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FCC Eyes an Index for Media Mergers

The formula would be designed to measure the diversity of voices in a local market.

February 10, 2003|Edmund Sanders | Times Staff Writer

WASHINGTON — Deep inside the halls of the Federal Communications Commission, a search is on for The Formula.

It is not a recipe for next-generation fiber optics or a way to stretch the broadcast spectrum. Rather, the elusive calculation, being pursued by a handful of FCC economists, is a simple mathematical solution to one of the agency's most perplexing philosophical debates:

When it comes to media mergers, how big is too big?

As part of an ongoing review of the FCC's media-ownership rules, Chairman Michael K. Powell is offering a reward to the first FCC economist who can bring him an objective scientific formula that will accurately measure the diversity of media voices in a local market. A former antitrust attorney, Powell says he wants something akin to the widely accepted index used by the Justice Department when reviewing whether mergers create a monopoly.

Now, the race is on.

If Powell prevails -- and it's by no means clear that he will -- he could move toward transforming a rancorous legal and social debate that has preoccupied generations of FCC commissions into a simple, neat algebraic equation that is blind to political interpretations and consistently applied. Simply drop in a few numbers based upon the specifics of a local market and let the index tell you whether diversity is strong or weak.

The very idea is quintessential Powell, who has never been comfortable with vague concepts or loose definitions. He once famously called the FCC's public-interest standard an "empty vessel" into which politicians can pour their preconceived notions. As a commissioner, he tried -- without success -- to convince colleagues to embrace a set of guidelines to narrowly define the weighty but subjective standard.

Now the chairman is seeking to bring a similar order and predictability to the concept of diversity, an issue that lies at the heart of the media-ownership debate.

"The chairman has challenged everyone in this process to base the rationale for the rules on empirical evidence and data versus intuition, personal opinion and taste," said Susan Eid, Powell's legal advisor for media issues. "If we could create a diversity index, it would be something that would survive time so that every other commission doesn't have to go through the same intensive fact-gathering process that we are."

Eid and other FCC officials declined to comment on the specifics of a possible formula or just what the reward might be for the clever economist who creates it.

But Powell hinted recently that the agency has "some interesting work going on" to develop a diversity index, based upon data collected from 12 FCC-commissioned studies.

Many are nevertheless skeptical, questioning whether a calculator will ever be the proper tool to determine how big media companies can grow, who can control what Americans see on television or how the public is informed.

"This isn't something that can be figured out to the tenth of a decimal point," said actor Richard Masur, a former Screen Actors Guild president.

"Explain to me how we can quantify something as subjective as diversity or quality.... An index is a fine idea, if you could do it, but one of the reasons we have a commission is so that the members exercise their judgment."

Powell has said the quest for a diversity index was born out of a string of FCC defeats in federal court, which remanded many of the agency's media-ownership rules and ordered the FCC to stop relying on hunch and opinion and come up with some evidence to justify its regulations.

Powell is betting that a scientific formula -- designed to factor in the varying size of local markets, the number and type of media outlets available, and common ownership of different outlets by the same company -- will have the same appeal to the courts that it has to him.

Courts have long held that fostering a diversity of viewpoints and local voices in the media is crucial to the health of the nation's democracy. These judicial decrees form the basis upon which the FCC is empowered to enforce its ownership rules. The rules generally prevent the same company from dominating a local market by owning too many TV stations or controlling both a newspaper and a TV station. (Tribune Co., owner of the Los Angeles Times and KTLA-Channel 5, is fighting to overturn the rules.)

The concept of a cold calculation is based upon the Herfindahl-Hirschman index, or HHI, a long-accepted measure of market concentration that the Justice Department uses to evaluate the potential harm of proposed mergers. The index is based on work performed more than 50 years ago by Orris Herfindahl, a respected environmental economist who died while trekking through Nepal in 1972, and Albert O. Hirschman, a member of the Institute for Advanced Study at Princeton University.

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