Media Ownership Rules

free essayMedia is a lucrative business that provides opportunities for growth through mergers, takeovers, and creating new broadcasting channels. However, the Federal Government controls the number of broadcasting channels an individual or a company can own. The government has set up the Federal Communication Corporation (FCC) to oversee this. The FCC was established in 1934 to replace the Federal Radio Commission (FRC) (Bush & Martin, 2015). The mandate of the commission was to regulate interstate communications via television, satellite, cable, and radio. The commission has jurisdiction in all 50 states, the District of Columbia, and US territories. In addition, it has an international task, which lies in overseeing the activities of communication bodies in North America. However, in 1940 the FCC released a report on chain broadcasting, which caused the formation of a new FCC with James Lawrence as the chairman.

The 1948 Freeze

After the Second World War, the FCC issued licenses to new and existing television channels. After issuing almost 100 licenses the commission realized that the proximity between the stations was too close, causing interference. To prevent a similar scenario in the future the commission decided to stop issuing licenses (Sheketoff, Clark, & Visser, 2015). The termination was intended to give the commission time to create a blueprint for television control in the country. The commission was to break for six months but the period had to be extended due to the war in Korea. During this period television broadcasting was rare around the country with only the major cities enjoying broadcasting. This period allowed the FCC to resolve a number of issues. The following policies were accepted: some licenses would be reserved for television channels that aired educational material; the FCC would find a way to rectify the interference problem; the FCC would draft a map representing every channel in the US; the FCC promoted color television and the commission would expand the spectrum space. In the year 1952, the FCC lifted the ban on the issuing of licenses (Bush & Martin, 2015). Due to the pressure from Senator Edwin Johnson, Denver was the first city to have a post-freeze station. This marked the beginning of a new era in broadcasting for the USA.

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The 1949 & 1973 Minority Ownership Policies

Previously, the minorities were hardly represented in the meetings of broadcast owners. No person of color operated a radio station. In order to change this trend, the commission awarded radio station WERD, Atlanta to Jesse B. This change concerned radio stations only, but in the year 1978 FCC issued a license for WGPR-TV, Detroit to a small business entity (Sheketoff et al., 2015). The chairman of the FCC at the time Richard Wiley instructed his employees to find other means to strengthen minority ownership in broadcasting services.

The 1978 Minority Ownership in Broadcasting Businesses

The staff of the FCC came up with policies and guidelines to tackle minority broadcasting under the chairmanship of Charles Ferris. The policies advocated for decisions in the favor of minority applicants. The minorities were given a right to own, participate in, and manage media stations (Scherer, 2015). The second policy developed by FCC was called the ‘distress sale’. It allowed minority radio and television stations to transfer their licenses if their qualifications were questionable. The third policy involved issuance of tax certificates to large broadcasters who sold their entities to minority broadcasters. The issuance of broadcasting certificates depended on comparative hearing. The FCC allowed these policies to enable diversity in the programs being aired.

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1981 Congress Mandate to FCC

The congress mandated the FCC to issue licenses through the process of random selection, doing away with the comparative hearing system. This would increase the issuance of licenses to cellular radio, low power television (LPTV), and wireless cables (Multichannel Multipoint Distribution Service or MMDS). However, the FCC declined to issue minority ownership licenses, especially for cellular radio. The commission determined that minority ownership licenses introduced little diversity to the programs. This was due to the fact the owners of these minority broadcasts had to edit the content of the messages conveyed by their companies. The commission established that minority owners of broadcasts could adhere to the requirements of the first amendment (Bush & Martin, 2015). In the year 1985, the chairman of FCC Mark Fowler appealed to the congress to allow the commission to issue licenses through the lottery method since the auction process proved to be unproductive (Honig et al., 2014). The congress declined the plea of the chairman stating that the auction policy was better since it raised money for the government as compared to the lottery policy which generated less earnings for the government. The auction policy was not effective in its implementation since it prevented small investors from acquiring licenses. The amount capital required by the FCC in order to receive a license proved to be much higher than many small retailers can afford.

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Control of Consolidation and Conglomeration of Media Houses by FCC

Over the years, the FCC has limited the number of broadcasting stations a media house can own. The FCC reviews these rules every four years. The 2006 review of the media ownership rules allowed the FCC to have a clear picture of the current market condition of media businesses. In the year 2007, the commission allowed merging newspaper entities and broadcasting businesses, which had been prohibited by the FCC for over 30 years (Graber & Dunaway, 2014). In 2010, the FCC quadrennial review encouraged the entry into media ownership of such new players  as the public, academia, and industry stakeholders. The FCC has limited the opportunities for mergers in the media industry for years. This move has caused key players to retaliate. A good example of this is Rep Bob Latta who is the vice chair of the Communications and Technology Committee. He said that the reluctance of FCC to develop laws that facilitate ownership in the media industry was a move that hurt the industry.

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Summary of Current Media Laws

In the year 2011, the court amended the law that allowed newspaper/broadcast co-ownership to restrict a company from owning a daily newspaper and full broadcast station in case they do operate within the same city. As for national TV ownership, the FCC does not limit the number of stations a certain group can have as long as the content of the group does not exceed 39% of all U.S television households (Hauge, 2014). In 2013, the commission started plans to eliminate the UHF discount since it lost its relevance after digital migration. The commission clearly prohibits the mergers of two television channels. The commission allows for multiple television channels as long as the stations’ networks are not in one area, neither of the station is among the top 4 leading television channels in the country, and the merger will not put 8 players of the industry out of business (Hauge, 2014). The mergers between radio stations and television are not applicable to large companies in the industry. The commission facilitates this by imposing many laws. The reason the FCC discourages these mergers is to allow diversity within the industry. If these mergers were possible, many small players in the media industry would not be able to conduct business, thus reducing the diversity of programs.

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FCC New Ownership Guidelines

The FCC will soon develop new rules following the 2014 extended summit. The rules are to affect the ability of the media owners to merge or form partnerships. Besides, the FCC will ensure that there is healthy competition between media owners. The FCC chairman Ajit Pai maintains that the content being aired by broadcasting channels should be diverse. To maintain this diversity, media stations will have to broadcast local content (Graber & Dunaway, 2014). The FCC has also maintained a firm standard on limiting the power of media giants who seek to dominate the industry. In my view, the FCC should continue protecting American citizens and small media owners. For instance, there was a law passed by the FCC which allowed media owners to own three TV stations, eight radio stations, and a major daily newspaper. This law was a major drawback for the FCC principles. Luckily, the congress failed to pass the bill. The FCC should maintain its position; media owners should only be allowed to own one major TV station. If one media house owns more than one TV station, it will control the content being broadcasted. Such a media house will also have more power to ignore the rules set by the FCC. Finally, if media giants were to merge they would crash small media houses and cause them to close down. To prevent this occurrence, it is better to prevent the merging and conglomeration of media houses.