Remarks of Assistant Secretary Irving at the 38th Annual Conference of the Broadcast Cable Financial Management Association

New Orleans, LA
May 19, 1998
Remarks of Larry Irving
Assistant Secretary for Communications and Information
 
and
 
Administrator, National Telecommunications and Information Administration
U.S. Department of Commerce
 
before the
 
38th Annual Conference of the
Broadcast Cable Financial Management Association
 
May 19, 1998
 
New Orleans, Louisiana

 


Introduction
 

First, let me thank BCFMA for inviting me to be here today. As I look at the program for this year's conference, I truly am honored to be among such distinguished speakers. And I am particularly pleased that you have chosen "Growing Together" as the theme for this year's conference.
 

I think it was Dickens who said, "it was the best of times, it was the worst of times" and that line accurately describe's today's television, radio and cable landscape. Stock prices and advertising revenue are up. New technologies, such as the Internet and digital transmission technologies, are extending your reach, changing your demographics, and allowing you to offer new services.
 

You here today are on the front line of these changing times. When your station decides to merge and consolidate, switch to a digital format, or broadcast over the Internet, you help make these decisions and help bring to fruition all the exciting opportunities and possibilities presented by change. And, you also are the first to grapple with the impact such changes have on your company's operations, workforce and bottom line.
 

At NTIA, we, too, are on the front line when dramatic changes take place in the world of communications. Like you, we are excited about the promise of convergence between computer technology and traditional mediums, such as tv, radio and cable. And, while you are busy helping your companies analyze the impact of the latest technological or regulatory change, we at NTIA are busy helping President Clinton and Vice President Gore analyze and assess the impact technological changes have on national policy and the global economy.
 

I'm hear today to talk to you this morning about traditional values, about the potential death of diversity, about my concerns about the loss of localism and about my hopes for the future.
 

And, that takes me back to your conference theme, "Growing Together." Does it mean just growing larger or more vertically or horizontally integrated? Or, does it connote a sense of community; of growing something larger than ourselves? I think then Senator Bobby Kennedy had it right more than 30 years ago when he said:
 

"Even as the drive toward bigness [and] concentration . . . has reached heights never before dreamt of in the past, we have come suddenly to realize how heavy a price we have paid . . . in loss of the values of nature and community and local diversity that found their nurture in the smaller towns and rural areas of America. And we can see, as we enter the last third of the twentieth century, that the price has been too high. Bigness, loss of community, organizations and society grown far past the human scale-these are the besetting sins of the twentieth century, which threaten to paralyze our very capacity to act, or our ability to preserve the traditions and values of our past in a time of swirling, constant change. . . .
 

Therefore, the time has come . . . when we must actively fight bigness and over concentration, and seek instead to bring the engines of government, of technology, of the economy, fully under the control of our citizens, to recapture and reinforce the values of a more human time and place . . .
 

It is not more bigness that should be our goal. We must attempt, rather, to bring people back to . . . the warmth of community, to the worth of individual effort and responsibility . . . and of individuals working together as a community, to better their lives and their children's future . . . if this country is to move ahead

. . . it will not be by making everything bigger, not by piling all our people further on top of one another in huge cities, not by reducing the citizen to the role of passive consumer and recipient of the official vision, the official product."
 
 

Consolidation in Broadcasting

Since the passage of the Telecommunications Act more than two years ago, we all have witnessed a dizzying array of changes in the broadcasting and cable industries. Many of the changes have been positive, but some give us cause to pause.
 

What I am most concerned about is what concentration in the television industry means to Americans and particularly what it means to minority America. Although I'm not an economist, I do understand the importance of economies of scale in order to remain competitive in today's fierce marketplace. But, I am far from convinced that this kind of consolidation is necessary to keep the stations on the air.
 

And, I join FCC Commissioner Susan Ness - who I understand spoke to you last year - in her wariness of efforts to relax the current FCC prohibition against owning two television stations in a market. Because, while I am 100% for efficiency in the marketplace, I am 100% against the death of diversity in the most ubiquitous and powerful mass medium in our country.
 

The greatest amount of activity has been seen in the radio market, where the elimination of checks on ownership concentration has been the most extensive. The pattern in radio is arguably a harbinger of things to come in the television industry, if there is further relaxation of the rules in that arena. According to Radio World, the top ten radio groups in 1997 controlled 1,134 stations. That represents a 74% leap over 1996 numbers. NTIA calculates that at the beginning of 1998, the top 10 radio station group owners operated 11% of our nation's commercial radio stations.
 

What does that mean for the advertising market, for format diversity, for editorial diversity, for localism and for minority ownership of broadcast properties? Two companies provide virtually all the news for Washington, D.C. radio listeners. In just one year after passage of the Telecommunications Act of 1996, the top four publicly-owned groups increased their market share to 28.7% from 17.5% in one year. CBS, Chancellor, Clear Channel and Jacor. In that same one year, the top 20 privately held radio group owners increased market share from 9.2 % to 14.5%. Most analysts predict more consolidation to come.
 

The number of minority owners in the broadcast industry is appalling. Minorities represent more than a quarter of the nation's population. However, since 1990, when NTIA began collecting data on minority ownership of commercial broadcast stations, the totals have remained consistently low - never exceeding 3.1%. In the year after the '96 Act, minority ownership slid to 2.8% of all commercial broadcast properties in the United States. And, in that one year, from 1996 to 1997, minority ownership of FM radio stations dropped 21% from 127 to 100 stations. Most of that decline is directly attributable to skyrocketing prices resulting from the race to consolidate.
 

Now some in the broadcast industry want to create the same level of concentration in the television industry. Television duopoly, cable/broadcast, newspaper/cable...why do they matter? Structural regulations ensure government need not regulate content. Except to protect children, we don't. It is unacceptable for government to censor the broadcast industry. Similarly, however, every American should be concerned if a small oligopoly controls our television or radio industry, determining what every American sees or hears over the airwaves. The broadcast industry is as great as it is because of our commitment historically to localism and diversity.
 

The rampant consolidation - in the communications industry, as well as many other sectors - has triggered a reaction. Recently, the White House announced that it will be forming a high level group to review the wave of corporate mergers throughout American history to determine whether these have been to the benefit or detriment of consumers. My boss, Commerce Secretary William Daley, will be a member of the group.
 

EEO Ruling
 

Another threat to diversity was the decision last month by the federal court of appeals for the D.C. Circuit striking down the FCC's Equal Employment Opportunity rules as unconstitutional. That decision could have devastating results for our country.

When I started my career in the communications field, more than 15 years ago, I was optimistic that the percentage of women and minorities as employed in the broadcasting and cable industries had only one direction to go - up. Since 1971, the FCC EEO rules - predicated upon its statutory mandate to regulate in the "public interest" - have helped raise the percentage of women and minorities in broadcasting from 23.3% and 9.1%, respectively, to last year's figure of 40.8% and 19.9%, respectively.
 

While the numbers still could stand improvement, progress has been made, so that the broadcasting industry's workforce is more representative of the reality of women and minority presence in the larger society. For those of you in the room, whose companies have helped to advance these percentages, I commend you and your leadership. I don't have to tell you about the competitive advantage that diversity brings to your station. You already know that it makes good business sense to diversify your workforce -- that this only helps your company make better marketing, programming and customer service decisions. But, you also know that because of the EEO regulations, you work a little harder at finding women and minorities
 

Why is minority employment important, where did this come from? These regulations result from the Kerner Commission Report on the 60's riots. The Kerner Commission determined the media did not accurately or adequately cover issues of concern to or about minority Americans. Media did not know or understand minority communities. Think about the important perspective female and minority reporters bring to the industry. Bryant Gumbel certainly brought a different perspective, an important perspective, when he served as an anchor on the Today Show. He brought something different than any other anchor before or since. Similarly, Oprah celebrates her gender and ethnicity and has exposed millions of Americans to issues, information and experiences and has broadened understanding about life in this great country. It's a different perspective. Both will acknowledge affirmative action policies helped them get their show.
 

Minority owners come from employment ranks and that matters because minority owners program for their communities. A study released by the California Institute of Technology based on data from more than 7,000 radio stations found a statistically significant positive relationship between minority broadcast ownership and the supply of minority programming. Moreover, the study also found that a minority-owner would most likely provide programming of interest to his or her own minority group. This, to me, is common sense, and why we, as a nation, should be doing more, not less, to ensure diversity in this medium.
 

The FCC's EEO rules are identical for the cable industry. I am concerned that with the D.C. Circuit's ruling hot off the presses, there were some in the cable industry who questioned whether they too could jettison their EEO efforts.
 

It is critical that women and minorities participate in the communications industry, which is the largest growth sector in our economy. Your industry is the engine of democratic thought and must ensure a voice for all Americans. We cannot revert to back the 60's, where many questioned the need for affirmative action. Again, the answer comes from Robert Kennedy:
 

"But if any man claims the Negro should be content or satisfied, let him say he would willingly change the color of his skin and go to live in the Negro section of a large city. Then and only then has he a right to such a claim."
 

Would you be where you are today if you were black or a woman? Would you send your child to the average school a Latino or African American goes to? How would you have fared if you grew up on a Native American reservation? If you honestly believe that all people start on an equal footing and don't require any assistance, then you may be right in believing that there is no need for affirmative action. But, we know that is not the case, and certainly has not been the case, in the communications industry.
 

Digital World
 

While I have serious concerns about what's happening on the ownership and employment front, I am extremely optimistic about how new technologies are going to impact your mediums and provide new opportunities for new entrants, including women and minorities.
 

Every time I'm able to sit in my office in Washington and listen to a jazz radio station in Seattle - via tools such as RealAudio and the Internet - I know this is the best of times. Every time I see a demonstration of highspeed cable modems and hear about their roll-out in a new community, I know this is the best of times. And, every time I think about how close we are to realizing DTV and the possibilities of new services that DTV will bring to millions of Americans, I know this is the best of times. We truly are living in a remarkable era - one that our communications forefathers might have imagined and surely would have loved.
 

To be sure, as the cable and broadcast industries become more involved in the provision of Internet access, Internet telephony and Internet content, and as the industries begin to offer expanded content and data services via its digital spectrum, there will be new opportunities for your companies and other new companies to prosper. Not opportunity to succeed but opportunity to compete. Digital technologies may be the FM of the future.

As convergence presents a whole host of opportunities for your companies, an increasing part of your job will be to help navigate the new responsibilities and opportunities that come with going digital. Ensuring that diversity is not stifled is one responsibility. But there are others, like privacy.
 

As more of your customers turn to your web sites for news and local information or as you contemplate expanding from infomercials into the rapidly growing electronic commerce marketplace -- where over $300 billion goods and services are projected [by Forrester Research] to be traded in the next five years -- how many of your companies have thought about developing a privacy code-of-conduct that is prominently displayed on your web sites informing them on how you intend to use information captured from their "mouse droppings?"
 

Or, as families search for quality, educational programming on the Internet, how many of your companies are thinking of ways to develop such programming and promote it in a way that is easy for families to find?
 

You represent the best communicators and some of the best managed businesses in the world. Your experience in being responsive to the needs of all the communities you serve - whether you work for a national conglomerate or an independent system or station -- will be put to the test, as your company ventures into the digital world and copes with changes in national policy.
 

Conclusion
 

I am confident that, working together, we all can meet the challenges posed by the era of digitalization, consolidation and deregulation. Especially, if we keep in mind that all of our efforts on the national and local front is because of our collective desire to improve the daily lives of Americans. We must never lose the human factor in all that we do. Whether at the Washington level or at the corporate level, we must ensure that our policies make sense for the viewers, listeners and subscribers actually affected by them.
 

During the recent NAB convention, FCC Chairman William Kennard challenged the industry to develop ways to ensure diversity. Through internships, focusing on community, mentoring would-be owners, providing scholarships for talented community youth, there are a myriad of ways to ensure that diversity thrives.

NTIA and the Clinton Administration look forward to working with you to meet all these challenges and welcomes your ideas about how to ensure that broadcasting and cable businesses remain inclusive, continues adherence to the traditional values of localism and diversity as we move into the digital frontier. Working together, we can ensure that "Growing Together" means using this great industry to bring communities together and the American people together.
 

Thank you.