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PACE LAW REVIEW

Comment

THE PUBLIC INTEREST, CONVENIENCE, OR NECESSITY: A DEAD STANDARD IN THE ERA OF BROADCAST DEREGULATION?

Section V


Pace University School of Law

Summer, 1990

Marc Sophos

Copyright 1990 by the Pace Law Review; Marc Sophos

You can also read this article in pdf format.


V. Analysis

"What sort of part do I play . . . ? Is it an important part?''

"Just about the most important part in the show."

"The lead?''

"No, the commercial."

Make Room for Daddy, 1959.

In 1959 it was a joke on a television sitcom. Today it is the government-sanctioned reality. The many deregulatory actions taken by the Commission have changed the face of the broadcasting industry, and have had a devastating effect on the public interest standard, not to mention the public interest itself. [FN154]

Originally, radio and television stations "paid" for the otherwise essentially free use of the frequencies allocated to them [FN155] by fulfilling certain programming obligations. [FN156] The requirement that stations fulfill these obligations was intended to serve the public interest by ensuring that the public's first amendment right to be informed was satisfied. In no sense, then, was a station's use of a frequency "free"; nor was it permanent. [FN157]

All of this changed under deregulation. The Commission's elimination of the nonentertainment programming guidelines, [FN158] the ascertainment requirements, [FN159] and the fairness doctrine [FN160] have left stations with no explicit programming obligations at all. In eliminating the nonentertainment guidelines and the ascertainment requirements, the Commission stated that licensees would still have to exercise "good faith discretion" in ascertaining the needs of their communities, [FN161] to be "responsive to the issues facing their community," [FN162] and to continue to adhere to the fairness doctrine. [FN163] It trusted that stations would continue to provide news and public affairs programming because of "market forces." [FN164] When the Commission declared the fairness doctrine unconstitutional in 1987, [FN165] stations were left with no real regulatory or statutory requirements to air news or public affairs programming, balanced or otherwise.

By eliminating these requirements, the Commission also eliminated most of the standards by which a station would be evaluated in a comparative hearing. [FN166] This substantially weakened the status of a renewal challenger, and increased the incumbent licensee's expectation of renewal [FN167] to near certainty. [FN168]

The effects of these deregulatory actions are not difficult to judge. Television news programs are filled with increasingly sensational "hard" news, and many stations claim to be fulfilling their public interest responsibilities by airing such programs as A Current Affair and Geraldo. [FN169] In a typical market, the average FM station airs three and one half minutes of news per hour. [FN170]

The reasons for these programming responses to "market forces" are clear. Originally, Congress and the Commission intended the broadcasting industry to play a crucially important role in American society by contributing to the marketplace of ideas through news and public affairs programming, and to lead community discussions on issues of public importance. [FN171] By allowing stations to respond only to "market forces," the Commission has given every broadcast licensee carte blanche to operate only with the maximization of its audience in mind in other words, to chase ratings, and so maximize its revenues, by giving the public more of what it wants. [FN172] This has turned upside down the concept that stations are supposed to be community leaders, exercising a public trust to fulfill the vital first amendment need of the public to be informed. [FN173] Now stations are followers, responsible only to the financial bottom line.

Also turned upside down is the notion that stations exist primarily to provide programming services for the public. [FN174] In theory, the station was the provider of a product. The product was the programming, and the consumer of the product was the listener or viewer. The public's first amendment right to be informed was the paramount concern in broadcast regulation. [FN175] Advertisers provided necessary revenue to allow stations to provide this service in exchange for program sponsorhip and commercial announcements. [FN176]

Now, with the economic marketplace as the only real regulator, the functions performed by the participants have changed. The station provides a service by delivering a quantity of potential buying power the listening or viewing public to the advertiser. The audience, or rather the potential buying power that the audience represents, is the product; the advertiser is the consumer of the product; and the station is the purveyor. [FN177] If the ratings drop, the station scrambles to find out why. If, as is usual, the programming is the "culprit," it is adjusted or changed to recover the lost ratings points. Whereas radio or television stations once existed primarily to inform the public and secondarily to provide entertainment, they now exist primarily to deliver buying power to advertisers. The entertainment and especially the informational functions have been reduced to secondary importance, at best.

This "free market" approach to broadcast regulation, or, more accurately, non-regulation, has redefined the phrase "public interest, convenience, or necessity." [FN178] Originally, the public interest standard contemplated programming that the public ought to hear or view the news and public affairs programming required by the first amendment public trust concept along with what it wanted to hear or view (entertainment programming). [FN179] Now the standard contemplates only programming that the public wants to hear or view mostly entertainment. A broadcast licensee which gives the public only what it wants will achieve the maximum rating, [FN180] while a licensee which airs public service programming (which is generally less popular, and more expensive to produce) will likely suffer in the ratings and thus in its profitability.

If one subscribes to the theory that, for the most part, the public tends to sink to its lowest level of political, social, and cultural awareness in the absence of countervailing forces, the Commission's decision to allow the economic marketplace to regulate broadcasting is particularly disturbing. The electronic mass media have unequaled power in contemporary American society, and because of this power they have enormous responsibilities. However, the removal of regulations and the increasing role of the economic marketplace allow stations to ignore the public trust concept [FN181] and to use the publicly owned airwaves solely for private gain with little corresponding public benefit. This offends the whole history and theory of broadcast regulation, the Communications Act, and in this context, the first amendment.

The public's first amendment right to receive a wide range of information from diverse sources has thus been subordinated to the desire of advertisers to reach the maximum amount of buying power, and to the desire of stations to maximize their profits by satisfying their advertisers. Deregulation has been extraordinarily beneficial for the broadcast industry. [FN182] Each station now has essentially permanent access to the broadcast channel assigned to it. Although this channel is theoretically a public resource, [FN183] each licensee now has government approval to program its station, or stations, with only "market forces" in mind, maximizing its revenues through whatever programming the "market" responds to. Moreover, each station has, for all intents and purposes, gained ownership of the frequency assigned to it because of the near certainty of license renewal. [FN184]

The Commission has thus allowed the broadcasting industry to reap enormous profits from the use of publicly owned frequencies by allowing it to respond only to the forces of the economic marketplace, without corresponding public benefit and therefore at the expense of the public's first amendmentright to be informed. [FN185]

It was in this pro-industry climate that the Commission dealt yet another blow to the public interest standard: stating that the scarcity of broadcast frequencies was no longer a concern, [FN186] the Commission in 1984 relaxed the multiple ownership rule [FN187] to allow individual entities to own up to twelve AM, twelve FM, and twelve television stations. [FN188] This limitation will likely be completely eliminated in 1990, [FN189] allowing a single entity to own as many broadcast properties as it cares to. The Commission also relaxed the local concentration provisions, [FN190] again stating that the scarcity of frequencies was no longer a concern. [FN191]

To support this contention, the Commission pointed to the expansion of the communications marketplace that has occurred since the original rules were promulgated. [FN192] At that time, there were far fewer radio and television stations than there are now, and cable television service and home video cassette recorders (VCRs) either did not exist or had not yet become an important part of the communications marketplace. [FN193] Now, with more than 9200 commercial radio stations, nearly 1100 commercial television stations, and with cable television service and VCRs in more than half of the television households in the United States, [FN194] the Commission has concluded that broadcast channels are no longer scarce, [FN195] and that restrictive government regulations are no longer justified. [FN196]

In this regard, the Commission has pulled a linguistic fast one. There are two different definitions of "scarcity": first, it may mean an inadequate supply; and second, it may mean a small number. [FN197] Historically, the scarcity rationale justifying broadcast regulation focused on the first definition: because the electromagnetic spectrum was publicly owned, [FN198] because the number of channels available for broadcasting was limited, and because there were more people who wished to broadcast than there were available channels, [FN199] the government had to determine which applicants were granted licenses to broadcast and which were not. In making this determination, the Commission had to decide which applicants would best serve the public interest, convenience, or necessity. [FN200]

However, the Commission, in relaxing and eliminating the multiple ownership and local concentration rules, has ignored the fact that there is simply an insufficient number of frequencies to go around (the first definition of scarcity), and has focused instead on the overall size of the communication marketplace (what it considers to be a lack of scarcity, under the second definition). [FN201] This approach completely misses the point.

The goal of the multiple ownership and local concentration rules was to avoid the tendency toward monopolistic control of the broadcast mass media; this was to be effectuated by maximizing the number of gatekeepers. [FN202] By allowing "market forces" to regulate in these areas, the Commission has paved the way for just such monopolistic control. If the multiple ownership limitation is eliminated, a group owner will be able to own a very large number of radio and television stations. The relaxation of the radio duopoly rule will make it possible for a group owner to own two or more stations in the same service that can be heard in the same area. [FN203] The relaxation of the one-to-a-market rule will allow increased cross-ownership of radio and television stations in the same market. Under deregulation, a single group owner could theoreticallyown stations that blanket the entire country. Moreover, there could be significant geographical areas in which two or more of this owner's radio stations could be heard simultaneously; and finally, this owner could own television stations in many of the same markets in which it also owned radio stations.

This scenario, admittedly extreme, will be possible if the Commission lifts the "rule of twelves" [FN204] in 1990, as is expected. [FN205] This is especially true now that the local concentration rules have been relaxed. [FN206]

These rules, which were intended to ensure maximum diversification of viewpoints and programming through maximum diversification of ownership, [FN207] have been swept aside because the Commission incorrectly considers the scarcity rationale to be obsolete in light of the increased size of the communication marketplace. Ironically, the Commission states that it still considers diversity of viewpoints and programming to be important, [FN208] but it says that there is not necessarily a connection between these and diversity of ownership. [FN209]

The Commission is allowing the number of gatekeepers to shrink, and is thus opening the door for precisely the kind of concentrated control that Congress, the courts, and at one time the Commission itself feared would develop in the absence of limiting regulations. Even before deregulation, the number of gatekeepers was not as large as it might have been. The prevalence of the television networks had decreased the number of gatekeepers long before deregulation. The ABC elevision network, for example, has 223 affiliates. [FN210] During prime time, when by definition the largest number of people are watching television, ABC thus provides programming to more than twenty percent of the commercial television stations in the United States. [FN211] CBS and NBC command similar percentages; [FN212] thus, fifty-seven percent of the commercial television stations in the country are "controlled" by three gatekeepers during the time that the largest number of people are watching.

The emergence during the 1980s of twenty-four hour satellite radio networks has drastically reduced the number of gatekeepers in that medium as well. One of the largest such networks, Satellite Music Network (SMN), has more than 1000 radio affiliates. [FN213] While these stations are not owned by SMN, they are controlled by it just as television network affiliates are controlled by their networks. [FN214] Thus, there are more than 1000 fewer gatekeepers among the 9200 commercial radio stations in the United States than there would be without SMN.

Exacerbating the situation is the fact that SMN was purchased by ABC in 1989. [FN215] This means that ABC, a single gatekeeper, now controls twenty percent of the commercial television stations during prime time and about eleven percent of the commercial radio stations for substantial portions of each day. These figures do not include the 2310 radio stations affiliated with ABC's seven other radio networks. [FN216] If this is not an example of unduly concentrated control, it is difficult to imagine what would be.

The new prevalence of the twenty-four hour satellite networks has been made possible largely by the Commission's elimination of the nonentertainment guidelines [FN217] and the fairness doctrine. [FN218] The drastic reduction in the number of gatekeepers occasioned by the popularity of these networks among stations should cause the Commission to take every possible step to maximize diversity of ownership. Instead, it has done just the opposite. [FN219]

The situation is no better in the expanded communication marketplace to which the Commission referred when it relaxed the multiple ownership and local concentration regulations. While it is certainly true that cable television service brings an increased number of channels into each subscriber's home, the number of gatekeepers is limited. [FN220] The Commission's references to VCRs are similarly misplaced. While it may be true that most homes now have at least one VCR, it is inappropriate to rely on the VCR's popularity in eliminating or relaxing regulations intended to ensure the vigor of the marketplace of ideas. [FN221]

In spite of its obligations under the Communications Act of 1934, [FN222] the Commission has replaced the public interest standard, imposed on it by Congress, with its own private interest standard. The beneficiary of this standard is, of course, the broadcast industry. The Commission eliminated or relaxed restrictions on the industry in two major areas news and public affairs programming and multiple ownership relying on strikingly parallel reasoning: first, it eliminated one regulation, justifying this by stating that stations would still have to satisfy a second regulation; then it eliminated or substantially relaxed the second regulation. When the Commission eliminated the nonentertainment programming guidelines, [FN223] it stated that broadcasters would still be required to broadcast these types of programming through adherence to the fairness doctrine. [FN224] In 1987, the fairness doctrine was eliminated. [FN225] In 1984, the Commission relaxed the national multiple ownership rule (the rule of sevens), [FN226] stating that "the appropriate market for ideas is primarily local . . . ." [FN227] Implicit in this statement is that continued restrictions on local multiple ownership would minimize the marginal decrease in diversity the Commission expected to occur when the rule of sevens was relaxed or eliminated. In 1989, the Commission substantially relaxed the local multiple ownership rules. [FN228]

Through this process of inverse bootstrapping, the Commission has made it abundantly clear that the broadcast industry, and not the public, is the beneficiary of deregulation. [FN229] In each of the three multiple ownership proceedings, the Commission relied heavily on comments submitted by members or representatives of the industry. [FN230] It referred repeatedly in all three proceedings to the cost savings that stations would realize if the rules were eliminated or relaxed, [FN231] and it stated that these cost savings could possibly result in increased news and public affairs programming. [FN232] The Commission thus employed a kind of balancing process, weighing the concededly speculative benefits to the public, brought on by the cost savings that stations would realize, against the loss to the public of the benefits of maximum diversification of ownership. The subordination of the public interest to the private interest of the industry is evident when one considers that the Commission has the power to regulate in these areas. It may require stations to air certain amounts of news and public affairs programming, as it did through its nonentertainment programming guidelines; [FN233] it may require stations to provide balanced coverage of issues of public importance, as it did under the fairness doctrine; [FN234] and it may limit multiple ownership, both nationally and locally, to ensure that the public enjoys the benefit of maximum diversification, as it did through its multiple ownership, [FN235] duopoly, [FN236] and one-to-a-market [FN237] rules. Each of these policies was considered essential to the public interest standard. [FN238]

However, rather than require stations to meet both requirements of the standard (that they program a prescribed amount of news and public affairs programming, [FN239] and that ownership diversification be maximized [FN240]), which it concedes are important, [FN241] the Commission will now allow ownership diversification to be reduced, perhaps substantially, in the hope that stations may invest some of the money they save through combined operation in news and public affairs programming. [FN242]

The effects of this are clear. Before deregulation, stations "paid" for the use of the frequencies assigned to them by, among other things, airing news and public affairs programming responsive to community needs. [FN243] These types of programming are not inexpensive to produce; but stations were required to air them as a benefit to the public corresponding to the public's inability to use the channel or allocate it to another user. All programming expenses, including those incurred in the production of this required programming, were paid for out of the stations' revenues.

Now, despite the often enormous profitability of broadcast properties, [FN244] the Commission has decided that stations must be "paid" to air news and public affairs programming, which is unlikely to be as profitable as most entertainment programming. The payment is in the cost savings stations will enjoy because of the relaxation or elimination of the multiple ownership rules; and paying the bill is the public, who not only provides the real dollars keeping stations on the air, [FN245] but who must now also pay the price in terms of the effects of reduced diversification of ownership.


Footnotes

FN154. Lorenzo Milam, who has built and operated a number of noncommercial community-based radio stations, wrote in his whimsically titled book, SEX AND BROADCASTING:

Broadcasting as it exists now in the United States is a pitiful, unmitigated whore. At some stage in its history, there was a chance to turn it to a creative, artful, caring medium; but then all the toads came along, realizing the power of radio and television to hawk their awful wares. The saga of broadcasting in America is littered with the bodies of those who wanted to do something significant and who were driven out [or more correctly, sold out] by the pimps and thieves who now run the media.

L. MILAM, SEX AND BROADCASTING: A HANDBOOK ON STARTING A RADIO STATION FOR THE COMMUNITY 19 (3d ed. 1975) (emphasis and brackets in original).

FN155. At various times, the Commission has charged fees associated with broadcast applications; however, it has never collected anything in the nature of a spectrum use fee. Telephone interview with James Gattuso, Deputy Chief, Office of Plans and Policy, Federal Communications Commission, Washington, D.C. (Apr. 20, 1990).

FN156. For example, stations had to undertake formal studies to determine the problems and needs of their communities. See supra note 68. They had to air a certain amount of nonentertainment programming. 47 C.F.R. 0.281(a)(8) (1982). Under the fairness doctrine, they had to provide balanced presentation of issues of public importance in their local community. Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 369-70 (1969).

FN157. The continuing requirement that each station fulfill these programming obligations was enforced by the Commission's license renewal procedures. Broadcast licenses were issued for a period of three years. 47 U.S.C.A. 307(d) (1962). As part of the Omnibus Budget Reconciliation Act of Aug. 13, 1981, Pub. L. No. 97-35, 1981 U.S. CODE CONG. & ADMIN. NEWS (95 Stat.) 736 (codified at 47 U.S.C. 307 (1982)), Congress authorized the Commission to extend broadcast license terms. In 1987, the Commission increased license terms to seven years for radio stations and five years for television stations. Order, 2 F.C.C. Rec. 3805 (1987).

Six months before the license's expiration date, the licensee was required to notify the public, normally on the air, that it was applying for renewal of its license, 47 C.F.R. 73.3580(d) (1988), so that members of the public, if dissatisfied with the station's programming, could challenge the renewal by filing either a petition to deny the renewal or a competing application to take over the frequency. Applications challenging the license of an incumbent licensee must normally be filed no later than one month before the license's expiration date. 47 C.F.R. 73.3516(e) (1988).

While incumbent licensees were entitled to a "reasonable expectation" of renewal because of their substantial investment in their facilities, this procedure was designed to ensure that stations failing to meet their programming obligations would face the possibility of non-renewal. Normally, a station's renewal application could be denied only when the station failed to meet its programming obligations; the Commission was reluctant to deny license renewals or to deny applications for license transfer when members of the public objected to the entertainment format (rock, top 40, classical, jazz, etc.) of the station, or to a change of format. See Changes in Entertainment Formats, 37 RAD. REG. 2d (P & F) 1679 (1976). But see Citizens Comm. to Save WEFM v. FCC, 506 F.2d 246 (D.C. Cir. 1974) (disappearance of unique formats may justify Commission intervention).

When a renewal application was challenged, the Commission normally designated the two (or more) applications for comparative hearing. See supra note 87.

FN158. The nonentertainment programming guidelines required stations to air a prescribed amount of nonentertainment programming. 47 C.F.R. 0.281(a)(8) (1982). The guidelines were eliminated in 1981. Deregulation of Radio, 84 F.C.C.2d 968 (1981).

FN159. The ascertainment rules required stations to conduct formal studies every year to determine the significant problems and needs of their communities and develop programs addressing those problems and needs. 53 F.C.C.2d 3 (1975); 27 F.C.C.2d 650 (1971). The rules were eliminated in 1981. Deregulation of Radio, 84 F.C.C.2d 968 (1981).

FN160. See supra note 117 and accompanying text.

FN161. Deregulation of Radio, 84 F.C.C.2d at 998.

FN162. Id. at 978.

FN163. Id. at 979. The Commission had attempted to placate those who opposed its elimination of the nonentertainment programming guidelines by stating that stations would still be required to adhere to the fairness doctrine. Id. at 976, 979. See supra text accompanying note 118.

FN164. Deregulation of Radio, 84 F.C.C.2d at 978.

FN165. Syracuse Peace Council, 2 F.C.C. Rec. 5043 (1987). See supra note 117.

FN166. For a brief description of the comparative hearing process, see supra notes 87, 90, 157, and accompanying text.

FN167. See supra note 157.

FN168. In the same proceeding in which it eliminated the radio nonentertainment programming guidelines, ascertainment requirements, and commercialization guidelines, see supra note 5, the Commission also eliminated the requirement that stations maintain program logs, the only official documents reflecting what was ctually broadcast. Deregulation of Radio, 84 F.C.C.2d 968 (1981). It also liminated the program logging requirements for commercial television stations. Report and Order, 98 F.C.C.2d 1076 (1984). Thus, there remain no official documents that renewal challengers may utilize to examine an incumbent licensee's overall programming. Cf. R. HORWITZ, THE IRONY OF REGULATORY REFORM 210 (1989) ("[T]he Reagan-sponsored Paperwork Reduction Act of 1980 reduces the recordkeeping and reporting obligations of regulated firms, thereby making the enforcement of rules more difficult.").

As if this were not bad enough, the National Association of Broadcasters (NAB) is urging the elimination of the comparative license renewal process. Radio World, Feb. 22, 1989, at 10, col. 1. The House of Representatives has proposed a bill, H.R. 1136, which would amend the Communications Act of 1934, 47 U.S.C. 151-805 (1982 & Supp. V 1987), to prohibit the filing of competing applications in connection with a station's license renewal application unless the station had either violated the Commission's rules or failed to present any programming addressing local issues. Radio World, Apr. 12, 1989, at 1, col. 4. These actions appear to have been taken in response to the recent rash of competing applications filed for the purpose of obtaining a cash settlement in exchange for the withdrawal of the applications.

Because the Commission has indicated, by its elimination of the nonentertainment programming guidelines, that it is unwilling to require stations to provide any specific amount of news and public affairs programming, it would appear that if a station presented any amount of programming directed at local issues, the renewal of the station's license would be more or less automatic. This would virtually guarantee stations permanent access to the frequencies assigned to them in other words, possession, for all intents and purposes. Contra supra note 47 and accompanying text. The House bill, if enacted, would remove from the present licensing system the important safety valve which provides a procedure under which broadcasters who do not serve the public interest can lose their licenses.

FN169. A brief examination of newspaper program descriptions for Geraldo is illuminating. For the week of November 6, 1989, the program was scheduled to cover the following topics: pregnant women behind bars, women in prison, teen- age prostitutes, and nymphomaniacs. N.Y. Times, Nov. 5, 1989, 11 (Television), at 20, 26, 33, 45.

FN170. J. TUNSTALL, supra note 57, at 152. There are usually more radio stations in larger markets than there are in smaller markets. Some stations in larger markets provide more substantial amounts of news and public affairs programming (for example, all-news stations in major markets). However, these stations often provide capsulized, headline-type coverage of news events, thus limiting the value of their service in a first amendment context.

FN171. See supra notes 52-63, 94, and accompanying text.

FN172. Certainly, the public interest standard includes considerations of what the public wants to hear and view, but not to the exclusion of what it ought to hear and view. See supra note 57 and accompanying text. However, the deregulatory actions the Commission has taken in recent years have encouraged stations to ignore all considerations except what the public likes and wants. The Commission's maverick deregulatory actions have trashed the first amendment concerns of Congress and the Supreme Court.

FN173. See supra notes 51-63 and accompanying text.

FN174. See supra notes 46-63 and accompanying text.

FN175. See supra notes 46-63 and accompanying text.

FN176. See supra text accompanying note 52.

FN177. The Commission itself acknowledged this characterization in the Duopoly Decision, 4 F.C.C. Rec. 1723, 1732 n.42 (1989).

FN178. 47 U.S.C. 307(a) (1982 & Supp. V 1987).

FN179. See supra note 57 and accompanying text.

FN180. The listening or viewing public decides what it likes, and listens to or views the programming of the stations that provide it. This, of course, influences the ratings. The stations respond to the ratings by adjusting their programming to maximize them. The stations try to give the public more of what it likes and less of what it does not, as evidenced by the ratings. With increased ratings, stations may charge more for advertising time. In short, stations attempt to maximize their profits by giving the public more of what it wants. This is the goal of the economic marketplace to which the Commission has left much broadcast regulation. This chase of maximum profits, unfettered in the deregulated climate the Commission has created, tends to eliminate programming that the public ought to hear or view but may not like (for example, news and public affairs programming).

FN181. For a discussion of the public trust concept, see supra notes 46-63 and accompanying text.

FN182. In an editorial, BROADCASTING noted: "Between [outgoing FCC Chairman Dennis Patrick] and his predecessor, Mark Fowler, broadcasters and other Fifth Estaters have had the best telecommunications policy run of their lives." End of an Era?, BROADCASTING, Apr. 10, 1989, at 98.

FN183. See supra note 47 and accompanying text.

FN184. See supra note 157. The electromagnetic spectrum is publicly owned, and the Communications Act, as interpreted by the Supreme Court, provides that "no person is to have anything in the nature of a property right as a result of the granting of a license." FCC v. Sanders Brothers Radio Station, 309 U.S. 470, 475 (1940).

FN185. For a discussion of the public benefit and the public's right to be informed, see supra notes 46-63 and accompanying text.

Broadcasters have long complained that any attempt by the government to regulate programming constitutes an abridgment of their first amendment right of free speech. See, e.g., T. SNIDER, Serving the Public Interest: Voluntarily or by Government Mandate?, in PUBLIC INTEREST AND THE BUSINESS OF BROADCASTING 87 (J. Powell & W. Gair eds. 1988):

Broadcasters are in the business of communicating with the public through their programming. So are newspapers, magazines, signs, direct mailers, and skywriters. But none of them is burdened with a content public interest standard.

. . . .

Why are broadcasters singled out and saddled with a programming content public interest standard by which they live or die? . . . Very simply, it's because Congress, in violation of the First Amendment, decided to treat broadcasters as second-class citizens. How long are we going to sit still for this?

. . . .

Broadcasters are second class citizens in the business community. They can never enjoy full freedom of speech until Congress passes a law that eliminates comparative renewal based on programming content. Passage of such a law should be the number-one priority of free, over-the-air broadcasters. The comparative renewal process is an abomination that allows a challenge to a license based on programming content promises. We broadcasters deserve license renewals like all non-broadcast users of the spectrum when we adhere to technical standards. . . . We must not pay too high a price and codifying the public interest standard and the Fairness Doctrine is too high.

Comparative renewal proceedings involve contests between businessmen. They have nothing to do with the public's rights. The public still has the right to petition or complain, just as they do with other licensed businesses.

The airways are not, nor can they be, owned by the public. Broadcasters are not public trustees. Indeed we do not have any more special obligation to the public than other types of businesses that are licensed. We do not deserve to be burdened with a "public interest" over and above technical operating standards in order to get our licenses renewed or to eliminate comparative renewal. It is unfair that we, and only we, are forced to operate under an unceasing threat by challengers who want to put us out of business or the government, which wants to control us by denying our First Amendment rights.

For too long we've allowed "Big Brother" to control us. For too long we've meekly accepted unfair treatment and even outright discrimination. We have a case, and we need to make it. We need to stand up and speak for ourselves. If we don't, who will?

Id. at 89-93 (emphasis in original).

This argument entirely misses the point. First, the airwaves (or the "aether," as hey were somewhat poetically called in the early days of broadcast regulation) are deemed to belong to the public. See supra note 47 and accompanying text. Second, the airwaves are "scarce" there is simply an inadequate number of frequencies available to accommodate all of the people who wish to broadcast, notwithstanding the Commission's misplaced assertions about the increased number of stations and the availability of alternative technologies. See infra notes 192-96 and accompanying text; contra supra note 48 and accompanying text. On these foundations, Congress decided that broadcasting stations should be licensed only when they would serve the public interest, convenience, or necessity. See supra text accompanying note 36.

Under this scheme, broadcasters are indeed public trustees, charged with the responsibility of using publicly owned frequencies for the benefit of the public. See McIntire v. William Penn Broadcasting Co. of Philadelphia, 151 F.2d 597, 599 (3d Cir. 1945) ("a radio broadcasting station must operate in the public interest and must be deemed to be a 'trustee' for the public."). See also Schaeffer Radio Co., a 1930 Federal Radio Commission case, reprinted in part in The Federal Radio Commission and the Public Service Responsibility of Broadcast Licensees, 11 FED. COMM. B.J. 5 (1950):

A broadcasting station is public in purpose and character and any use of it as a private or individual affair is repugnant both to policy and legislation. The conscience and judgment of a station's management are necessarily personal, but the station itself must be operated as if owned by the public. No person may consider broadcasting facilities as his mere personal chattel. It is as if people of a community should own a station and turn it over to the best man in sight with this injunction: 'Manage this station in our interest. Furnish the programs and judgment and keep the pecuniary reward, if any, but remember it is our station, not yours.' The standing of every station is determined by that conception. There is no other foundation on which it may be established and maintained. Its value and influence must rest entirely on its consecration to the public service.

Id. at 14.

It would be impossible for the Federal Communications Commission to satisfy its congressional mandate without establishing at least some requirements concerning the manner in which its broadcast licensees program their stations. The nonentertainment programming guidelines and the fairness doctrine were directed toward promoting the vigor of the broadcasting industry's contribution to the arketplace of ideas; they were not attempts by the Commission to coerce stations to air programs on certain topics or programs reflecting particular viewpoints. Any such attempt would certainly not pass constitutional muster, and would in any event violate the Communications Act. Section 326 of the Act provides:

Nothing in this chapter shall be understood or construed to give the Commission the power of censorship over the radio communications or signals transmitted by any radio station, and no regulation or condition shall be promulgated or fixed by the Commission which shall interfere with the right of free speech by means of radio communication.

47 U.S.C. 326 (1982 & Supp. V 1987). See also National Broadcasting Co. v. United States, 319 U.S. 190 (1943):

"With the number of radio channels limited by natural factors, the public interest demands that those who are entrusted with the available channelsshall make the fullest and most effective use of them. . . ."

. . . .

Freedom of utterance is abridged to many who wish to use the the limited facilities of radio. Unlike other modes of expression, radio inherently is not available to all. That is it unique characteristic, and that is why, unlike other modes of expression, it is subject to governmental regulation. Because it cannot be used by all, some who wish to use it must be denied.

Id. at 218, 226 (quoting the Commission's Report on Chain Broadcasting). See also supra note 52 and accompanying text; Commission en banc Programming Inquiry, supra note 68.

Just as unprofitable is the complaint of broadcasters that they should be free of government-imposed programming regulations because no such regulations could constitutionally be applied to the print media. The print media utilize private resources paper and ink. Any person with financial resources adequate to purchase the necessary supplies and equipment may start a newspaper or magazine. Broadcasters, on the other hand, utilize a resource which is not only owned by the public, and which therefore cannot be bought or sold, but also one of which there is an inadequate supply. Anyone with adequate financial resources may purchase the equipment and supplies necessary to broadcast on radio or television. These assets typically cost a small fraction of what it would cost to purchase an existing station. Yet without a license from the Commission, no transmitter may be put on the air. 47 U.S.C. 301 (1982) ("No person shall use or operate any apparatus for the transmission of energy or communications or signals by radio . . . except under and in accordance with this chapter and with a license in that behalf granted under the provisions of this chapter."). In many areas of the country, no frequencies are available, and the only access an otherwise qualified citizen has to the airwaves is through the purchase of an existing station, often at grossly inflated prices. See infra note 244.

Each broadcaster is granted government permission to use a slice of the publicly owned airwaves to the absolute exclusion of any other potential user in that geographic area. Great profits can be made from that use. The central first amendment concern focuses on the public's right to receive information, not on the broadcaster's right to speak with no restrictions. See supra note 51. For broadcasters to suggest that the government should be prohibited from requiring them to program their stations for the benefit of the public represents the height of hypocrisy and arrogance.

FN186. Multiple Ownership Decision, 100 F.C.C.2d 17, 19, 37-38 (1984); Duopoly Decision, 4 F.C.C. Rec. 1723, 1726-27 (1989); One-to-a-Market Decision, 4 F.C.C. Rec. 1741, 1743 (1989).

FN187. See supra note 79 and accompanying text.

FN188. See supra notes 132-33 and accompanying text.

FN189. See supra note 135.

FN190. The radio duopoly rule and the one-to-a-market rule were intended to reduce the possibility that a single owner would become overly dominant in a local market through the ownership of two or more nearby stations in the same service or the ownership of both radio and television stations in the same market, respectively. See supra notes 81-84 and accompanying text.

FN191. Duopoly Decision, 4 F.C.C. Rec. 1723, 1726-27 (1989); One-to-a-Market Decision, 4 F.C.C. Rec. at 1741, 1742-43 (1989).

FN192. Duopoly Decision, 4 F.C.C. Rec. at 1726; One-to-a-Market Decision, 4 F.C.C. Rec. at 1743.

FN193. Duopoly Decision, 4 F.C.C. Rec. at 1726; One-to-a-Market Decision, 4 F.C.C. Rec. at 1743.

FN194. Duopoly Decision, 4 F.C.C. Rec. at 1726.

FN195. Id.

FN196. Id.

FN197. See FIRESTONE & JACKLIN, Deregulation and the Pursuit of Fairness, in TELECOMMUNICATIONS POLICY AND THE CITIZEN 111-12 (T. Haight ed. 1979).

FN198. See supra note 47 and accompanying text.

FN199. See supra notes 48, 76 and accompanying text.

FN200. See supra note 63 and accompanying text. See also FIRESTONE & JACKLIN, supra note 197, at 107.

FN201. See FIRESTONE & JACKLIN, supra note 197, at 111-12.

FN202. See supra note 147 and accompanying text.

FN203. See supra notes 136-39 and accompanying text.

FN204. See supra notes 132, 133, and accompanying text.

FN205. See supra note 135.

FN206. See supra notes 136-42 and accompanying text. While the scenario may be extreme, it is not unrealistic. In cable television, an industry in which ownership is essentially unregulated, Tele-Communications, Inc. (TCI), a cable multiple system owner, owns 692 cable systems serving over 9.5 million subscribers. BROADCASTING CABLE YEARBOOK 1989 D-308, D-309 (Broadcasting Publications 1989). TCI also has interests in numerous other systems serving over 3.1 million additional subscribers. Id. at D-300 to 311. There are a total of approximately 47 million cable subscribers in the United States. Id. at D-3. This means that a single company owns or has interests in cable systems that serve more than 25 percent of all the cable subscribers in the country. As if this were not sufficiently concentrated, TCI recently bought a 50 percent interest in Showtime Networks Inc., which owns the cable premium services Showtime and The Movie Channel. TCI Makes Its Equity Play for Showtime, BROADCASTING, Oct. 23, 1989, at 40, col. 1. Sen. Albert Gore (D-Tenn.) called this acquisition "an alarming development in the continuing saga of TCI's drive to dominate the industry." Id.

FN207. See supra notes 79-83 and accompanying text.

FN208. The Commission focused on viewpoint diversity in the Multiple Ownership Decision, 100 F.C.C.2d 17, 24-31 (1984). See also the Duopoly Decision, 4 F.C.C. Rec. 1723, (1989) ("[T]he ultimate objectives of the duopoly rule, like our other multiple ownership rules, have been to promote economic competition and diversity of programming and viewpoints in order to further the public interest. . . ."); the One-to-a-Market Decision, 4 F.C.C. Rec. 1741, 1742 (1989) ("[T]he ultimate objective of the radio-television cross-ownership rule is to enhance consumer welfare through the promotion of economic competition and diversity of programming and viewpoints.") (emphasis in original); id. at 1743 ("It is important to realize that we are retaining our traditional concern for encouraging diversity of programming and viewpoints . . . .").

FN209. Multiple Ownership Decision, 100 F.C.C.2d at 31-34 (1984); Duopoly Decision, 4 F.C.C. Rec. at 1727; One-to-a-Market Decision, 4 F.C.C. Rec. at 1744.

FN210. BROADCASTING CABLE YEARBOOK 1989 F-44 (Broadcasting Publications 1989).

FN211. Strictly speaking, network affiliation does not strip a station's owner of control over its own station: the station owner may reject network programming. However, network affiliation brings large revenues to many stations, and most elect to carry substantially all of the networks' prime time programming. Thus, the networks have de facto control over the stations during prime time.

FN212. The CBS television network has more than 200 affiliates. BROADCASTING CABLE YEARBOOK 1989 F-50 (Broadcasting Publications 1989). NBC has 203 affiliates. Id. at F-55.

FN213. Radio World, Sept. 6, 1989, at 2, col. 3.

FN214. See supra notes 152-53 and accompanying text.

FN215. Radio World, Sept. 6, 1989, at 2, col. 3.

FN216. See supra note 153.

FN217. Deregulation of Radio, 84 F.C.C.2d 968 (1981). See supra notes 99-102 and accompanying text.

FN218. Syracuse Peace Council, 2 F.C.C. Rec. 5043 (1987). See supra note 117 and accompanying text.

FN219. The Commission relaxed the multiple ownership rule, 100 F.C.C.2d 17 (1984), and proposed eliminating any restriction on the number of stations an individual entity may own. Id. at 18. This reduces the number of gatekeepers nationwide. The Commission also relaxed the radio duopoly rule, 4 F.C.C. Rec. 1723 (1989), and the one-to-a-market rule, 4 F.C.C. Rec. 1741 (1989), thus allowing the number of gatekeepers in local markets to shrink.

FN220. For example, Cable News Network, CNN Headline News, Turner Network Television (TNT), and Superstation WTBS are all owned by Ted Turner's Turner Broadcasting System, a single gatekeeper. BROADCASTING CABLE YEARBOOK 1989 D-318 (Broadcasting Publications 1989). Home Box Office owns Cinemax. Id. Nickelodeon/Nick at Nite, Music Television (MTV), and Video Hits One (VH-1) are under common ownership, as are The Movie Channel and Showtime. Id. Recall that TCI also owns 50 percent of Showtime. See supra note 206.

Twenty years ago, former FCC Commissioner Nicholas Johnson noted that cable television "offers some reason to hope for an end to the tyranny of banal mass- audience programming we have all come to know, if not love." N. JOHNSON, HOW TO TALK BACK TO YOUR TELEVISION SET 152 (1970). In 1989, the television critic Tom Shales noted: "When cable TV started, we were promised cultural enrichment, a cornucopia of diversity and programming aimed at minority interests. What we got was music videos, program-length commercials, and home shopping networks." The Herald Statesman (Yonkers, N.Y.), Nov. 16, 1989, B (Lifestyles), at 1, col. 1 (reprinted with permission from The Washington Post Writers Group, Nov. 16, 1989).

FN221. People who own VCRs usually use them for recording programs on broadcast television or cable and watching them at different times. National Association of Broad- casters, VCR Audience/Market Profiles & Advertisers' Intentions, 6 Broadcast Marketing & Technology News 5, April/May 1989. This makes the VCR merely an extension of those media. VCRs are also commonly used for watching rented or borrowed movies. Caravatt, Videocassettes Explore the Demographics, American Demographics (Dec. 1985) (reprinted as Research Memo, Videocassettes and the New Specialty Tape Market, National Ass'n of Broadcasters (Dec. 1985)). The entertainment value of a VCR is clear, but VCRs do not play a significant role in the first amendment marketplace of ideas.

FN222. 47 U.S.C. 151-805 (1982 & Supp. V 1987).

FN223. See supra notes 6 and 99 and accompanying text.

FN224. See supra note 102 and accompanying text.

FN225. See supra note 117 and accompanying text.

FN226. See supra notes 79, 80, and accompanying text. The rule of sevens was changed to the rule of twelves in 1984; in 1990, the Commission will likely remove any limitation on national multiple ownership. See supra notes 133-35 and accompanying text.

FN227. Multiple Ownership Decision, 100 F.C.C.2d 17, 54 (1984).

FN228. The duopoly and one-to-a-market rules, which restrict local multiple ownership, are collectively known as the local concentration rules. See supra note 84; notes 136-42 and accompanying text.

FN229. The significance of this has not been lost on the industry. See supra note 182 and accompanying text.

FN230. See, e.g., the Multiple Ownership Decision, 100 F.C.C.2d 17, 25 nn.22 & 24, 31 nn.47-61, 41 nn.63-72 & 81, 44 n.100, 52 n.124, 53 n.128, 54 n.130 (1984); the Duopoly Decision, 4 F.C.C. Rec. 1723, 1730 nn.15-23 & 25, 1732 nn.50-56 & 58 (1989); and the One-to-a-Market Decision, 7 F.C.C. Rec. 1741, 1755 nn.16-22 & 26, 1757 nn.42-44 & 49, 1758 n.58, 1759 n.73, 1760, nn.73-80 & 95 (1989).

FN231. Multiple Ownership Decision, 100 F.C.C.2d at 45-46; Duopoly Decision, 4 F.C.C. Rec. at 1725, 1727; One-to-a-Market Decision, 4 F.C.C. Rec. at 1746-47.

FN232. "[G]roup ownership can foster news gathering, editorializing and public affairs programming . . . ." Multiple Ownership Decision, 100 F.C.C.2d at 44- 45 (emphasis added). "[T]he cost savings and aggregated resources of combined radio-radio operations may also contribute to programming benefits to the public, especially with regard to the type of programming that the multiple ownership rules were intended to encourage news, public affairs, and non- entertainment programming." Duopoly Decision, 4 F.C.C. Rec. at 1727 (emphasis added). "[T]he cost savings and aggregated resources of combined radio- television operations may also contribute to programming benefits to the extent that there may be more news, public affairs and other non-entertainment programming." One-to-a-Market Decision, 4 F.C.C. Rec. at 1748 (emphasis added).

Ironically, the Commission noted in the multiple ownership decision that "[t]he Supreme Court has instructed that the public interest standard that governs the Commission's policies invites reference to First Amendment principles. A cherished First Amendment principle crowns speech that addresses political or public affairs with maximum constitutional protection because of its centrality to efficacious democratic government." Multiple Ownership Decision, 100 F.C.C.2d at 35 (citation omitted).

FN233. 47 C.F.R. 0.281(a)(8) (1982).

FN234. See supra notes 94, 118, and accompanying text.

FN235. See supra note 79 and accompanying text.

FN236. See supra note 81 and accompanying text.

FN237. See supra note 83 and accompanying text.

FN238. See supra notes 78-98 and accompanying text.

FN239. See 47 C.F.R. 0.281(a)(8) (1982).

FN240. See supra notes 86-94 and accompanying text.

FN241. See supra note 209 and accompanying text. See also supra notes 79-98 and accompanying text.

FN242. See supra note 232 and accompanying text.

FN243. See supra notes 155-57 and accompanying text.

FN244. The only commercial classical music FM station in Los Angeles was recently sold for $55 million. Beacham, Gold Fever Strikes LA's Radio Market, Radio World, Sept. 27, 1989, at 1, 22. The new owner immediately changed the format to contemporary hits. Id. at 1. The media consultant Jeff Pollack noted that the Commission's lifting of the anti-trafficking rules has placed radio in the hands of impatient investment bankers seeking short term solutions to generate cash necessary to pay off their huge debts. He stated that when buyers "spend $55 million on a station, they don't want to hear [long term plans] to develop an audience. . . . They want it now." Radio World, Oct. 25, 1989, at 2, col. 4.

In a discouraging editorial, Radio World noted:

The loss of commercial classical radio in LA touches on issues which go beyond that of one format or one city's listenership.

The decision by new owners of KFAC to compete with the plethora of rock music stations was clearly the result of the financial speculation running rampant in the radio industry.

Record-breaking station prices continue to carry a heavy debt service and force new owners to take drastic revenue-producing action.

In some stations this takes the form of cutbacks which take their toll on the technical plant. In other markets, the cost is one of format diversity, as is the case with KFAC, which was LA's only commercial classical station.

While the demise of the three-year anti-trafficking rule is certainly a factor in the leveraged buyouts, it is by no means the only culprit.

Reducing a station's value to that of an "investment" is a far cry from the public interest mandate of the Communications Act of 1934.

While it's true that a prosperous station is in a better position to serve its community of license, it's also true that when financial gain is the sole motivation for station acquisition the concerns of the public as well as many in the broadcast industry can get lost in the shuffle.

The newly seated FCC should take a second look at its deregulatory policies and weigh them carefully against public interest concerns.

And those involved in the buying and selling would do well to factor in the idea of service to their communities of license along with entrepreneurial concerns.

A broadcast license should be more than a license to make money.

Radio World, Sept. 27, 1989, at 5.

The Commission, in a moment of almost unparalleled arrogance, stated that the scarcity rationale, which has justified the regulation of broadcasting since 1927, no longer justifies limits on multiple ownership. Multiple Ownership Decision, 100 F.C.C.2d 17, 19 (1984). Contra supra note 48 and accompanying text. The Commission stated that "because broadcasting stations can be purchased, typically the only genuine barrier to entry into broadcasting is insufficient capital, as is the case regarding entry into the newspaper field." 100 F.C.C.2d at 19-20 (footnote omitted). It went on to note that its elimination of the multiple ownership rule would not adversely affect minority ownership of broadcasting stations. Id. at 46-49.

The Commission has done practically all it can to allow station prices to skyrocket. It has eliminated the nonentertainment programming guidelines, 84 F.C.C.2d 968 (1981), and the fairness doctrine, 2 F.C.C. Rec. 5043 (1987), among others. Now stations are relatively unfettered in their pursuit of maximum ratings and maximum revenues. The Commission eliminated the anti-trafficking rule, 52 Rad. Reg. 2d (P & F) 1081 (1982), which was intended to exclude from station ownership those seeking quick profits.

There is often an enormous difference between the costs involved in starting a new station analogous to the startup costs of any new business and the costs involved in purchasing an existing station. By ignoring this difference, the Commission has made clear the real purpose behind its deregulatory moves: to turn a broadcasting license, insofar as possible, into a license to make money with little or no corresponding public benefit.

FN245. The audience buys the products and services provided by the advertisers, presumably at least in part because of the broadcast commercials, and the advertisers pay the stations for the commercial airtime. See supra text accompanying note 177.



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