REMARKS OF FCC COMMISSIONER ROBERT M. McDOWELL
MEDIA INSTITUTE LUNCHEON
FOUR SEASONS HOTEL, WASHINGTON, D.C.
November 19, 2007
As prepared for delivery
Thank you for having me here today.  Many thanks to Dick and Patrick for 
inviting me.   When I agreed several months ago to speak here, I didn’t realize just how 
timely my visit would be.  Patrick and Dick must have been clairvoyant to have known 
last summer that I’d be speaking just a few days after Chairman Martin released his de-
regulatory idea for softening of the newspaper/broadcast cross ownership ban, and at the 
same time, laying the foundation for unprecedented regulation of the cable industry.  If 
this were a classic novel, it might be entitled, “A Tale of Two Regimes.”  It is the best of 
times, and it is the worst of times.  Maybe newspaper publishers and smaller broadcasters 
in the top 20 markets feel as though it could be the best of times (well, at least since 
1975).  But maybe not; they don’t seem too excited by the Chairman’s proposal.  The 
cable industry says it is the worst of times.  But their critics are saying that they aren’t 
facing any competition, so they should stop their bellyaching.  Perhaps they’d prefer the 
classic title “Hard Times.”  And I don’t know if it’s true, but I’ve heard that a graffiti 
artist emblazoned across NCTA’s door the motto: “the beatings shall continue until 
morale improves.”
Anyway, here we are just a couple of weeks before some Congressional hearings 
on these matters, and only a few days before some big votes. The debates are reaching a 
fever pitch and we have before us tinder boxes of controversy.  I’m not here today to 
spark a firestorm.  I’m too late.  That has already happened.  The flames are rising, and 
2
the heat is on.  But I’m hoping that cooler heads will prevail.  So, today I’d like to give 
you my perspective on these proceedings.  Let’s look at how we got here, the process of 
the past several months, and what Congress and the courts have told us to do.  But first, 
let’s look at the concept of competition, which is at the heart of all of these decisions.
In the business context, Webster’s Dictionary defines “competition” as a, “rivalry 
between two or more businesses striving for the same customers or market.”  Increased 
competition among newspapers, broadcast radio and television, cable television, satellite 
radio and TV, and the Internet have all been cited by many, including the Chairman, over 
the years as the evidentiary basis for updating or eliminating the newspaper/broadcast 
cross ownership ban.  These media, he maintains, are all competing for the attention of 
the same customers and, therefore, advertising dollars.  
At the same time, however, he is asserting that the cable industry, and the cable 
industry alone, is facing less competition and should be subject to more regulation.  This 
is a radical departure for the Commission – a departure being made without sufficient 
chance for public comment.  In fact, just last year, the FCC determined that cable 
subscribership was at about 60% penetration.  Nielsen and Kagan numbers support this 
figure.  According to the vast majority of other analyses, the cable industry’s share of 
video customers has declined steadily in recent years.  In fact in just the last year, six of 
the largest cable operators lost nearly 200,000 video customers.  These are figures that 
cable companies have to report under the Sarbanes-Oxley Act, so presumably they are 
accurate -- seeing as how prison time could otherwise be involved.  In the meantime, the 
two satellite companies, DirecTV and EchoStar, gained 1.8 million customers in the last 
year and are now the second and third largest multichannel video program distributors.  
3
AT&T, Verizon and other incumbent telephone companies, are now also competing for 
video customers.  Verizon is rapidly approaching 1 million video subscribers.  
 But now the Commission is proposing to throw out that data and insert new 
studies from Warren Communications even though Warren Communication’s Managing 
Editor says that his figures “aren’t well suited” for determining whether the 23-year-old 
70/70 rule has been triggered.  He says he had no idea that the information he provided to 
the mysterious FCC staffer who requested it would be used for such purposes.  And, had 
he known, he said he would have used footnotes and caveats to put his study in the proper 
factual and analytical context.  All of this uncertainty is precisely why Commissioner 
Tate and I sought more data to illuminate this mysterious development. 
I have a lot of questions that need answering.  Why is the FCC suddenly changing 
its evidentiary standard and methodology just for this one industry?  How will this abrupt 
and radical departure affect other analyses and proceedings?  Doesn’t this shift weaken 
arguments for updating the cross ownership ban?  Does our proposed change affect our 
analysis of the proposed XM-Sirius merger?  How do we reconcile decades of data 
showing more convergence and more competition among more delivery platforms with 
this sudden reversal?  I am searching for credible answers to these and many other 
questions—thus far to no avail.
But let me get back to the original topic of this now verbose speech: media 
ownership.  In contrast, we are rushing toward a decision in media ownership the way a 
slug races across a garden. Let’s review the procedural history.
4
The current proceeding began at my first open meeting as a Commissioner, 17 
months ago.  This proceeding has been unprecedented in scope and thoroughness.  We 
gathered and reviewed over 130,000 initial and reply comments and extended the 
comment deadline once.  We released a Second Further Notice in response to concerns 
that our initial notice was not specific enough about proposals to increase minority and 
female ownership of stations.  We gathered and reviewed even more comments and 
replies in response to the Second Notice.  We traveled across our great nation to hear 
directly from the American people during six field hearings on ownership in: Los 
Angeles and El Segundo, Nashville, Harrisburg, Tampa-St. Pete, Chicago, and Seattle.  
We held two additional hearings on localism, in Portland, Maine and here in our nation’s 
capital.  In those hearings, we’ve heard from 115 expert panelists on the state of 
ownership in those markets and we’ve stayed late into the night, or early into the next 
morning, to hear from concerned citizens who signed up to speak.  
We also commissioned and released for public comment ten economic studies by 
respected economists from academia and elsewhere.  These studies examine ownership 
structure and its effect on the quantity and quality of news and other programming on 
radio, TV and in newspapers; on minority and female ownership in media enterprises; on 
the effects of cross-ownership on local content and political slant; and on vertical 
integration and the market for broadcast programming.  We received and reviewed scores 
more comments and replies in response.  Some commenters did not like the studies and 
their critiques are part of the record.
So, during my entire term as a Commissioner, we have been reviewing this 
matter.  But our review didn’t begin last year.  The previous round began in 2002.    At 
5
that time, the Commission received thousands of formal comments and millions of 
informal comments.  The Commission held four localism hearings across the country to 
gather additional evidence.  The FCC also produced twelve media ownership working 
group studies.  We all know that the 2002 review ended badly for the Commission – with 
both the legislative and judicial branches reacting through a Congressional override of the 
national ownership cap, and a reversal and remand from the Third Circuit in the 
Prometheus case.  By the way, while the court threw out almost all of the Commission’s 
order, it concluded that, “reasoned analysis supports the Commission’s determination that 
the blanket ban on newspaper/broadcast cross-ownership was no longer in the public 
interest.”   
But our story didn’t begin in 2002 either.  In 2001, the FCC issued a rulemaking 
focused on the newspaper-broadcast cross ownership ban – a concept that has been 
around since at least 1975.  Comments and replies were gathered there too.  That 
proceeding sprouted up as the result of a June 2000 report from a Democrat-controlled 
FCC, which found that the ban may not be necessary to protect the public interest in 
certain circumstances.  That report was the result of yet another proceeding, which 
commenced in 1998.  The 1998 proceeding stemmed from a 1996 proceeding; which was 
sparked by legislation; which was engendered by an overwhelming and bi-partisan vote 
of a Republican-controlled Congress and signed into law by a Democrat President.
In my 17 years of being in and around the FCC, I can’t think of any issue that has 
been examined more thoroughly.  I can’t remember any proceeding where the
Commission has solicited as much comment and given the American people as much 
opportunity to be heard.  If anyone knows of an FCC proceeding where there has been 
6
more opportunity for debate over an 11-year period, please let me know.  I just hope the 
Commission doesn’t fumble the procedural ball now that it’s fourth down and goal.
One of the many things I have learned during my adventure at the FCC is that 
opponents of any further de-regulation have been far more vocal and organized than 
proponents of more relaxed rules.  In fact, while broadcasters have prioritized their 
opposition to the XM-Sirius merger and the use of TV white spaces over their advocacy 
for relief under media ownership rules, their opponents have skillfully recast the debate 
into whether old and new media should live under additional regulations, not fewer.  In 
the meantime, at our hearings, witnesses on behalf of broadcasters prefer to discuss the 
positive contributions broadcasters make to their communities rather than the competitive 
threats they may face that might warrant deregulation.  Don’t get me wrong, 
broadcasters’ community involvement and support are beneficial endeavors.  But the 
legal question before us involves some measurement of the competition faced by 
broadcasters.  Much of their oral testimony fell short of shedding light on that subject.
Fortunately, the voluminous written record is considerably more data-rich and 
offers a more dispassionate discussion of the facts.  The public hearings have been a 
better measurement of emotion than dispassionate data; but they have been very valuable.  
At a minimum, they have provided our fellow Americans with the chance to vent their 
frustration with the federal government.  We have been yelled at about the Iraq war, 
global warming, the tyranny of America’s copyright laws, and the need to legalize drugs, 
among other topics.  And then there was the fellow in Los Angeles who had a very strong 
opinion about the Peloponnesian War.  Now, I don’t mean for this to sound like a cop-
out, but that was before my time at the Commission.  But in all seriousness, I’ve greatly 
7
valued hearing directly from the thousands of people who have traveled to these hearings, 
often on short notice.  While we have been the object of a great deal of anger, being on 
the frontlines of democracy in this way has deepened my love for our country and its 
diverse peoples.  We are truly the greatest nation on earth.
But, a point that gets lost in the emotion over these issues is that the directly 
elected representatives of the American people, the Congress, enacted a statute that 
contains a presumption in favor of modifying or repealing the ownership rules as 
competitive circumstances change.  Section 202(h) states that we must review the rules 
and “determine whether any of such rules are necessary in the public interest as the result 
of competition.  The Commission shall repeal or modify any regulation that it determines 
to be no longer in the public interest.”  This section appears to upend the traditional 
administrative law principle requiring an affirmative justification for the modification or 
elimination of a rule, and it is crucial for everyone involved in this debate to recognize 
this important presumption.
But before I go further on this point, just a reminder, and full disclosure: both of 
my parents were print journalists.  My father, Bart McDowell, was a senior editor of 
National Geographic Magazine.  He met my mother, Martha Shea McDowell, after 
World War II at the University of Missouri’s famed School of Journalism where she was 
on the faculty.  She went on to become a reporter for the Chicago Daily News at a time 
when almost no women held such jobs.  She went on to work for the Washington Post
and was there when the cross ownership ban went into effect.  So I found it especially 
remarkable, when I was sorting through her estate - after she passed away in 2005 - to 
find a book entitled The Fading American Newspaper.  I’ve read through it and I’ve 
8
come across some timely quotes.  Here’s one: “As journalism migrates into new areas of 
communication, its practitioners, too, are on the move.  The commerce in information 
flourishes and quickens its tempo, new skills are developed, and the major problem for 
the newspaper journalist is to keep his readers from migrating, too.”  So when was this 
book written?  2005?  1975?  No, it was written in 1960.  Its author is Carl Lindstrom 
who was executive editor of the Hartford Times and a journalism professor at the 
University of Michigan.   But the point is that there is not a general concept before us in 
this proceeding that hasn’t been debated for decades.
Even though the newspaper industry was already facing challenges in 1960, it has 
undergone dramatic change in the 32 years since the newspaper-broadcast cross 
ownership ban went into effect.  Now we have five national networks, not the three I 
grew up with.  Today we have hundreds of cable channels spewing out of a multitude of 
video content produced by more, not fewer, but more entities than existed 32 years ago.  
In 1975, cable was in its infancy and had yet to develop programming.  Now we have 
DBS, telephone companies offering video, cable overbuilders, the Internet and its 
millions of websites, iPods, satellite radio, cell phones, Wi-Fi, video-on-demand, digital 
video recorders, pay-per-view, etc. There is no disputing that the marketplace has been 
transformed by technological advances and business innovations into the most 
competitive multimedia environment in human history.  Consumers have more choices 
and more control over what they read, watch and listen to than ever.  As a result, at least 
300 daily newspapers have gone out of business in the last 32 years because people are 
looking elsewhere for their content.  Newspaper circulation has declined year after year.  
Since just this past spring, average daily circulation has declined 2.6%.  Newspapers’ 
9
share of advertising revenue has shrunk while advertising for online entities, which are 
not subject to cross ownership restrictions, has surged.  Is the cross-ownership ban still in 
the public interest, or is it a millstone around the neck of a drowning industry?  The 
statute demands an answer.
Has this new era of competition been helpful or harmful to localism and 
diversity?  Audiences seeking news, local information and entertainment are more 
fragmented than ever before.  But combinations allowed by the 1996 Act have occurred.  
What these changes mean for localism and diversity remains an unanswered question.  
On the one hand, some argue that combinations that may have been dangerous to 
diversity in 1975 are no longer any threat due to the existence of an unlimited number of 
delivery platforms and content producers.  Not only are there more hoses to deliver the 
information, there are more spigots to produce the information.  On the other hand, most 
people still rely primarily on television broadcasts and newspapers for their local news 
and information.  With local broadcasters and newspapers still producing a large share of 
local online content as well, are there really more diverse sources of local journalism than 
before?  All of us must handle this question with great care.
That question begs yet another question that is vexing to me: what can the FCC 
do to promote ownership among people of color and women?  Many positive ideas put 
the Commission into a legal vice grip, with Supreme Court prohibitions against race-
specific help on one side, and a lack of statutory authority for doing much more on the 
other side.  Like it or not, whatever the FCC or Congress does must withstand 
constitutional muster.  The strict scrutiny standard adopted by the Supreme Court in 
Adarand v. Pe??na applies to all racial classifications imposed by the federal government. 
10
It is a difficult standard to satisfy.  Like it or not, post-Adarand, regulators have to walk a 
constitutional tight rope when considering how to define the class that should benefit 
from policies intended to encourage ownership diversity.  Adopting rules that would be 
struck down on appeal would only provide false and fleeting hope to the very people the 
rules were intended to help.  So let’s focus on the possible -- and the legally sustainable.
One of our ownership studies (Study #7) finds that women and people of color are 
clearly underrepresented in the radio, TV and newspaper industries – no surprise there, 
sadly.  But it also finds that this pattern holds across a broad sampling of industries at 
relatively similar rates, so that the radio, TV and newspaper businesses are not unique.  
The study also finds that access to capital is the primary cause of under-representation.  
Or, to quote Jack Kemp, “you can’t have capitalism without capital.”  Accordingly, the 
study recommends several improvements to the FCC data collection process to track race 
and gender in ownership.  Gathering better data could easily be fixed.  Putting incentives 
in the right place so that it’s in the economic interest of businesspeople to solve the 
access to capital problem?  Not so simple.
The most promising idea may be renewal of the tax certificate program, which 
permitted deferral of gain realized upon the sale of a broadcast station to a minority-
owned or controlled entity.  It was successful in increasing the number of minority 
owners.  During the program’s lifespan, 364 tax certificates were issued for transactions 
involving sales to minorities: 290 radio, 43 television, and 31 cable television.  But it was 
repealed in Congress by an overwhelmingly bi-partisan vote in 1995.  Today, Chairman 
Rangel’s bill to restore it allows for a tax deferral of up to $50 million from a sale to 
small businesses that own 10 or fewer broadcast stations.  Chairman Rush’s bill permits a 
11
taxpayer to exclude from gross income some of the gain for a sale to an eligible 
purchaser, such as an economically and socially disadvantaged business.   While our role 
at the Commission is not to lobby for any particular legislation, I am encouraged that 
Congress is considering tax incentives to bolster minority ownership.  Putting the 
incentives in the right place so that sellers have an economic interest to sell stations to 
minorities or small businesses may be the most effective means of increasing minority 
ownership.  
But here we are, in the middle of another public comment period.  Soon the 
Commission might be testifying before both Houses of Congress.  Further deliberation 
ensues.  While the FCC races ahead like “a runaway glacier,” as one analyst put it, the 
private sector has been busy working around the regulations of yore.  Is it any wonder 
that most of the energy, creativity, capital and growth have been focused on areas that are 
less regulated?  The ironic truth is: in many cases, media consolidation has actually 
become media divestiture.  Companies such as Disney, Citadel, Clear Channel and Belo 
actually have been shedding properties to raise capital for new ventures.  They are 
directing new capital investment toward new media ventures.  That’s where America’s 
eyeballs are looking; so that means that’s where the ad dollars are flowing.  The 
Hollywood writers’ strike is all about the concept of following the eyeballs and ad 
dollars.  For instance, over one-third of Americans go online to get their news.  That 
number is growing.  Traditional media’s numbers are shrinking.
While heavily-regulated newspapers and broadcast properties decline, unregulated 
new media is in its ascendancy.  This new frontier is especially promising for people of 
color and women.  The rise of so-called “niche” markets is benefiting people who have 
12
been underserved in the past.  The low barriers to entry and low capital requirements to 
get started have spawned a plethora of minority and women oriented new media outlets 
such as: NetNoir.com, a minority owned online destination that connects people 
interested in African American culture and lifestyle; or iVillage.com, which provides 
daily hot topics for women; or Women’s eNews.com, an online source for news and 
perspectives of particular concern to women. The exciting news is that all Americans 
will benefit from this new paradigm because new technology empowers the sovereignty 
of the individual regardless of who you are.  While this new era is in its infancy, and we 
have a long way to go before it matures, I am confidently optimistic that the media 
ownership debates of the early 21st Century will fade into obscurity as technology and 
competition advance.
Thank you again for inviting me here today.  Please have a happy Thanksgiving.  
And I look forward to taking your questions.