Policy & Economics (Law)


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Policy & Economics (Law)

  1. 1. MEDIA POLICYAND ECONOMICS<br />How the Government Can Impact the Business of an Electronic Media Firm<br />
  2. 2.
  3. 3. 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 />
  4. 4. 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 />
  5. 5. 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 />
  6. 6. Who<br />Government (Communication Policy)<br />Regulatory Authorities (Media Law/Regulations)<br />
  7. 7. 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 />
  8. 8. Communication Policy Players <br />Legislative body<br />Independent regulatory authority<br />Many countries have two<br />Courts<br />President / Prime Minister<br />
  9. 9. 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 />
  10. 10. 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 />
  11. 11. 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 />
  12. 12. 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 />
  13. 13.
  14. 14. Basic Powers of Regulators<br />Licensing<br />Supervisory<br />Rule-making<br />
  15. 15. Regulatory Process<br />Congress passes legislation<br />FCC prepares rules that will implement the legislation<br />Legislation or rules challenged in court<br />
  16. 16. 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 />
  17. 17. 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 />
  18. 18. Rulemaking<br />Notice of Proposed Rulemaking<br />Comments<br />Promulgate Rule<br />Requests for Reconsideration<br />
  19. 19. 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 />
  20. 20. 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 />
  21. 21. 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 />
  22. 22.
  23. 23. Media Concentration<br />Ownership<br />Quotas<br />
  24. 24. Spectrum Management<br />spectrum allocation<br />band allotment<br />channel assignment (licensing)<br />Berlin International Radio Convention of 1906<br />
  25. 25.
  26. 26. FCC Objectives<br />Localism<br />Local control<br />Local programming<br />Diversity<br />Healthy Industries<br />Competition<br />
  27. 27. CASE STUDIES<br />
  28. 28. Carroll Doctrine<br />Financial Interest and Syndication<br />Public Television<br />Telecommunications Act of 1996<br />
  29. 29. The Carroll Doctrine<br />previously economic injury was not sufficient grounds to deny new license application<br />Carroll established that it could deny if loss so significant would deprive the public of service (1958)<br />FCC had to adopt a procedure for assessing economic harm from new licensing decisions<br />
  30. 30. though no licenses were ever denied by a Carroll challenge, did delay licensing and drive up cost of competition<br />after 30 years, FCC re-examined policy<br />found changes in marketplace undermined whatever validity Carroll had had<br />
  31. 31. 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 />
  32. 32. 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 />
  33. 33.
  34. 34. Public Television<br />Founded in 1969 by Act of Congress<br />receives funds (through the Corporation for Public Broadcasting) from Congress<br />
  35. 35. Telecommunications Act of 1996<br />allowed competition for all telecommunications markets<br />eliminated most cross-market entry barriers<br />relaxed concentration and merger rules<br />new implementation obligations on the FCC and state regulators<br />restrictions on television violence and “indecent” online communications<br />
  36. 36. Some results include . . .<br />Increased consolidation<br />Increased vertical integration<br />
  37. 37. Clear Channel<br />owns, programs or sells airtime for 1,200 radio stations<br />240 stations internationally<br />50 syndicated programs<br />another merger: CBS and Viacom<br />
  38. 38. Media Ownership Rules<br />Always a debate<br />
  39. 39. Telecommunications Act of 1996 requires FCC to review ownership rule biennially.<br />Also two federal court decisions striking down some rules.<br />2010, the Commission will open a new phase of a rulemaking proceeding. <br />
  40. 40. Analyze ownership rules<br />To determine if<br />“necessary in the public interest as the result of competition.” <br />
  41. 41. 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 in market.<br />only one can be in top 4 in market<br />
  42. 42. 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 6, no more than 4 of a kind, no more than 50% of the market<br />
  43. 43. National TV Ownership<br />May own stations reaching up to 39% of national audience.<br />Reviewing<br />UHF reach discounted by 50%<br />
  44. 44. Dual Network Rule<br />Top four national broadcast networks may not merge.<br />
  45. 45. Media Cross-Ownership<br />Radio-television cross-ownership possible.<br />Newspaper-television cross-ownership possible.<br />See<br />
  46. 46.
  47. 47. Other Things that Are Good to Know<br />
  48. 48. 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 />
  49. 49. Specific Rules<br />Ownership<br />Concentration<br />Foreign ownership<br />Political Advertising<br />Children’s Television<br />Cable<br />Satellite<br />
  50. 50. More Rules<br />Advanced television (digital; HDTV)<br />Close-captioning<br />Indecency<br />
  51. 51. 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 />
  52. 52. Federal Trade Commission (FTC)<br />Enforcement Powers Against Deceptive Advertising<br />Consent Decrees<br />Cease and Desist Orders<br />Corrective Advertising<br />Industry Wide Actions<br />
  53. 53. Federal Communications Commission (FCC)<br />Regulates amount of advertising in children’s programming<br />12 minutes per hour weekdays<br />10.5 minutes per hour weekends<br />No “program-length” commercials (host-selling)<br />Program separators required<br />
  54. 54. Indecency<br />language or material that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards for the broadcast medium, sexual or excretory organs or activities<br />prohibited between 6:00 a.m. and 10:00 p.m.<br />
  55. 55. Miller Test<br />Average person, applying contemporary community standards, would find that the work taken as a whole appeals to the prurient interest;<br />Work depicts or describes in a patently offensive way sexual conduct specifically defined by the applicable state law; and<br />Work, taken as a whole, lacks serious literary, artistic, political, or scientific value.<br />
  56. 56. Libel<br />Libel -- written<br />Slander -- spoken<br />Some states, broadcast defamation is libel<br />California, broadcast defamation is slander<br />Purpose -- redress for injury to one’s reputation<br />
  57. 57. Privacy<br />Commercial appropriation<br />Intrusion<br />Public disclosure of embarrassing private facts<br />False light<br />
  58. 58. Economic Impact<br />cost of litigation<br />libel insurance<br />
  59. 59. Copyright<br />©<br />
  60. 60. Exclusive Rights under ©<br />Reproduction<br />Derivation (prepare derivative works)<br />Distribution<br />Performance<br />Display<br />
  61. 61. Fair Use Exception<br />Purpose and character of use (commercial or nonprofit educational)<br />Nature of copyrighted work<br />Amount of copyrighted work used<br />Effect of use upon potential market for or value of the copyrighted work<br />
  62. 62. Antitrust<br />Sherman Act<br />Federal Trade Commission Act<br />Clayton Act<br />Hart-Scott-Rodino Act<br />
  63. 63. Sherman Act<br />every contract, combination . . . , or conspiracy, in restraint of trade<br />“monopolize, or attempt to monopolize," trade or commerce<br />
  64. 64. Federal Trade Commission Act<br />unfair methods of competition<br />
  65. 65. Clayton Act<br />prohibits mergers and acquisitions where the effect "may be substantially to lessen competition, or to tend to create a monopoly." <br />
  66. 66. Hart-Scott-Rodino Act<br />requires the prior notification of large mergers to both the FTC and the Justice Department<br />