Bryan defends media common ownership
J. Stewart Bryan III, chairman and CEO of Media General, defended the FCC's decisions to allow common ownership of a newspaper and television station in many U.S. markets during an address Oct. 14 in Lee Chapel.
His speech:
Good evening. It’s a pleasure and an honor to be here tonight.
As a native Virginian for 65 years, I’ve always wanted to have an opportunity to speak in the Lee Chapel at Washington and Lee University.
Fifteen years ago, I almost did. Let me explain.
In the early 1980s, in a case before the Supreme Court of the United States, our newspapers prevailed in what has come to be styled the Richmond Newspapers case. It established the public’s right to attend trials in the courts of this land -– a concept that had been a common law right in our country since its founding, but one that had been whittled at by various court decisions and had never been tested at such a high level before.
A year or two later, Clark Mollenhoff, then a professor in the journalism school here, called me with the news that we had won the 1987 First Amendment Award of the Washington and Lee Chapter of the Society of Professional Journalists – Sigma Delta Chi.
He went on to say that the award, and I quote, “…carries the responsibility to deliver a speech of 30 to 40 minutes at the Robert E. Lee Chapel (which) should be appropriate for publishing in the Washington and Lee University Political Review.” While that assignment was a little daunting, I hastened to accept.
Then came the blizzard of 1987 or 1988, and all the roads across the Blue Ridge, including I-64, were shut down for the day I planned to drive to Lexington, make the speech, and receive the award. When it was rescheduled several weeks later, there was already another speaker scheduled as well. He got the Lee Chapel and I got the DuPont Library.
So, still I coveted this opportunity.
I made that observation to Ham Smith and Tom Burish several months ago, they issued an invitation on the spot, and that’s why I am here tonight -– on a day unlikely to see any snow.
At the time Ham suggested that a fitting topic would be the new change in FCC ownership rules that were scheduled to be released momentarily and to become law on September 1, 2003. Well -– several funny things happened on the way to September 1, with the result that the old rules are still in place, while Congress and the courts legislate and contemplate.
So, tonight, I plan to talk to you about those proposed rules, and why one of them in particular makes good sense and will result in better local news and information, especially in small and mid-town America.
So, let’s begin.
In 1996, after several decades of unprecedented advances in communications technology, Congress rewrote this nation’s laws dealing with telecommunications. The most sweeping change was a direction to the Federal Communications Commission (the FCC) to examine its media ownership regulations every two years with a prejudice in favor of deregulation unless the public interest clearly demanded the opposite.
Also, in 2002, the District of Columbia Circuit Court told the FCC that some of its rules were clearly not justified, and required modification.
In the meantime, many of this nation’s media companies, both publicly and privately owned, petitioned the FCC to abolish the 1975 regulation prohibiting, with only a few grandfathered exceptions, a newspaper from owning a radio or television station or a cable system in the same community. Also the television networks asked the FCC to remove the ownership cap on the number of TV stations they could own and operate which then stood at a maximum of 35 percent of the nation’s households.
To complicate the picture further, while all this was going on, in a separate action, the FCC changed the rules dealing with the number of radio stations that a single company could own in an individual metropolitan area.
To make an even longer story as short as possible, after studying parts of these rules for two years, the FCC lumped all the ownership rules dealing with radio, television, and cable into one omnibus procedure, and after an additional 18 months of testimony and contemplation, issued a whole new series of regulations earlier this summer.
Two of the more controversial ones raised the network ownership cap from 35 percent of occupied housing units to 45 percent, and removed the cross-ownership prohibition between newspapers and broadcast stations in all but the country’s smallest markets.
The new regulations were scheduled to take effect in September of this year, but the ensuing storm in Congress and the courts have put a stop to that. Suffice it to say that the U.S. Senate has passed legislation expressing disapproval of these changes – primarily the network ownership cap, and secondarily, removal of the cross-ownership prohibition.
The House has been less vociferous in its opposition, although maneuvering continues there, as we speak. And, early last month, the Third Circuit Court of Appeals in Philadelphia, granted a restraining order to keep the new rules from becoming law until it has determined their legality.
Now, with all that having set the scene, and if you’re still awake, let me talk to you about why the cross-ownership prohibition is wrong for the country as a whole, and especially for small-town America, and why, if that regulation was ever justified (and I don’t believe it was), it clearly is not now.
First, let’s look at a little history.
In most of the 19th century, newspapers were really the only game in town for the dissemination of local, national, and international news. There were some news and literary magazines published monthly, but they commanded little, if any, advertising revenue.
As the 20th century was dawning, American newspapers generally made no pretense at objectivity. Usually, the owner was a strong individualist with distinct ideas, who was not bashful about making them known throughout his newspaper –- not just on the editorial pages, but in the news and advertising columns as well.
Sometime during the early 1900’s, the notion of objective reporting reared its head, and during the past 90 or 100 years, that concept has gained majority, if not absolute, control.
Throughout the first half of the 20th century, newspapers remained the primary means of daily dissemination of the news. Thus, they were also the predominant advertising medium. Virtually all literate Americans read one or more daily papers. By no means, however, were all these journals prosperous. Many failed and either merged with stronger competitors or ceased publication altogether. Metropolitan Richmond today – with one million inhabitants –has one daily paper; at the end of the War Between the States – with a population of 49,000 – it had five.
Now, let’s look at the beginning of broadcasting. Congress first determined that the public airwaves should be regulated in the late 1920’s, and created the Radio Control Board, to license and regulate AM radio stations.
That board urged newspapers to apply for licenses and put radio stations on the air. Public policy of the day dictated that newspaper-owned radio stations would be the best providers of news and information to American families.
By the late 30’s or early 40’s, the Radio Control Board had become the Federal Communications Commission, and was charged with regulating more than radio. Once again, in the early and mid-50’s, as it had with radio licensing, the FCC urged newspapers to put TV stations on the air, and many did.
In the 1930s, ’40s and ’50s, strong competition for the advertising dollar emerged, in the forms of radio, mass circulation magazines and television. In 1950, advertising expenditures in the United States totaled $5.4 billion. Of this, $2 billion or 38 percent was spent in newspapers. But, more importantly, in the same year radio received 11 percent; magazines, 9.9 percent; and television a mere $171 million, a paltry 3 percent of that year’s total.
Forty years later, or 10 years ago now, these ratios had changed radically. In 1994, the shares of total advertising revenue were: newspaper, 22.8 percent (down from 38 percent); television, 20.8 percent (up from 3 percent); radio, 7 percent; and magazines, 5.3 percent. The remaining 44 percent, by the way, was spread among all other media, with the lion’s share, almost half, going to direct mail, a category that did not exist in 1950.
By the year 2001, however, the picture had changed even more radically. Newspapers share of total ad expenditures was down to 19.2 percent – one half of its 1950 share; broadcast television down to 16.8 percent; direct mail roughly the same as it had been, at 19.3 percent. Cable and satellite television, not on the map in 1994, garnered $15.5 billion or 6.7 percent; and the Internet, took in $5.7 billion or 2.5 percent – about the same percentage spent in 1950 on broadcast television.
I tell you all that to show you that the revenue picture of this nation’s media mix has changed and is changing rapidly.
Newspapers, once dominant, and broadcast television, once ascending, have some muscular competitors today.
Also, in the 28 years since cross-ownership was prohibited, much has changed in the world of news collection and dissemination. In 1975, there were three commercial networks, ABC, CBS, and NBC, and the non-commercial PBS. There were no UHF or low power TV stations and no commercial wireless communications to speak of. TV channels were limited to the 13 on the VHF spectrum. There was no cable television, no satellite television, no Internet.
Today, our world is vastly different. Cable and satellite TV have surpassed broadcast TV in viewership. There are six commercial networks. Households routinely receive 70 to 150 channels on their television sets.
And the Internet, since its invention by Al Gore, has revolutionized desktop publishing, making anyone and everyone an instant publisher. Just last month it was announced that, nationwide, online household penetration had passed newspapers, and was closing in on cable TV.
Worldwide today, there are 580 million Internet users, up from 379 million two years ago, and three quarters of them log on regularly. In the United States alone, web-watchers currently number 168 million, and the average one spends 25 hours and 25 minutes online each month. About 16 million Americans 18 and over have made a purchase online.
Any way you look at it, these numbers reflect a communications revolution that will forever change our lives. Future historians will likely say its significance is similar to that of the Industrial Revolution.
Consider these additional facts:
· A quarter century ago, there were an estimated 50,000 computers worldwide. Today, it is estimated that many more than that are installed daily, and there are 600 billion is use worldwide. More than 160 million new units will be installed this year.
· The Federal Department of Transportation predicts that more than 20 million U.S. workers will be telecommuting from home in 2006 – an increase of 750 percent in 10 years.
· Some 80 percent of the jobs in 21st century America will be cerebral in nature, and 20 percent will be manual; that’s the complete opposite of our labor force structure at the start of the 20th century.
· By 1996, the Internet had beaten the U.S. Postal Service in pieces of mail handled. Today, it is estimated that e-mails more than double the 200 billion pieces of mail processed annually by the postal service. In fact, the proliferation of e-mail – at the expense of snail mail – has been cited as a key reason behind the proposal to cut back postal delivery service and raise prices.
Newspaper penetration of occupied housing units has slipped from 100 percent or more to half of that, and local television news, while more costly to produce than ever before, receives a smaller share of advertising revenues as its viewership declines as well.
Our company, Media General, owns 25 daily newspapers and 26 network affiliated television stations – all but five TV stations located in the southeastern United States.
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