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July 14, 2003 Dear
__________________________:
The National Grange, this nation's oldest general farm and rural public interest
organization, supports the decision by the Federal Communications Commission to
increase the national television ownership cap applied to the major networks from
35% to 45% of national market share. This change will be benefit rural communities
who rely on free, over-the-air TV because they generally lack adequate access
to pay TV platforms. The FCC's action is a good first step toward leveling the
playing field between free, local, over the air television and pay TV services,
which have no comparable national cap. The change also furthers regulatory neutrality
and benefits rural America by allowing free over the air TV to compete for capital
and talent through acquisition of additional local stations for an indispensable
supplemental revenue stream from local advertising. As
such, the National Grange opposes efforts to roll back the FCC's decision on this
issue through the appropriations process. Reinstating the current ownership caps
on the major networks will inevitably result in reduced quality of service for
rural communities that depend on free, over-the-air TV. We urge you to oppose
these efforts, as well.
Founded in 1867, today the National Grange represents over 200,000 members affiliated
with 3000 local, county and state Grange chapters across rural America. More than
70% of all local Grange chapters are located in communities of 2500 persons or
less.
The
National Grange recognizes the importance of broadcast TV to the public welfare,
especially in rural communities. While only 15% of the nation's households do
not subscribe or have access to pay TV services, rural Americans rely disproportionately
on free TV, for vital information, including weather, emergency situations, local
and national news, as well as entertainment programming. The pay TV industry,
which has been growing rapidly in urban and suburban communities, currently covers
less than 30 percent of all local markets with fewer than 85,000 homes. The costs
of extending cable infrastructure to most rural communities is prohibitive. While
satellite broadcast systems are increasingly popular in rural communities, there
are still significant additional capital costs to purchase, install and maintain
these systems that are above and beyond the monthly service fees for satellite
TV systems. In addition, line of sight limitations in many rural locations that
arise from mountains, trees or other obstructions often physically restrict access
to high quality satellite broadcast signals. These factors, (costs, service and
infrastructure) have restricted the competitive growth of pay TV service in rural
communities and require rural Americans to rely on free TV broadcasts for comparable
service. The
national television ownership cap limits the ability of free over the air broadcasters
to maintain the quality programming that rural Americans deserve and appreciate.
Without relaxation of the national cap, the future of free TV is uncertain as
more sports, public affairs, local event, emergency services and other programming
migrate towards the pay services that are not available in the majority of rural
communities. Unless free, over the air television networks are able to defray
their substantial programming costs through ownership of more local stations,
the networks will continue to lose programming - such as this year's NBA All-Star
Game -- and audience share to the pay services. This will lead to least cost or
inferior programming on free TV. For rural viewers the issue is not just the extra
costs of pay TV services but the systematic lack of access to these services in
their communities. Migration of capital and talent to pay TV services will ultimately
result in inferior TV programming being the ONLY option in many rural communities.
The National
Grange believes that the recent action of the FCC to increase the national television
cap benefits rural America. The change is a good first step toward leveling the
playing field between free TV and pay TV services, which have no comparable national
cap. (A single cable operator can claim 30 percent or more of the nation's total
cable and DBS subscribers as its customers. No television station group can claim
more than 5 percent of the nation's households as viewers at any one time.) The
change also furthers regulatory neutrality and benefits rural America by allowing
free TV to compete for capital and talent through acquisition of additional local
stations for an indispensable supplemental revenue stream from local advertising.
Relaxation
of the national television cap does not diminish the importance of localism. Network
owned stations have not been shown to diminish local service. Network stations
have consistently hired and retained quality local talent because they want to
have the most popular and profitable station in the market. Network stations also
employ more skilled individuals represented by professional trade unions than
independent media companies. The data in the FCC record demonstrated that network
stations actually air more local news (other factors being equal) than other stations.
Localism is, in fact, the key competitive advantage that free TV has over pay
TV. An important
fact about the FCC's decision to raise the network ownership caps that has not
received sufficient attention is that this action enhances the ability of the
free, over-the-air broadcast industry to serve the interests of rural residents
without creating additional regulatory or commercial burdens on the pay TV industry.
Instead, it will allow the free TV industry greater flexibility to meet the requirements
of a competitive and rapidly evolving market by maintaining its ability to attract
the capital and the talent necessary to provide quality over the air broadcasts
that serve the interests of rural Americans. Station
ownership by the television broadcast networks has served the public interest
since the beginning of television. It continues to serve the interests of millions
of rural television viewers across the nation who have no other practical access
pay TV service. The FCC took account of the Americans who live in rural communities,
and their lack of competitive TV service options, when it made its decisions on
the national television cap. It would be inappropriate for Congress to second
guess the judgment of the FCC on this issue through the appropriations process.
The FCC has taken a prudent step to ensure that television broadcast networks
have the necessary regulatory freedom to continue to serve rural America with
quality free over-the-air broadcast programming by modifying the national broadcast
television station group ownership cap. Second guessing that decision will only
restrict the ability of the free television broadcast industry to serve the interests
of rural Americans. For these reasons, the National Grange urges you to oppose
reinstating the current ownership caps on the major networks through the appropriations
process. Sincerely,
Leroy Watson,
Director of Legislative Affairs
The National Grange of the Order of Patrons
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