Advertising Deductibility: For the Sake of Speech

 The “Tax Cuts and Jobs Act,” introduced amid great fanfare on Nov. 2, has now been passed by the U.S. House of Representatives along an essentially party-line vote. The Senate’s version, introduced Nov. 9, is still undergoing intense scrutiny as groups from every quarter weigh the bill’s proposed cuts in tax rates versus the elimination of certain deductions, credits, and other tax breaks.

As ideas for reforming the tax code were tossed around in recent months and even years, one proposal – or some variation of it – would surface from time to time. This was the idea that the tax deduction for business advertising expenses should be eliminated.

This has always been an ill-considered idea (as we shall discuss below), and thus we were relieved that it did not find its way into the new tax bills of either the House or Senate. But since these bills are only the opening salvos in the difficult battle to revise the tax code, it would be worthwhile to examine why this ad-related provision should not be a part of the measure that finally reaches the president’s desk.

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Repealing Media Ownership Regulations: It’s About Time

FCC Chairman Ajit Pai has proposed the most reasonable of actions: repealing or revising 40-year-old media ownership rules that long ago outlived any marginal usefulness they might’ve once had.

This should be a no-brainer. But, Washington being what it is, entrenched interests and politicians bent on maintaining the status quo for their own purposes have pilloried Pai for trying to do something that should’ve been done decades ago.

First, the facts. On Oct. 26, Chairman Pai released an Order on Reconsideration and Notice of Proposed Rulemaking. This proceeding seeks to accomplish the following:

  • Eliminate the Newspaper/Broadcast Cross-Ownership Rule;
  • Eliminate the Radio/Television Cross-Ownership Rule; and
  • Revise the Local Television Rule to eliminate the Eight-Voices Test and to incorporate a case-by-case review provision in the Top Four Prohibition.

The proceeding would also seek to eliminate the attribution rule for television Joint Sales Agreements; retain the disclosure requirement for commercial television Shared Services Agreements; keep the Local Radio Ownership Rule; and create an incubator program to encourage new and diverse voices in the broadcast industry.

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Keep Big Bird, Ditch the News: A Path Forward for PBS With Budget Cuts

As was the case a half-dozen years ago, PBS and NPR are again the subject of a contentious debate about their taxpayer funding, this time courtesy of President Trump. The problem with that debate, then and now, is that like so many policy disputes, the arguments employed oversimplify the facts and ignore the obvious. I wrote about this matter in 2011 in a piece published in the now-defunct app called The Daily. What follows is an update of that piece.

For years, Republicans and conservatives have accused NPR and PBS of ideological and political bias. Things came to a head in 2010 when NPR fired Juan Williams as a commentator for allegedly making anti-Muslim remarks, and NPR successfully solicited funding for local reporting from a foundation controlled by the uber liberal George Soros.

This perception of bias would be noteworthy enough even if these broadcasters were not financially supported by taxpayers, conditioned on explicit statutory language requiring objectivity and balance. Since, however, they are, the ubiquity and durability of this perception becomes very nearly miraculous. Surely it’s not easy to so thoroughly offend one of the two major parties that, in the House vote in 2011, virtually every Republican member voted to defund NPR » Read More


Maines is president of The Media Institute. The opinions expressed are his alone and not those of The Media Institute, its board, advisory councils, or contributors. The full version of this article appeared in The Hill on March 21, 2017.

Dueling Philosophies on Minority Ownership

What happens when you invite the FCC’s two veteran commissioners to speak about the media at a Rainbow PUSH Coalition symposium?  When one of the commissioners is Michael Copps, and the other is Robert McDowell, you get two very different views of where things stand and how they could be improved, as we saw on Nov. 20.

Copps, a Democrat, is a long-time foe of large media companies.  So he uses phrases like “excessive media consolidation,” “big media run awry,” “tsunami of consolidation,” and the punchline: “Minorities have suffered greatly because of consolidation.”  

One of his proposals to “put some justice back into our ownership policies” would involve a “public interest licensing system for broadcasters.”  Copps would like the Commission to “go back to having some guidelines to make sure stations are consulting with their audiences on what kinds of programming people would like.”  But wait, I think we already have such a system.  It’s called “ratings.”

Copps also favors something called a “full file review,” which would have the Commission award certain broadcast licenses by considering an applicant’s “experiences in overcoming disadvantages,” including race and gender discrimination.  (This sounds like a lawsuit waiting to be filed, but that’s another story.)  In other words, Copps views the FCC as the referee in a fight between “big media” and the little guy, where the solution is a tight rein on ownership regulations.
    
Robert McDowell sees things differently.  For minorities to get ahead in broadcasting and other media, Republican McDowell is quite clear about what is needed: access to capital.  “An important priority for me in my three-and-a-half years on the Commission has been to help create a competitive environment that allows minority entrepreneurs and other new entrants a real opportunity to build viable communications businesses,” he told the Rainbow PUSH group.
    
McDowell noted that he enthusiastically supported the Commission’s 2007 Diversity Order, which contained nine measures to help small entrepreneurs acquire capital or use their financial resources more efficiently.  He has also called for a tax certificate program to help disadvantaged businesses.  
    
At the same time, McDowell is keenly aware of the unintended and hurtful consequences of regulations (of the sort favored by Copps) aimed at helping small, local media owners  – like a “localism” proposal to reinstate a 20-year-old rule requiring stations to be manned throughout their broadcast day (technology notwithstanding), or onerous “enhanced disclosure” requirements so complex that they could require the hiring of additional employees.   
    
In short: On the question of disadvantaged minorities, Copps sees the culprit as large media companies.  From his perspective, the FCC must be a strict regulator of media ownership.  McDowell sees the culprit as the lack of access to capital.  He would envision the FCC as a facilitator, creating policies to generate financial opportunities for entrepreneurs.
    
Whose view is more accurate and whose solution is more likely to succeed?  On both counts, my money is on McDowell.   

Hate Speech and the First Amendment

“If you bring up the First Amendment, you’re a racist.”  In so many words that’s the message – or threat – to anyone who would dare question the constitutionality of a proposal that the government launch an inquiry into media content.     

The threat is leveled by the National Hispanic Media Coalition (NHMC) in a Jan. 28 petition asking the FCC to conduct an inquiry into hate speech in the media.  The petition was written for NHMC by the Institute for Public Representation at Georgetown Law and the Media Access Project.

Ironically, the names of both groups (“Public Representation,” “Media Access”) would seem to suggest support for freedom of speech.  Here, however, the ultimate intent of these groups is to eradicate certain types of speech (and speakers) in the media, and to chill the speech of anyone who would question that endeavor.   

The petitioners throw down the gauntlet to First Amendment challengers with this line: “The NHMC understands that those who would prefer hate speech to remain under the radar will claim that such an inquiry violates the First Amendment.”  

Let me say up front that I find racial slurs and other forms of bigoted, biased, hateful speech to be utterly abhorrent.  Such speech usually emanates either from small-minded, obtuse bigots, or from persons who are smart enough to know better but are consumed with hate, anger, and at bottom, fear.

However, I do challenge the constitutionality of an inquiry that could lead to the banning of speech – not because I’m a bigot (as the petitioners imply), but because I happen to be a staunch supporter of the First Amendment.   

Like it or not, the First Amendment was designed precisely to prevent government censorship, not only of popular speech but of unpopular speech – even so-called “hate speech.”  

There are some narrow exceptions, like speech that incites immediate violence.  That seems to be the slim reed on which NHMC tries to build its case.  The petitioners say that there has been an increase in hate speech in the media.  Then they say that there has been an increase in the number of violent hate crimes against Hispanics.  By that juxtaposition they try to imply that there is a causal relationship between hate speech and hate crimes.  

But the petitioners offer no evidence – only vague assertions like “hate speech over the media may be causing concrete harms.”  Even a 1993 report by NTIA, which the NHMC petition quotes liberally,  “found that ‘the available data linking the problem of hate crimes to telecommunications remains scattered and largely anecdotal,’ and that [NTIA] lacked sufficient information to make specific policy recommendations.”

So what’s going on here?  NHMC and its public-interest collaborators take great pains to point out that they are only asking for an inquiry into what’s happening out there, “merely the collection of information and data about hate speech in the media” – not for any overt censorship.  Oh, and of course they’re not calling for a reinstatement of the Fairness Doctrine, they are quick to note.

But as we know, FCC notices of inquiry have a way of turning into rulemaking proceedings.  And if a rulemaking proceeding aimed at outlawing hate speech had the effect of outlawing conservative talk radio … who needs a Fairness Doctrine?

This is no time for First Amendment advocates to be cowed into silence by bogus challenges to their political correctness.  Speech isn’t always pretty, or pleasing, or even palatable.  That’s why we have a First Amendment.

Digital Technology: Double-Edged Sword

Two items in the Washington Post in the past three days point up how the relentless march of technology will affect news in the months to come – both how it is generated by the White House, and how it is reported by at least one local TV station.

President-Elect Barack Obama sees new technology as a means “to reinvigorate our democracy,” according to senior adviser David Axelrod.  And, as Chris Cillizza reported on Dec. 14, Obama is starting with the Saturday morning radio broadcast begun by Ronald Reagan in 1982.  

“The speech is still beamed out to radio stations nationwide on Saturday mornings, but now it is also recorded for digital video and audio downloads from YouTube, iTunes and the like, so people can access it whenever and wherever they want,” Cillizza reports.

It’s part of a “broader revolution” in how the Obama White House will communicate, according to Doug Sosnik, a senior aide in the Clinton Administration. "The mainframe for this White House will be the Internet, not TV," he told Cillizza.

Only two days earlier (Dec. 12.), Paul Farhi reported that WUSA-TV, Channel 9 in Washington, D.C., had reached a new labor agreement that would scrap the traditional two-person news crew of reporter and photographer.  Under the new pact, an individual “multimedia journalist” will report, shoot, and edit stories alone using digital tools.  Reporters will double as their own camera crew.  Camera operators will take on reporting tasks as well.

In the case of WUSA, however, the impetus is economic. The one-person operatives are part of a broad budget-cutting scheme under which these “multimedia journalists” will actually be paid less than current reporters.

It’s encouraging that Obama embraces digital technology and plans to use it extensively.  At the same time, it’s ironic that digital technology has siphoned viewers from broadcast television and weakened some local news operations to the point where they can only be saved by changes in news-gathering built around … digital technology.

Fairness Doctrine: The Talk Goes On

The Fairness Doctrine, or at least talk of a reimposed Fairness Doctrine, just won’t go away.  It was finally killed off in 1987 but the current Democratic Congress has been making periodic noises about bringing it back.

The big question now seems to be what would happen under a President Obama.  Would he actively support a return of the doctrine?  Would he accede to a Congress controlled by his Democratic friends who put a Fairness Doctrine bill in front of him?  Would he dare (or bother) to go against his congressional allies and veto such a bill?

All we know for sure has been ferreted out by the hard-working John Eggerton of Broadcasting & Cable.  He reported back on June 25 that Obama’s press secretary, Michael Ortiz, told him that "Sen. Obama does not support reimposing the Fairness Doctrine on broadcasters," and that the candidate sees the issue as “a distraction from the conversation we should be having about opening up the airwaves and modern communications to as many diverse viewpoints as possible."

On Sept. 18, however, George Will opined that an Obama-led government would bring back the Fairness Doctrine.  Will wrote:

“Until Ronald Reagan eliminated it in 1987, that regulation discouraged freewheeling political programming by the threat of litigation over inherently vague standards of ‘fairness’ in presenting ‘balanced’ political views.  In 1980 there were fewer than 100 radio talk shows nationwide.  Today there are more than 1,400 stations entirely devoted to talk formats.  Liberals, not satisfied with their domination of academia, Hollywood and most of the mainstream media, want to kill talk radio, where liberals have been unable to dent conservatives’ dominance.”

Will’s comments have stirred the pot once again, particularly among right-leaning blogs where much of the speculation and hand-wringing takes place.

In support of Will’s assertion are two factors.  The first is that Obama need not actively support a reimposition of the doctrine to sign a bill pushed by his fellow Democrats.  The second is that his press secretary also told Eggerton that Obama supports “media-ownership caps, network neutrality, public broadcasting, as well as increasing minority ownership of broadcasting and print outlets" – in other words, the traditional Democratic media-policy platform in which the Fairness Doctrine plank would fit snugly.

The Fairness Doctrine was a bad idea for a lot of reasons.  It should be allowed to rest in peace.  Sen. McCain gets that, and has co-sponsored legislation to keep it dead.  Sen. Obama says he opposes a new Fairness Doctrine.

Yet George Will can be a hard person to bet against.  In the case of Obama and the Fairness Doctrine, however, I’m hoping Will is wrong.

The Real Problem With Radio

Washington radio icon Chris Core was given the boot in February after 33 years behind the microphone at WMAL-AM in the Nation’s Capital.  He was part of a cost-cutting move by the station’s owners, who also fired the entire on-air staff of sister station WJZW-FM.

Marc Fisher, a Washington Post reporter who had written “The Listener” radio column since 1995, wrote his final column and signed off June 1, as he lamented the passing of “the kind of eccentric, iconoclastic voices that made radio so alluring from the 1950s into the ’80s.”  Now, Fisher says, the talent is “mostly anonymous and amateur.”  The implication: Radio in the Washington, D.C., market isn’t worth writing about anymore.

Critics of “media concentration” will be quick to seize on the tales of Core and Fisher to “prove” that big is bad.  They will tell us that the multiple-station ownership practiced by big companies like Clear Channel and Citadel (which now owns WMAL) is the root cause of all that is wrong with radio today, from the loss of “localism” to the homogenization of programming.

Unfortunately, these critics will be exactly wrong.  Media concentration is not the cause of radio’s problems – it is an effect of something else entirely: the fragmentation of audiences that has come about as exploding technology has given the public a whole new panoply of delivery platforms.

Listeners (and especially young listeners) are getting their audio fix via satellite radio, Internet radio, cell phones, and PDAs, and can create their own mix on iPods and MP3 players.  Don’t forget free HD radio and, soon, free Internet radio in cars.  The always-philosophical Core recognizes that “radio stations have to either evolve from their traditional ways or wither.” 

Kenneth J. Goldstein, president of Communications Management Inc., presciently observes that fragmentation not only is the cause of consolidation (as station owners try to re-aggregate audiences), but also of cost pressures, less localism, content sharing, and stretching the boundaries of taste. 

Regrettably, policymakers are being bombarded with the big-is-bad “concentration myth” by critics of multiple ownership.  However, until policymakers understand the issue correctly (i.e., realize that media consolidation is merely one effect of technology-driven fragmentation), the debate is fated to be an uninformed waste of time.  And any policy “solutions” that spring from such a spurious debate are almost sure to be catastrophic.

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