FCC’s Pai Makes Vigorous Case to Loosen Media Ownership Rules

Commissioner warns of impact on small markets

Federal Communications commissioner Ajit Pai made it clear where he stands on media ownership rules. In a no-holds-barred style that is becoming the GOP commissioner's trademark, Pai laid out a vigorous defense for loosening or eliminating the rules that govern how many broadcast stations and newspapers a company can own in any one market.

"The competition that [TV broadcasters] face for viewers and advertisers is stronger than it has ever been," said Pai addressing a Media Institute luncheon in Washington. "Our regulations have to reflect that reality."

Pai's remarks were made as commissioners are considering a draft proposal circulated by FCC chairman Julius Genachowski to modify the media ownership rules by lifting the cross-ownership ban on newspaper and radio stations and allow newspaper-broadcast combinations in the top 20 markets.

But the proposed rules would also count shared services agreements (for news, programming and sales) between broadcast stations toward ownership limits, a provision Pai ripped to shreds in his luncheon speech.

"I can't believe we are debating tightening the rules with shared service and joint sales agreements. I fear the effects will be quite negative, especially in smaller markets," said Pai, who pointed to a number of examples where the agreements benefited viewers. In his home state of Kansas, for example, an agreement between an Entravision and Univision station in Wichita enabled the introduction of the only Spanish-language local newscast in the market.

"If the FCC effectively prohibits these agreements, fewer stations in small-town America will offer news programming and they will invest less in news gathering. And the economics suggest that there will likely be fewer television stations, period," Pai said.

Even though when asked, Pai didn't give a straight answer as to whether he would vote against the FCC's media ownership draft, few in the room doubted that he was voting "yes" unless the SSA provision came out.

"These agreements have concrete value," Pai said.

Genachowski finds himself between a rock and a hard place on the quadrennial review of the rules, which are already two years late. (Pai quipped that it was a "quadrennial-ish" review.) The two Dem commissioners want more study into the impact of the proposed media ownership rule changes on minority ownership. The GOP commissioners want more relaxation of the rules and, at the very least, the SSA provision taken out of the current draft.

"All our antiquated rules are actually making it more difficult for some industries to cope with the Internet transformation. … It's clear that the Internet has revolutionized the print marketplace and I believe it's long past time that we eliminated the newspaper-broadcast cross-ownership rule," Pai said.

Buzz at the luncheon: the media ownership rules at the FCC are going nowhere any time soon.