And there should be specific opportunities for reform at the FCC in this area. I’m thinking of a prospective deal, for example, in which broadcasters could be relieved of these costly sham filings in exchange for spectrum user fees that would add funding to the Corporation for Public Broadcasting, which is purpose-built to serve the public interest in ways that licensed commercial broadcasters obviously are not. The National Association of Broadcasters estimates that stations spend $7 billion annually by donating airtime to support their public interest obligations, a figure that does not include the cost of paperwork filings; even 10 percent of that amount, redirected to the CPB, could remake public media in the United States.
No doubt you and your FCC colleagues can think through the details of such a reform better than I can on the outside, but there is a larger point here. To reconstruct our inherited media policy regime so that it is more responsive to the times in which we live, it will be necessary to re-think the public interest obligation. We don’t need a better system of paperwork and filings; we need a new bargain that spurs the funding of innovation and journalism in the public interest, the kind that commercial journalism may no longer be able to fully support.
What we’ve learned from the sham filings we have now, it seems to me, is that trying to force profit-seeking licensees to tack public interest work onto their commercial enterprises is for the most part a fool’s errand. It would be far more rational to let commercial enterprises respond to market incentives as they see fit, while leaving the construction of public interest journalism to organizations and leaders who want to do nothing else.
The public interest obligation system has been deteriorating for years, while only a handful of policy wonks paid attention. The context in which this embarrassment has been perpetuated has changed, however. That, too, should galvanize the FCC’s attention.
Professional journalism is being gutted in the United States. Newspaper revenues from advertising have fallen by almost half since 2000, according to the Federal Trade Commission’s staff report. Newspaper owners have responded to the decline in revenue by reducing costs, primarily by firing staff, shrinking the amount of column inches devoted to news, and shuttering bureaus and beats. Broadcast network news organizations, too, are implementing buyouts, layoffs, and bureau closings. Newspapers and broadcasters brought some of this pain on themselves, by failing to innovate and ignoring their customers. But to suggest that the evisceration of professional newsrooms today is a consequence of a failure of business leadership, rather than technological change, is like saying that Americans would be riding more horses today if only early twentieth century stable owners had been more foresighted.
The online divisions of newspapers and broadcasters are experimenting vigorously with new paywall and advertising models that they hope will replace a significant amount of the lost revenues from the old business models. Let’s hope they succeed. However, as the FTC staff noted:
There are reasons for concern that experimentation may not produce a robust and sustainable business model for commercial journalism. History in the United States shows that readers of the news have never paid anywhere close to the full cost of providing the news. Rather, journalism has always been subsidized to a large extent by, for example, the federal government, political parties, or advertising.
It would be possible to argue, as our friends at the Cato Institute and other free-market or libertarian organizations surely would, that the old postal subsidies were an error, even though George Washington supported them; that all other forms of direct and indirect government subsidy to journalism were misguided when enacted; and that the best possible policy going forward would be to eliminate all forms of targeted support for journalism in every corner of the federal policy regime. But such arguments are radical and wrong.