Murdoch’s empire gets to own two New York TV stations, including the local Fox outlet, and the New York Post tabloid. Now there’s a lovely cross-ownership.

Many of the historic FCC rules about media ownership have been tossed over the past 20 years, so whereas we used to limit broadcasters from owning more than seven AM, seven FM and seven TV stations in the interest of media competition and diversity, we now have debt-leveraged conglomerates like iHeart Media owning 850 radio stations. We allow corporations to operate two TV stations in one market and hundreds all over the nation. But that’s not enough for the NAB. It wants the ability for television and radio stations and the local newspaper in your city to be owned and operated by the same company.

Here are some examples of what happens with all of this consolidation. According to the media monitor site FTVLive.com, viewers who tune in to their so-called local newscast on KPTM-TV in Omaha, Nebraska, might be surprised to learn the newscast originates from KMPH-TV, 1678 miles away in Fresno, California. Both stations are owned by Sinclair Broadcast Group, the same company that was recently reported to have laid off much of the news staff at WNWO-TV in Toledo, Ohio, saying the Toledo newscast would instead originate from its station in South Bend, Indiana. Broadcasters call it “hubbing”, which is corporate talk for saying it’s cheaper to do it this way. Why pay all those salaries in Toledo when you can pipe the newscast in from South Bend, 156 miles away? Sinclair owns 173 TV stations across the country, so there are lots of opportunities to pipe in broadcasts from who knows where.

Sometimes the cost reduction efforts verge on comical. So, again according to FTVLive,  viewers of the KCEN-TV newscast in Temple/Waco, TX, might have noticed the “new” set on the station’s newscast. Only it wasn’t new. After being used for nine years at KUSA-TV in Denver, the set was reportedly dismantled and shipped off to Texas. Why pay all those Texas carpenters to build a new set when you can just take an old one and brush it up a little bit? Both stations are owned by Tegna, which was formed when Gannett (owners of the USA Today national newspaper) decided to spin-off their broadcasting division. I guess we can give a little credit to Tegna for recycling at one of its 46 TV stations.

Across the nation, thousands of talented and experienced broadcast anchors, reporters, producers and other staff have lost their jobs in the interest of corporate consolidation and cost reduction. You might be surprised to learn that your local traffic report on your morning radio doesn’t originate from your local radio station, nor the weather forecast nor the news. The Los Angeles CBS all-news radio station was recently reported to have laid off three long-time anchors and reporters from an already dwindling news staff. I’m sure it will make the financial statements look better as the radio division is spun off. 

With the incoming administration, it won’t be just the media cross-ownership rules that will likely run into the ditch. And it might well be your next smartphone has FM radio reception whether you like it or not. Climate change, banking, etc. Pick your concern and we’ll strap ourselves in to see where the regulatory/anti-regulatory ride takes us. As they say in broadcasting, stay tuned!

A different take on -- Government Deregulation: Be Careful What You Wish For

(This article is written and researched by Guy Heston, a good long-time friend and return contributor to LeftWingCapitalist.  It is thoughtful and insightful.  He is very even-handed about these things, so you will probably find this to be more informative and entertaining than anything I could have written on this topic.  --LWC, ed.) 

My friends on the right are in an election year tizzy over government regulations.  The United States Chamber of Commerce, of late funding a massive pro-Republican television ad campaign in battleground states such as Virginia, Ohio and Florida, has invoked the name of conservative icon William F. Buckley by declaring, “At some point we must stand athwart the growing regulatory blob and yell stop!”  The Republican Party Platform 2012 contains various references to regulations, including this doozy:  “Experience has shown that, in caring for the land and water, private ownership has been our best guarantee of conscientious stewardship, while the worst instances of environmental degradation have occurred under government control.”

Anyone who has ever dealt with a city planning department can attest to onerous regulations.  And I would argue that deregulation of the airline industry has been largely beneficial to the public.  We flyers get herded like cattle and nickeled and dimed on fees (at least the loo is still free) but the price and access are better under deregulation and the airlines do have to worry about competition.

But be careful what you wish for.  Deregulation does not always serve the public interest.

The radio broadcasting industry -- it used to be fun, but those good ol' days are just quaint

Take for example the radio broadcasting industry.  Once upon a time radio stations were closely regulated by the Federal Communications Commission under the Communications Act of 1934.  The theory was that since broadcast frequencies were limited and belonged to the public (unlike the newspaper industry or what’s left of it where anyone is free to publish) there should be some rules to protect the public assets.  And so it came to pass that no one, including corporations “who” have since been ruled by the Supreme Court to be people, could own more than seven AM and seven FM stations and no more than one AM and one FM in any city.  The idea was diversity of ownership and programming.  And a station was required to devote a certain amount of air time to news and public affairs. Radio flourished, even with the former and now quaint regulation limiting the amount of commercial time in any one hour of broadcasting.

Prodded by the Reagan administration, both the FCC and Congress began to ease regulations, lifting restrictions on the amount of advertising that could be carried, somewhat easing restrictions on the number of stations one could own and so forth.  Most famously, the Fairness Doctrine was turned off in 1987 (another quaint regulation that simply and without any prior restraint required broadcasters to be fair in the presentation of their programming). 

Fast forward to 1996 when the radio industry was vastly deregulated (OK, I admit it happened under a Democrat president).  With encouragement by the National Association of Broadcasters (NAB), those pesky regulations on ownership limits were mostly tossed.  Corporations were freed to buy hundreds of stations all over the country (there are still certain limitations to how many stations you can own in one market, so even today you cannot buy every station in Los Angeles and monopolize the market--a small tribute to government regulation).  

Radio broadcasting now -- all monsters, all the time

What do we have to show for this?  The radio industry is now dominated by a few corporate players such as Clear Channel, Cumulus and CBS Radio.  The largest is Clear Channel, which owns more than 850 stations according to its website.  As a result of a huge cost cutting effort at such companies, thousands of local DJ’s, newscasters and other radio employees have been laid off.  Much of the programming you hear originates from out of town via computer, explaining why you infrequently hear the time and temperature or much local news unless you are listening to one of the few metropolitan news/talk stations.  If you are traveling around the country, it’s often difficult to know what city you are in just by listening to the car radio since the programming is so often piped in from who knows where.  Kind of like elevator music.  So much for deregulation.

Let’s return to the National Association of Broadcasters, that potent force for the free market place.  It turns out that when it suits the interests of its corporate members, the NAB is all in favor of government regulation.  So for example it recently proposed the FCC require/mandate/order (pick your regulatory verb) smart phone manufacturers to include FM radio access on your device.  Some manufacturers already provide this option, so consumers are regulation-free to choose this if they so desire.  But, no, the NAB wants this regulated--consumers would get it and pay for it whether they want it or not.  Those blasted government regulations!

I can appreciate the NAB’s concerns.  Radio advertising has been sluggish.  More than 20 million Americans have freely chosen to subscribe to Sirius/XM satellite radio.  Pandora Internet radio is hugely popular.  And now even Apple has announced it’s getting into the personalized on-line radio game.  That blasted competition!

So by all means let those of us who wish stand athwart the growing regulatory blob.  Unless of course the blob affects your corporate interests.  Meanwhile, others of us occasionally listen to terrestrial radio and pine for the glory days of a little more regulation.