Lina Khan

The Federal Trade Commission has not in recent years drawn much attention from broadcasters as the agency has largely been hands-off media deals with only occasional forays into advertising regulation – and even then, it was mostly focused on digital ads. But under new FTC Chair Lina Khan, the media sector may get extra scrutiny in the years to come. An indication of its plans came during a recent public hearing focused on the media and entertainment sector as the FTC considers updates to its merger review guidelines.

“Content has long been distributed through platforms that can give rise to bottlenecks, where a limited number of companies are wielding power over market participants both up and downstream. And increasingly we've heard concerns that a handful of companies may now again be controlling the bulk of the entertainment supply chain from content creation to distribution,” said Khan. “We've heard concerns that this type of consolidation and integration can enable firms to exert market power over creators and workers alike and potentially limit the diversity of content reaching consumers. And we've also heard that smaller independent players may find themselves cut off from content or distribution that they need to stay in business.”

During the hearing, Khan did not target broadcast radio directly. Instead, she hinted streaming audio platforms were on the radar. “Music albums sales meanwhile have plummeted in favor of streaming subscriptions,” said Khan. She also called out the growing role concerts play for artists, with the FTC focused on how live events are promoted and tickets are sold. But it was Khan’s comments on the news media that may best reflect her thinking about local broadcasting.

“We’ve heard concerns about what it means for consolidation in local news, and specifically its effects on local coverage and coverage of small communities,” Khan said. “I see news and media and entertainment as really being the lifeblood, in many ways, of our democracy. And so making sure that we're not allowing forms of consolidation that are allowing firms to wield outsized power over how information is distributed in our country is especially important.”

Keeping Pace With ‘New Market Realities’

For the FTC to review potentially illegal mergers, Khan said they are working to update their analytical tools to keep pace with what she sees as the new market realities of the media and entertainment sector. “We really want to make sure that our approach to measuring harm that may occur through mergers and acquisitions is rigorous and fully capturing the day-to-day realities that a range of participants in these markets face,” she said.

The FTC typically works in lockstep with antitrust regulators inside the Dept. of Justice as it reviews mergers. During the hearing, Johnathan Kanter, who heads the DOJ Antitrust Division, agreed that when they face a potential media deal one of the questions they will consider is whose voice will be silenced.

“It's important for us to understand the effect on speech and the effect on the output of content,” said Kanter. He also said the DOJ may be less willing to put conditions on a deal in order to clear it across the finish line in the past. “Conditions on a merger that are designed to preserve competition can often be difficult to administer, expensive for victims to monitor and report, and often too little too late in terms of addressing harm,” he said.

Updated Merger Guidelines

Khan said at the final of the public forums on Tuesday that the FTC and DOJ will release their draft updated merger guidelines in the “coming months” after which they will be taking additional public comment on the proposed changes.

Washington lobbyists expect Khan will mainly be focused on cutting the big tech platforms down to size, especially with fewer big ticket broadcast deals being announced. An indication of how active it will be is likely to come with radio and TV owners Standard General’s pending $5.4 million buyout of TV giant Tegna in a colossal, multi-layered deal that also involves Cox Media Group owner Apollo Global Management.

That deal may have radio at the edges but depending on the outcome of the Federal Communications Commission’s pending quadrennial media review processes, other radio and TV transactions could be hatched giving both the FTC and DOJ a bigger role to play in the broadcast deal market.