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Fact and Fancy in Television Regulation

Fact and Fancy in Television Regulation: An Economic Study of Policy Alternatives

Copyright Date: 1980
Published by: Russell Sage Foundation
Pages: 524
  • Book Info
    Fact and Fancy in Television Regulation
    Book Description:

    How diverse can, and should, TV programming be? And especially, in what precise ways does governmental regulation of TV affect (or fail to affect) the programs station owners produce-programs which, in the final analysis, shape in such large measure the values of Americans? It is to these timely and beguiling questions that Harvey Levin addresses his dispassionate assessment of the complex relationship between government and the TV industry. Analyzing data drawn from the history of the FCC's regulatory decisions, as well as from interviews with numerous government and industry officials, Professor Levin shows how the present form of restrictive governmental regulation almost always results in higher profits and rents for TV stations, with no concomitant increase in programming diversity.

    In addition, Professor Levin investigates various other aspects of the media market, from the particular kinds of crucial decisions that are made when, for example, a newspaper owns a TV station, to the kinds of problems that arise when commercial rents are taxed to fund public TV; from the brand of programming we are offered when a monopoly controls a given TV market to the nature of programming in a situation of steady and fair competition. Following a comprehensive assessment, the author makes a compelling case for diversification of station ownership, in order to be "safe rather than sorry." He also argues for the entry of new stations, more extensive support of public TV, and some form of quantitative program requirements-all of which will help bring about greater program diversity.

    Professor Levin's volume provides us with a fully documented and sharply focused analysis of the theories, policies, and problems of one of the most powerful and misunderstood of contemporary institutions.

    eISBN: 978-1-61044-351-7
    Subjects: Political Science, Law, Sociology

Table of Contents

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  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-x)
  3. Tables
    (pp. xi-xv)
  4. Acknowledgments
    (pp. xvi-2)
    H. J. L.
  5. Chapter 1 Scope and Method
    (pp. 3-22)

    THIS BOOK examines the licensing of television stations. In particular, it addresses the stated objectives and actual results of the licensing policy and practices of the Federal Communications Commission. The inquiry, then, is a case study in regulatory effects and policy alternatives. My procedure will be, first, to identify the relevant regulatory goals, at least those that frequently appear in regulatory, legislative, and judicial pronouncements, though not necessarily reflected in sustained FCC policies; second, and most important, to measure the divergence of these stated goals from actual licensee performance; third, to explain these divergences; and fourth, to consider alternative ways...

  6. PART I Basic Framework

    • Chapter 2 Economic Structure and Regulatory Framework
      (pp. 25-51)

      THE U.S. broadcast system is composed of several related segments. Hardware companies manufacture the receivers, set owners watch the programs and buy the products advertised, and stations transmit the programming. National or specialized network companies, independent program producers, and the stations supply the programs. Advertisers provide the basic support for programs, buying time for commercial announcements, to reach specified markets, or over chains of stations. Network companies integrate stations into nationwide systems, mainly through leasing the microwave and cable links from the American Telephone and Telegraph Company in order to tie together their affiliates. Periodicals and newspapers supply information regarding...

    • Chapter 3 The Concept and Measurement of Diversity
      (pp. 52-101)

      PROGRAM DIVERSITY, loosely defined, has long been a professed objective of federal broadcast regulation. It is, accordingly, a cogent yardstick by which to evaluate current or proposed regulatory policies. However, diversity is often conceived ambiguously, and rarely measured empirically.¹

      The purpose of this chapter is therefore twofold: first, to specify and distinguish several kinds of diversity—in program options, program types, and sources; second, and foremost, to measure the relative impact of options diversity and types diversity on aggregate audience behavior. Briefly, the task is to determine whether the typology used in this book to measure type diversity is entirely...

    • Chapter 4 Origin and Incidence of Economic Rents in Broadcasting
      (pp. 102-136)

      BY “rents” we refer to payments to any factor of production in excess of the “minimum earnings necessary to induce the particular unit of it to do its work”—that portion of the payment made for use of a unit of a resource, over and beyond the amount necessary to ensure its utilization for the class of purposes at hand. Rents arise because of artificial limits on access to, or scarcity of, resources, or both. That is, one must distinguish between natural physical or technical limitations on one hand, and, on the other, limitations due to law, administration, or to...

    • Chapter 5 Objectives versus Results in Federal Broadcast Regulation
      (pp. 137-160)

      I HAVE now laid out two concepts, the diversity goal and the economic consequences of license limitation, which constitute the principal components of regulatory assessment in this book. Before turning to that task in later chapters, I first offer here a broad overview of the degree to which regulatory objectives and results converge. I do so fully mindful of the complexities encountered in defining and measuring the diversity goal in chapter 3, and economic rents as regulatory side effects, in chapter 4.

      From the very outset a major stated objective of broadcast regulation has been to sustain a diversified and...

  7. PART II A Critique of Current Policies

    • Chapter 6 The Policy on Ownership Diversity
      (pp. 163-208)

      WITHIN the frame of reference developed in the preceding chapters of Part I, the next six chapters will appraise key FCC policies that relate to owner diversity, structural diversity, and network-affiliate relations. The purpose of this chapter is to assess two major policies on owner diversity alone—that is, one relating to cross-media ownership, and the other to nonnetwork group ownership. My plan is to first describe the objectives of these basic licensing policies, and then to assess their effects on a large number of economic and programming variables, at the station and market levels (for 1967). In the following...

    • Chapter 7 The Cross-Ownership Proceeding: A Case Study In Factual Deficiencies
      (pp. 209-240)

      SO MUCH, then, for our quantitative assessment of effects of the policy to diversify station ownership. In assessing the efficacy of one part of that policy—a proposed newspaper rule—special attention will now be paid to seven issues: (1) its probable consequences for diversity and program composition, and in particular for cultural, informational, and local service; (2) its further effects on the alleged cross-subsidization of newspaper-owned TV subsidiaries; (3) the use of phased-in divestiture rather than forfeiture via nonrenewal, to minimize licensee distress; (4) the existing adequacy of “multiple voices” in individual communities as an effective safeguard of diversity;...

    • Chapter 8 Structural Diversity, Owner Diversity, and the Role of Public Television: A Comparative Assessment
      (pp. 241-275)

      THE present chapter will consider the relative impact of structural diversity, owner diversity and, more briefly, public television as alternative (and supplementary) approaches to insure content diversity as herein conceived.

      I start by describing the FCC’s policy on structural diversity with special reference to new station entry. Then, in the next section, I briefly compare the impact of this policy with that of owner diversity, as examined in chapters 6 and 7. In conclusion, I compare the above with the impact of public television on program composition and diversity.

      The policy for promoting new entry has normally taken two forms:...

    • Chapter 9 Alleged Bases of National Television Network Power
      (pp. 276-297)

      NETWORK TELEVISION has from the outset been an oligopoly, with three firms accounting for all network time sales since 1955, and the bulk of network national spot time sales as well. Until recently, two “majors” (CBS and NBC), dominated the third company. Rising time sales and profitability have not however elicited new network entry, in large part because of the scarcity of comparable facilities and economic factors at work in the network-affiliate relation.

      Because of limited opportunities for promoting more competition among the national TV networks, the commission has repeatedly sought to insure competition between them and other industry components....

    • Chapter 10 The Limits of Network Regulation
      (pp. 298-322)

      THE present chapter will examine the comparative performance of network affiliates, network-owned (key) stations, and independents. It does so, finally, with an eye on whether the present complex of rules, practices, and industry economics together act to further, or impede, attainment of such goals as localism, competition, and diversity.

      In particular, the issues under review are, first, whether network affiliates do indeed earn significantly more than independents when other major factors are taken into account, and, if so, whether superior affiliate earnings result in larger amounts of informational programming, and in greater types diversity generally. Hence my analysis is directly...

    • Chapter 11 Objectives versus Consequences in Prime-Time Access
      (pp. 323-340)

      AT THE OUTSET of chapter 9, mention was made of the pivotal importance FCC has for many years given prime-time access to the network system by nonnetwork program suppliers and advertisers. We saw there that the network affiliates’ preponderant airing of evening network shows was better explained by the program cost savings they thereby enjoy, and possible leverage the networks derive in the largest markets, where stations exceed networks, than by the value of adjacent time slots to advertisers. Prime-time access is a much debated mechanism through which regulators have purported to delimit, and eventually pare back, the blanketing by...

  8. PART III Assessment of Selected Alternatives

    • Chapter 12 A Note on the Regulatory Implications of Scarcity Rents in Television
      (pp. 343-348)

      THE EVIDENCE so far expounded strongly suggests that FCC licensing and allocation policies have more often operated to bolster industry profits and rents than to channel them into local, cultural, or informational service. These divergent effects call into question whether regulation has been able to induce broadcasters to invest more in less remunerative (merit) programming than otherwise, as aquid pro quofor the valuable privileges they enjoy.

      The rents which licensing and allocation policies have created, that is, appear to have remained with commercial licensees as a group, whereas their distribution is shaped by the pattern of market trading...

    • Chapter 13 Quantitative Program Requirements
      (pp. 349-384)

      THE RASH of renewal contests and petitions to deny which followed the commission’s failure to renew the license of station WHDH in 1969 has posed a difficult administrative task: to devise procedures that reconcile the stimulus of potential challenges with the industry stability essential to adequate informational and diversified programming generally.¹ It is within this context that the proposal for quantitative requirements must be carefully assessed.

      In its 1970 Comparative Renewal Policy Statement, the commission stipulated that a demonstration of “substantial” service would insure renewal in the face of a competing contestant. Only if such demonstration failed would the challenger...

    • Chapter 14 The Use of Scarcity Rents to Fund Public Broadcasting
      (pp. 385-412)

      IN this final chapter I shall mainly consider alternative techniques for recapturing television’s scarcity rents to fund public broadcasting. This proposal has had a long and checkered history. In one form it has now been incorporated in Title IV of the proposed Communications Act of 1978 (HR 13015), and is a central component of the recent Carnegie Commission Report on the Future of Public Broadcasting. Both the proposal’s history, and its latest version will be examined in the second section, after which I consider a less promising but timely version (involving internal cross-subsidy) to illustrate the problems and pitfalls of...

  9. Appendix I. Basic Methodological Issues
    (pp. 413-432)
  10. Appendix II. Principal Estimating Equations
    (pp. 433-494)
  11. Name Index
    (pp. 495-496)
  12. Subject Index
    (pp. 497-505)