06.19.13

In FCC Nomination Hearing, Cantwell Urges Scrutiny of Media Cross-Ownership and Shared Services Agreements

Cantwell: ‘There is going to be an adherence to - not a continued move on - consolidation’

WASHINGTON, D.C. – Yesterday during a U.S. Senate Commerce Committee hearing, U.S. Senator Maria Cantwell (D-WA) said to the Obama Administration’s nominee for Federal Communications Commission (FCC) chair, Thomas Wheeler, that media cross-ownership and shared services agreements should not become a backdoor to further media consolidation.

During the hearing, Cantwell opened her exchange with Wheeler by urging the FCC to examine whether so-called ‘shared services agreements’ could be used to skirt rules to prevent media consolidation. Under these agreements, media outlets in the same market can share certain administrative and news-gathering functions yet remain separate in the FCC’s eyes.

“Last week Gannett newspaper announced that it was going to purchase BELO’s 23 television stations,” said Cantwell during her opening statement. “And while the purchase is subject to the approval of both the FCC and DOJ, I think that Gannett is trying to basically use these ownership rules, use the whole shared service agreement, as a way to get around those rules. So I’m very concerned about that whole issue.”

Cantwell then asked: “So do you believe that making it easier for owners of daily newspapers to own television stations and radio stations in the same market will fix what is wrong with the newspaper industry? And is that the way we need to be going?”

In response to Cantwell’s opening statement Wheeler said, “Senator I understand the seriousness of this issue. And I have long been an advocate of diversity of voices. On the specific issue that you just raised, I also note that the chairman has asked the GAO to opine on this issue. And I think that’s appropriate and called for. And I look forward to their opining, their opinion. But I think you said the key thing: that when the commission looks at these issues – competition, localism and diversity – are the issues that should be the touchstones. Not business plans.”

Cantwell later asked, “What I was asking in my first question is a lot of people try and put forth the notion that the newspaper industries in and of itself are having problems. And this is why you should allow the consolidation of media to save the day. I’m trying to get your thoughts on that.”

Wheeler responded: “I’m a businessperson. And it has been my experience that the way to grow businesses when they are challenged by new technologies is to embrace those new technologies. And that’s the way of working yourself out of this kind of situation.”

Watch a video of the exchange here.

Yesterday’s nomination hearing before the U.S. Senate Commerce Committee comes as the FCC continues a review of media ownership rules. Throughout the review, Cantwell has consistently spoken out against the approval of rule that encourage further media consolidation.

In March 2013, Cantwell voiced her support for pursuing a Resolution of Disapproval against the FCC if its media ownership rules urge further media consolidation. In November 2012, Cantwell called for a public vote on the FCC media ownership rules that could increase media consolidation. In a letter to then FCC Chairman Julius Genachowski and his fellow commissioners, Cantwell also expressed disappointment that discussion on a draft order with the potential to ease media ownership rules was taking place behind closed doors. Earlier that year at a Senate Commerce Committee hearing Cantwell also urged Genachowski to reconsider the FCC’s proposed rules on media ownership. Previously, in December 2011, Cantwell expressed disapproval with a FCC vote to move forward with the proposed rules.

A complete transcript of Cantwell’s exchange with Wheeler follows.

Cantwell: “Thank you, Mr. Chairman. I stayed around just to wish you a happy birthday. And to ask Mr. Wheeler some questions. I’m very glad that he brought up Newton Minow. I remember that story about Newton Minow taking President Kennedy – or maybe it was Senator Kennedy at the time – and he said ‘why are we launching satellites instead of people into space?’ And Minow said, ‘because ideas last longer than people do.’ And I think that’s a very important question when it comes to media and media consolidation. I want lots of ideas. I don’t want ideas packaged up and shoved down local throats of individual broadcasters saying, ‘this is the news and that’s the way it’s going to be.’ So one question I have for you is this issue of media consolidation and your role on the FCC. You know about previous chairmen and their attempts to advocate for rules. Then Senators Obama and Biden joined us in a disapproval resolution. Last week Gannett newspaper announced that it was going to purchase BELO’s 23 television stations. That includes KING in Seattle, KREM in Spokane and KGW in Portland. And while the purchase is subject to the approval of both the FCC and DOJ, I think Gannett is trying to basically use these ownership rules, use the whole shared service agreement, as a way to get around those rules. So I’m very concerned about that whole issue. So do you believe that making it easier for owners of daily newspapers to own television stations and radio stations in the same market will fix what is wrong with the newspaper industry? Is that the way we need to be going?”

Wheeler: “Senator I understand the seriousness of this issue. And I have long been an advocate of diversity of voices. On the specific issue that you just raised, I also note that the chairman has asked the GAO to opine on this issue. And I think that’s appropriate and called for. And I look forward to their opining, their opinion. But I think you said the key thing: that when the commission looks at these issues – competition, localism and diversity – are the issues that should be the touchstones. Not business plans.”

Cantwell: “And so do you believe that some broadcasters could abuse those shared services or joint sales agreements to get around those ownership rules?”

Wheeler: “I am not informed enough to be explicit on that. But I am going to be. And I look forward to pursuing that issue with you.”

Cantwell: “And so you basically believe that this is an issue that the commission needs to give more attention to, to assure members of Congress. Otherwise we’ll have another disapproval resolution. There is going to be an adherence to – not a continued move on – consolidation. What I was asking in my first question is a lot of people try and put forth the notion that the newspaper industries in and of itself are having problems. And this is why you should allow the consolidation of media to save the day. I’m trying to get your thoughts on that.”

Wheeler: “I’m a businessperson. And it has been my experience that the way to grow businesses when they are challenged by new technologies is to embrace those new technologies. And that’s the way of working yourself out of this kind of situation. That’s the best way of growing yourself of this kind of situation.”

Cantwell: “So you don’t run to the explanation of ‘well let’s just allow for all source of integration to solve this problem?’ And thereby throw out these very legitimate concerns about over-consolidation in the market?”

Wheeler: “I am specifically trying not to be specific on that Senator because I want to become more informed. I do understand the seriousness of this. And I understand the priority of competition, localism and diversity, trumps everything.”

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