Part tWO the policy and regulatory landscape

Part TWO

the policy and regulatory landscape

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Since the beginning of the Republic, government policies have affected--sometimes profoundly-- the evolution of the news media. What follows is a description and evaluation of FCC and other governmental policies that have shaped--and that continue to shape--the news media landscape and the provision of civically important information to citizens on a community level and nationwide. We focus on those policies that relate to the concerns raised in Part One, especially regarding the health of local information, news, and journalism. We have tried to critically evaluate the FCC's own role. While some FCC policies have helped, some have not--and crafting sound policy going forward requires the Commission to understand why. Sociologist Paul Starr has argued that we are currently in a rare "constitutive moment," when today's decisions will shape media industry evolution for decades to come. Given the seismic nature of today's changes, it is imperative that we be conscious of what our policies are and what they are attempting to achieve. In general, our review indicates that: 1. some current FCC policy is not in synch with the nature of modern media markets; and 2. many of the FCC's current policies are not likely to help communities and citizens get the information they need.

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26 Broadcast Radio and Television

There is no doubt that FCC policies have played a profound role in the development and growth of the modern

broadcasting industry from its earliest days. Historically, some of the most significant Congressional and FCC poli-

cies were:

Promoting the creation of national radio networks: In 1928, the Federal Radio Commission, the FCC's prede-

cessor, set aside national "clear channels" to allow for the creation of national radio networks. This allowed business

models to develop more quickly since radio stations could attract national, not just local, advertising. These radio

networks--the National Broadcasting Company and the Columbia Broadcasting System--later became the TV net-

works that set the course for the future of TV.

Licensing stations locally, creating a nationwide system: While allowing for the creation of national radio net-

works, Congress and the FCC decided to award TV licenses locally, not nationally (as has been done in many other

countries). To do this, and ensure nationwide availability, FCC engineers worked for years to define the contours of lo-

cal stations and resolve interference issues. Licensing stations locally was intended to promote the availability of locally oriented content,

Even though broadcasting was

competition, and control. Setting aside spectrum for noncommercial use: In 1952, the FCC

set aside 242 television channels for educational use,1 and historically the Commission has sought to reserve approximately 25 percent of

born with government help-- based on a grant of airwaves from the public--once it took

television channels for noncommercial educational use.2 Had it not, the public broadcasting systems might never have developed.

Ownership rules: While some argue that FCC ownership rules have led to massive consolidation with baneful results and oth-

its first breath, it in some ways became "the press." Hence, government regulation

ers insist that they have facilitated greater market efficiencies with beneficial results for the public, few disagree that they have had a significant impact.

of broadcasting is sometimes appropriate, yet circumscribed.

Must-carry rules: In general, Congress required major cable pro-

viders to set aside up to one-third of their channel capacity for local broadcast stations. This dramatically increased the

leverage of broadcasters in the cable industry's early days, and probably protected the primacy of local TV news shows.

Digital and high-definition television: Between 1987 and 1997, the FCC adopted a series of decisions that began

a transition from analog to digital television, paving the way for reallocation of 108 MHz of spectrum from television

to other valuable uses.3

In addition to these decisions that shaped the structure of the broadcasting industry, a parallel track of regula-

tions, in some form or another, has affected how content is developed and distributed. The government has played a

greater role in shaping content in the broadcast industry than it has in the print industry for a simple reason: While

the printing press belongs to private owners, the airwaves belong to the public. Because there is a finite amount of

spectrum, and a much greater demand for licenses than can be accommodated, policymakers beginning in the 1920s

had to decide who would get the spectrum and for what use. After all, if one broadcaster received a license it meant

another could not have it, so it made sense to oblige those authorized "speakers" to meet broad community needs.

Policymakers adopted a "trustee" model, in which, in exchange for public spectrum, broadcasters were required to

serve public service goals. Companies that subsequently bought these stations did pay for them but that did not ab-

solve them from having to fulfill the attendant public interest obligations.

Yet, even though broadcasting was born with government help--based on a grant of airwaves from the

public--once it took its first breath, it in some ways became "the press." As such, broadcasters have, and should have,

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special protections under the First Amendment, although these protections are less rigorous than those afforded other media such as newspapers. Hence, government regulation of broadcasting is sometimes appropriate, yet always circumscribed. Courts and Congress have, at various points, reaffirmed the FCC's authority to consider program content in the exercise of its licensing function but to what extent and in what manner has been open to near constant debate. Over time, the combination of new court rulings and changing market forces have made policymakers less and less comfortable with highly prescriptive requirements. One court described the balancing act:

"[T]he Commission walks a tightrope between saying too much and saying too little. In most cases it has resolved this dilemma by imposing only general affirmative duties--e.g., to strike a balance between various interests of the community, or to provide a reasonable amount of time for the presentation of programs devoted to the discussion of public issues. The licensee has broad discretion in giving specific content to these duties, and on application for renewal it is understood the Commission will focus on his overall performance and good faith rather than on specific errors it may find him to have made."4

Questions abound. Among them: When, if ever, is it permissible or wise to regulate content? What are the limits? What governmental actions indirectly affect content? These questions have challenged media policymakers for decades. In some cases, governmental involvement is not appropriate; in others it may be unnecessary and unwise; and in yet other instances, it depends on the circumstances. We discuss three sets of rules that illustrate this point: We look at sponsorship identification and disclosure rules as an example of regulation that potentially promotes a vigorous and informative press by requiring transparency. We consider the Fairness Doctrine as an example of governmental action that would likely harm the development of a robust media. Finally, we delve even more thoroughly into the issue of the public interest obligations of broadcasters.

The Fairness Doctrine The roots of the Fairness Doctrine go back to the Federal Radio Commission's 1929 Great Lakes Broadcasting decision, which denied licenses to a labor union-controlled radio station, on the grounds that "the public interest requires ample play for the free and fair competition of opposing views."5 In 1940, the FCC went further and decided that, because the public interest required stations to present "all sides of important public questions fairly, objectively and without bias," stations must agree not to editorialize. The FCC stated that, "radio can serve as an instrument of democracy only when devoted to the communication of information and exchange of ideas fairly and objectively presented."6 As a commenter has noted, "[l]icensees were thus put on notice that advocacy broadcasting would not be tolerated."7 This speech-restrictive approach lasted eight years.

In order to ensure that broadcasters covered important issues in their programming, and did so in a balanced manner, in 1949 the Commission introduced what has become known as the Fairness Doctrine. In its Report on Editorializing By Broadcast Licensees, the Commission stated, "the public interest requires ample play for the free and fair competition of opposing views, and the commission believes that the principle applies to all discussion of importance to the public."8

It established a two-part obligation for broadcasters:

> provide coverage of vitally important controversial issues of interest in the community served by the station; and

> afford a reasonable opportunity for the presentation of contrasting viewpoints.

Stations were given wide latitude in deciding how they would present contrasting views; for instance, they might air segments during news or public affairs programs or broadcast distinct editorials. No particular party had a right to reply to an issue covered by the station. Rather, the station simply had to ensure that contrasting views on the issue were aired. But, a party that believed that a station had failed to honor this obligation could file a complaint with the Commission, which would be decided on a case-by-case basis. In time, two related rules were adopted: the "personal attack rule," which required that when an attack was made on someone's integrity during a program on a controversial issue of public importance, the station had to inform the subject of the attack and provide the oppor-

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tunity to respond on the air; and the "political editorial rule," which required a station that had endorsed a particular candidate for political office to notify the other candidates for that office and offer them the opportunity to respond on the air.9 These rules applied to broadcast TV and radio, but not to cable or satellite.

In 1969, in Red Lion Broadcasting Co. v. FCC, the Supreme Court ruled that the Fairness Doctrine was constitutional, concluding that the print and broadcast media were inherently different in terms of regulatory First Amendment considerations, especially given the scarcity of available broadcast spectrum.10 The Court held, "[i]t is the right of the viewers and listeners, not the right of the broadcasters, which is paramount."11

As part of its 1980s deregulation of broadcasting, the Commission abolished the Fairness Doctrine, concluding after an inquiry that "the requirement that broadcasters provide balance in their overall coverage of controversial public issues in fact makes them more timid than they would otherwise be in airing programming that involves such issues."12 The Commission's inquiry had provided numerous examples of this "chilling" effect, including Dan Rather's recollection of his time as a young reporter working at a radio station owned by the Houston Chronicle:

"I became aware of a concern which I previously had barely known existed--the FCC. The journalists at the Chronicle did not worry about it: those at the radio station did. Not only the station manager but the news people as well were very much aware of the Government presence looking over their shoulders. I can recall newsroom conversations about what the FCC implications of broadcasting a particular report would be. Once a newsroom has to stop and consider what a Government agency will think of something he or she wants to put on the air, an invaluable element of freedom has been lost."13

Since that time, lawmakers have periodically attempted--unsuccessfully--to enact legislation to reinstate the Fairness Doctrine. Furthermore, in 2000, the Commission eliminated the "personal attack" and the "political editorial" rules after the D.C. Circuit Court of Appeals had issued a writ of mandamus directing it to do so.14 All of the current commissioners are on record as opposing its reinstitution. For instance, Chairman Genachowksi told a Senate Committee in 2009: "I don't support reinstatement of the Fairness Doctrine. I believe strongly in the First Amendment. I don't think the FCC should be involved in censorship of content based on political speech or opinion."15

Although the Fairness Doctrine is not in effect, it is referenced in the FCC's written rules. Section 73.1910 of the Commission's Rules states that:

The Fairness Doctrine is contained in section 315(a) of the Communications Act of 1934, as amended, which provides that broadcasters have certain obligations to afford reasonable opportunity for the discussion of conflicting views on issues of public importance.16

It is unclear why the Commission did not eliminate this when it repealed the Fairness Doctrine policy. The sentence has no force of law or policy import, but, it should be said, the language remains "on the books."

It is our view that its reinstatement would most likely chill the robust broadcast discussion of critical issues, because stations would simply avoid addressing controversial issues in their programming rather than risk Commission sanctions for their failure to have allowed all interested parties an opportunity to respond. With the growth of additional media sources, such as cable, satellite, and more recently the Internet, Commission regulation in this sensitive area seems particularly unnecessary and unwise.

Disclosure Rules and On-Air Deception The FCC has established as a central principle that "listeners are entitled to know by whom they are being persuaded."17 This concept is at the heart of several rules governing on-air disclosure.

Beginning with the Radio Act of 1927, Congress required broadcasters to identify their sponsors.18 In 1969, the FCC applied similar disclosure rules to cable operators for programming they create.19 Significantly, the rules do not prohibit the use of sponsored material; they only require identification of the sponsor.

Broadcasters and cable operators must identify sponsors and advertisers at the time of airing of any programming for which consideration has been received or promised. The relevant statute, section 317(a)(1) of the Communications Act, provides:

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"All matter broadcast by any radio station for which any money, service or other valuable consideration is directly or indirectly paid, or promised to or charged or accepted by, the station so broadcasting, from any person, shall, at the time the same is so broadcast, be announced as paid for or furnished, as the case may be, by such person."20

The Commission only requires that the announcement occur once during the programming and remain

on the screen long enough to be read or heard by an average viewer, although somewhat more rigorous identifica-

tion rules apply to sponsored political speech.21 Other decisions are left to the "reasonable, good faith judgment" of

the licensee.22

Stations are not required to post the disclosure on their website.23

To make sure that broadcasters have the information necessary to decide whether sponsorship announce-

ments are needed, station employees have a legal duty to notify the station management if they accept any gifts or

compensation in exchange for agreeing to run programs. 24

A particularly troubling development in recent years has been the rise of sponsored news stories, character-

ized by some as "fake news stories" or "pay for play." (See Chapter 3, Television.) In the Television chapter, we saw

some cases in which broadcasters appear to have entered into agreements with sponsors to run news stories promot-

ing the sponsors' products or services, without disclosing such agree-

ments on the air.25 The Enforcement Bureau recently entered into a consent decree with a broadcaster accused of airing particular news stories on behalf of a sponsor without appropriate sponsor identifi-

A young Dan Rather stated: "Once a newsroom has to stop

cation.26 "The evidence we've seen suggests that this is much more and consider what a Government

widespread than a few years ago," says Tom Rosensteil, director of the Pew Project on Excellence in Journalism. "That's what I'm hearing from news directors."27

agency will think of something he or she wants to put on the

These cases often rely on the Enforcement Bureau getting air, an invaluable element of

written evidence of quid pro quo, which is hard to come by. The Bureau usually begins investigations on the basis of complaints filed.

freedom has been lost."

Those wanting to file a complaint can do so confidentially if they call

the Enforcement Bureau, but the web-based complaint system currently has no way to ensure the confidentiality of

emailed tips.

In addition, the penalties for such violations can be small. The base-level "forfeiture" per violation of the

sponsorship-identification rules is $4,000.28 Moreover, the pay-for-play disclosure rules do not apply to most pro-

gramming on cable. The only exception is programming that is directly controlled by a cable operator, such as a local

all-news station.

Sponsorship identification rules also govern the airing of video news releases (VNRs), described in Chapter

3, Television. With VNRs, sponsors create video clips that look like news stories, though they may use actors to play

reporters.29 Some studies have indicated that in many cases, stations do not identify the nature or provenance of the

VNRs.30 The FCC recently issued two Notices of Apparent Liability against TV stations for violating sponsorship iden-

tification rules--one for a station that had aired a VNR produced by General Motors and another for the airing of a

VNR by the maker of a cold remedy. In both cases, the stations were fined $4,000.31

However, some argue that such enforcement actions violate First Amendment rights. FOX argued that its

running VNRs did not violate sponsorship ID rules since it did not get paid to air them. FOX also objected "to the

issuance of the Commission's Letter of Inquiry and to the Commission's attempt to encroach upon broadcasters' dis-

cretion in making editorial choices about what news to cover and how to produce local newscasts." FOX continued:

"[ne]ws content lies at the very heart of the First Amendment...intrusive inquiries tread heavily on the core consti-

tutional principles of freedom of speech and freedom of the press...Faced with invasive inquiries into the newsgathering

process, broadcasters likely will self-censor and eschew perfectly legitimate speech."32 The Fox case remains pending.

Another type of disclosure rule attempts to force transparency regarding the origins of aired programming.33

For instance, in 2007, the Enforcement Bureau issued a citation to the television personality Armstrong Williams

and his production company for failing to disclose to TV stations that aired Williams' program that he had received

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compensation from the U.S. Department of Education in exchange for his favorable on-air comments about the No Child Left Behind law.34 Though the Bureau concluded that the stations airing Williams' comments had not violated any FCC rules, stations do have an obligation to exercise "reasonable diligence" to learn of financial arrangements affecting the content35 and disclose those arrangements to the public.36

Finally, FCC rules call for disclosure of any programming sponsorship, including "product placement" and "embedded advertising," that is done in exchange for money, service, or other forms of payment. A 2006 survey showed that out of 251 television news directors, 12.4 percent said they were either already doing or considering doing product placements within their newscasts.37 FITM (Fairness and Integrity in Telecommunications Media) also provided research on embedded advertising (including references to McDonald's coffee being placed on local newscasts and Starbucks paying to have its products appear on an MSNBC cable newsmagazine show).38 (See Chapter 3, Television.) The National Association of Broadcasters (NAB) and others responded that the public is not being deceived or misled because stations generally provide disclosures through on-air announcements and on-screen graphics.39

The "Public Interest" Standard

The notion of imposing a public interest obligation on broadcast station operators was first put forth officially by Her-

bert Hoover in 1924. As secretary of commerce for Republican President Calvin Coolidge, Hoover argued that radio "is

not to be considered as merely a business carried on for private gain.... It is a public concern impressed with the public

trust and is to be considered primarily from the standpoint of public interest to the same extent and upon the basis of

the same general principles as our public utilities."40 In 1925, the Fourth Radio Conference, a gathering of congressmen,

government officials, radio industry professionals, academics, and private citizens, accepted Hoover's "public inter-

est" concept, and recommended that licenses be issued only to those who will "render a benefit to the public; or are

necessary in the public interest; or are contributing to the development of

Radio, Herbert Hoover argued, the [broadcast] art."41 NAB supported the idea, declaring, "The test of the

"is not to be considered as merely a business carried on

broadcasting privilege [must] be based on the needs of the public served by the proposed station."42

In response to complaints about scarce spectrum, Hoover at-

for private gain . . . [It] is to be tempted to remedy interference problems by reallocating some of the

considered primarily from the standpoint of public interest."

spectrum and denying some license applications.43 Court rulings blocked these remedial efforts.44 At the same time, intolerable levels of interference were experienced in many major urban areas, in some cases making

transmission virtually impossible. Under these circumstances, Congress

passed the Radio Act of 1927, which created the Federal Radio Commission, giving it broad authority to classify sta-

tions, prescribe the nature of service to be provided, assign frequencies, determine transmitter power and location,

and issue regulations to avoid interference.45 What is more, it required that stations must serve "the public interest,

convenience or necessity"--a phrase whose ambiguity would loom over communications policymaking for the next

80 years.46

Although the Radio Act did not provide a public interest definition, it established a clear--and dramatic--

principle for policymakers: these were "the public's airwaves"--and no person or corporation could own the electro-

magnetic spectrum flowing through the air, any more than it could own the air itself.47

As a result, there would be a quid pro quo for the government's grant of spectrum use.48 The public, with the

government as its agent, would hand over--gratis--a license to use its airwaves to operate a radio station for a fixed

period of time. In exchange, the lucky recipient of this extremely lucrative asset would operate the station as a trustee

for the public that owned its spectrum, with the obligation to perform certain functions for the greater good beyond

merely airing entertainment programming.49 Congressman Wallace H. White, a sponsor of the Radio Act, comment-

ed, "If enacted into law, the broadcasting privilege will not be a right of selfishness. It will rest upon an assurance of

public interest to be served."50

In 1933, Franklin Roosevelt's administration sought to remedy deficiencies in the Radio Act by enacting the

Communications Act of 1934, which created the Federal Communications Commission. The Communications Act

announced the "criterion governing the exercise of the Commission's licensing power" using, once again, the phrase

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"public interest, convenience and necessity."51 The Act also contemplated the application of this "public interest" standard, beyond licensing and interference issues, to also govern programming issues and those of licensee conduct.52

Defining the Public Interest During its early days, the Commission was quite prescriptive in defining how broadcasters should meet what came to be known as "public interest obligations." In a 1939 memorandum, the FCC listed 14 specific kinds of programming material or practices not deemed to be in the public interest, including defamation, racial or religious intolerance, obscenity, and excessive playing of recorded music to fill airtime.53

On March 7, 1946, the Commission issued one of its first major policy statements on broadcast programming: a 59-page internal document entitled Public Service Responsibility of Broadcast Licensees. This so-called Blue Book encouraged stations to air programming of local interest and that stimulated public discussion, noting in particular the importance of news and information programming:

"American broadcasters have always recognized that broadcasting is not merely a means of entertainment, but also an unequaled medium for the dissemination of news, information, and opinion, and for the discussion of public issues.... Especially in recent years, such information programs and news and news commentaries have achieved a popularity exceeding the popularity of any other single type of program. The war, of course, tremendously increased listener interest in such programs; but if broadcasters face the crucial problems of the post-war era with skill, fairness, and courage, there is no reason why broadcasting cannot play as important a role in our democracy hereafter as it has achieved during the war years."54

The Commission concluded that it needed to look not only at technical issues but also "the broadcaster's service to the community"55 and that "the principal ingredient of such obligation consists of a diligent, positive and continuing effort by the licensee to discover and fulfill the tastes, needs and desires of his service area."56 The FCC emphasized the health of local media. Each station was licensed to a particular community and was required to provide service to that specific community. The process by which stations determined these local needs became known as "ascertainment."57 The Commission outlined 14 "major elements" of programming that are generally necessary in the service of the public interest, but noted that they "are neither all-embracing nor constant:"

"(1) opportunity for local self-expression, (2) the development and use of local talent, (3) programs for children, (4) religious programs, (5) educational programs, (6) public affairs programs, (7) editorialization by licensees, (8) political broadcasts, (9) agricultural programs, (10) news programs, (11) weather and market reports, (12) sports programs, (13) service to minority groups, (14) entertainment programs."58

A premise of all these rules is that the "trustee" obligations of broadcasters meant that they were required to provide programming beyond what the market would normally produce. Policymakers implicitly were taking the position that some types of programming ought to be provided--and are good for a community--even if there isn't a large enough consumer demand to lead to its provision in a pure free market.

"Ascertaining" Community Needs Throughout the 1960s and 1970s, great emphasis was placed on prodding stations to find out community needs, so the stations themselves could then better serve them. The Commission's 1971 Primer on Ascertainment of Community Problems by Broadcast Applicants gave detailed instruction on how to determine community needs.59 Notably, the Primer stated that the purpose of the ascertainment process was to help a station determine what the important issues were, which was different from determining what programming might be most popular.60 The Primer got quite granular, requiring principals and management-level employees to personally speak with community leaders.61 The goal was not for the FCC to determine what the significant local problems were, but rather to insure that the stations themselves were doing so, and then, at their discretion, producing relevant programming.

Beyond "ascertainment," the FCC ultimately tried to encourage a minimal level of non-entertainment programming. In 1973, the Commission revised its regulations in order to place initial determination of license renewal

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