This post was drafted with the help of Sean Vitka, Google Policy Fellow at IPR.
On August 20th, the Institute for Public Representation filed a joint reply to the Oppositions to its Petition to Deny seven license assignments contemplated by Gannett’s $2.2 billion acquisition of Belo because the transaction is harmful to the public interest. IPR filed the initial Petition on behalf of Free Press, NABET-CWA, TNG-CWA, National Hispanic Media Coalition, Common Cause, and Office of Communication, Inc., of the United Church of Christ (“Petitioners”). Oppositions were filed by Gannett, Belo, Sander, and Tucker (“Applicants”).
The primary arguments put forth by Petitioners were the following: (1) Petitioners have met their burden to show the deal is harmful to the public interest and Applicants have not rebutted that showing; and (2) the FCC is not required to undertake a rulemaking, as Applicants suggest.
Central to the Federal Communications Commission’s decision in this case is how it applies the public interest standard—a broad concept that includes an analysis of a transaction’s effects on diversity of media voices, competition among broadcasters, and localism.
The Gannett-Belo transaction would harm the public interest by, among other things, severely undermining diversity and competition in local programming, especially local news. For instance, in some markets Sander and Tucker have signed agreements that commit them to, among other things, retaining Gannett to sell all of their advertising, buying programming from Gannett, and/or leasing property from Gannett. Gannett provides these services for a hefty monthly fee and in markets where Gannett already owns another top-four station, a daily newspaper, or both (Phoenix). Moreover, after the transaction closes, the St. Louis and Tucson markets would be highly concentrated through various sharing arrangements made between Gannett, Sander, Tucker, and media companies Raycom (Tucson) and Sinclair (St. Louis).
In their replies, Gannett, Belo, Sander, and Tucker failed to rebut Petitioners’ public interest argument. They instead discount it in favor of relying on the mistaken assumption that if a Commission rule is not clearly violated, the Commission need not investigate the public interest effects of the transaction. To the contrary, the Commission is statutorily required to undertake that investigation. Gannett’s principal (and essentially only) “evidence” that the transaction furthers the public interest is its unsubstantiated assertions about amorphous “economies of scale.” Even if Gannett would achieve scale, the harms to the public interest (diversity, competition, localism) far outweigh those internal benefits.
Applicants also argued that Petitioners are asking the Commission to make a broad-based policy decision through an adjudication rather than the more appropriate, in their view, rulemaking proceeding. As a fundamental principle of administrative law, agencies may make policy by either adjudication or rulemaking. They have done so many times in the past and recently were upheld in doing so by the Supreme Court (Fox v. FCC). Thus, the Commission could, if it chose, establish new policy regarding sharing arrangements through adjudication.
Even if the Commission decides not to do so, Petitioners are simply asking the Commission to enforce the public interest standard in these circumstances because Gannett/Belo’s shared service agreements are particularly harmful to the public interest.
Petitioners hope that the Commission resolves this quickly. The avalanche of media consolidation will continue until the Commission puts its foot down. Petitioners are handing the Commission the opportunity to do just that.