FCC Eyes Adarand Research, After Delay Raises Concern of Media Ownership Rule Remand

The FCC plans to pay for research on the hurdles demographic groups like minorities face getting radio and TV stations, of which new data shows they continue to own a disproportionately low share (CD Nov 16 p21). The results will come too late for consideration prior to a forthcoming vote on media ownership rules, agency officials said. They said the coming study or studies would be done so the commission could possibly adopt future rules to target minorities and comply with the strict constitutional scrutiny the Supreme Court’s 1995 Adarand decision requires of such policies. The Adarand research won’t be finished in time for the expected adoption this year of new media ownership rules (CD Nov 15 p1), agency officials said. Some inside and outside the commission said they worry that will prompt the 3rd U.S. Circuit Court of Appeals for a third time to send back the quadrennial review order to the agency.

Other concerns in the Media Bureau that drafted the quadrennial review order now circulating for a commissioner vote -- the cost to do the Adarand research and FCC Chairman Julius Genachowski’s focus on issues like broadband and not media ownership rules as a more primary way to promote diversity -- were cited by agency, public-interest and industry officials as reasons for not finishing the studies. Conducting the research would be a complicated and potentially lengthy process, said agency and public-interest officials and a researcher who helped put together the 2010 FCC National Broadband Plan. The quadrennial review order was due in 2010, and past FCC chairmen including Kevin Martin who preceded Genachowski have also missed the deadlines.

Under Genachowski, the FCC “has prioritized assessing and promoting media diversity, including through two diversity and participation studies the FCC funded” last fiscal year, one of which will continue “well into the coming year,” an agency spokesman said by email. He noted the FCC sought $500,000 in its FY 2013 budget request for further media diversity studies. Last week “for the first time” the bureau issued a report “which gathered comprehensive information and data across the country on minority and female ownership” of stations, the spokesman said.

Doing an Adarand study wasn’t getting much “attention” from Genachowski’s office, and the bureau “took the easy way out” with the current rule review by not commissioning new research by outsiders or doing its own, said Professor Angela Campbell, co-director of Georgetown University’s Institute for Public Representation. The decision was “we will just repeat the studies we did before,” on usage of media and ownership but not look at barriers to entry over time, said Campbell, representing nonprofits opposed to media mergers and acquisitions. “The money would have been much better spent on the Adarand studies, rather than what they did spend it on.” That research was released last year (http://xrl.us/bkz6ju) and cost about $1 million (CD Aug 9/10 p6). The cost prompted the commission to ask for and get congressional permission to use unspent money from previous fiscal years for the studies (http://xrl.us/bnz3tq). After media ownership studies the commission paid several hundred thousand dollars for under Martin weren’t subject to competitive bidding (CD May 2/07 p5), the commission under Genachowski issued competitive bidding requests.

Informal cost estimates range up to $1 million for future Adarand research, and some at the commission had hoped that money would have been freed up to do the studies in time for the current draft order, agency officials said. The agency had been considering whether to use money not spent in past fiscal years in the current one, which began Oct. 1, to do the studies, they said. Sen. Dick Durbin, D-Ill., chairman of the Financial Services Subcommittee, which oversees the commission’s budget, hadn’t received such a request, his spokesman said. This commission’s FY 2013 budget included a request for $500,000 to “support FCC research and analysis to determine whether there is a link between the identity and/or characteristics of an owner and employment and service (including important content) to all Americans, and to determine the continued impact of past or present discrimination based on immutable or other characteristics on participation in FCC regulated and related industries.” The money was also for “consulting services to gather data and study communication industry participation and impact,” the February budget document said (http://xrl.us/bnzz8i).

The current draft ownership order addresses diversity by targeting some regulatory relief, under eligible entity rules, for small broadcast businesses, FCC officials said. The 3rd Circuit in summer 2011 (CD July 7/11 p3) sent back the eligible entity definition in the 2007 order adopted under Martin because the rules in “large part punted yet again” on diversity, the three-judge panel of the Philadelphia court wrote (http://xrl.us/bnzz36). The current draft rules say there’s no basis on which to adopt race-based ownership criteria, which was possible to conclude without doing an Adarand study, an FCC official said. There are “high constitutional hurdles” to come up with “an expressly race- or gender-based standard on remand and the data that would be necessary,” December’s rulemaking notice that led to the draft order said (http://xrl.us/bnuqfz). “While we continue to believe that promoting minority and female ownership is an important goal, we also recognize that implementing a program expressly aimed at this goal in the context of this proceeding would require the support of a substantial evidentiary record that the Commission has not yet been able to amass."

The eligible entity definition in the draft order may not be enough to prevent the 3rd Circuit from issuing a third remand after the forthcoming rules are adopted and likely appealed, a commission official said. Nonprofit advocates who oppose radio and TV station M&A voiced similar concerns in other interviews. They unsuccessfully tried to get the bureau to release for public comment, before the quadrennial review order was circulated for a vote, data showing what groups own radio and TV stations. That data from 2009 and 2011 biennial forms that all broadcasters file were released last week.

Ownership Figures

Data released by the bureau found minorities controlled as of Oct. 1, 2011, 559 U.S. stations. They include 30 full-power TV outlets, or 2.2 percent of all such licenses; 237 AM stations, or 6.2 percent of all; and 196 FMs, or 3.5 percent (http://xrl.us/bnz2v7). Such ownership appears to have decreased over time, said St. John’s University law Professor Leonard Baynes and public-interest groups. (See separate report below in this issue.) The figures showed women controlled less than 8 percent of all commercial, full-power radio and TV outlets. “The commission cannot just report data totals” -- data totals do “not support a decision” on new media ownership rules, said public-interest communications lawyer Cheryl Leanza, representing the United Church of Christ. “A report with data totals does not explain why allowing further consolidation” wouldn’t hurt people of color, she added.

It has been 11 years since the FCC last did research on the barriers to entry in broadcasting, said experts including Baynes, who as an aide to then-Chairman William Kennard in 2001 helped with the gathering of that research (http://xrl.us/bnz22d). The commission June 21 issued a request for information for studies that those who reviewed the RFI said could include research that would be helpful if the commission were to make an Adarand showing for future minority-targeted rules. The FCC seeks “an entity capable of performing an analysis of survey research examining whether there are market entry barriers to participate in the media, telecommunications and information industry,” the request said (http://1.usa.gov/TOrsfz). The request also sought a “multi-lingual poll” on how consumers’ “critical information needs” are met by “FCC-regulated and related industries,” and “field research” on the extent to which people in six small, medium and large markets “rely on the Legacy Media and/or New Media to acquire critical information."

Such information is what the commission would need to make an Adarand showing, said researchers who do such work and public-interest lawyers. The attorneys, some opposing ownership deregulation and others favoring it, agreed the agency can take steps to increase diversity of broadcast owners without targeting any racial group, so the rules wouldn’t be subject to constitutional scrutiny. “My God, we've got 47 in just this media ownership docket,” Minority Media and Telecommunications Council Executive Director David Honig said of race-neutral proposals such as letting a broadcaster own an additional station in each market if it was used to train minorities. “An Adarand study is useful, but that’s if all race-neutral measures fail.” More important than such research is that “the commission get about the business of working through this backlog” of such proposals, said Honig. His group, which also brokers station M&A, has reversed its long stance against cross-ownership of broadcasters and newspapers within a market.

Research that could be used to show why race-based telecom policy is needed to address a past pattern of discrimination would likely show data over time, such as since the last batch of studies done in 2001, said Baynes and John Horrigan, who helped do research for the National Broadband Plan. Such work entails a significant amount of time, and potentially expenditures if existing data from media research firms don’t address barriers to entry, said Baynes and Horrigan, who now directs the Media and Technology Institute of the Joint Center for Political and Economic Studies. The center on Feb. 27 asked Genachowski to undertake such work (http://xrl.us/bnz26h). Understanding how new and old media are used and whether racial groups use them differently would help make an Adarand showing, said Horrigan. He recommended “comparable snapshots at different points in time of what the mass media landscape is, both from the consumer side and from the supplier side."

Form 323 data may not be accurate enough to solely rely on to show minority ownership, said Baynes. For many stations the bureau couldn’t determine who owned them. For 383 full-power TVs, or 28 percent of the total, there was no majority interest by ethnicity. “Fifteen percent of stations either submitted insufficient data to identify ownership or failed to file,” the report said. “The challenge” for the agency is to get a database that’s not, as with the Form 323s, “seemingly compromised,” Baynes said. Studies showing the availability of financing for minority-owned stations, their access to ad buys -- since commercials are “the lifeblood of the industry” -- and the probability of a person of color getting a license, holding other variables constant, also would be needed, he said. “There’s a whole world of experts who do this kind of study,” often in other industries for government contracting decisions, said Leanza. “There has been tons of litigation over the Adarand decision over time,” she said. “It’s sort of striking to me the commission is not collecting this data and looking at it.”