The FCC should deny Gannett’s planned $1.5 billion acquisition of broadcaster Belo, said a coalition of public interest groups that filed a petition Wednesday asking the commission to block the merger. “Gannett’s acquisition of several of Belo’s television stations -- in cities including Louisville; Phoenix; Portland; Ore.; and St. Louis -- would violate the FCC’s newspaper-broadcast cross-ownership rule or the television duopoly rule” said Free Press, one of the groups involved, in a release Wednesday. Other members of the coalition include Common Cause, the Institute for Public Representation and National Hispanic Media Coalition. “The deal would clearly violate the Commission’s cross-ownership bans, with covert consolidation contracts working to combine newsrooms,” said Free Press CEO Craig Aaron in the release. In a conference call on the deal in June, Gannett conceded market overlaps between itself and Belo, but said it would address the problem through shared service agreements. “These covert consolidation arrangements would allow Gannett to control multiple media outlets in the same market, resulting in job losses, less diversity on the airwaves and diminished competition,” Free Press said. Gannett and Belo didn’t comment by our deadline.
Notable CROSS rulings
The proposed design of research into the critical information needs (CIN) raised concerns among all three commenters on the CIN work on new and old media alike. A dozen nonprofits including the umbrella organization Leadership Conference on Civil and Human Rights, NAB and five communications academics from Howard University raised different issues with the research design. Comments on a May public notice from the FCC Office of Communications Business Opportunities were posted Tuesday and Wednesday in docket 12-30 (http://bit.ly/14IvBuD). The possible barriers-to-entry studies OCBO asked about, which would cost about $1 million (CD May 29 p2), could be used for making decisions about media ownership rules and some said would be required under the Adarand Supreme Court precedent if the commission ever targets relief to women, minority and/or other groups.
Public interest groups clashed with trade associations and media owners over cross-ownership rules in comments filed in docket 09-182 on the Minority Media & Telecommunications Council’s cross-ownership impact study. Monday was the filing deadline for comments on Impact of Cross Media Ownership on Minority/Women Owned Broadcast Stations, which was released in May (CD May 31 p1). “The MMTC Study is not adequate to support the conclusion that any cross-ownership rules should be changed in this proceeding,” said the National Association of Black Owned Broadcasters in its comments. Groups such as NABOB and Free Press attacked the study for not being sufficiently quantitative and having a small sample size, while trade associations and others pointed to what they said is a lack of evidence supporting cross-ownership rules and urged the FCC to change them. “The record in fact supports broader reform of the broadcast ownership rules, including the local television and local radio rules, to allow broadcasters to achieve economies of scale and scope and enhance their service to the public,” said NAB.
Reforming Europe’s patchwork of telecom regulations could deliver up to 750 billion euros ($985 billion) in GDP growth by 2020, said a study for the European Telecommunications Network Operators’ Association. The study by Boston Consulting Group (http://xrl.us/bpg48t) examined how a better regulatory framework could protect competition and incentivize funding of the next-generation access networks needed for the EU to reach its digital agenda targets, ETNO said. While Europe was once a leader in the technologies that make up the backbone of the digital economy, many markets in Asia and North America now have fiber access penetration up to 20 times higher and LTE penetration as much as 25 times greater than Europe’s, the study said. European consumers have slower connections, leading to less value and slower economic growth, it said. Fast Internet connectivity is “the foundation of a modern digital economy” and without it, “Europe will fall behind on the world stage,” it said. European investment in telecom infrastructure fell by about 2 percent a year over the last five years, while investments in other international markets grew by roughly that amount, the study said. If there aren’t “major changes” to the telecom regulatory system, sector revenue will continue to shrink over the next decade, further cutting down on investment in new networks, it said. One of the root causes of the current situation is regulatory distortion in three areas, the study found: (1) Network owners can’t capture the fair returns needed to fund investment because of over- and inconsistent regulation of competitive markets arising from the failure to locally assess relevant competing infrastructures and from preferential treatment of non-infrastructure players. (2) Current approaches require inefficiency in the mobile sector, including in the allocation of spectrum, and create barriers to consolidation in a highly fragmented industry. (3) The lack of a true digital single market with harmonized regulations means that different rules and procedures in areas such as consumer protection across EU countries hinder operators’ ability to reap cross-border synergies. The report recommended a five-strand program to tackle the regulatory root causes of decreasing investment. It called for “substantial deregulation” of fixed-line wholesale access, and a level playing field between network operators and over-the-top services providers. The EU should also pursue a policy that ensures efficient spectrum allocation; permits healthy consolidation in the mobile sector; and standardizes rules and procedures, the study said. The findings “come at the right moment,” as the European Commission has begun reform of telecom rules, said ETNO Executive Board Chairman Luigi Gambardella.
Since that means the shareholders will still own both TV stations and newspapers, it doesn’t change status regarding FCC cross-ownership rules, said Fletcher Heald attorney Peter Tannenwald: “Unless they do something to change the ownership at the beginning it won’t make it any difference.” But Tannenwald said if the companies want to try to use the split to come into compliance with cross-ownership rules without receiving an FCC waiver, they could do so by more clearly separating the ownership of the two companies. Tribune said each of the companies will have its own board and senior management team, and “revenues in excess of $1 billion.” “This doesn’t remove the need to ask the question” about possible cross-ownership violations in the proposed Tribune/Local TV merger, said Free Press Senior Policy Director Matt Wood. He also said the spinoff doesn’t do anything to fix Free Press concerns about media consolidation. “We still see reduced journalism and reduced diversity of viewpoint,” he said.
The European Commission will unveil legislation to create a single European telecom market “first thing in September,” said Digital Agenda Commissioner Neelie Kroes Tuesday in a discussion with the European Parliament Industry, Research and Energy (ITRE) Committee. The package will boost the “connected continent in three ways,” she said. Truly European networks need a single authorization system for an operator to operate anywhere in Europe, under the supervision of its EU member home country, she said. That will let the EC ensure more consistent competition remedies with less red tape, cost and hassle, she said. The second change will involve more evenhanded ways to access fixed networks such as via “virtual bitstream” products, interconnection services that guarantee quality and better spectrum rules for wireless, she said. The third arm of the reform is fairer rights for citizens, including the right to net neutrality, she said. Kroes promised to “guarantee net neutrality” by making contracts more transparent and making it easier to switch ISPs. She also vowed to end anticompetitive blocking and throttling for every citizen, on every network and on every device. A fair deal also requires better prices, she said. European calls shouldn’t count as pricey international calls within a true single market, she said. Any difference in price across borders must be objectively justified by additional costs, she said. There will also be an end to mobile roaming charges, she said. But Kroes told ITRE members, who approved a resolution Tuesday saying for roaming fees for phoning, texting and downloading data should end by 2015, that banning roaming charges won’t create the single market. To the contrary, Kroes said it’s by creating the single market that such surcharges will end. The fragmented cross-border market has “real consequences,” she said. One example is spectrum, where countries are failing to follow their obligations to assign spectrum or are doing it differently so it’s harder for operators to bid, plan and offer services across borders, she said. That makes it difficult for gadget makers to optimize their devices across Europe, and for businesses to take advantage of economies of scale, she said. Operators’ uncertainties and costs are passed on to consumers, leading to higher prices and worse service, she said. Kroes said she isn’t just looking at one sector, but at the entire European telecom and information and communication technology ecosystem. The boost from a competitive single telecom market could be 110 billion euros ($141 billion) per year, she said. Kroes called her approach “pragmatic,” saying she doesn’t intend to dig up existing networks, tear up rulebooks and start from scratch. It’s about adapting what exists, unblocking bottlenecks and bringing down barriers, she said. ITRE members are discussing a longer term comprehensive review of the entire ecosystem, but such a review would take five years, she said: “Lost time means lost opportunity.” The ITRE resolution on roaming fees will be voted on at the Sept. 9-12 plenary session, the committee said.
Tribune will likely avoid falling afoul of FCC ownership rules through shared service agreements in St. Louis and Denver, said Free Press Policy Director Matt Wood. He also pointed to previous Tribune efforts to sell off its newspaper properties as a possible solution to the cross-ownership conflict in Virginia. “There’s not a lot of formal levers for the FCC to grab onto,” he said, describing the deal as being “not as bad” as a recent plan for Gannett to buy Belo Corp.’s TV stations, which also featured a market overlap (CD June 14 p7). No mention was made of how Tribune and Local TV will get past cross-ownership rules during a conference call Monday held by the companies. The deal would allow Tribune to create “synergies” between its print, video and digital properties, said CEO Peter Liguori on the call. BIA/Kelsey Chief Economist Mark Fratrik said he believes the companies would not pursue the deal without believing it will be approved by the FCC. “They obviously have good legal counsel; good FCC counsel,” he said.
The Minority Media and Telecommunications Council will “shortly” release additional information about the respondents to its cross-ownership study to answer criticisms by public interest group Free Press, said MMTC President David Honig in an email to us Thursday. He responded to a Free Press FCC filing (CD June 28 p15) attacking the study for not adequately describing its sample or providing quantitative evidence on cross-ownership. Free Press is “profoundly misreading” the study, Honig told us. “As we explained when we filed the study with the Commission, the study is not intended to be dispositive. Rather, it is a piece of evidence to be weighed together with other evidence.” The small number of cross-ownership markets makes a fully empirical study “impossible,” Honig said. He disputed Free Press’s claim that the MMTC study doesn’t satisfy the 3rd U.S. Circuit Court of Appeals’ Prometheus II ruling that the commission must base ownership rule changes on hard data. “What courts do expect is that agencies rest their judgments on the best evidence available, even if the evidence is unavoidably imperfect,” said Honig. He didn’t give a date for the release of the additional information on the subjects of the study, and said the data would be “consistent with the confidentiality we promised our respondents."
As the updated Children’s Online Privacy Protection Act (COPPA) rule takes effect Monday, operators of child-directed websites and apps are navigating the expansions in the rule, industry members and observers told us. The expansions in the rule -- unveiled by the FTC late last year (CD Dec 20 p10) -- include defining personal information to include device identifiers and the inclusion of sites and apps that are largely but not primarily directed to children. Such expansions require apps and websites to do substantial backend work and may cause revenue losses, said industry officials.
A cross-ownership study by the Minority Media and Telecommunications Council is “deeply flawed in numerous ways,” public interest group Free Press told FCC staff Tuesday, according to an ex parte filing Thursday (http://bit.ly/13apluT). The MMTC study, submitted as part of the 2010 Quadrennial Review, found the impact of cross-media ownership on minority and women broadcast ownership (CD May 31 p1) to be “negligible.” Free Press attacked the study for not being quantitative or providing the data needed by the commission to consider changes to media ownership rules. “MMTC’s study fails to satisfy the Third Circuit’s mandate in Prometheus II that the Commission collect the data necessary for informed policy-making,” said the Free Press filing. The study doesn’t adequately describe its sample, Free Press said, so the responses from “female Caucasian owners” are combined with responses from “female and male racial and/or ethnic minority owners” and it doesn’t differentiate between radio and TV station ownership. “Thus the number of interview subjects is small, and we have no information about the demographic or market distribution of the respondents,” said Free Press. “This information is critical to assessing the study’s validity.” Free Press said the problems with the study mean it isn’t sufficient to be used as a basis for changes to cross-ownership rules. “While qualitative research can inform policymaking, the results of a single, small (and undefined) sample survey that conflated the impacts of two very different types of cross-ownership are not dispositive,” said Free Press. “In this particular case, the results are not even suggestive, and in no way support the study’s conclusion that ’the impact of cross-media ownership on minority and women broadcast ownership is probably negligible.'” MMTC did not comment.