Saturday, November 22, 2008

Can reduced publishing frequency bypass the cross-ownership rule?

Here and elsewhere, the suggestion has been floated that struggling daily newspapers should be considering drastic restructuring in the form of a truly web-first publishing plan, paired with a twice-weekly printed paper, or a similar frequency adjustment, depending on the market.

So, if a daily paper does that, could it then make an end-run around the Federal Communications Commission's cross-ownership rule?

It looks to me like it could, and for some of the major dailies across the U. S. where the red ink is flowing, that might be an excellent option to pursue.

Here's a reminder of what the cross-ownership rule has dictated for most of its 33-year existence: Basically, a newspaper and a television station in the same market can't be under the same ownership, with some tricky exceptions and a few dozen grandfathered exceptions, most of them dating from before the rule's origin in 1975, along with a few waivers granted since then.

(Under revisions proposed by the FCC in 2007, in the top 20 television markets (DMAs), a newspaper could be combined with a TV station that's not among the top four stations in the market, so long as at least eight independent "major media voices" remain in the market. Beyond the top 20 markets, the FCC has said consistently that "it is inconsistent with the public interest for an entity to own newspaper/broadcast combinations and emphasized that it therefore is unlikely to approve such transactions." In any case, these changes were voted down by the Senate last spring, and are being challenged in court. The whole issue will now tide over to the Obama administration, which is not likely to do anything that would be perceived as permitting "media concentration," and has also strongly signalled its interest in renewed enforcement of anti-trust legislation as well as the encouragement of "media diversity.")

The rule itself, as it currently on the books and will likely remain, is damned hard to find but makes for interesting reading because of several apparent loopholes. Here's the operative part of the rule (Found at Title 47 of the Code of Federal Regulations, Section 73.3555(c):
Cross-media limits. Cross-ownership of a daily newspaper and commercial broadcast stations, or of commercial broadcast radio and television stations, is permitted without limitation except as follows:
(1) In Nielsen Designated Market Areas (DMAs) to which three or fewer full-power commercial and non-commercial educational television stations are assigned, no newspaper/broadcast or radio/television cross-ownership is permitted.
(2) In DMAs to which at least four but not more than eight full-power commercial and noncommercial educational television stations are assigned, an entity that directly owns, operates or controls a daily newspaper may have a cognizable interest in either:
(i) One, but not more than one, commercial television station in combination with radio stations up to 50% of the applicable local radio limit for the market; or,
(ii)Radio stations up to 100% of the applicable local radio limit if it does not have a cognizable interest in a television station in the market.
(3) The foregoing limits on newspaper/broadcast cross-ownership do not apply to any new daily newspaper inaugurated by a broadcaster.
That last bit says that a TV station could launch a new daily newspaper in its market, but if it did, an established newspaper in that market still could not buy a different TV station in the market, or launch a new one. (Because it would then be in violation of the basic rule.) Whether you generally feel that cross-ownership restrictions are a good thing, or not, that particular one-sided restriction makes no sense at all. Perhaps it was inserted at the behest of some broadcast industry lobbyist. In any case, I don't think any TV station owner has ever tried to launch a new daily paper, nor would they think about it, at least not in today's financial climate.

The loophole that should be of much more interest to newspaper publishers is contained in the definition of a daily newspaper as it pertains to the rule. Together with much other qualifying fine print, that definition is spelled out a bit farther down in the bureaucratese:
Note 6 to Sec. 73.3555: For the purposes of paragraph (c) of this section a daily newspaper is one that is published four or more days per week, is in the dominant language of the market in which it is published, and is circulated generally in the community of publication. A college newspaper is not considered as being circulated generally.
Four days per week! This means that if, let's say, the Boston Globe decided to cut its frequency to three times a week, it would immediately be exempt from the cross-ownership rule and could buy the biggest TV station in town. (Or, the biggest broadcaster in town could buy the Globe.) Boston is one of the top-20 DMAs where the FCC's proposed loosening of the rule might permit the Globe, under daily publication, to combine only with a station ranking fifth or worse in the market, but all restrictions go away entirely if the Globe simply got out from under the FCC's definition of a daily newspaper.

In a market like Pittsburgh, not a top-20 town, even under the proposed loosening, the FCC would not contemplate any combination at all, but if published once, twice or three times weekly, the Post-Gazette could go right ahead and buy whichever of Pittsburgh's nine full-power TV stations it fancied.

Should newspapers consider such a strategy? Well, why not? The industry, in a self-acknowledged crisis, has yet to come up with anything better than continual cost-slashing by shrinking page sizes, reducing news holes, cutting staff through layoffs, buyouts and attrition, consolidating sections, dropping niche supplements, and, in a few cases so far, considering or actually making frequency reductions of a few days per week—all of which, as many have argued, are tactics simply accelerating the industry's death spiral by incrementally (and irreversibly) reducing newspapers' ability to carry out their core mission, retain audience, and sell advertising.

Here at News After Newspapers, I've suggested newspapers should blow up their business model and emerge as web-centric news enterprises publishing maybe twice a week, Wednesdays and Saturdays. I wrote that among other things, this would strengthen the brand because "two fat newspapers each week and a robust web platform will have more impact than five or six skinny papers and a site that’s not foremost in the newsroom’s mind." (Again, different non-daily solutions would work in different markets, so let a hundred flowers bloom.)

Suppose, then, that a reinvented twice-weekly took it a step further and got formally hitched to one of the major TV stations in town, without FCC interference. While TV news web sites are usually nothing to write home about, the combined entity could collaborate internally on a truly comprehensive multi-media web site, while maintaining strong print and broadcast divisions. The number of news "voices" would be actually increase, especially if the site applied social networking and participatory journalism techniques and pulled in a multitude of bloggers and niche-topic experts.

Given that broadcast TV networks and local stations are going through structural upheavals of their own, a hybrid web-print-broadcast enterprise might have the best shot at long-term survival.

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