How the FCC Could Help Save Local News

MB Docket No. 24-14 

We strongly support the Notice of Proposed Rulemaking providing “Priority Application Review for Broadcast Stations that Provide Local Journalism or Other Locally Originated Programming.”

In these comments we will describe:

1. Why the local news crisis is so severe that policies like those proposed in this NPRM are warranted
2. Some possible ways of strengthening the rule
3. Other ways the FCC can help strengthen local news, including:

• • • Allowing stations to fulfill public interest obligations by supporting local news funds
    • Using spectrum proceeds to be used for local news
    • Weighing local news impacts during merger analyses
    • Considering news ecosystem effects during deliberations about privacy rules
    • Considering news ecosystem effects during deliberations about AI

This Proposal

As noted in the NPRM, local news is facing a severe crisis in the United States.  About 2.5 newspapers are closing each week on average – some 2,900 so far. Thousands more have “ghost newspapers” that barely cover communities.  

The actions outlined in this NPRM are thoroughly justified because the consequences of the local news collapse are grave.  As Rebuild Local News summarized recently in a submission to the U.S. Department of Justice:

“The decline in the number of local reporters and newspapers has led to a decline in the amount of local reporting. Between 1999 and 2017, coverage of local politics dropped by 56 percent, according to a study of 121 newspapers by Professors Danny Hayes and Jennifer Lawless….

This has hurt the ability of Americans to get crucial information about urgent topics affecting their lives, such as education: “One out of every three stories written about school boards in 2003 had disappeared by 2017.” Again the trend was more alarming in small outlets. “Among those with less than 15,000 circulation, the average reduction in schools’ coverage was 56%.”

Typically, newspapers that have cut back on local reporting fill more of their pages with national or regional material. One study of 16,000 stories in 100 communities conducted by Duke University’s Phil Napoli, only 17% of the content in local newspapers was about local communities and addressed a critical information need. One in five newspapers had no locally-produced journalism at all.

There is a growing body of research demonstrating what we know intuitively — that the decline in local news causes, or is correlated with, a wide variety of serious harms to consumers and communities. According to rigorous academic studies, communities with less local news have:

Less voter knowledge about candidates

A decline in local coverage (based on a study of 10,000 articles from 2010 to 2014), led to voters being less likely to have an opinion about their member of Congress.

Residents in areas with less local news are less likely to be able to name things they like or dislike about their representative.

They are less likely to be able to place their representative on an ideological spectrum.

They had less knowledge about public officials.

They were less likely to Google the mayor.

In all, the collapse of local news appears to have contributed to a significant drop in the knowledge of local civic affairs in the United States. In 1966, 70% of voters could name their mayor. In 2016 only 40% of voters could.

Lower voter turnout and less choice in candidates

Communities with less local news have lower voting rates.

Communities with less local news had fewer contested races.

Less civic engagement in their communities

After the closure of newspapers in Seattle and Denver, there was a significant drop in the likelihood that people would volunteer in civic organizations such as the PTA, the American Legion or a neighborhood watch.

Those who follow local news closely are more likely to engage in activities with civic organizations such as sports leagues, church groups or charity organizations’ civic activities.

Americans who have a close attachment to their community are twice as likely to be regular local news consumers as those with minimal attachment.

Those who rate local news highly are more likely to speak highly of their communities.

Less well-functioning local government

Communities with less local news had lower bond ratings, higher financing costs, and higher taxes.

They have more government corruption.

And more government waste.

Those districts get less government spending on public benefits.

The members of Congress who get less coverage in the local press are less likely to appear as a witness before a congressional committee to advocate for their district.

More polarization

In communities with less local news, voters are more likely to vote on a party line basis, splitting their tickets less frequently.

The members of Congress who get less coverage in the local press are less likely to vote against the party line.

Public health and corporate crime

Communities with less local news are more likely to have more toxic emissions.

Public health officials say the decline of local news has made it more difficult to track disease outbreaks.

Companies are more likely to have serious regulatory violations — including environmental and workplace infractions — in communities that have lost local news coverage.

In sum, after reviewing the academic literature on the decline of civic participation, Lawless and Davis conclude that most analyses “don’t account for the most dramatic change in the civic life us communities have experienced in the last 20 years: the decimation of the local news media.”

In the language of communications policy, this is powerfully eroding localism – a value that the FCC has championed for decades, under both Democratic and Republican leadership. 

Although the role of local TV news is often less discussed, they remain an essential part of the local news ecosystem. TV news is still among the most common, and trusted, sources for local news, according to the Pew Research Center.  Some 62 percent of Americans say they get some of their news from TV.

In theory, local TV stations – which have fared better economically than newspapers –  could have countered the contraction of local reporting with a surge of additional reporters. In most communities, that has not happened.  

On the surface, it looks like local stations have risen to the challenge. The number of hours of local news aired by local TV stations has grown 83 percent since 2004.

But this is not as hopeful as it sounds – because during that same period, the number of TV broadcast news reporters has stayed the same or even declined.  That means the same number of reporters are producing more content.  They are spread much thinner than they have ever been before.

This NPRM recognizes that we are in a local news crisis and that local TV must play an important role, in accordance with longstanding FCC imperative to encourage localism.

Although this rule will likely have just a modest impact, it is nonetheless quite worthwhile. It rewards stations that already do local programming and would encourage some that do little local programming.

The rule would have more impact if the minimum amount of local content were raised to ten hours a week or more. Three hours a week amounts to 26 minutes per day, barely enough to have an impact.  Increasing that to ten hours would be more likely to alter behavior of the stations.

If the amount of programming required was a bit more, we could imagine a potentially positive market-based cascade of activity: local news organizations (including nonprofits, digital-only websites, newspapers and public radio) could pitch the stations that have no news capacity to create the programming for them. The stations would get original local programming and the other sources of reporting could get paid for their work.

The principle is important. As the preeminent agency of the federal government focused on our communications and media systems, the FCC should be a player in the drive to save local news in ways that are effective but preserve the editorial independence of media outlets, and respect the First Amendment. This is a productive step, and we hope there are more to come. 

In short, we believe the proposal is a worthwhile effort to strengthen localism, and would be even more effective with a slightly higher target.

Other Ways the FCC Could Help Save Local News and Encourage Localism

Rebuild Local News would like to use this opportunity to suggest other ideas for how the FCC can take a leadership role in helping to save local news in First-Amendment-friendly ways:

Allow stations to fulfill their public interest obligations by paying into local news funds

Currently the public interest obligation is vague and barely enforced. As the FCC staff report “The Information Needs of Communities” put it in 2011:

“The current system of public interest obligations for broadcasters is broken: TV stations are required to maintain programming records and other such paperwork, which FCC staff and members of the public rarely read. (Some provide detailed descriptions of substantive news programming; others list the sponsorship of an America’s Next Top Model tryout as fulfilling the obligation to provide issue-responsive programming.) Licenses are routinely renewed, regardless of whether a station is investing huge sums in local reporting or doing no local programming at all. Over the FCC’s 75-year existence, it has renewed more than 100,000 licenses. It has denied only four renewal applications due to the licensee’s failure to meet its public interest programming obligation. No license renewals have been denied on those grounds in the past 30 years. The current system operates neither as a free market nor as an effectively regulated one; and it does not achieve the public interest goals set out by Congress or the FCC.”

Some have looked at this dysfunction and concluded that we should shift to a system in which every broadcaster would just pay a spectrum fee and resolve their obligations that way.  Norman Ornstein, Paul Taylor and Steve Coll in the past have suggested assessing such a fee and using it to fund public broadcasting.

We like these ideas but suggest modernizing them. A new infrastructure of local news philanthropy has arisen.  Some 400 nonprofit local news organizations have been created, and at least as many for-profit, hyper-local outlets. There are more than 900 community or “placed based” foundations in the United States and many now support local news in a nonpartisan, platform-neutral way. Report for America helped create, identify and track “Community News Funds” that act as “community chests” for helping local news, administered by local foundations. Press Forward is now trying something similar on a larger scale with its Press Forward local chapters.

We therefore propose that broadcast stations be able to fulfill their public interest obligations by making annual contributions to local placed-based foundations, Community News Funds or other trusted nonprofit entities. Under such an approach, a local TV station could opt to fulfill their public interest obligations through such donations, reported to the FCC.  If they did, they would no longer have to file the paperwork proving that they are meeting their public interest obligations through programming.

Most of the stations that currently do local news will continue to do so because they are finding that local news is one of the few distinguishing characteristics they have to compete with streaming services.  They are not doing this news programming because of the FCC’s public interest obligation requirements.

Dedicate some spectrum auction proceeds to support local news

Spectrum auctions have generated $230 billion so far for the federal government. Some of those funds have been set aside for public purposes, such as a public safety communications network, the “ the Next Generation 911 Grant program, and funding for the Department of Defense. Hindsight is 20-20, but if just one percent of those proceeds had been set aside for saving local news, most of the harm would have been ameliorated.

There’s an especially strong argument that a portion of the spectrum held by non-commercial media should be set aside. That was spectrum that was literally allotted for nonprofit public purposes – so the proceeds should go to public purposes too.

Congress needs to reauthorize the FCC’s ability to run spectrum auctions, if for no other reason than the spectrum is needed to promote universal broadband. Recent legislation to reauthorize spectrum authority has earmarked many of the funds toward particular projects.

A small percentage of the spectrum auction could be set aside to help pay for First-Amendment-friendly efforts to save local news, such as the bipartisan tax credit to encourage the employment or retention of local reporters (probably the most popular of the non-bureaucratic ideas to help save local news).

Alternatively, the funds could be provided to state broadband authorities that use BEAD or other digital equity funding in part to help with the information needs of communities. Rebuild Local News has laid out a plan for how digital equity strategies can help address “double deserts,” areas that lack both broadband access/affordability and community information and news.

 “Regarding the Competitive Grant Program, the Assistant Secretary should include local news organizations as an entity that is “in the public interest and is not a school” (Section 60305(b) of the IIJA, page 13104 of the Notice). Doing so would both recognize the vital connection between local news and digital equity, and the role that local news organizations can play in fostering digital inclusion initiatives.  Second, also regarding the Competitive Grant Program, initiatives to strengthen local news should be included as eligible organizations to advance digital equity. Third, related to State Digital Equity Plans, the Capacity Grant Program, and the Competitive Grant Program, increased civic engagement should be included as a metric of impact and success of certain digital equity programs. 

And finally with regards to State Digital Equity Plans, the Capacity Grant Program, and the Competitive Grant Program in “double deserts,” local news organizations should be strengthened in order to help achieve those civic engagement goals.”

Condition Media Mergers on a Local News Impact Assessment

We commend the commission for looking at the impact on local news of a potential merger between Tegna and Standard General.  FCC Chairwoman Jessica Rosenworcel said, “As part of the FCC’s mission, we are responsible for determining whether grant of the applications constituting this transaction serves the public interest.  That’s why we’re asking for closer review to ensure that this transaction does not anti-competitively raise prices or put jobs in local newsrooms at risk.”

It is a legitimate concern, and a crucial question to be asking. There is considerable evidence that the acquisition of local newspapers organization by hedge funds and private equity firms tend to lead to steeper cuts in newsrooms and less localism, so it is well worth knowing whether the same patterns apply in local TV news.

The evidence about newspapers is worrisome (quoting from the Rebuild Local News comment to the U.S. Department of Justice):

“Many of these transactions involve private equity firms or hedge funds. “At their peak in 2016, six of the 10 largest newspaper chains were owned and operated by private equity firms or other investment entities,” the same study found. Since then some of the iconic newspapers — the Chicago Tribune, the Baltimore Sun, the New York Daily News and dozens of others — have also been acquired by private equity or hedge funds. The study also found that more than 1,000 newspapers are now controlled by “hybrid” companies that are both publicly traded and yet controlled by financial institutions.

These mergers have likely accelerated and intensified harm to communities. A recent study by Michael Ewens, Arpit Gupta, and Sabrina T. Howell found that newspapers acquired by private equity firms were more likely to cut the number of reporters and the amount of local coverage. “The composition of news shifts away from local governance, the number of reporters and editors falls, and participation in local elections declines,” they concluded.

The number of reporters fell from 6.2 to 3.8 at newspapers that were acquired by a private equity firm. By comparison, for other types of newspapers, the number of reporters fell far more modestly, from 7.3 to 6.1. The number of editors at these papers fell from 9.1 to 6.1, compared to a drop of just 5.7 to 5.4 at other papers.

The number of articles about local government at newspapers acquired by private equity firms fell from 5,700 to 2,500 after an acquisition, “a significant negative effect.” For those newspapers not owned by private equity firms, the drop was smaller, from 5,200 to 4,400.  They even found that these changes in coverage led to lower voting turnout and a greater percentage of residents having no opinion about their member of Congress.

By contrast, the study showed that family-owned newspapers were more likely to maintain higher levels of local news coverage and reporting staff.  An increasing number of local news organizations, both nonprofit and commercial, have been able to achieve financial sustainability when they don’t have the burden of debt payments or high EBITDA goals required by publicly-traded companies.

The Ewens, Gupta and Howell study did not consider Alden Global Capital to be a private equity firm. Alden has cut reporting staff more than other companies. So their inclusion could make the numbers even more alarming. Abernathy in 2018 found that newspapers owned by Alden cut staff at roughly twice the rate of the national average.

Another study by Benjamin LeBrun, Kaitlyn Todd and Andrew Piper looked at 130,000 articles at 31 corporate-owned local newspapers. They concluded that “corporate acquisition leads to a significant reduction in the amount of local news disseminated by affected publications.”

In some cases, a central problem is that the mergers were financed with large amounts of debt at a time when newspaper revenues were declining.  For instance, the 2019 acquisition of Gannett by Gatehouse, a smaller company, was financed through $1.8 billion in debt financing.  The firm now owns 479 newspapers. Since 2019, the company has shed almost half of its staff. During much of that period it was managed by the private equity firm Fortress, and much of its debt is held by the private equity firm Apollo Capital Management. Even if managers are well intentioned, their options are limited. In its 2021 annual 10k filing with the Securities and Exchange Commission, Gannett declared that one of its risk factors was that “we are required to dedicate a substantial portion of cash flow from operations to fund interest payments.”

Of course, these are general tendencies. There are exceptions and nuances.   The McClatchy newspaper chain, now owned by the private equity firm Chatham Capital, has stated that it is maintaining or growing staffing levels. It could well be that the problem is not bigness per se but mergers involving particular types of entities (with particular ROI needs) and/or involving  particular types of  financing, especially in an economically declining sector.”

This evidence relates to newspaper acquisitions. But patterns are sufficiently worrisome that they warrant extra scrutiny when TV stations are involved.

We recommend a simple bright line standard: if the evidence is that the merger is going to lead to fewer local reporters than before the merger, it should be rejected.

Note that we recommend tying this to the number of local reporters rather than the hours of local news. If stations add hours without adding reporters, coverage will often become shallower not deeper.   Note that we also are not calling the FCC to make judgments about the quality of the content.

In the cases when the FCC approves a merger but with conditions, policies can be even more explicit. Firms should pledge to increase the number of local reporters.  Of course, the FCC needs to review its past efforts to impose such conditions to see if they have been met.

Consider how strong privacy standards can help local news

Although efforts by the FCC and other regulatory bodies to curb the collection of each individual’s data are usually justified on privacy or security grounds, they actually have a major implication on the news media’s health, too. One of the reasons that the revenue models for many news organizations have eroded is that businesses no longer have to advertise alongside content in a particular publication in order to reach particular demographics. In the pre-internet era, someone who wanted to reach 40-year-old married women could advertise in certain magazines. Now they can buy ads that track such people as they wander the internet.  That has been made possible by the rise of surveillance advertising. Technology companies capture information about consumers, and use that to target ads ever more precisely.  That has offered many benefits to advertisers but  has deprived residents of privacy – and undercut the business models of media companies.

As the FCC weighs privacy rules in the future, it should consider the effects on local news as one factor (among many).

Consider how the FCC’s strong oversight of deep fakes and AI may help local news

Although AI has benefits and risks across the information landscape, the potential problems are particularly worrisome on the local level. National news organizations will be better able than local news organizations to track and expose misleading use of AI, such as the fake audio of Joe Biden in New Hampshire.  That’s why the FCC’s swift action on the New Hampshire call was so important. We applaud the action and urge continued vigilance in the misleading use of AI.

Strengthen Pay for Play Rules for Local TV News

The 2011 FCC report included “disturbing examples of “pay-for- play” arrangements at local TV stations, in which advertisers have been allowed to dictate, shape or sculpt news or editorial content. This trend, if not checked by the industry itself, will rot away the community’s trust in local TV.” We endorse the recommendations from that report that disclosures be made online as well as on air.

“Current ‘sponsorship identification’ laws and rules already require that stations disclose during a broadcast whether content is paid for, furnished or sponsored by an outside party, but the Commission should make enforcement more effective by considering one simple but potentially potent additional step: when newscasts are required to provide sponsorship identification on air, they should also disclose it on the Internet. Specifically, when a show providing news identifies a pay-for-play arrangement or use of a video news release on air, it should also post that information online, perhaps as part of a unified online public file. This would create a permanent, searchable record of which stations use these arrangements and afford easy access by consumers, competitors and watchdog groups to this information.”