FCC Cross-Ownership Debate Presages Local News Multimedia Future
Important Details: FCC Chairman Kevin Martin has stirred up a dormant hornet’s nest. He’s proposed relaxing decades-old rules on local media cross-ownership, and doing it before the end of the year. Currently, media owners are largely prohibited from owning both a daily newspaper and a top TV station in the same metro area, though there are numerous long-standing exemptions granted if they existed prior to the 1975 adoption of the rules. Media owners have long sought rule change, which was last tried in 2003 when the FCC loosened rules, but saw the change struck down by a federal court.
Though not final in draft, the new rules are expected to allow single media companies to own both dominant daily newspapers and top TV stations in the same market.
Martin’s argument is that the media landscape has changed dramatically, with cable and internet access affording Americans more media choices than ever before. Therefore the old rules limiting local ownership, especially given the financial struggles of newspaper companies, are antiquated and need to be updated.
The debate comes at a time of much cross-media movement:
- Belo has recently moved to separate its newspaper and broadcast assets into two companies;
- Scripps has recently moved to divide into two companies as well, one local (incorporating TV and newspapers) and one national/global (cable and internet);
- Tribune is on the brink of going private, but waiting to see whether its properties in five cities (New York, Chicago, Los Angeles, Hartford and the Miami-Fort Lauderdale area) can be brought into the new Sam Zell-headed private company. It had applied for an extension of its current status, but that application now seems to be superseded by the wider FCC push. Without the extension, Tribune officials say the nine-month old deal may evaporate.
Implications: Outsell believes that the current debate and the apparently contradictory combining and separating of assets reflects both old-world thinking and a pivotal change in how traditional text and video assets are viewed going forward. The old-world thinking is based on the idea that bigger is better. That philosophy led Tribune to buy Times Mirror in 2000. Its driving purpose: to dominate local ad markets, by offering bundled ad buys in print and broadcast and to cross-promote media. The strategy largely failed to produce significant new market share and, in part, led to Tribune’s agreement to sell itself earlier this year. In the internet age, power has been increasingly moving from ad seller to ad buyer, and concentration of properties in single markets probably won’t do much to change that.
However, the dawning new reality of easily accessible online video changes potential value assessments. Clearly, the local media sites of tomorrow will offer audiences text, video and audio – using the content type that best tells each story. So the local media company adept at producing multimedia content — producing it as cheaply and efficiently as possible — and then distributing it widely through aggregators and mobile, will come to dominate. We see that world being born on both sides of the Atlantic in multimedia newsroom pushes from London’s Daily Telegraph to Gannett’s Seven Desks newsroom rolling out at 100 properties to Media General’s joint newspaper/TV Tampa operation. Combine multimedia newsroom strategies with the big push to cut expenses through regional clustering of properties, and you have a sense of where the world could be headed.
Perhaps the prize held out by rules allowing common ownership of TV stations and newspapers is the ability to merge. No one’s used the word merger so far, but it’s a logical result of such a change. What do local media do? They gather the news, and they sell ads, alike for print and broadcast. How they distribute their content has defined them, but won’t in the new world.
That’s why observers of the FCC fast-paced process had better keep one eye focused forward, as much as they have one fixed on the world that’s rapidly receding in the rear-view mirror.