The Center for Public Integrity

The greatest concentration of ownership in the radio industry can be found in smaller and medium-sized markets and not in large cities, with broadcast leviathan Clear Channel Communications Inc. by far the most dominant player in America's heartland, according to a new study by the Center for Public Integrity.

The radio ownership survey shows that among the 25 metropolitan areas most dominated by a single radio broadcast company, only Florida's Sarasota-Bradenton area cracks the list of 100 largest markets.

Number one on the ownership concentration list is Mansfield, Ohio, where Clear Channel owns 11 of the metro area's 17 radio stations. Second is Corvallis, Ore., and third is Albany, Ga. Of the 25 markets most heavily controlled by a single owner, Clear Channel is the top owner in 20 of them and Cumulus Media Inc. (the nation's second largest owner of radio stations) controls five.

According to the Center's study, a single company owns nine or more stations in 34 different metropolitan areas. The limit for even the largest markets in the nation, including New York and Los Angeles, is eight stations.

The Center also found that such ownership concentration is not, as the industry has suggested, merely an anomaly limited to a handful of areas. Indeed, in 43 different metropolitan areas across the nation, a single company owns at least a third of all stations, the survey shows.

Bowing to pressure from a powerful member of the House Appropriations Committee, the Federal Communications Commission says it plans to largely eliminate its longtime practice of accepting free travel and entertainment from the communication industries it regulates.

U.S. Rep. Frank R. Wolf, R-Va., who oversees the agency's budget, sent a letter to FCC Chairman Michael Powell in late July asking him to "take steps internally to end this practice." Wolf wrote that the practice "creates a perception of conflict of interest."

Wolf is a member of the House Appropriations Committee and chairman of the House subcommittee that oversees the FCC's budget.

In a response dated August 18, Powell said he would seek an increase of about $500,000 in the agency's fiscal year 2005 travel budget so it could "largely eliminate [industry-funded travel and entertainment] in cases involving those we regulate."

Wolf indicated yesterday he would support an increase. "He's committed to working to provide adequate funding so we don't revisit this problem," said Dan Scandling, the congressman's chief of staff.

In the interim, Powell said he had begun a review of the FCC's travel program to "substantially reduce" industry-funded travel and entertainment and "to guarantee that all travel is necessary to advance the agency's mission."

A quasi-governmental corporation set up to fund telecommunications company start-ups is spending nearly as much on executive salaries and overhead as it is investing in companies, a Center for Public Integrity investigation has found.

The Telecommunications Development Fund was created by Congress in 1996 to kick-start small communications firms in hopes of spurring innovation and competition. Instead, the six-year-old fund has paid more than $7 million in executive salaries and other expenses while investing only $9.4 million of seed money in start-ups.

"It may be totally legal, but it smells to high heaven," says Stuart Gilman, president of the Ethics Resource Center, a Washington group that advises businesses and non-profits on ethics issues. Gilman was a top official at the federal government's Office of Government Ethics from 1988 to 2001.

The fund itself is the bizarre offspring of government and industry. There's even dispute among government officials as to whether it is a government entity subject to public scrutiny or a private company.

The fund gets its money from interest on deposits paid by large telecommunications companies that bid for licenses in spectrum auctions.

There are a number of reasons why the fund is the subject of some concern:

A measure introduced by U.S. Sen. John McCain bans industry-sponsored travel by FCC commissioners and staff, according to a statement from the senator's office.

McCain, chairman of the Senate Commerce, Science and Technology Committee, attached the measure to the FCC Reauthorization Act of 2003 introduced June 13. The Arizona Republican also wants to allocate funds to audit the FCC's troubled "E-Rate" program, used to fund Internet access for schools, and would also impose a one-year lobbying ban on FCC employees.

On May 22, the Center released a report detailing FCC Commissioners and staff received nearly $2.8 million in travel and entertainment expenses over the past eight years, most of it from the telecommunications and broadcast industries that the agency regulates. McCain referenced the information in the report in his statement, addressed to President George Bush.

The bill was co-authored by South Carolina Democrat, Sen. Ernest Hollings.

"Although this is perfectly legal and it is often appropriate for FCC officials and staff to attend such conventions, conferences, or meetings, it should be without the appearance of impropriety," McCain wrote. "Therefore, the bill authorizes the Commission sufficient funds to pay for their own travel costs in the future."

In addition, the bill also sets aside funding for an audit of the E-Rate program. On Jan. 9, the Center reported the $2.25 billion federal programthat helps schools and libraries connect to the Internet was "honeycombed with fraud and financial shenanigans, but the government officials in charge say they don't have the resources to fix it."

The Federal Communications Commission voted along party lines to dramatically loosen rules that restrict ownership of broadcast outlets.

The vote followed "the most comprehensive review of media ownership regulation in the agency's history, spanning 20 months and encompassing a public record of more than 520,000 comments," according to the agency. The Telecommunications Act of 1996 requires the FCC to conduct a biennial rule review, repealing or modifying any regulation it determines to be no longer in the public interest.

The rules were approved 3-2 with the two Democratic commissioners strongly dissenting. Here's what they decided:

Dual network ownership (originally adopted 1946): Commissioners opted to retain a ban on any merger between any of the top national broadcast networks.

Local television ownership limits (originally adopted in 1964): Commissioners dramatically loosened the number of stations an entity can own in a single market. Prior to the ruling, a company could own two stations only if one of the two is not rated in the top four, and there were a total of at least eight independent stations remaining post-merger. Under the new rule:

The nation's top broadcasters have met behind closed doors with Federal Communications Commission officials more than 70 times to discuss a sweeping set of proposals to relax media ownership rules, the Center for Public Integrity has discovered.

The private sessions included dozens of meetings between broadcasters and the agency's five commissioners and their top advisors. A June 2 vote is scheduled on the controversial proposals, which critics fear will touch off a major new round of media consolidation. See a list of the media ownership proposals.

The 71 meetings FCC officials have held with top broadcasters were in stark contrast to the number of private sessions with Consumers Union and the Media Access Project, the two major consumer groups working on the issue. Those two groups have had only five such sessions with commissioners and other agency officials since the proposals first surfaced eight months ago.

Media moguls Rupert Murdoch of News Corp., which owns Fox, and Mel Karmazin of Viacom, which owns CBS, virtually dashed from one FCC office to another for a series of private meetings with commissioners and top staff in late January and early February, as the agency was crafting the controversial proposals.Rather than send their lobbyists to the closed door meetings, many of the broadcasting behemoths who stand to benefit the most from the pending relaxation of the ownership rules have sent their top executives to lobby the agency personally.

When the Federal Communications Commission decides on June 2 whether to dramatically loosen restrictions on media ownership, it will be relying largely on analyses based on proprietary databases not freely available to the public.

The FCC's reliance on non-government, private data is so ingrained that when public interest groups asked for access to data underlying a series of media ownership reports last fall, the FCC relented only after issuing a quasi-judicial "protective order" meant to keep the information secret.

While the FCC has a legal responsibility to protect proprietary data it buys from other sources, an investigation into the data it does acquire raises the question of whether relying so heavily on that information is such a good idea in the first place.

When the Center for Public Integrity was constructing its database of media companies, staff researchers were repeatedly referred by FCC staff to private companies for basic information on ownership, audience reach and cable subscribers. Getting market share information, which is key when reviewing whether broadcasters are within existing FCC regulations that limit the number of households any one owner can reach, was all but impossible without going outside the agency.The agency argues that, in some cases, Congress itself specifies what data should be used to conduct certain studies and that it doesn't make economic sense to collect information already available in the private sector.

Mark Cooper of the Consumer Federation of America creates his own databases to keep track of what's going on in the marketplace. "To me the outrage is that on an ongoing basis they don't do a very good job of making it user friendly," he said. "It's there, but it's almost impossible to find."

Federal Communications Commission officials have been showered with nearly $2.8 million in travel and entertainment over the past eight years, most of it from the telecommunications and broadcast industries the agency regulates, a new study by the Center for Public Integrity has found.

The FCC is preparing to relax several longstanding ownership rules for broadcasters and other media outlets. Those rules are widely credited with preventing the complete takeover of local and national media outlets by huge conglomerates such as Viacom, Tribune Co. and Rupert Murdoch's News Corp. Critics are particularly incensed the commission has held only one official public hearing on the controversial proposals, which are expected to touch off a major new round of media consolidation.

The officials often serve as speakers or panelists at the events, but many times go only as attendees. They often stay for the entire event at glitzy hotels such as the Bellagio in Las Vegas, even though they are only scheduled to give a single speech or serve on a single panel, FCC travel records show.The $2.8 million paid for FCC commissioners and agency staffers to attend hundreds of conventions, conferences and other events in locations all over the world, including Paris, Hong Kong and Rio de Janeiro.

As Federal Communications Commission Chairman Michael Powell mulls over whether the FCC should loosen rules on media ownership, he might want to take a ride through Birmingham, Ala., the town of his birth.

If he flips on his car radio, he will find that of 40 commercial radio stations within a 40-mile radius of the city, 15 are owned by three giant out-of-state companies. (Another eight are gospel or Christian stations.) If he stops at a diner to read the paper and watch the news, he will find that one of the largest private media companies in America owns the Birmingham News and the local cable television system.

For those few people left in the city who receive their television signal over the air, of the four major commercial network affiliates in Birmingham, one is owned by Media General Inc., the second by General Electric, the third by Australian billionaire Rupert Murdoch's News Corp. and the fourth by Allbritton Communications.

A survey of the hometowns of each of the five FCC commissioners by the Center for Public Integrity reveals a heavy concentration of ownership by large, out-of-town media companies in four of them. Only Commissioner Jonathan Adelstein's hometown of Rapid City, S. Dak., is still mostly in local hands.All are huge media companies. None is from Birmingham.

The experience of those who live in the home cities of the commissioners is not unique. Similar situations can be found in virtually every mid-sized and larger market in the nation, the Center discovered.

The Federal Communications Commission has adopted new rules aimed at cleaning up financial fraud and abuse within a multi-billion-dollar program that helps wire schools and libraries to the Internet.

A January 2003 Center for Public Integrity report chronicled widespread fraud and a lack of proper government oversight of the FCC's schools and libraries program, also known as E-Rate. (See the Center report, which drew on documents acquired under the Freedom of Information Act and an FCC Inspector General's investigation.)

Two of the most powerful members of Congress who oversee telecommunications issues—Rep. W.J. Tauzin, R-La, and Sen. Conrad Burns, R-Mont.—announced investigations and hearings on the $2.25 billion a year program soon after the Center report was released. The program is funded by universal service fees, which are paid by virtually anyone who uses a telephone.

Top among the reforms adopted by the FCC were new rules allowing the suspension of contractors convicted of criminal or civil fraud against the program.

Four of the five members of the FCC, including FCC Chairman Michael Powell, said the reforms they approved were "a good first step" in cleaning up the program.