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Dec. 2, 2019, 1:52 p.m.

An old FCC rule is being used to justify shrinking the Dayton “Daily” News to three days a week

Want to get around a regulation that limits who can own a daily newspaper? Just make it a less-than-daily newspaper.

This surfaced over the Thanksgiving break here in the United States, but I don’t want to let it pass without noticing: To increase the quality of local journalism in Ohio, the Federal Communications Commission is requiring three newspapers to stop printing daily.

No, really. The ruling came down on November 22, but it appears no one in mainstream media noticed until Keith Kelly wrote it up for the New York Post:

The 121-year old Dayton Daily News and two other Ohio newspapers will shrink to three days a week from daily publication to appease regulators who on Monday approved a $3.1 billion acquisition of Cox TV stations and newspapers by private equity firm Apollo Global Management.

The Leon Black-led Apollo proposed cutting back the print editions of the Pulitzer Prize-winning Dayton daily, among others, to get around Federal Communications Commission rules banning the same owner from having a TV station and daily newspaper in the same market.

Did you get that? To strengthen the local news ecosystem in Dayton, the government is making its biggest newspaper publish less.

Back in 1975, a thousand media ecosystems ago, the FCC passed a well-intentioned rule that said a city’s newspaper couldn’t be owned by the same company that owns one of its TV or radio stations. There were only a few available slots in each market for a TV station, and those were divvied up by the FCC; there was, even then, usually only one, maybe two newspapers in most cities. In that limited an environment for local media, it made sense to say different people needed to own a paper and a station.

But the FCC rule grandfathered in the many newspapers that already owned a TV station. And over time, enforcement of the rule weakened.

If you’re grandfathered in, though, that exemption goes away if you sell your outlet to someone else. And that’s what happened with Cox — a once-proud news company that got its owner nominated to be president and created one of the great media fortunes. (Most of it went to Cox’s daughter, Anne Cox Chambers, who turned 100 years old yesterday and was worth about $17 billion before passing it down to her kids. Happy birthday, Mrs. Chambers!)

Cox owned the Dayton Daily News — it was the newspaper that started the company, actually — and WHIO-TV in Dayton. (Also, four radio stations. And two nearby county-seat papers, the Springfield News-Sun and the Hamilton Journal-News.)

So when it agreed to sell a controlling share to Apollo Global Management in February for $3.1 billion, there was the possibility of a problem. That possibility grew stronger when a surprise court ruling pushed the FCC to enforce the rule more strictly.

(You may remember Apollo Global Management from its financing of the Gannett–GateHouse megamerger last month, via a high-interest loan of $1.8 billion. Apollo has been sniffing around the newspaper business for years now and doesn’t appear to have any forward-looking plan beyond cost-cutting.)

What to do? Well, the rule applies only a “daily” newspaper. And the official FCC definition of a daily newspaper is one “which is published four or more days per week, which is in the dominant language in the market, and which is circulated generally in the community of publication.”

So the math is simple: 4 – 1 = FCC approval. A three-days-a-week newspaper isn’t worth the bother of protecting, essentially, so you can do whatever you want with it.

The group Common Cause had raised objections to this deal back in May:

The transaction would specifically harm localism and viewpoint diversity in the Dayton DMA. Cox currently owns the Dayton Daily News, WHIO-TV, and four radio stations in the Dayton DMA. Throughout the course of its ownership, Cox has brought the newspaper, television station, and radio stations under one roof. This consolidation has led to reporter layoffs and less robust coverage of local news. People in the Dayton community say they know more about what is going on in Akron and Toledo than they do in Dayton.

If the transaction is approved, the harms to localism and viewpoint diversity would be magnified in Dayton given the already high level of consolidation. Even worse, Apollo as a replacement for a company with over a century of news-making in the Dayton market does not bode well for the people in that market.

When Apollo & Co. suggested the three-days-a-week solution, Common Cause objected again:

The Applicants October 2019 Amendment disregards the primary purpose of the Commission’s media ownership rules and seeks to take advantage of loopholes resulting from the FCC’s own failure to update its rules.

First, the Applicants propose to comply with the Newspaper/Broadcast Cross-Ownership (“NBCO”) Rule by reducing the print publication of acquired newspapers to three days a week. This proposal neglects the primary purpose of the NBCO rule — to promote viewpoint diversity at the local level. This is why the Commission has prohibited the combination of newspapers and broadcast stations found within the same market. As the Commission has found, broadcast stations and newspapers remain the dominant sources of local news and information for communities even in today’s changing media landscape.

Cross-ownership has significant consequences to localism and viewpoint diversity. As demonstrated by the Dayton DMA, Cox’s ownership of the Dayton Daily News and WHIO-TV has led to reporter layoffs and less robust coverage of local news. The Applicants proposal to comply with the NBCO rule simply by reducing the daily publication of acquired newspapers to three days a week does not the address the public interest harms of cross-ownership that necessitates the rule in the first place.

The Applicants’ October 2019 Amendment also takes advantage of the Commission’s failure to meaningfully update the NBCO rule. For the purposes of the NBCO Rule, the Commission defines a daily newspaper as one “which is published four or more days per week, which is in the dominant language in the market, and which is circulated generally in the community of publication.” This definition no longer makes sense in today’s media marketplace.

For example, the NBCO Rule does not distinguish between the print and digital publications of newspapers. Digital newspapers could be updated much more frequently than daily print publications with breaking news stories, investigative reporting, coverage of local sports, weather, and other information communities rely on to make informed decisions.

The Applicants October 2019 Amendment remains silent to the status of the digital publications of the acquired newspapers. Nevertheless, the Commission’s failure to meaningfully update the NBCO Rule does not mean it should permit the Applicants to exploit this loophole that violates the goal of the NBCO.

But the chief of the Media Bureau at the FCC, Michelle M. Carey, wasn’t buying it, writing that Common Cause’s “arguments are speculative, unsupported, and unpersuasive. Common Cause et al. fail to provide any transaction-specific evidence demonstrating that transfer of the existing combination of media outlets will negatively impact localism and/or viewpoint diversity in the market.”

Carey found “no merit to the argument…that the October 2019 Amendment somehow disserves the primary purpose of the Commission’s rules by exploiting supposed ‘loopholes’ in print publication frequency.”

And so a rule intended to increase the number of local media voices will instead shrink a community’s biggest one left standing.

Troublingly, the Dayton “Daily” News’ own story on the FCC ruling — unbylined, written six days after the ruling, four days after the Post had run its story — doesn’t even mention the cutback to three print days. I’m going to take the unusual step of reproducing it here in full so you can see the awkwardness.

The Federal Communications Commission has approved the sale of Cox Media Group’s media properties to Terrier Media.

Those properties include WHIO-TV, WHIO Radio, K99.1 FM, WZLR, the Dayton Daily News, Springfield News-Sun, Journal-News and Dayton.com.

However, the FCC approval prohibits Terrier from owning daily print newspapers and broadcast properties in the same market. The company has previously said its goal is to maintain 7-day publication for the Dayton Daily News, the Springfield News-Sun and Journal-News.

“Cox Media Group leadership continues to explore options to keep all of our Ohio newspapers publishing seven days,” the company said in a statement Thursday. “This sale has created an unprecedented situation when the FCC’s media ownership rule was reinstated during the approval process of the transaction.”

In February, Cox Media Group signed an agreement to sell all its TV stations across the country as well as all its Ohio media companies to Terrier Media. At that time, the FCC’s rules would have allowed the company to own both broadcast and newspaper. But in September, the Third Circuit Court of Appeals invalidated those rules, forcing the company to seek alternative solutions.

“Our goal is to meet the requirements of the regulation and at the same time continue to provide excellent service and support to the Dayton region, our employees and our customers,” the statement said.

Did you catch that? It pushes back against a claim the story doesn’t even make. It doesn’t even mention that the new owners volunteered to cut to three days, or that the FCC has now ordered them to do so. If you didn’t already know what was going on, that third graf just comes out of nowhere.

(The paper had raised the possibility of cutting print days the previous month — but only in the form of a company press release, not a story.)

In print, the story ran at the very bottom of Page B1, under the header “ONLY IN THE DAYTON DAILY NEWS.” But of course you can also find it on the website of WHIO and other Dayton-area Cox news sites. And as far as I can tell, the paper hasn’t said a word about this impending change to readers since.

What comes next? It’s possible Apollo could sell the newspaper to someone else who could then move back to seven-day printing — though that would mean disentangling all the shared operations between the various Dayton outlets. Or it could seek a waiver from the FCC. Or it could do neither and just do what private equity newspaper owners do and keep suctioning money out of local news. Cox is declining to comment. (Cox specifically chose not to include its other remaining newspaper, the Atlanta Journal-Constitution, in the sale to Apollo. Cox own multiple TV and radio stations in the Atlanta market, so it would have faced the same FCC issues as Dayton did.)

The FCC’s final order demands that the “modification of the publication schedule” to three days a week must occur within 30 days of the deal’s final consummation.1

This is a hell of a lump of coal in local news’ stocking.

  1. Note: I originally said it was 30 days from the deal’s approval by the FCC, but a little birdie points out it’s actually from the day the sale closes, which as far as I know hasn’t yet been publicly set. []
POSTED     Dec. 2, 2019, 1:52 p.m.
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