The FCC's multiple ownership proceeding was going to be decided at last, before Christmas, or at least that was what was suggested by many news reports as recently as early last week. Published reports suggested that a draft proposal was circulating at the FCC, and that it was expected to be acted on in December – perhaps at or before next week's open meeting. That timetable now seems to be out the window, as the FCC has asked for additional comments on the summaries of the information gleaned from the FCC Form 323 Ownership Reports as to minority and female ownership of broadcast stations released late last month. The summary of those reports showed low levels of minority ownership in many parts of the broadcasting world. As the Third Circuit's remand of the last multiple ownership order (which we summarized here) was based in part on the Commission's failure to address the impact that its minor liberalization of the newspaper-broadcast cross-ownership rules would have on minority ownership, this request for additional comments seems addressed, at least in part, to addressing that perceived deficiency.
The request for comments gives a short deadline, with comments due the day after Christmas, and Replies on January 4. This indicates that there still is a push to get the ownership proceeding resolved early next year. With this push on, it seemed like a good time to review some of the more controversial issues likely to be addressed in the upcoming order.
The area where the most arguments seem to be centered, and the one most likely to be impacted by the data on minority ownership, is the cross-ownership rules. In the Notice of Proposed Rulemaking in this proceeding (see our summary here), the Commission proposed dropping the remaining restrictions on radio-television cross-ownership, and relaxing the newspaper-broadcast cross-ownership restrictions, which the FCC attempted to do in 2007, only to be rebuffed by the Third Circuit. We have observed how some pundits in Washington have mused that the newspaper-broadcast cross-ownership restrictions may well outlive the daily newspaper, and that seems to be the debate now, as advocates of relaxation argue that combinations will help economically challenged newspapers, while also promoting more news on broadcast stations in such combinations. Opponents, on the other hand, fear that combinations will lessen minority ownership in markets – either by foreclosing opportunities for minority buyers, or by buying minority-owned stations.
The other issue likely to be addressed in the proceeding is the treatment of Shared Services Agreements and Joint Sales Agreements for television stations. The question here is whether these agreements should be "attributable", i.e. whether they should count in a multiple ownership analysis so that if you can't own a station, you can't, for instance, have a JSA with it. We warned that this seemed to be a target for public interest groups when this Quadrennial review of the ownership rules first began in 2009, and it is still being debated today as the issues are being considered in concrete form by the Commissioners. Many of the same issues that arise in the cross-ownership debate also arise here – whether the effect on diversity is such that it is more important than the economic efficiencies that are recognized by such operations – as many broadcasters submit that many small-market television stations would cease operations or drop local news but for their relationships with other stations in the market. The NAB has recently pointed out, as well, that MVPDs in many markets have their own joint sales agreements, so it seems unfair not to allow single-channel providers like TV stations to enter into such arrangements.
Ways to encourage minority ownership and other diversity in broadcasting is also likely to be addressed in the proceeding. Questions of the promotion of incubators for minority ownership, waivers or certain grandfathering rules, and the return of the tax certificate have all been discussed in this context. See our past article for many of the other proposals to encourage minority ownership that have been raised before the FCC. Given the Third Circuit review, the issue is bound to be extensively addressed by the FCC.
There are certain to be other items clarified in the decision as well. The NPRM suggested that the radio sub-caps (limiting the owner to a particular number of AM or FM stations in a market) should at least be reviewed, and the criteria for waiving ownership rules, e.g. in the instance of failed or failing stations, would also be analyzed. So, while the decision is unlikely to be in the Christmas stocking of any of the parties involved in the proceeding, by Valentine's Day participants may well have one more reason to celebrate (or another reason to dread the day depending on your position and the ultimate outcome).