Remarks of
FCC Commissioner Susan Ness
Federal Communications Commission
before the
American Advertising Federation

March 14, 1996

The Power of Advertising

Thank you for your kind introduction.

It is a great pleasure to be speaking before such a powerful audience. Of course, I get to speak to lots of powerful audiences -- broadcasters, telephone companies, and the like -- but we regulate them, and they have to listen to me.

You don't -- so I truly appreciate your warm welcome.

I have always been fascinated by advertising. I can remember many commercials from my childhood.

For example, there's the Maxwell House Coffee tag line -- "good to the very last drop." My ninety-eight year old grandmother in California still wants to know, "What's wrong with the last drop?"

And then there was the particularly boring day in school when I passed the time by dissecting an advertised brand of cold capsule to determine whether there truly were 800 tiny time pills inside it. There weren't.

"Where's the beef?" A phrase that I have found particularly useful in my present occupation, purloined from a memorable spot.

Advertisers -- you've come a long way (I won't say "baby") since the infancy of television. In 1930, the Federal Radio Commission (predecessor of the FCC) ruled that the rebroadcasting of radio commercials on television was illegal.

This was based in part on the view that TV was experimental and solely for research. But it also reflected the view Herbert Hoover had expressed a year earlier: "It is inconceivable that we should allow so great a possibility for service, for news, for entertainment, and for vital commercial purposes to be drowned in advertising clutter."

65 years later, in 1994, annual expenditures for television advertising totaled $33.7 billion.

What would the world be like without advertising? Advertising is the financial engine that drives much of what the American public sees or reads or hears.

Without advertising, entertainment and news programming on television would not be produced. Newspapers and magazines would not be published. Radio stations would be silent. Consumers would have starkly fewer products to choose from, and competition based on price or quality would be difficult.

Advertisers play a critical role in our society. Their clout was demonstrated recently.

People had been expressing their displeasure with the trashy content of daytime television talk shows. Reading a synopsis of the day's talk show topics in the TV listings was akin to reading a tickler list for perversion and promiscuity.

The public sounded the alarm for producers and station owners to take greater responsibility for the product they produce and air. No response.

Along came Secretary Bill Bennett and Senator Joe Lieberman. They berated broadcasters for the shows they produce and air. All to no avail.

But then Bennett and Lieberman focused the spotlight on the advertisers that sponsored these programs. Like magic, the shows were dropped from station lineups.

That's power!

And that's why, in our short time together this morning, I want to explore with you the make-it-or-break-it role that advertisers play in improving quality programming options for children. I also want to examine media concentration in this rapidly changing communications world and its implications for advertisers.

Children's Television

As individuals and as organizations, we form a national community. And as part of that national community, I think we can all agree that we have a collective responsibility to ensure that our children are given the best possible foundation for success. Our children are our future.

One of the dominant forces in their lives is television, a singularly pervasive, persuasive, and powerful medium. Children watch an average of 27 hours of television a week. But I don't need to give you viewer statistics -- you live and breathe them.

Television can educate, illuminate, and entertain. It can also annoy, pollute, and debase. Today, television does too little of the former -- and too much of the latter. For example:

So, the message is clear: our national community is calling on broadcasters -- and their advertisers -- for sober self-assessment and improved service to tomorrow's adults.

Frankly, I think broadcasters have missed an opportunity to show leadership on behalf of children. The Children's Television Act requires every broadcast licensee to serve the educational and informational needs of children. But, most broadcasters have vehemently fought efforts to put meat on the bones of that statute.

As I see it, there are three impediments to the marketplace working for kids:

You -- the advertising community -- can make a difference in each of these areas.

First, program cost: I believe educational programming, to be successful, needs to be programming children will want to watch. It needs to capture and enrapture, to entertain and educate.

There are ample examples of programming that is both educational and entertaining.

How great it would be if advertisers would underwrite such programming for commercial television as well as for public television.

Why don't we have the junior version of the Hallmark Hall of Fame or Texaco's Metropolitan Opera?

Also, let's not just rely on ratings to determine success or failure. There may be ancillary products associated with such programs, for example, the Magic School Bus books and tapes, which have been marketed with great success. That's how the market works for non-educational shows.

Today, syndicators pre-package advertising with programs and clear the time with the dollars. Often, they sell two shows together, the first advertising the action toy featured in the second program and vice versa. With prepackaged, pre-sold product in competition for airtime -- or dollars -- quality children's programming doesn't stand a chance.

So, let's try to think of creative ways of attractively packaging entertaining and educational programming with advertising. Let's give broadcasters a good reason to choose a course that will actually benefit children.

Again, our children are our future.

Secondly, scheduling: I hope our revised definition of core children's programming will include the hours in which it is be aired -- geared to when children are likely to be watching. And I especially hope that we will take the steps necessary to ensure that each broadcaster makes a significant, concrete commitment to serve the needs of children -- every week -- with regularly scheduled shows.

One failure of the children's programming market is that some broadcasters view the "opportunity cost" of providing educational and informational programming to be too high. But the competitive consequences of this consideration fall away if every licensee must meet its responsibility to children in its community.

You can help by seeking opportunities to support these shows. You can also insist that these programs be aired in the dayparts with the best chance of attracting a reasonable-sized audience.

Finally, Promotion: In order for a program to attract an audience, parents and children need to know it exists. It's important for the Commission to require that broadcasters designate which shows they deem educational and to make this information publicly available for use in weekly program listings.

Then, as a purely voluntary matter, I hope newspapers will choose to prominently feature lists of family-friendly fare -- as identified by broadcasters -- and that you, the advertising community, will support that effort. For example, an advertiser could sponsor a special box in the weekly television guide that lists educational programming. What a community-minded statement that would make!

All of the pieces have to fit together. If children and their parents are better able to find these programs, audiences will grow, advertising dollars will flow, and more good programming will be produced.

This is the marketplace at work.

I challenge the advertising community to seize the opportunity to serve our nation's children. Make a conscious decision to support high-quality educational and informational programming. And discourage the airing of gratuitously violent programs and just plain "trashy" talk shows, particularly during the after-school hours when so many children are watching.

Television can be -- and should be -- a family-friendly medium. Advertisers have the clout to make this happen.

Or not.

Media Concentration

Now let me turn to media concentration.

Why do we have ownership limits for radio and TV broadcasting? To foster competition and to insure a diversity of voices in the marketplace of ideas. These are principles I care about.

Having diverse sources of news and informational programs within a local market is important to an informed citizenry. Stated another way, no one person or handful of people should be able to control information flow.

Only through a diversity of voices can we nurture our shared freedom, our common bonds, our national community. And only through spirited competition can we assure that the advertising marketplace is fair and open.

The Telecommunications Act of 1996 increased broadcasting ownership limits, and removed legislative prohibitions on other media combinations within a local market.

The law changes some existing rules and leaves the Commission with discretion as to others. In general, Congress recognized that greater freedom should be allowed on a national level, while certain limits should be retained on the local level to preserve diversity.

In the case of radio, the new law removes all national ownership limits. The only restrictions are at the local level, where various combinations of stations are allowed, depending upon the number of competing voices in the market. Last week, the Commission issued an order adopting these congressional directives.

In the biggest markets, a company may own up to eight radio stations; no more than five in a single band. These could be the top-rated stations in the market.

When it comes to consolidating holdings, many radio groups did not even wait until the ink was dry -- or shall I say the laser pen was turned off -- at the Bill-signing ceremony. There already has been a sea-change in the ownership structure of the radio industry. While I believe local duopolies have been good for radio, it would be unfortunate if everyone must combine into local, multi-station groups to have a chance of competing successfully.

Time will tell whether common ownership of the top eight radio stations in a market will have an adverse impact on advertising. Concentration in media markets may limit competition for advertising dollars -- just as it may limit competition in the marketplace of ideas.

I will be watching these developments closely. I know you will as well.

In the case of television, the new law eliminates the national cap on the number of stations that may be commonly owned and raises the present audience reach from 25 percent to 35 percent.

At the local level, the new statute does not require us to change our existing rules but permits us to consider whether a single entity should be allowed to control more than one TV station in a given market.

I haven't made up my mind on this issue. But in general, I believe that those promoting a change have the burden of showing how increased concentration -- decreased diversity -- would serve the public interest.

And, given the sky-high prices being paid for some media properties, one can imagine that there will be upward pressure on advertising rates and downward pressure on expenditures for quality programming.

In addition to raising in-service ownership limits, the law eliminates the statutory prohibition against broadcasters owning a cable system in the same market (our rules remain), permits broadcast network/cable system cross-ownership, and allows one entity to own both radio and television stations in the top fifty markets.

Cable companies are consolidating ownership as rapidly as broadcasters. In 1995 alone, almost six billion dollars in cable system sales took place. That's not including the Time Warner-Turner deal -- or this year's $10.8 billion sale of Continental Cablevision, the third largest MSO, to US West Media, a Bell Operating Company affiliate.

Last summer, two of the three original TV networks were sold -- one to one of the largest program producers, Disney, and the other to Westinghouse, a mega-station powerhouse.

Where will it end? What will be the impact on the advertising market? What will be the effect on the marketplace of ideas?

All of us have a stake in the answers to these questions.


I hope we all agree that meeting the programming needs of children and promoting a diversity of voices are worthy goals for our national community.

Advertisers have the power -- and the tools -- to make a difference. It is up to you.

Thank you.

NewsMarch 19, 1996

FCC Commissioner Susan Ness Challenges Advertisers
To Support Children's Television Programming

The advertising community should "seize the opportunity to serve our nation's children" and "make a conscious decision to support high-quality educational and informational programming," said Commissioner Susan Ness in a March 14 speech before the American Advertising Federation. She noted that advertisers play a "make-it-or-break-it role in improving quality programming options for children."

Commissioner Ness cited three "impediments to the marketplace working for kids" and suggested ways in which advertisers could use their power to make a difference.

Commissioner Ness also highlighted the issue of media concentration and outlined the changes to ownership rules under the recently passed Telecommunications Act of 1996. She cautioned that "concentration in media markets may limit competition for advertising dollars -- just as it may limit competition in the marketplace of ideas.

- FCC -

Contact: James L. Casserly, Office of Commissioner Ness, 202-418-2100