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Reagan’s Imprint

6/13/2004 8:00 PM Eastern

The Great Communicator didn’t ignore communications policy.

As America mourned President Ronald Reagan’s death on June 5 after his long, private battle with Alzheimer’s disease, he was largely remembered for his big domestic and global achievements: Taking the U.S. economy to new peaks and winning the Cold War without triggering Armageddon.

But the Reagan administration also coincided with major changes in media and telecommunications policy in the decade of the 1980s, triggered by the deregulatory agenda that Reagan brought from California, one which still animates much of today’s telecom policy debates.

During his eight years in the White House, Reagan presided over big changes. His government permitted the breakup of AT&T Corp., the deregulation of the cable industry, and the elimination of certain content controls on radio and television broadcasters that planted the seeds for partisan talk radio dominated by conservatives like Rush Limbaugh and Sean Hannity.

“It’s clear that Ronald Reagan’s policies across the board were an important foundation point for the explosion of business in multiple industries of the last 20 years,” A&E Television Networks CEO Nickolas Davatzes said. “I think he will be recognized as one of the two really great presidents of the last century, Franklin Roosevelt being the other one.”

Reagan was known as the “Teflon president,” a moniker he earned after his conservative base refused to punish him for committing political heresy, such as raising taxes to help close the budget deficit.

SOME MEDIA SLIPS

The Gipper slipped a time or two in the conduct of media policy, particularly if an industry had a nostalgic inroad.

Reagan — after some personal lobbying by his old agent, Lew Wasserman — agreed to retain primetime programming ownership controls on ABC, NBC and CBS in an effort to keep billions of dollars in syndication rights flowing to Hollywood studios.

“Reagan would make a stumble like any other mortal, so his heart trumped over his head in this narrow sector. It’s not what I would consider a cardinal sin, given the hundreds of other decisions he had to make. If he made one exception for the home team, so be it,” said Bruce Fein, general counsel at the Federal Communications Commission from 1983 to 1984.

Reagan’s first telecommunications issue was probably the biggest: the breakup of AT&T. For a century, Ma Bell was a regulated monopoly. The Justice Department wanted to bust up the old Bell system to allow new players like MCI Inc. to compete for long-distance customers.

MCI was effectively precluded from the market owing to legal and regulatory barriers that allowed AT&T to protect its monopoly by establishing prices that were propped up by cross-subsidies, all in the name of ensuring that every American had affordable phone service.

HE BACKED BAXTER

Justice Department lawyers filed suit in 1974 that called for the largest reorganization in U.S. corporate history. In early 1982, AT&T and Justice reached an agreement which required AT&T to spin off 22 local phone companies that later became the seven regional Baby Bells.

Reagan’s role was to settle an internal dispute. Defense Secretary Caspar Weinberger opposed the AT&T breakup for national security reasons, putting him at odds with Assistant Attorney General for Antitrust William Baxter.

Despite his reputation as a defense hawk, Reagan supported Baxter.

“There was furious lobbying by Cap Weinberger against breaking up AT&T and the president stood by the Department of Justice and Bill Baxter,” Fein recalled.

A maturing cable industry was another beneficiary of Reagan’s deregulatory policies.

In 1984, Reagan signed legislation that led to cable’s first big boom and established the industry as a serious rival to broadcasters.

The bipartisan law phased out local rate regulation and limited the ability of local government to make unreasonable demands on cable companies seeking or renewing franchises.

A key provision in the new cable law smacked of protectionism. It barred the Baby Bells from entering the cable business within their local phone markets.

That ban was lifted in 1996, just as it appeared the U.S Supreme Court was going to rule that it violated the First Amendment.

CABLE SOARED

The 1984 Cable Act permitted cable companies to invest in programming and facilities with the knowledge that price controls wouldn’t rob operators of the opportunity to recover their costs from subscribers.

In the last five years of Reagan’s presidency, the number of cable subscribers rose 41%, from 15.2 million to 37.2 million, and the average monthly expanded basic cable bill jumped 70%, from $8.98 to $15.21. (The sharp rise in cable prices would later become a political liability for the industry.)

Cable caught a break because Reagan’s 1980 election swept Senate Republicans into power, though the House remained in Democratic hands.

James Mooney, president of the National Cable & Telecommunications Association two decades ago, said the Reagan administration left the writing of the new cable law to Congress.

“They really didn’t have that on their radar at all. I mean, they certainly didn’t harm it. I remember at the beginning of the process we got a little flak from the Antitrust Division at the Justice Department, but they went away after a while,” said Mooney, now a lawyer in Seattle.

Sens. Barry Goldwater (R-Ariz.) and Bob Packwood (R-Ore.) took the lead in crafting a bill harmonious with the aims of the new Reagan White House.

“It was a philosophy that was shared by Senators Goldwater, Packwood and others that were on the [Commerce Committee]. It was they who told me to start drafting a cable bill in 1981,” Christopher D. Coursen, a top Commerce Committee aide then, recalled.

The cable law, he added, “was absolutely consistent with Reagan’s philosophy: remove government regulation wherever possible and allow the marketplace to flourish.”

'FAIRNESS’ ENDS

Broadcasters won a big one under Reagan, too. In 1987, the FCC eliminated the Fairness Doctrine, a rule requiring TV and radio stations to cover controversial issues in a balanced manner.

The commission concluded that the nation was served by a sufficient number of media outlets to justify the doctrine’s repeal.

Fein said that after the Fairness Doctrine was abolished, radio and TV stations became more daring because they didn’t have to worry about being fined for excluding a point of view from a broadcast.

“There was a perverse incentive to only broadcast blandness,” Fein said. Elimination of the rule “enabled radio and TV stations to be more feisty in presenting controversial issues.”

Media and telecommunications policy was at the periphery of a Reagan White House preoccupied with economic recovery and the Cold War’s endgame. But on Reagan’s watch, media controls started to come off, triggering a debate over media power that exists today.

“Under Reagan, our media system became more consolidated. We have never recovered from the Reagan era. Diversity and quality was lost,” said Jeff Chester, executive director of the Center for Digital Democracy, a liberal advocacy group.

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