Wednesday, January 5, 2011

For Profit/Nonprofit Media Joint Ventures: The Comcast-NBC Merger and Nonprofit Media

Undoubtedly, many of our readers are much better informed on the issues regarding the role of the media in society than I am.  I have a general understanding that the media in a free society should not be monopolized either by private concerns or government.  Nonprofits play a role in ensuring the independence of the media, broadcast or otherwise, to include the internet, by making media content and creation more accessible to the proverbial "voiceless" people in society.  So a recent NY Times article regarding the proposed acquisition of NBC by Comcast caught my eye.  The headline states that "Nonprofit News May Thrive in Comcast Takeover."  Without having the qualifications to really analyze the headline, I can only rely on the generally intuitive notion that news controlled by neither capitalists nor government is a good thing.  The article generally touts the increased access to news and information brought about by the nonprofit sector:

Cooperative arrangements such as this advance the commission’s interest in ensuring that all Americans have access to vibrant, diverse sources of news and information as well as promoting the positive effects of the digital revolution on news-gathering, journalism and information dissemination,” the company stated in the letter. It said it would keep the arrangements with the nonprofits in place for at least three years.

The article is not very useful though in describing the importance of maintaining media diversity, including a media that generates access to low-income or marginalized (for whatever reason) communities and also including efforts to expand internet access to low-income homes.  But in a letter to the FCC, Comcast generally described the initiatives it seeks to accomplish via partnerships with nonprofit media.  The letter includes a committment by Comcast to make internet access available to low-income homes at a cost of $9.95 per month, provide computer hardware for low-income families at a cost of less than $150, and provide free installation of internet service.  Incidentally, these are the types of concrete committments to serving the poor I think were missing from early joint ventures involving nonprofit and for profit health care. 

Within 12 months of the closing of the transaction, at least half of the 10 owned-andoperated NBC stations will have in place cooperative arrangements with locally focused non-profit news organizations that provide reporting on issues of particular concern toeach such station’s market and/or region (“Online News Partners”). The selection of appropriate Online News Partners will be made by NBCU in its discretion, taking into account such factors as the initial and continuing availability of a viable Online News Partner in each NBC O&O market; adherence by the Online News Partner to standards of journalism compatible with those of NBCU, including accuracy, fairness, and independence; and the overall level of professionalism exhibited by the Online News Partner. The cooperative arrangements are intended to be similar in approach and level of involvement to the arrangement in place as of the date of the adoption of this Order between NBC O&O station KNSD-TV, San Diego, and the website “Voice of San Diego,” including, as appropriate: story development, sharing of news footage and other content resources, financial support, in-kind contributions, shared use of technical facilities and personnel, on-air opportunities, promotional assistance, and cross-linking/embedding of websites.

Comcast has a plan to substantially increase broadband adoption in low-income homes throughout Comcast’s service area. In households in Comcast’s service areas with annual incomes below $20,000, broadband adoption rates are at approximately 40 percent. More than a quarter of those homes include students who are eligible for free lunches under the National School Lunch Program (“NSLP”), a commonly accepted indicator of need. (Qualifying homes have annual incomes of less than 130 percent of the poverty level.)

To increase access to the anytime, anywhere future that this transaction will deliver, we believe that a comprehensive plan that addresses three key barriers to adoption identified in the National Broadband Plan – reducing the cost of broadband access for low-income homes, the lack of a computing device in the home, and the absence of digital literacy – will give us the opportunity to boost the number of low-income homes using broadband in Comcast service areas.

Its reassuring to see this sort of concern by the FCC.  I wonder, too, whether the IRS (or the tax code in general) should have a role.  I am not quite sure if all the chaos regarding for profit/non-profit partnerships (generally applicable to hospitals) is relevant to the discussion of partnerships between for profit and nonprofit media.  The joint venture rulings are so very idiosyncratic to the health care industry.  But for the sake of academic argument I can think of some concerns that should be addressed with regard to the potential request for tax exempt status made by future nonprofit media outlets who want to partner with Comcast.  Essentially, those concerns relate to whether Comcast or other for-profit content providers unduly benefit from a relationship with nonprofit, tax exempt media content providers and whether a joint venture can be justified by increasing access to underserved communities.  I don't think this is an area previously explored -- and maybe we don't need to slow down the process by raising the issue until there is evidence of abuse.  Lord knows, the regulation of joint ventures in the health care arena seems to have impeded the provision of health care to poor people, even if as a result of legitimate concerns.  But joint ventures between for-profit and nonprofit media seems an interesting area of exploration.

dkj

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