There’s a tragic irony to this situation. For all the talk from lawmakers about injecting money into news outlets or letting them band together in certain ways, outdated regulations remain on the books that explicitly prohibit local newspapers and broadcast stations from investing in one another.
In 2017, the Federal Communications Commission (FCC), in compliance with its statutory mandate, reviewed its rules related to media ownership. The Commission made several changes, including removing rules prohibiting common ownership of newspapers, television, and radio stations in a given market. The FCC also relaxed rules related to the number of the largest broadcasts stations by audience in a given market that could be commonly owned.
Yet last fall, two judges on the Third Circuit Court of Appeals reversed the FCC’s changes. Of note, these same judges have blocked several attempts by the FCC to update its ownership rules over the last two decades.
The logic behind the FCC’s changes is fairly straightforward. First, all of these businesses are ultimately driven by advertising sales. Allowing common ownership of newspapers and broadcast stations would allow for these businesses to achieve economies of scale in their sales departments and other keys aspects of their operations. Further, they would be able to offer a wider range of products and packages to potential advertisers.
Second, new technology has rendered the rules to be nonsensical. The original intent of restrictions on common ownership of various local media outlets was to ensure a diversity of voices and perspectives while preventing any single entity from dominating the flow of information in any given area. The Internet has rendered such concerns moot.
Today, virtually anyone with an Internet-connected device can share information or their opinion and narrowly target their audience based on any number of categories, including geography. Furthermore, newspapers now have their own podcasts and YouTube channels while local broadcast stations have their own blogs. All are economically relevant substitutes to one another.
Those opposing the FCC’s changes, including the Third Circuit judges, insist that the rules must be retained to protect minority and female voices in local news. Yet, it seems none of them have considered the fact that no voices—minority, female, or otherwise—are protected when a newspaper stops the presses or airwaves go silent.
Entrepreneurs and companies with active investments in local media are natural suitors to other local outlets desperately seeking capital and other efficiencies. Yet, regulations are keeping these ideal investors on the sidelines.
Thankfully the FCC appealed the Third Circuit’s decision to the Supreme Court last month. However, there is no guarantee the Court will agree to hear the case, what the outcome will be if it does, or how long the entire process will take. Meanwhile, local media outlets are shuttering daily while Congress debates wheter and how to throw borrowed money at them. There’s no need for any of this.
Congress has the power to eliminate restrictions on media ownership. As stated, the rules are painfully unnecessary in an age where anyone with a smartphone can become a reporter and publisher. By removing unnecessary media ownership restrictions, or at least affirming the FCC’s changes, Congress can ensure that fresh private capital reaches struggling local newspapers and broadcasters without creating new red tape or spending another borrowed dime.