Telecommunications: Preliminary Information on Media Ownership
(14-DEC-07, GAO-08-330R).
Various laws and regulations constrain the ownership of
television and radio stations. Five restrictions on the ownership
of television and radio stations follow: (1) National television
ownership cap - A single entity can own any number of television
stations nationwide as long as the stations collectively reach no
more than 39 percent of national television households. (2) Local
television ownership limit - A single entity can own two
television stations in the same DMA if (1) the "Grade B" contours
of the stations do not overlap or (2) at least one of the
stations is not ranked among the top four stations in terms of
audience share and at least eight independently owned and
operating full-power commercial and noncommercial television
stations would remain in the DMA. (3) Local radio ownership limit
- A single entity can own up to 5 commercial radio stations, not
more than 3 of which are in the same service (that is, AM or FM),
in a market with 14 or fewer radio stations; up to 6 commercial
radio stations, not more than 4 of which are in the same service,
in a market with 15 to 29 radio stations; up to 7 commercial
radio stations, not more than 4 of which are in the same service,
in a market with 30 to 44 radio stations; and up to 8 commercial
radio stations, not more than 5 of which are in the same service,
in a market with 45 or more radio stations; except that an entity
can not own, operate, or control more than 50 percent of the
stations in a market. (4) Newspaper-broadcast cross-ownership ban
- A single entity cannot have common ownership of a full-service
television or radio station and a daily newspaper if the
television station's "Grade A" contour or the radio station's
principal community service area completely encompass the
newspaper's city of publication. (5) Television-radio
cross-ownership limit - A single entity can own up to 2
television stations (if permitted under the Local Television
Multiple Ownership Cap) and up to 6 radio stations (if permitted
under the Local Radio Multiple Ownership Cap) or 1 television
station and 7 radio stations in a market with at least 20
independently owned media voices remaining post merger; up to 2
television stations and up to 4 radio stations in a market with
at least 10 independently owned media voices remaining post
merger; and 1 television station and 1 radio station regardless
of the number of independently owned media voices. In the 1996
Act, the Congress required FCC to conduct a biennial review of
its media ownership rules to determine "whether any such rules
are necessary in the public interest as the result of
competition" and to "repeal or modify any regulation it
determines to be no longer in the public interest."
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-08-330R
ACCNO: A78912
TITLE: Telecommunications: Preliminary Information on Media
Ownership
DATE: 12/14/2007
SUBJECT: Data collection
Data integrity
Data recovery
Data storage
Federal regulations
Mass media
Policy evaluation
Radio
Regulatory agencies
Telecommunication policy
Telecommunications
Telecommunications industry
Television
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO Product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
******************************************************************
GAO-08-330R
* [1]Results in Brief
* [2]The numbers of media outlets and owners of media outlets gen
* [3]Background
* [4]Numbers of Media Outlets and Owners Generally Increase with
* [5]Ownership of Broadcast Outlets by Women and Minorities Appea
* [6]Stakeholders' Opinions Varied on Modifications to Media Owne
* [7]Agency Comments
December 14, 2007
The Honorable Edward J. Markey
Chairman
Subcommittee on Telecommunications and the Internet
Committee on Energy and Commerce
House of Representatives
Subject: Telecommunications: Preliminary Information on Media Ownership
Dear Mr. Chairman:
The media play an important role in educating and entertaining the public
and fostering an informed citizenry; thus the ownership of media outlets
has been a long-standing concern of the Congress. The Federal
Communications Commission (FCC) regulates many aspects of the media
industry, including radio and television stations and cable and satellite
service. In the Telecommunications Act of 1996 (1996 Act), the Congress
required that FCC periodically review its media ownership rules. In 2003,
FCC released an order that altered its existing media ownership rules.
This order generated significant public debate, and more than 500,000
comments were filed with FCC. The U.S. Court of Appeals for the Third
Circuit affirmed some of FCC's rule changes while remanding others for
further justification or modification;^1 most of the rule changes have not
gone into effect. In response to the court's decision and the
congressional mandate for periodic review of its rules, FCC has another
proceeding underway to assess its media ownership rules. This proceeding
has attracted significant attention from both the public and the Congress,
and has raised concerns about the level of consolidation in the media
industry.
While today's media environment provides the public with numerous
programming choices from across the country, media outlets in local
markets remain a concern for policymakers. With cable and satellite
service, the public can receive programming from nationwide outlets, such
as CNN and FOX News, and television stations in adjacent markets. However,
media outlets located in a market are more likely to provide local news,
public affairs, and political programming addressing the needs of
residents in that market, such as coverage of local political campaigns,
compared to nationwide and adjacent-market outlets. Reflecting the
importance of local media outlets, localism is one of FCC's three policy
goals for media ownership.
You asked us to examine the current status of media ownership. In this
report, we provide preliminary information on (1) the presence and
ownership of various media outlets, (2) the level of minority- and
women-owned broadcast outlets, and (3) stakeholders' opinions on modifying
certain media ownership laws and regulations. We plan to issue a final
report on this work in several months.
^1Prometheus Radio Project v. FCC, 373 F.3d 372 (3rd Cir. 2004), cert.
denied, 545 U.S. 1123 (2005).
To respond to the objectives of this report, we interviewed officials from
FCC, the National Telecommunications and Information Administration (NTIA)
of the Department of Commerce, and trade associations. Additionally, we
conducted structured interviews with 102 industry officials and experts,
selected based on industry sector (such as television and radio stations,
broadcast networks, newspapers, and cable and satellite companies),
geographic service territory, size of the media outlet, and professional
publications (for experts). To assess the presence and ownership of media
outlets, we conducted case studies in 16 Nielsen Designated Market Areas
(DMA).^2 To select the 16 case study markets, we used a stratified random
sample methodology: we (1) randomly selected four case study markets from
each of three market strata (large, medium, and small), (2) selected the
three largest markets as a separate stratum, and (3) judgmentally selected
one market from the medium-size category to test our data collection and
structured interview methodology. The 16 case study markets that we
analyzed include approximately 20 percent of all television households in
the United States. In each case study market, we identified the number of
television and radio stations, newspapers (daily and weekly), and cable
and satellite companies present in the central city of the DMA. We also
identified the number of owners of these media outlets.
We conducted our review from February 2007 through December 2007 in
accordance with generally accepted government auditing standards.
Results in Brief
The numbers of media outlets and owners of media outlets generally increase with
the size of the market, although operating agreements may reduce the effective
number of independent outlets. Markets with large populations have more
television and radio stations and newspapers than less-populated markets. For
example, in New York City, the nation's largest market, we identified 21
television stations and 73 radio stations. In contrast, we found 2 television
stations and 16 radio stations in Harrisonburg, Virginia, the smallest market in
our review. In more diverse markets, we also observed more radio and television
stations and newspapers operating in languages other than English, which
contributed to a greater number of outlets. While we focused on media outlets
located in specific markets, residents, in some instances, may be able to
receive television and radio signals from stations located in adjacent markets.
Some companies participate in agreements to share content or agreements that
allow one company to produce programming or sell advertising through two
outlets, among other agreements. In our review, these agreements were prevalent
in a variety of markets but not in the top three markets, suggesting that market
size may influence the benefits that companies realize through such agreements.
To some degree, these agreements may suggest that the number of independently
owned media outlets in a market might not always be a good indicator of how many
independently produced local news or other programs are available in a market.
^2According to Nielsen, a DMA consists of all counties whose largest
viewing share is given to stations of the same market area. There are 210
nonoverlapping DMAs that cover the entire continental United States,
Hawaii, and parts of Alaska.
Ownership of broadcast outlets by minorities and women appears limited,
but comprehensive data are lacking. FCC collects data on the gender, race,
and ethnicity of radio and television station owners biennially through
its Ownership Report for Commercial Broadcast Stations, or Form 323.
However, we found that these data suffer from three weaknesses: (1)
exemptions from filing for certain types of broadcast stations, such as
noncommercial stations; (2) inadequate data quality procedures; and (3)
problems with data storage and retrieval. While reliable government data
on the ownership by minorities and women are lacking, available evidence
from FCC and nongovernmental reports suggests that ownership of broadcast
outlets by these groups is limited. For example, reports by Free Press, a
nongovernmental organization, found that women and minorities own about 5
percent and 3 percent of full-power televisions stations, respectively,
and about 6 percent and 8 percent of full-power radio stations,
respectively.
Stakeholders expressed varied opinions about the media ownership rules
under review by FCC. Among the stakeholders we interviewed, there was
little consensus on modifications to existing laws and regulations related
to media ownership. However, stakeholders representing business interests
were more likely to support deregulatory positions while nonbusiness
stakeholders were more likely to support enhancing or leaving existing
rules in place. Moreover, both business and nonbusiness stakeholders who
expressed an opinion on a previously repealed tax certificate program
supported either reinstating or expanding the program to encourage the
sale of broadcast outlets to minorities.
Background
Various laws and regulations constrain the ownership of television and
radio stations. Five restrictions on the ownership of television and radio
stations follow:
o National television ownership cap. A single entity can own any
number of television stations nationwide as long as the stations
collectively reach no more than 39 percent of national television
households. For purposes of calculating the 39 percent limit,
ultra-high frequency (UHF) television stations are attributed with
50 percent of the television households in their market.
o Local television ownership limit. A single entity can own two
television stations in the same DMA if (1) the "Grade B"
contours^3 of the stations do not overlap or (2) at least one of
the stations is not ranked among the top four stations in terms of
audience share and at least eight independently owned and
operating full-power commercial and noncommercial television
stations would remain in the DMA. In general, no entity can own
more than two television stations whose Grade B contours overlap
regardless of whether (1) the stations are not among the top four
stations in terms of audience share and (2) at least eight
independently owned and operating full-power commercial and
noncommercial stations would remain in the DMA.
o Local radio ownership limit. A single entity can own up to 5
commercial radio stations, not more than 3 of which are in the
same service (that is, AM or FM), in a market with 14 or fewer
radio stations; up to 6 commercial radio stations, not more than 4
of which are in the same service, in a market with 15 to 29 radio
stations; up to 7 commercial radio stations, not more than 4 of
which are in the same service, in a market with 30 to 44 radio
stations; and up to 8 commercial radio stations, not more than 5
of which are in the same service, in a market with 45 or more
radio stations; except that an entity can not own, operate, or
control more than 50 percent of the stations in a market.^4
o Newspaper-broadcast cross-ownership ban. A single entity cannot
have common ownership of a full-service television or radio
station and a daily newspaper^5 if the television station's "Grade
A" contour or the radio station's principal community service area
completely encompass the newspaper's city of publication.^6
o Television-radio cross-ownership limit. A single entity can own
up to 2 television stations (if permitted under the Local
Television Multiple Ownership Cap) and up to 6 radio stations (if
permitted under the Local Radio Multiple Ownership Cap) or 1
television station and 7 radio stations in a market with at least
20 independently owned media voices remaining post merger; up to 2
television stations and up to 4 radio stations in a market with at
least 10 independently owned media voices remaining post merger;
and 1 television station and 1 radio station regardless of the
number of independently owned media voices.^7
^3"Grade B" is an FCC-defined measure of signal strength pertaining to the
availability of an over-the-air signal with a rooftop antenna.
In the 1996 Act, the Congress required FCC to conduct a biennial review of
its media ownership rules to determine "whether any such rules are
necessary in the public interest as the result of competition" and to
"repeal or modify any regulation it determines to be no longer in the
public interest."^8 In its 2002 biennial review, FCC adopted several
important changes to its media ownership regulations. FCC increased the
caps on ownership of local television stations, increased the nationwide
television ownership cap, eliminated the prohibition on joint ownership of
a broadcast outlet and a newspaper in some instances, and raised the caps
on joint ownership of television and radio stations in local markets. In
2004, the U.S. Court of Appeals for the Third Circuit affirmed some of
FCC's rule changes while remanding others for further justification or
modification; most of the rule changes have not gone into effect. In 2006,
FCC released a Further Notice of Proposed Rule Making concerning its media
ownership rules.^9 FCC initiated the rule making to address the issues
posed by the Court of Appeals as well as to fulfill the congressional
mandate for periodic review of its media ownership rules.^10
4There is no limit on the number of AM or FM radio stations that a single
entity can own nationwide.
^5For purposes of this rule, a daily newspaper is defined as one published
4 or more days per week in English and circulated generally in the
community of publication; the definition includes non-English newspapers
if published in the primary language of the market.
^6Newspaper-broadcast combinations that predate imposition of this ban are
permitted. Companies also may seek a waiver from FCC to permit a
newspaper-broadcast combination.
^7For purposes of this rule, media voices include independently owned and
operating full-power television stations, radio stations, daily newspapers
with a circulation that exceeds 5 percent of the households in the DMA,
one cable system if that system is generally available to households in
the DMA, and independently owned out-of-market radio stations with a
minimum share as reported by Arbitron.
^8See Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56,
Section 202(h).
Since the 1970s, the number of media outlets has increased dramatically,
with large increases in the number of television and radio stations. In
the case of television, the number of full-power television stations
increased from 875 in 1970 to 1,754 in 2006; this increase occurred in
both commercial and noncommercial educational television stations.^11
Moreover, the number of broadcast networks that supply programming to
stations across the country increased from three major networks (ABC, CBS,
and NBC) to four major networks (ABC, CBS, FOX, and NBC) and several
smaller networks, such as The CW Television Network, MY Network TV, and
ION Television Network. In the case of radio, the number of full-power
radio stations more than doubled, from 6,751 stations in 1970 to 13,793
stations in 2006, with increases in AM, FM, and FM educational
stations.^12 Daily newspapers illustrate a different trend--decreasing
from 1,763 in 1970 to 1,447 in 2006. While the number of morning
newspapers increased from 334 in 1970 to 833 in 2006, the number of
evening newspapers decreased by more than half, from 1,429 to 614. Table 1
illustrates the trends in television and radio stations and newspapers.
Table 1: Number of Full-Power Television and Radio Stations and Daily
Newspapers
Media category: Television station;
Number of outlets by year: 1970: 875;
Number of outlets by year: 1990: 1,465;
Number of outlets by year: 2006: 1,754.
Media category: Radio station;
Number of outlets by year: 1970: 6,751;
Number of outlets by year: 1990: 10,770;
Number of outlets by year: 2006: 13,793.
Media category: Daily newspaper;
Number of outlets by year: 1970: 1,763;
Number of outlets by year: 1990: 1,643;
Number of outlets by year: 2006: 1,447.
Media category: Morning;
Number of outlets by year: 1970: 334;
Number of outlets by year: 1990: 559;
Number of outlets by year: 2006: 833.
Media category: Evening;
Number of outlets by year: 1970: 1,429;
Number of outlets by year: 1990: 1,084;
Number of outlets by year: 2006: 614.
Source: GAO analysis of data from FCC and the Newspaper Association of
America.
While the number of media outlets has increased, the ownership of outlets
also has evolved. Beginning in the late 1980s, the broadcast networks
increasingly have become affiliated with companies that provide program
production services, as happened when The Walt Disney Company acquired
ABC. Each of the four major broadcast networks also owns television
stations that reach more than 20 percent of the nation's television
households. Following the passage of the 1996 Act, several companies
acquired a large number of radio stations. Clear Channel owns over 1,000
radio stations throughout the United States, and Cumulus Broadcasting and
Citadel Communications each own over 200 stations. Finally, four
companies--Comcast, DirecTV, Time Warner, and EchoStar--provide service to
nearly two-thirds of subscribers to cable television or direct broadcast
satellite service; additionally, many nonbroadcast networks, such as CNN
and ESPN, are owned by cable companies or broadcast networks.^13
^92006 Quadrennial Regulatory Review--Review of the Commission's Broadcast
Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the
Telecommunications Act of 1996, Further Notice of Proposed Rulemaking, 21
FCC Rcd. 8834 (2006).
^10The Congress now requires FCC to review its broadcast media ownership
rules every 4 years.
^11In addition to full-power television stations, there were approximately
568 Class A and 2,227 low-power television stations in 2006.
^12In addition to full-power radio stations, there were approximately 770
low-power FM stations in 2006.
In recent years, some companies have taken steps to sell assets. In 2005,
Viacom split into two separate companies: Viacom and CBS Corporation.^14
In 2006, The McClatchy Company acquired Knight Ridder and subsequently
sold 12 former Knight Ridder newspapers. Also in 2006, Clear Channel
announced plans to sell 448 radio stations, all in markets outside the top
100, and its entire television station group.^15 More recently, The New
York Times Company sold its television stations. Alternatively, the two
satellite radio companies--Sirius and XM--have proposed a merger that, if
approved, would leave one company providing satellite radio service.
Numbers of Media Outlets and Owners Generally Increase with Market Size,
Although Operating Agreements May Reduce the Effective Number of Independent
Outlets
Markets with large populations have more television, radio, and newspaper
outlets than less populated markets. In the top three markets--New York,
Los Angeles, and Chicago--the combination of large populations and
relatively high disposable income helps produce substantial advertising
revenues for the media outlets in these markets. Hence, these markets have
more television and radio stations and more newspapers than other markets.
Alternatively, the small markets we analyzed--such as Jackson, Tennessee,
and Harrisonburg, Virginia--are characterized by significantly fewer media
outlets than larger markets. In more diverse markets, we also observed
more radio and television stations and newspapers operating in languages
other than English, which contributed to a greater number of outlets. For
example, the Miami/Fort Lauderdale, Florida, market has more television
stations than the other large, case study markets^16 we studied because of
the large number of Spanish language outlets. In addition, the Tucson,
Arizona, market, which has a relatively large Hispanic population, has
more television and radio stations than other similarly sized case study
markets due to the presence of Spanish language television and radio
stations. Table 2 illustrates the number of media outlets and owners in
our case study markets. While we focused on media outlets located in
specific markets, residents may, in some instances, be able to receive
television and radio signals from stations located in adjacent markets.
^13For example, among the nonbroadcast networks with the most subscribers,
CNN and TNT are affiliated with Time Warner, ESPN is affiliated with
Disney, USA Network is affiliated with NBC-Universal, and Discovery
Channel is affiliated with Cox.
^14These two separate companies are controlled by National Amusements,
Inc.
^15On November 13, 2007, FCC granted, subject to conditions, Clear
Channel's application to assign its television stations to Newport
Television LLC, which is wholly owned by affiliates of Providence Equity
Partners, Inc.
^16The other large media markets in our case study analysis are Charlotte,
North Carolina; Nashville, Tennessee; and Wilkes Barre/Scranton,
Pennsylvania.
Table 2: Number of Media Outlets and Owners in Case Study Markets
Case study market Name (DMA rank): New York, New York (1);
Television stations: Outlets: 21;
Television stations: Owners: 15;
Radio stations: Outlets: 73;
Radio stations: Owners: 44;
Daily newspapers: Outlets: 5;
Daily newspapers: Owners: 5.
Case study market Name (DMA rank): Los Angeles, California (2);
Television stations: Outlets: 24;
Television stations: Owners: 19;
Radio stations: Outlets: 69;
Radio stations: Owners: 34;
Daily newspapers: Outlets: 2;
Daily newspapers: Owners: 2.
Case study market Name (DMA rank): Chicago, Illinois (3);
Television stations: Outlets: 16;
Television stations: Owners: 13;
Radio stations: Outlets: 65;
Radio stations: Owners: 38;
Daily newspapers: Outlets: 3;
Daily newspapers: Owners: 3.
Case study market Name (DMA rank): Miami, Florida (16);
Television stations: Outlets: 16;
Television stations: Owners: 13;
Radio stations: Outlets: 47;
Radio stations: Owners: 24;
Daily newspapers: Outlets: 3;
Daily newspapers: Owners: 2.
Case study market Name (DMA rank): Charlotte, North Carolina (26);
Television stations: Outlets: 12;
Television stations: Owners: 9;
Radio stations: Outlets: 37;
Radio stations: Owners: 17;
Daily newspapers: Outlets: 1;
Daily newspapers: Owners: 1.
Case study market Name (DMA rank): Nashville, Tennessee (30);
Television stations: Outlets: 12;
Television stations: Owners: 11;
Radio stations: Outlets: 52;
Radio stations: Owners: 35;
Daily newspapers: Outlets: 2;
Daily newspapers: Owners: 2.
Case study market Name (DMA rank): Scranton, Pennsylvania (53);
Television stations: Outlets: 8;
Television stations: Owners: 7;
Radio stations: Outlets: 24;
Radio stations: Owners: 14;
Daily newspapers: Outlets: 1;
Daily newspapers: Owners: 1.
Case study market Name (DMA rank): Tucson, Arizona (70);
Television stations: Outlets: 11;
Television stations: Owners: 8;
Radio stations: Outlets: 38;
Radio stations: Owners: 17;
Daily newspapers: Outlets: 2;
Daily newspapers: Owners: 2.
Case study market Name (DMA rank): Springfield, Missouri (76);
Television stations: Outlets: 6;
Television stations: Owners: 6;
Radio stations: Outlets: 26;
Radio stations: Owners: 11;
Daily newspapers: Outlets: 2;
Daily newspapers: Owners: 2.
Case study market Name (DMA rank): Chattanooga, Tennessee (86);
Television stations: Outlets: 8;
Television stations: Owners: 8;
Radio stations: Outlets: 32;
Radio stations: Owners: 20;
Daily newspapers: Outlets: 1;
Daily newspapers: Owners: 1.
Case study market Name (DMA rank): Cedar Rapids, Iowa (89);
Television stations: Outlets: 9;
Television stations: Owners: 8;
Radio stations: Outlets: 25;
Radio stations: Owners: 11;
Daily newspapers: Outlets: 1;
Daily newspapers: Owners: 1.
Case study market Name (DMA rank): Florence, South Carolina (105);
Television stations: Outlets: 6;
Television stations: Owners: 5;
Radio stations: Outlets: 13;
Radio stations: Owners: 6;
Daily newspapers: Outlets: 1;
Daily newspapers: Owners: 1.
Case study market Name (DMA rank): Terre Haute, Indiana (151);
Television stations: Outlets: 5;
Television stations: Owners: 5;
Radio stations: Outlets: 18;
Radio stations: Owners: 11;
Daily newspapers: Outlets: 1;
Daily newspapers: Owners: 1.
Case study market Name (DMA rank): Sherman, Texas (161);
Television stations: Outlets: 2;
Television stations: Owners: 2;
Radio stations: Outlets: 23;
Radio stations: Owners: 13;
Daily newspapers: Outlets: 1;
Daily newspapers: Owners: 1.
Case study market Name (DMA rank): Jackson, Tennessee (174);
Television stations: Outlets: 3;
Television stations: Owners: 3;
Radio stations: Outlets: 21;
Radio stations: Owners: 14;
Daily newspapers: Outlets: 1;
Daily newspapers: Owners: 1.
Case study market Name (DMA rank): Harrisonburg, Virginia (181);
Television stations: Outlets: 2;
Television stations: Owners: 2;
Radio stations: Outlets: 16;
Radio stations: Owners: 7;
Daily newspapers: Outlets: 1;
Daily newspapers: Owners: 1.
Source: GAO analysis of FCC data, Warren Online Cable and Television
Factbook, and Bowker's News Media Directory.
Some media companies participate in operating agreements that involve a
partnership between two or more outlets. For example, some companies
participate in agreements wherein one company produces content or sells
advertising through its own outlets and another company's outlets. FCC's
attribution rules--which seek to identify those interests in or
relationships to licensees that have a realistic potential to affect the
programming decisions of licensees or other core operating
functions--apply to several types of operating agreements.^17 In our 16
case study markets, we found these agreements in a variety of markets but
not in the top 3 markets, suggesting that market size may influence the
benefits that companies realize through such agreements. We found
television stations participating in operating agreements in five
markets--Nashville, Tennessee; Wilkes Barre/Scranton, Pennsylvania;
Springfield, Missouri; Myrtle Beach/Florence, South Carolina; and Terre
Haute, Indiana. We also found operating agreements between radio stations
in Harrisonburg, Virginia, and Nashville, Tennessee; and in Tucson,
Arizona, the two competing daily newspapers participate in a joint
operating agreement.^18 To some extent, these agreements may reduce the
number of independent outlets. For example, in Wilkes Barre/Scranton, we
identified eight television stations. However, one owner of two stations
participated in an agreement with a third station and the remaining four
television stations participated in two separate agreements--each
agreement covering two stations. Thus, while there are eight television
stations and seven owners in Wilkes Barre/Scranton, there are three loose
commercial groupings in the market. This example suggests that the number
of independently owned media outlets in a given market is not always a
good indicator of how many independently produced local news or other
programs are available in a market.
^17We did not review whether the agreements fell within the requirements
of the attribution rules.
^18The Newspaper Preservation Act of 1970 allows various operating
agreements in order "to preserve separate and independent editorial
voices."
Ownership of Broadcast Outlets by Women and Minorities Appears Limited, but
Comprehensive Data Are Lacking
In 1998, FCC issued rules to collect data on the gender, race, and
ethnicity of holders of broadcast licenses. FCC decided to collect these
data via its Ownership Report for Commercial Broadcast Stations, or Form
323. FCC noted that it was appropriate to develop "precise information on
minority and female ownership of mass media facilities" and "annual
information on the state and progress of minority and female ownership,"
thereby positioning "both Congress and the Commission to assess the need
for, and success of, programs to foster opportunities for minorities and
females to own broadcast facilities."^19 FCC began collecting these data
in 1999 and the Form 323 is the only mechanism through which FCC collects
information on the gender, race, and ethnicity of broadcast owners; FCC
requires biennial filing of the Form 323.
As FCC's only information source on owners' gender, race, and ethnicity,
the Form 323 data potentially could be used to determine and periodically
report on the level of women and minority broadcast ownership. However, we
identified several weaknesses that limit the usefulness of the Form 323
data.^20
o Filing exemptions. Sole proprietors, partnerships, and
noncommercial stations are not required to file the Form 323.^21
Since data from the Form 323 do not include stations owned by sole
proprietors, partnerships, or noncommercial stations, it is not
possible to use the Form 323 data to identify either the full
universe of broadcast stations owned by women and minorities or
the number of women and minority owners. FCC also does not require
the filing of the Form 323 for low-power stations.
o Data quality procedures. According to FCC officials, FCC does
not verify or periodically review the gender, race, and ethnicity
data submitted via the Form 323. According to these officials, a
staff person from FCC's Video Division reviews submitted Form
323s, and this staff person focuses on ensuring compliance with
the commission's multiple ownership and citizen ownership rules.
These officials told us that station owners were responsible for
determining the accuracy of their Form 323 submissions.
o Data storage and retrieval. Companies must file the Form 323
electronically. However, FCC allows owners to provide attachments
with their electronic filing of the Form 323. These attachments
may include the gender, race, and ethnicity data. Since these data
are not entered into the database, the data are unavailable for
electronic query.
^191998 Biennial Regulatory Review--Streamlining of Mass Media
Applications, Rules, and Processes; Policies and Rules Regarding Minority
and Female Ownership of Mass Media Facilities; Report and Order, 13 FCC
Rcd. 23056, 23096-23097 (1998).
^20For its media ownership proceeding, FCC commissioned three studies
assessing the status of women and minority broadcast ownership. Each of
the three studies explored the adequacy of FCC's Form 323 data records and
found the aggregate data to be unreliable.
^21Noncommercial stations are required to file a Form 323-E. However, the
Form 323-E does not collect data on gender, race, or ethnicity.
While there are no reliable government data on ownership by women and
minorities, ownership of broadcast outlets by these groups appears
limited. According to the industry stakeholders and experts we
interviewed, the level is limited, and recent studies generally support
this conclusion. In a 2006 report, Free Press found that for full-power
television stations, women and minority ownership was about 5 percent and
3 percent, respectively. Specifically, the report noted that women owned a
majority stake in 67 of 1,349 full power commercial television stations
and minorities owned 44 stations, 8 of which were owned by 1 company. In
another report, Free Press estimated that women owned approximately 629 of
10,506 (or 6 percent) of full-power radio stations and minorities owned
812 stations (or 8 percent) of full-power radio stations. Additionally,
three reports commissioned by FCC as part of its media ownership
proceeding found relatively limited levels of ownership of television and
radio stations by women and minorities.
Stakeholders' Opinions Varied on Modifications to Media Ownership Rules, but
Business Stakeholders Were More Likely to Favor Deregulation
The stakeholders we interviewed seldom agreed on proposed modifications to
media ownership rules. However, business stakeholders expressing opinions
on these rules were more likely to report that the rules should be relaxed
or repealed. In contrast, nonbusiness stakeholders who expressed opinions
on the rules were more likely to report that the rules should be left in
place or strengthened. Both business and nonbusiness stakeholders who
expressed an opinion on a previously repealed tax certificate program
supported either reinstating or expanding the program to encourage the
sale of broadcast outlets to minorities.
o National television ownership cap. The majority (65 of 102) of
stakeholders expressed no opinion on this issue. Of the 37 who did
express an opinion, 22 said the cap should be left as is or
lowered, further restricting ownership, while 15 favored raising
or repealing the cap. But these results differed for nonbusiness
and business stakeholders. Whereas 11 of 15 nonbusiness
stakeholders stated that the cap should be left as is or lowered,
further restricting ownership, 11 of 22 business stakeholders
indicated that the cap should raised or repealed.
o Local television and radio ownership limits. Stakeholders were
fairly evenly divided on whether FCC should alter rules limiting
the number of television and radio stations a single entity can
own in a local market. Of the 50 stakeholders expressing an
opinion on the matter, 27 said the rule should be repealed and 23
said the rule should either be left as is or strengthened.
However, opinions within stakeholder segments were more
consistent. Fourteen of 19 nonbusiness stakeholders were in favor
of strengthening or leaving the rules in place, while 22 of 31
business stakeholders were in favor of repealing the regulation.
o Newspaper-broadcast cross-ownership ban. Overall, stakeholders
were fairly evenly divided on whether FCC should modify its
current rule prohibiting cross-ownership of newspapers and
television or radio stations in the same local area. Of the 50
stakeholders expressing an opinion on the matter, 27 reported that
the rule should be repealed and 23 said the rule should either be
left as is or strengthened. However, among business and
nonbusiness stakeholders interviewed, there were clear differences
in opinion on this issue. Fourteen of 20 nonbusiness stakeholders
were in favor of strengthening or leaving the rule in place. In
contrast, 21 of 30 business stakeholders were in favor of
repealing the regulation. For example, 13 of 14 stakeholders from
multisector media companies stated the rule should be repealed.
o Reinstitution of minority tax certificate program. Prior to its
repeal by the Congress in 1995, the minority tax certificate
program provided for the seller of a broadcast station to defer
capital gains taxes on the sale if the station was sold to a
minority-owned company. Of the 102 stakeholders interviewed, most
(72) expressed no opinion as to whether the minority tax
certificate program should be reinstated. However, among the 30
stakeholders who mentioned this issue, there was broad consensus
in favor of reinstating some version of this program. Twenty-eight
of these 30 stakeholders indicated that either the program should
be reintroduced without changes or expanded, and 2 said the
program was not needed and should not be reinstated.
Agency Comments
We provided a draft of this report to FCC for its review and comment. FCC
provided technical comments that we incorporated where appropriate. In
addition, FCC noted that it has several items under consideration that
could impact media ownership.
- - - - -
As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from
the report date. At that time, we will send copies of this report to the
Chairman of the Federal Communications Commission and interested
congressional committees. We will also make copies available to others
upon request. In addition, the report will be available at no charge on
the GAO Web site at [8]http://www.gao.gov .
If you have any questions about this report, please contact me at (202)
512-2834 or [email protected]. Individuals making key contributions to this
report include Michael Clements (Assistant Director), Carl Barden, Matt
Barranca, Steve Brown, Ted Burik, Elizabeth Eisenstadt, Brandon Haller,
Madhav Panwar, Friendly Vang-Johnson, and Mindi Weisenbloom.
JayEtta Z. Hecker
Director, Physical Infrastructure Issues
(544148)
References
Visible links
8. http://www.gao.gov/
*** End of document. ***