Before the Federal Communications Commission Washington, D.C. 20554 In the matter of ) ) 2002 Biennial Regulatory Review – Review of the ) MB Docket No. 02-277 Commission’s Broadcast Ownership Rules and ) Other rules Adopted Pursuant to Section 202 of ) Of the Telecommunications Act of 1996 ) ) Cross-Ownership of Broadcast Stations and ) MM Docket No. 01-235 Newspapers ) ) Rules and Policies Concerning Multiple ) MM Docket No. )1-317 Ownership of Radio Broadcast Stations ) In Local Markets ) ) Definition of Radio Markets ) MM Docket No. 00-244 COMMENTS OF CONSUMER FEDERATION OF AMERICA CONSUMERS UNION CENTER FOR DIGITAL DEMOCRACY MEDIA ACCESS PROJECT Dr. Mark Cooper Gene Kimmelman Director of Research Senior Director of Advocacy and Public Policy Consumer Federation of America Chris Murray 1424 16th Street, N.W. Legislative Counsel Washington, D.C. Consumers Union 1666 Connecticut Ave., NW, #310 Washington, D.C. 20009 January 2, 2003 TABLE OF CONTENTS EXECUTIVE SUMMARY................................................................................................................................................................ 1 PART I: MASS MEDIA AND DEMOCRATIC DISCOURSE.............................................................................................10 I. INTRODUCTION: NARROWING THE LINES OF COMMUNICATIONS ......................................................11 A. THE CALM BEFORE THE STORM ..........................................................................................................................................11 B. LEGAL STANDARDS OF REVIEW .........................................................................................................................................13 C. OUTLINE OF THE COMMENTS..............................................................................................................................................17 II. THE FORUM FOR DEMOCRATIC DISCOURSE V. THE COMMERCIAL MEDIA MARKET...............21 A. THE MEDIA ARE NOT TOASTERS WITH PICTURES.............................................................................................................21 B. DEMOCRATIC DISCOURSE DEMANDS CITIZENS ACTIVE SPEAKERS, NOT JUST PASSIVE LISTENERS OR VIEWERS............................................................................................................................................................................................24 C. NUMEROUS INDEPENDENT VOICES ARE NECESSARY ......................................................................................................27 D. ENTERTAINMENT IS NOT INFORMATION............................................................................................................................29 E. INSTITUTIONAL DIVERSITY PROMOTES VIBRANT CIVIC DISCOURSE ............................................................................31 F. THE NEED TO ENRICH CIVIC DISCOURSE TO PRESERVE DEMOCRACY .........................................................................34 G. THE FOCAL POINT OF POLICIES TO PROMOTE DEMOCRATIC DISCOURSE .....................................................................36 III. EMPIRICAL EVIDENCE ON THE ROLE OF MASS MEDIA IN DEMOCRATIC DISCOURSE........42 A. OWNERSHIP OF THE MASS MEDIA MATTERS A GREAT DEAL......................................................................................43 B. THE MASS MEDIA ARE CRITICAL TO AGENDA SETTING AND INFLUENCING PUBLIC OPINION................................51 C. DIVERSITY IS CRITICAL TO SUPPORTING DEMOCRATIC DISCOURSE..............................................................................56 D. TENSION BETWEEN COMMERCIALISM AND CIVIC DISCOURSE IS CLEAR......................................................................57 E. COMMERCIAL MASS MEDIA UNDERSERVE MINORITY COMMUNITIES AND UNPOPULAR POINTS OF VIEW ..........61 F. NEW COMMUNICATIONS TECHNOLOGIES DO NOT PROVIDE A SIMPLE SOLUTION TO THE PROBLEM OF CIVIC DISCOURSE ........................................................................................................................................................................................65 G. CONCLUSION ..........................................................................................................................................................................70 IV. MASS MEDIA MARKET FAILURES UNDERMINE THE QUALITY OF CIVIC DISCOURSE..........71 A. COMPETITION, DEMOCRATIC PROCESSES AND THE SHORTCOMINGS OF MASS MEDIA MARKETS..........................71 1. The Link Between Competition and Democracy .......................................................................................................71 2. The Tyranny of the Majority: An Economic Theory of Discrimination In Concentrated Media Markets......74 B. THE DISCOURSE IMPLICATIONS OF MEDIA MARKET FAILURE.......................................................................................79 1. Ownership........................................................................................................................................................................79 2. View Points......................................................................................................................................................................82 3. The Watchdog Functions, Externalities and Institutional Diversity......................................................................85 C. EMPIRICAL CONCEPTS OF DIVERSITY IN CIVIC DISCOURSE ............................................................................................91 D. CONCLUSION ..........................................................................................................................................................................94 PART II: THE MASS MEDIA MARKET STRUCTURE....................................................................................................95 V. MAPPING THE TERRAIN OF MASS MEDIA MARKETS.....................................................................................96 A. AN INCREASINGLY DIVERSE POPULATION IN AN INCREASING INTERCONNECTED WORLD ......................................96 B. CIVIC DISCOURSE...................................................................................................................................................................98 C. THE COMMERCIAL MASS MEDIA PRODUCT SPACE ........................................................................................................ 119 1. Television.......................................................................................................................................................................119 2. Newspapers and Radio................................................................................................................................................124 i 3. Multichannel Video......................................................................................................................................................126 4. The Internet....................................................................................................................................................................127 VI. MASS MEDIA NEWS SOURCES: COMPLEMENTS OR SUBSTITUTES .................................................130 A. NEILSEN SURVEY EVIDENCE ............................................................................................................................................ 131 B. THE ECONOMETRIC STUDY OF SUBSTITUTION .............................................................................................................. 136 1. Ambivalent Evidence on the Existence of Substitutability.....................................................................................136 2. Statistical Evidence On The Existence Of Substitution Is Weak...........................................................................137 3. The Small Extent of Substitutability ..........................................................................................................................142 C. IN SEARCH OF SUBSTITUTION AND COMPLEMENTARITY IN THE SURVEY DATA...................................................... 143 D. CONCLUSION ....................................................................................................................................................................... 151 VII. NATIONAL MARKETS................................................................................................................................................152 A. EMPIRICAL MEASURES OF MARKET STRUCTURE .......................................................................................................... 152 B. BROADCAST VIDEO............................................................................................................................................................ 159 C. MULTICHANNEL VIDEO..................................................................................................................................................... 162 D. NEWSPAPERS....................................................................................................................................................................... 165 E. THE INTERNET .................................................................................................................................................................... 168 VIII. LOCAL MEDIA MARKETS .......................................................................................................................................172