Getting in the Game
Newspaper companies hope to take advantage if the FCC relaxes its cross-ownership rules.
By John Morton
John Morton (email@example.com), a former newspaper reporter, is president of a consulting firm that analyzes newspapers and other media properties.
A QUATER CENTURY ago there probably was a rational argument that in most cities a newspaper and broadcast station should not be commonly owned--"cross-ownership" in industry parlance. After all, most newspapers then overwhelmingly dominated local news and advertising, and adding a television or radio station would just be piling on.
That is why the Federal Communications Commission in 1976 ruled that no new cross-ownerships should be created and ordered that several existing ones be broken up. But the FCC grandfathered cross-ownerships in the very largest cities, figuring that the dangers of hegemony were less because big cities tended to have many separate media ownerships, often including more than one newspaper.
A lot has changed in the media business since 1976. Television and radio stations have proliferated. Large chains of weekly suburban papers have sprung up in most cities. Cable television competes with broadcast stations and newspapers. And, of course, the Internet now looms as a threat to all traditional media outlets.
True, the number of cities with commercially competitive newspapers has dropped from 35 back then to a handful today, partly because of the growth of competitors described above. But even in single-newspaper cities, dailies have seen their dominance steadily wither.
These thoughts are occasioned by the apparent change in direction at the FCC under the administration of President Bush. The Bush-appointed FCC chairman, Michael Powell, has said of cross-ownership and other regulatory rules: "Validate the purpose of the rule in a modern context or eliminate it." It seems clear that the cross-ownership prohibition at least will be relaxed, if not eliminated, by allowing new cross-ownerships even in relatively small markets.
This is welcome news for newspaper companies, which have resented being closed out of part of the acquisition frenzy brought about by the FCC's earlier easing of rules against one company's owning more than one television station in a market. As John Sturm, chief executive of the Newspaper Association of America, put it: "The only people left out of the party were foreigners, felons and newspaper publishers."
Two newspaper companies--Tribune Co. and Gannett--have a deep financial interest in the outcome. A big part of the attraction for Tribune in acquiring Times Mirror last year was adding newspapers in Los Angeles, the greater New York City market and Hartford, Connecticut--all markets where Tribune already owned television stations.
Also, in 1997 Tribune took ownership of a television station in the Miami-Fort Lauderdale market, where it owns South Florida's Sun-Sentinel. The company received a temporary waiver of the cross-ownership rule but is barred from initiating any collaboration between the two properties. Gannett owns a television station in Phoenix and found itself in a cross-ownership situation upon its acquisition of Central Newspapers, including the Arizona Republic.
Now, an argument can be made that the fact that all media markets are vastly more competitive than they were 25 years ago is reason enough not to close off newspapers from acquiring same-market broadcast stations. A deeper argument, though, is that newspapers need to be allowed to take advantage of the media convergence that is sweeping, like it or not, through all media industries.
An interesting take on what convergence means appeared in a recent column by Andy Zipser in the Guild Reporter. He wrote that allowing multimedia properties in the same market allows all sorts of synergies, which he said "is corporate-speak for repackaging and cross-promoting the hell out of your product: newspaper copy can become television fodder that can be masticated into radio and Internet items that can promote the original print version, and on and on in a merry and very lucrative circle.... [T]hose synergies will really fly, churning the mass media mix into a homogenized goop."
Well, yes, although whether it all turns into goop will depend on the dedication of the people doing the work. From the examples of newsroom collaboration I've seen so far, it appears that television newsrooms get more benefit from newspapers' superior resources than the other way around.
But the larger point for newspapers is, ahem, the bottom line. Television exposure is of great value in this era of fading circulation, and collaborative selling of advertising across newspapers, television, radio and the Internet will surely benefit newspapers financially. Newspapers are still healthy by any measure, but that may not always be true if they do not participate in the swirl of change affecting all media operations. ###