Reflections on the FCC'S Recent Approach to Structural Regulation of the Electronic Mass Media

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I. INTRODUCTION

Today's media marketplace showcases the rapid development of the new medium of the Internet, the consolidation of old, established mass media, and the combination of the two. The merger of CBS and Viacom represents the latest and biggest in a series of "old media" combinations. These consolidations would not have been possible without the deregulatory turn in mass media policy that began with the Fowler Commission in the Reagan era and was codified in the Telecommunications Act of 1996.

This deregulatory turn and the consolidations it has permitted have led to a public debate about the Federal Communications Commission's (FCC's or Commission's) role in industry structure. Starting with the shared premise that the FCC is taking an increasingly market-facilitative role, commentators have applauded or criticized the impact of that approach on the mass media. This Essay seeks to put the Commission's current structural approach in fuller perspective. It contends that instead of taking a single, deregulatory course, the Commission is engaged in a multipronged approach to structural regulation of the mass media. This multivalent design has a deregulatory component, a regulatory counterweight, and a spectrum policy aspect. The regulatory counterweight in turn has two elements. One is explicit FCC rules that limit deregulation. The other element is voluntary public interest commitments by the regulated industries in response to FCC-articulated concerns. This Essay identifies the hard questions that face both sides of the existing regulatory debate and, having provided an alternative account of the FCC's strategy, also addresses the viability of the Commission's multipronged approach itself.

II. THE FCC'S STRUCTURAL REGULATIONS

The FCC operates under the extremely broad statutory mandate of regulating broadcasting in the public interest, convenience, and necessity.(1) While the agency has imposed some direct content regulations from time to time(2), it has been primarily active in adopting structural regulations.(3) Over its regulatory history, the Commission has endorsed ownership prohibitions both within and across traditionally distinct media.

Within broadcasting, for example, the FCC adopted local anticoncentration rules limiting multiple station ownership in individual markets(4) and national multiple ownership rules limiting the total number of stations allowed for any single entity.(5) The Commission also adopted a broadcast licensing approach in which comparative hearings among mutually exclusive broadcast license applicants would be resolved by reference, among other things, to the diversity in the various applicants' ownership of other media interests.(6)

In a parallel to its structural regulations for broadcasting, the FCC also adopted horizontal ownership restrictions in the cable context. As a result of its findings of increasing cable concentration in 1990(7) and pursuant to the requirements of the Telecommunications Act of 1996 (1996 Act),(8) the Commission adopted rules prohibiting any one entity from having an attributable interest in cable systems reaching more than thirty percent of cable homes passed nationwide.(9)

The Commission justified these ownership-regarding regulations as principally designed to prevent concentration, enhance competition, and promote diversity of voices.(10) On the Commission's view, diversity of outlets is in the public interest both because it will prevent the creation and exercise of market power and because it is likely to lead to a diversity of content and views.

The agency also has a history of cross-ownership limitations across industries--restricting or prohibiting common ownership of broadcast networks and cable companies,(11) cable systems and broadcast stations,(12) telephone and cable,(13) and newspapers and broadcast stations.(14)

However, starting even before the passage of the 1996 Act, but certainly since then, the Commission has taken what appears to be a deregulatory turn in its structural regulations. …