Why the FCC Needs a New Chief

Michael Powell's ill-advised efforts to help Big Media united left and right alike. After such a fiasco, resignation is the honorable option

By Thane Peterson

Enough already. Michael Powell should resign as chairman of the Federal Communications Commission. Ever since President Bush named him FCC head in January, 2001 (he had been a minority GOP commissioner for three-and-a-half years under Bill Clinton), Powell has tried to push through new rules that would allow more ownership concentration in American media. His efforts have been a bit like Silent Tom Smith trying to saddle Seabiscuit with a 250-pound jockey.

Powell's No. 1 policy initiative has been repeatedly rebuked. Over the summer, the House of Representatives voted to roll back his regulatory easement. On Sept. 3, a U.S. Appeals Court in Philadelphia blocked Powell's rule changes. And on Sept. 4, a Senate committee joined the House in moving to halt a key part of Powell's plan, which would raise the market share of TV stations that one company can own from 35% to 45% of U.S. households.

Powell has generated unprecedented opposition across the political spectrum, from the conservative National Rifle Assn.. to the liberal National Organization for Women. By the FCC's own count, it has received some 2 million calls, faxes, e-mails, and letters opposing the changes. This is failed leadership.

STAYING PUT.

  An FCC spokesman says Powell has no plans to resign and directed me to a prerecorded appearance on John McLaughlin's TV show One on One, broadcast on Sept. 7. On the show, Powell forcefully reaffirmed that he plans to stay on.

He should reconsider, and if he doesn't, President Bush should ask for his resignation. "He has not appeared efficient or effective," says Mark Cooper, research director of the Consumer Federation of America, which is calling on the FCC to revisit and rewrite its proposed ownership changes. "He hasn't been able to get anything done."

The Sept. 3 Appeals Court decision surprised even Powell's harshest critics. The court still has to decide on the merits of the legal challenge to the rules, which would make it far easier for media giants such as Disney (DIS ), AOL Time Warner (AOL ), and News Corp. (NWS ) to continue expanding into new markets and businesses. Says Celia Wexler, research director of the Washington (D.C.)-based public-interest group Common Cause: "The court understood that if the NRA, NOW, Common Cause, and all the other [disparate] groups oppose the [rules changes], it means there really is a problem."

WORKING VACATIONS.

  This isn't an antibusiness issue. The problem is Powell himself. At best, he has a tin ear for public relations, at worst, he seems to go out of his way to antagonize friend and foe alike. For instance, before the FCC passed the media consolidation changes on June 2, he refused to make public the 250-page FCC document that formed the justification for the move. He also held only one public hearing on the media rules changes. Later, he sought to justify that by saying that public hearings, at about $20,000 each, were too expensive.

Imagine that -- major changes in the rules governing media ownership of newspapers, radio, and TV, and the champion of the effort says a public airing of the merits of the case is too expensive. This rings a tad hollow, given that FCC commissioners and staffers accepted $2.8 million in freebie trips over the last eight years from the industry, according to the Center for Public Integrity, a nonpartisan Washington (D.C.) research organization. The favored destination for these "research" forays: Las Vegas. The trips continued at least through mid-June, the center says, though Powell has since promised to end the practice.

Michael Copps and Jonathan Adelstein, the two Democrats on the commission, were so incensed that they began holding ad hoc hearings around the country on their own (most of which Powell refused to attend). A firestorm of opposition erupted. By Thane Peterson

MASS MAILINGS.

  Powell tends to minimize the breadth of the anger he has stirred up. He isn't giving interviews these days to print media, his spokesperson says, but he said in a recent C-Span appearance that "three-quarters" of the 2 million missives opposing his rule changes were from one group, the NRA, which had its more fervent members each send in five postcards, one to each commissioner. Even if that's true, it means 300,000 NRA members opposed the issue, as well as 500,000 non-NRA-ites.

That's probably more opposition than the FCC has ever gotten before. It typically gets about 5,000 calls and letters on controversial issues, the FCC says.

Powell never mentioned the outpouring of calls and e-mail aimed at members of Congress. Common Cause and MoveOn.org, an Internet-based liberal advocacy group started by two Silicon Valley entrepreneurs, each say 300,000 people griped to their senators and representatives via their Web sites. MoveOn also collected 207,500 signatures on a petition to stop the FCC.

TIPPING THE SCALES.

  One reason for public anger is the shoddiness of the FCC's research. Powell proudly noted in his C-Span appearance that the FCC studied the issues for 20 months and did "12 empirical studies" of  media concentration before coming up with its new rules. Trouble is, most of the FCC studies were so poorly designed and inconclusive that they don't illuminate much of anything (see BW Online, 5/30/03, "Stop the FCC's Covert Operation").

Just as poorly thought-out is Powell's new "diversity index." In an attempt to assuage critics who fear the new rules will squash local news coverage, Powell came up with a scale that purports to measure to measure "news diversity" in various markets. But an analysis by the Consumers Federation and the Consumer's Union (publisher of Consumer Reports magazine) found it full of "flawed analytic thinking" and "riddled with internal contradictions."

For instance, the consumer groups note that in the Tallahassee (Fla.) area, the proposed FCC index gives the suburban Thomasville Tribune newspaper (circulation 10,000) equal weight to the Tallahassee Democrat (circulation 50,000), and twice as much weight as the local CBS affiliate, which has 50,000 viewers per day and 59% of the local TV market. In the New York City area, Shop at Home Inc., the Dutchess Community College TV station, and Multicultural Radio Broadcasting, owner of three small local radio stations, each counted for more than The New York Times.

POPULIST GROUNDSWELL.

  Even without the relaxed rules, big media just keeps getting bigger. Both Viacom (VIA ), which owns CBS, and News Corp., which owns Fox, already surpass the FCC's cap on TV station ownership. The FCC gave them a waiver pending passage of its new rules. And the media-consolidation boom shows no sign of abating. Witness NBC-parent General Electric's (GE ) bid to buy Vivendi's (V ) media assets, which include Universal Studios (see BW Online, 9/5/03, "Why GE Went for a Little Glitz"). The media behemoths still hope to beat back opposition with a big-buck ad campaign and the slogan, "America Says: Don't Get Between Me And My TV."

That won't wash. The populist groundswell, from both the left and the right, against greater media concentration is real. And leaders of both parties have good reason to oppose the FCC's plans. "Politicians fear that it will give the media even more leverage over them," says Joseph Turow, a professor at the University of Pennsylvania's Annenberg School for Communication.

So, to recap: Powell refused to make a public case for the merits of his proposal. Then, he skewed the data to try to fool people. Plenty of other telecommunications policy experts have the political skills to handle the FCC job less contentiously than Powell. He should leave, before he's shown the door.

Peterson is a contributing editor at BusinessWeek Online. Follow his weekly Moveable Feast column, only on BusinessWeek Online

Edited by Douglas Harbrecht

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