Mississippi Senator Trent Lott said it, “What does the FCC have to do with newspapers?” Today’s FCC vote on the newspaper-broadcasting cross ownership rule should have nothing to do with the financial health of newspapers. The cross ownership rule was not enacted in the 1970’s to protect newspapers, and it is not responsible for the demise of papers across the US. The demise of newspapers is due in large part to substitutes for classified and other advertising, and cro-magnon retrograde politics of the newspaper publishers that prevented the local papers from developing a loyal base of subscribers in their communities. The new rules, proposed by Martin, would be a financial bail-out for a few papers in large markets.
As noted in today’s hearing by Commissioner Michael Copps, newspaper profits are higher than broadcasting profits (not including cable of course, where the profit margin is 50%). This helps explain why a broadcaster might want to buy a ‘failing’ newspaper. A failing newspaper that makes more money than TV, and that is typically an advertising competitor in the local market.
Who will lose in this? Well, local and national business advertisers will lose big time. Advertising costs will rise about 25-30% in those markets. And these costs will be passed on to consumer, ultimately. Small businesses just starting out will face an even higher hurdle as they try to connect with customers.
Martin’s decision to muck about with the rules at the last minute, and the sad statements of support from consumer advocates for these changes, simply further illustrates Copp’s comment that “this is no way to make policy.” But Copps and others are missing the point of this entire exercise, its not about news, its about money, and money is about advertising.