The Dayton Daily News building.

Opinion: Federal rules threaten local newspapers, not investors

Recently my friend and former colleague from our days together at the Federal Communications Commission, Michael Copps, co-authored, with Dayton, Ohio Mayor Nan Whaley, an opinion piece condemning the FCC’s approval of the sale of dozens of local media properties, including the Dayton Daily News, Springfield News-Sun, and the Journal News, to an entity doing business under the familiar name of Cox Media Group (“CMG”). CMG is backed by Apollo Global Management, a new entrant into the highly competitive media industry that is infusing much-needed capital into the local media space.

When I was a commissioner at the FCC, Commissioner Copps and I worked together on many complex issues. We certainly agree that the people of Dayton and every American community need and deserve high quality local news. But in their opinion piece where they argue that the FCC should have blocked the sale of the Dayton Daily News, and two other papers because of approval required CMG to print the newspapers no more than three days per week, he and the Mayor omitted some key facts.

For starters, the potential reduction in the newspapers’ print schedule is due to the re-emergence of a harmful federal regulation Commissioner Copps has long supported. It’s called the newspaper-broadcast cross ownership ban that was implemented by the FCC in 1975, and it means that a single owner cannot own a broadcast station and a daily newspaper in the same local market. Strong evidence has been submitted to the FCC over the years that proves that this rule accelerated the decline of America’s newspapers. The current FCC in 2017 tried to modernize this misguided rule, but a federal appeals court in September blocked the FCC’s reform. Common Cause, an advocacy group where Commissioner Copps is a special advisor, argued to the court that the newspaper-broadcast ownership ban should be reinstated - an important fact the authors failed to disclose.

Before the court ruled, and while the cross-ownership ban was not in effect, the new company that became CMG filed at the FCC for approval of its transactions. To be clear, CMG never wanted to cut any of the newspapers’ print schedule; it wanted to publish the Dayton newspapers seven days a week as has been the case for 121 years. But while its transaction approval remained pending at the FCC, the court’s decision changed the rules for the worse. With the court’s decision, its only option to see that the print schedule was not affected was to seek out a company specializing in publishing newspapers to propose a sale. Under the regulation reinstated by the court, if CMG were to retain the Dayton newspapers, it would have no choice but to cut the publication schedules to three days a week so that the papers would not be deemed “daily” publications under the rule. Faced with the choice of walking away from a $3.5 billion-dollar deal to purchase several dozen local television and radio stations across the country or reducing the print schedule of the Dayton newspapers to comply with the court-mandated rule against broadcast/newspaper ownership, CMG understandably chose the latter. In short, as the result of a regulation that Commissioner Copps supports, the newspapers will have to shrink unless a new owner that does not own a broadcast station in Dayton can be found.

It is disingenuous for the authors to rail against “private equity” firms and their supposed plans to slash newsroom budgets and harm readers in pursuit of profit. That is not what is going on in Dayton. In fact, through fresh investment capital from Apollo, CMG is bringing new resources to strengthen traditional media outlets that are facing fierce competition from big Internet companies. Producing more local news and information is central to CMG’s plans and key to the future success of its businesses, not the opposite.

All is not lost in Dayton, however. CMG continues to work on solutions that will minimize the disruption to Dayton newspaper readers. Eventually, the Dayton newspapers will be sold to a company that can continue to serve Dayton’s readers by maintaining a daily print schedule. And, thankfully, the FCC recently allowed more time for CMG to find a buyer who is not subject to the harmful regulations.

For the rest of the country, however, the newspaper-broadcast cross ownership ban remains an impediment to investment in local newspapers and the dissemination of critical information to local readers. Only such investment can preserve the local newspapers that have always been American resources. If there is a lesson to be learned from the events in Dayton, it is that the FCC was right in 2017 and this old rule needs to be eliminated as soon as possible.

Robert M. McDowell served as a commissioner of the FCC from 2006 to 2013. He is a partner at Cooley LLP and serves as counsel to Apollo Global Management.

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