Media Economics & Communication Policy Fall 2011


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Media Economics & Communication Policy Fall 2011

  1. 1. MEDIA POLICYAND ECONOMICS<br />How the Government Can Impact the Business of an Electronic Media Firm<br />
  2. 2. Communication Policy<br />set of laws, rules and regulations that govern electronic media<br />regulated electronic media: telecommunications, broadcasting, cable<br />promote competition, pluralism, localism<br />
  3. 3. Broadcast Regulation<br />license broadcasters<br />create legal obligations for broadcasters<br />impose sanctions if fail to carry out those obligations<br />organize and co-ordinate the broadcast landscape<br />
  4. 4. Why<br />chaos<br />scarcity of the spectrum<br />public trustees of the airwaves<br />accessible to children<br />pervasive nature of medium<br />economics of media favors economies of scale and monopolies<br />
  5. 5. Who<br />Government (Communication Policy)<br />Regulatory Authorities (Media Law/Regulations)<br />
  6. 6. Objectives<br />Pluralism (diversity)<br />Avoid media concentration<br />U.S. -- no monopolies<br />Healthy industries<br />Competition<br />More choices & lower prices for consumers<br />Localism<br />Effectively manage broadcast spectrum<br />
  7. 7. Communication Policy Players <br />Legislative body<br />Independent regulatory authority<br />Many countries have two<br />Courts<br />President / Prime Minister<br />
  8. 8. Regulatory Authority<br />Supervise the implementation of broadcasting regulation<br />In most European countries, separate authorities for broadcasting and telecommunications<br />Some matters determined by the courts<br />
  9. 9. Regulatory Authorities<br />France: Conseil Supérieur de l’Audiovisuel<br />Germany: Landesmedienanstalten<br />Italy: Autorita per le garanzie nelle comunicazioni*<br />Netherlands: Commissariaat voor de Media<br />U.K.: Ofcom*<br />U.S.: Federal Communications Commission*<br />* = both broadcasting & telecommunications<br />
  10. 10. How: Policy - U.S.<br />Congress<br />Senate & House of Representatives pass legislation, signed into law by President<br />Act, Statutes, Code<br />FCC develops rules to implement<br />Federal Regulations<br />Statutes or Rules may be challenged in court<br />
  11. 11. The Communications Act of 1934<br />SEC. 303. [47 U.S.C. 303] GENERAL POWERS OF COMMISSION.<br />Except as otherwise provided in this Act, the Commission from time to<br />time, as public convenience, interest or necessity requires shall . . .<br />
  12. 12. Basic Powers of Regulators<br />Licensing<br />Supervisory<br />Rule-making<br />
  13. 13. Regulatory Process<br />Congress passes legislation<br />FCC prepares rules that will implement the legislation<br />Legislation or rules challenged in court<br />
  14. 14. Congressional Process<br />Introduction and referral to committee<br />Considered by committee<br />Public hearings<br />Mark-up sessions<br />Committee votes<br />House floor consideration<br />Resolving differences with Senate version<br />Final passage and signature by President<br />
  15. 15. Rationale for Regulation<br />Clear need for regulation -- otherwise chaos<br />Broadcast spectrum is a public resource<br />Scarcity of the broadcast spectrum<br />Fairness Doctrine<br />Pervasiveness of medium<br />Accessibility to children<br />Little or no warning<br />
  16. 16. Rulemaking<br />Notice of Proposed Rulemaking<br />Comments<br />Promulgate Rule<br />Requests for Reconsideration<br />
  17. 17. Licensing in U.S.<br />8 year license period<br />licensee must serve public interest, convenience and necessity<br />availability of frequency<br />no opposition<br />
  18. 18. Basic Qualifications<br />Technology<br />comply with FCC technical standards--transmission facilities, interference avoidance and signal quality<br />Financial<br />adequate capital -- sufficient funds to operate station for three months without ad revenue<br />
  19. 19. Character<br />lack of serious legal violations (don’t lie to commission, engage in fraudulent programming or commit felonies)<br />Citizenship/Ownership<br />U.S. citizens<br />ownership restrictions<br />
  20. 20. Media Concentration<br />Ownership<br />Quotas<br />
  21. 21. Spectrum Management<br />spectrum allocation<br />band allotment<br />channel assignment (licensing)<br />Berlin International Radio Convention of 1906<br />
  22. 22. FCC Objectives<br />Localism<br />Local control<br />Local programming<br />Diversity<br />Healthy Industries<br />Competition<br />
  23. 23. FINANCIAL INTEREST AND SYNDICATION<br />Finsyn adopted in 1970 to prevent three television networks from restricting market for television programming<br />networks couldn’t have a financial interest in the subsequent broadcasts of programs aired on their stations<br />networks couldn’t syndicate programming<br />networks had to lease programs<br />
  24. 24. over the years the television marketplace changed<br />fourth national network emerged -- FOX<br />cable had also developed<br />1991 rule was relaxed<br />1995 -- finsyn abolished<br />
  25. 25. Media Ownership Rules<br />Always a debate<br />
  26. 26. 2010 Quadrennial Review<br />Congress requires FCC to review media ownership rules every 4 years<br />To determine whether rules in are in the public interest<br />Rules limit number of broadcast stations one entity may own and limits common ownership of broadcast stations and newspapers<br />
  27. 27. Local Television<br />Local television multiple ownership rule.<br />1964 -- one to a market.<br />Rule relaxed late 90’s allow duopolies where 8 independent voices still in market.<br />only one station maybe in top 4 in market<br />
  28. 28. Local Radio Ownership Rule<br />Big market (45 or more stations) -- can own 8 stations, no more than 5 of a kind<br />30-44 commercial stations, can own 7, but no more than 4 of a kind<br />15-29 commercial stations, can own 6, no more than 4 of a kind<br />14 or less, can own 5, no more than 3 of a kind, no more than 50% of the market<br />
  29. 29. National TV Ownership<br />May own stations reaching up to 39% of national audience.<br />When calculating station reach<br />TV stations on UHF channels (14 and above) count less than TV stations on VHF channels (13 and below)<br />
  30. 30. Dual Network Rule<br />None of the following networks may merge: ABC, CBS, FOX and NBC<br />
  31. 31. Media Cross-Ownership<br />In top 20 markets owning a radio station and newspaper is presumed to be okay.<br />San Francisco is a top 20 market, so that will be our focus.<br />In top 20 markets owning a TV station and newspaper okay if<br />TV station not in top 4 in market<br />AND<br />8 major independent media voices remain<br />
  32. 32. TV-Radio Cross-Ownership<br />In markets with at least 20 independent media voices, one may own<br />2 TV stations and 6 radio stations<br />In markets with at least 10 independent media voices, one may own<br />2 TV stations and 4 radio stations<br />Smallest markets – 2 TV and 1 radio<br />local market ownership rules apply<br />
  33. 33. Other Powers of the FCC<br />Warnings<br />Fines (forfeitures)<br />Revoke Licenses<br />Refuse to Renew Licenses<br />Position Papers<br />Informal Negotiations<br />
  34. 34. Advertising<br />False and deceptive advertising prohibited<br />Puffery (exaggerated sales talk) is okay<br />Endorsements must reflect honest beliefs or experience of endorser<br />Federal Trade Commission (FTC) takes action against deceptive advertising<br />
  35. 35. Federal Trade Commission (FTC)<br />Enforcement Powers Against Deceptive Advertising include:<br />Consent Decrees<br />Cease and Desist Orders<br />Corrective Advertising<br />Industry Wide Actions<br />