Posted on July 29, 2009 by David Oxenford

A Full Five Person FCC - What's Next For Broadcasters?

For the first time since the term of FCC Commissioner Tate expired and Chairman Martin resigned, the FCC will be back to full strength with the Senate's approval of new FCC Commissioners Mignon Clyburn and Meredith Attwell Baker.  What issues of importance to broadcasters will the Commission, now headed by Chairman Julius Genachowski, take up in coming months?   The new Chairman, who gave a number of interviews last week with the trade and popular press, emphasized the importance of the broadband rollout.  Beyond that, his priorities for the broadcast media were not detailed.  He did, however, emphasize, that any broadcast regulation (specifically referencing the mandatory review of the broadcast ownership rules that must begin next year), would have to take into account the realities of the marketplace - including the current economic conditions.

Beyond that, there were few clues as to the new FCC's priorities in the broadcast world.  But, even though there are no indications of the FCC's priorities, there are many open broadcast issues that the Commission will, sooner or later, need to resolve.  Some involve fundamental questions of priorities - trying to decide which user of the spectrum should be preferred over others.  Other issues deal with questions of what kind of public service obligations broadcasters will face.  And yet another set of issues deal with just the nitty gritty technical issues with which the FCC is often faced.  Let's look at some of these open issues that may affect the broadcast industry. 

In the first category - the issues of priorities of one type of service over another, issues include the following:

  • The priorities between LPFM stations and FM translators and full power stations (see our posts here and here on that issue)
  • Final resolution of the White Spaces issues - implementing the FCC's decision to make TV spectrum available for use by wireless devices, or reconsidering that decision based on the pending appeals by the television industry
  • Deciding whether to take TV channels 5 and 6 and change them into radio channels (see our post here), when a limited number of full power TV stations, as well as a number of LPTV stations are currently using the channels
  • Making a decision about increased HD radio power, which some other FM stations that rely on service at the fringes of their protected contours or or beyond worry would interfere by such power increases

In the second category of issues - the question of what public interest regulations the Commission should impose on broadcasters, issues include:

  • Dealing with the Petitions for Reconsideration of the FCC's decisions to require TV stations to put their public files on line and to complete the Form 355 detailing all of their public service programming in minute detail - rules adopted in late 2006 but never implemented or even sent to the Office and Management and Budget for review of their compliance with the Paperwork Reduction Act
  • Resolution of the FCC's localism proceeding proposing regulations including:
    • A return to mandatory main studios in the station's city of license
    • Manned main studios during all hours of station operations
    • Mandatory public service obligations for broadcasters
    • Consideration of the process for the selection of music on broadcast stations and whether more local music should be required
    •   Potential extension of the TV public file and Form 355 obligations set out above to radio
  • Issues about the Arbitron PPM and whether it discriminates against minority owned stations
  • Resolution of the rural radio proceeding which includes questions about what kind of service stations need to provide to their city of license
  • Decisions on the proposals to mandate stricter sponsorship identification rules allegedly to protect the consumer from being influenced by undisclosed sponsors

Other more technical or procedural issues are also pending before the Commission, including:

And, of course, there are those issues that never go away.  Indecency cases are still pending before the Courts, so the Commission may once again have to face that issue.  And there is that little question of the Fairness Doctrine that just refuses to go away.  I'm sure that there are other issues that have escaped my mind while I'm writing this - but even if there were not, it is clear that the new Commission has plenty to keep it busy without even needing to bring up any new issues for the broadcaster.  And Congress can always give the FCC new things to do, like reregulating children's television programming or restricting prescription drug advertising.  Let's hope that these keep the Commission plenty busy for now, and that they don't have time to start anything new. 
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Posted on November 4, 2008 by David Oxenford

The Promise of an Obama Administration for Broadcast and Communications Regulation

With Barack Obama's historic victory just sinking in, all over Washington (and no doubt elsewhere in the country), the speculation begins as to what the new administration will mean to various sectors of the economy (though, in truth, that speculation has been going on for months).  What will his administration mean for broadcasters?  Will the Obama administration mean more regulation?  Will the fairness doctrine make a return?  What other issues will highlight his agenda?  Or will the administration be a transformational one - looking at issues far beyond traditional regulatory matters to a broader communications policy that will look to make the communications sector one that will help to drive the economy?  Some guesses, and some hopes, follow.

First, it should be emphasized that, in most administrations, the President has very little to do with the shaping of FCC policy beyond his appointment of the Commissioners who run the agency.  As we have seen with the current FCC, the appointment of the FCC Chairman can be the defining moment in establishing a President's communications policy.  The appointment of Kevin Martin has certainly shaped FCC policy toward broadcasters in a way that would never have been expected in a Republican administration, with regulatory requirements and proposals that one could not have imagined 4 years ago from the Bush White House.  To see issues like localism, program content requirements and LPFM become such a large part of the FCC agenda can be directly attributed to the personality and agenda of the Chairman, rather than to the President.  But, perhaps, an Obama administration will be different.

One of the specific proposals of the Obama campaign is the promise to appoint a Chief Technology Officer as a cabinet-level position to help coordinate policy across the many government agencies that deal with technology and communications.  This position would be designed to develop policies that will enhance the competitive position of the United States in the world-wide technology revolution.  Clearly, such a position will create a new executive-level focus on communications policy that will affect the workings of the FCC.  How will this focus impact broadcasters?  With the unanimous bipartisan decision of the FCC on Election Day approving the use of unlicensed devices in the television band, the so-called "white spaces" decision, one might have a glimpse of the kinds of regulatory actions that could be expected from an Obama FCC (though hopefully not an example of the procedures for making that decision).  No longer will the traditional media or established communications companies be favored if there is the potential for some sort of transformative technology that can increase US technological competitiveness.

But the hope for an Obama administration is that the rhetoric of a transformative candidacy, one geared toward uniting the various divides of the country, will seep into the broader workings of the administrative agencies in Washington - that the pitched battles of one industry versus another, or one partisan viewpoint over another, will be replaced by a more cooperative spirit that will move the country, and specific industries forward.  One would hope that this spirit would encourage compromise, and would bring a new openness to government that will allow real discussion to take place on issues, rather than decisions being made based on agendas that are set in stone before the evidence is in and the arguments made.   One would hope that some of the unyielding positions that some regulators have taken on communications policy issues would be more open to persuasion and discussion.

To be more specific, one would hope that an Obama administration would, in the broadcast regulatory arena, be open to recognizing that we have a pretty incredible broadcast service in this country - one that can rapidly adapt to disasters, and can bend and shape itself to the needs and desires of the audience.  While there have been excesses in broadcasting here and there, these tend to be self-correcting, as witnessed by the recent divestitures of many radio and television stations by big groups - helping to bring back some of the localism lost by the industry's rapid consolidation in the early part of this decade. 

Some have feared that the return of a Democratic FCC will result in the return of the kinds of nitty-gritty broadcast regulation that has seemingly been advocated by some quarters of the Democratic party - a return of the Fairness Doctrine, the kinds of detailed programming disclosure requirements that have been adopted but not yet implemented for television broadcasters that impose great costs without any discernible regulatory benefit (see our post here), or the adoption of other specific regulations that increase government mandates without corresponding benefits.

But I am hopeful that an Obama administration would not be one to adopt unproductive regulation.  Clearly, the Obama administration will be one that will want to stress inclusiveness and opportunity for all in the media, and will look for ways to encourage minorities and other new entrants into broadcast ownership.  But if we look at the recent localism proceedings, for instance, we see that many members of the minority community have actually opposed the kinds of specific regulatory obligations that some have attributed to the Democratic Commissioners, as minority broadcasters and other new entrants realize that they need to make a living operating a station - that broadcasting is a business that must generate a profit.  And that specific and detailed regulation take flexibility and innovation away from broadcasters, and usually impact small broadcasters more than large conglomerates.  So an administration that wants to encourage new owners can't engage in a wholesale re-regulation of the broadcast industry.

Do I expect some more regulation?  Of course - but that seems to be a reaction to the current climate for all industries in Washington where there seems to be building a general consensus that that the philosophy of deregulation may have gone too far (see our post here).  But I would look for regulation around the edges, regulation that imposes some public interest obligations on broadcasters but ones that can be lived with - not ones that are imposed simply for the sake of regulation and which can impose a crushing burden on small business. 

From the rumors swirling around DC of the names of potential Chairs of the FCC in the new administration, many have worked at past Democratic Commissions, but many of these have spent time in the business community since leaving the FCC, and are thus familiar with meeting a payroll and the costs of regulation.   I believe that right now, we should keep hope alive and look at the Obama administration as one that may bring a new emphasis to the communications world while not unduly burdening those that are already operating in that world.  It is a new day - let's hope that it is indeed a brighter one for broadcasters.
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Posted on April 24, 2008 by David Oxenford

Want a New FM Station? - The FCC Offers to Help Find One

As part of its efforts to diversify the ownership of the broadcast media, the FCC promised in its recent order on Localism in the media (see our summary here) to have its engineering staff come up with a computer program to help people determine where a new FM station can be allotted by the FCC, opening the process that will result in an auction to determine who gets a construction permit to build that station.  Today, the Commission's staff released a public notice announcing that this new program is now on-line, and that interested people can see where a new FM station will "fit" consistent with all FCC rules that require that certain spacings be maintained between stations on the same or adjacent channels to avoid interference.  The program for determining whether new allotments can be made is available here.  All you need to do is provide geographic coordinates for a potential station, and the Commission's new program will tell you if a new FM station could work there.

As the Commission notes in its Public Notice, the tool will only locate Class A FM stations - the lowest power station - limited to 6 kw of effective radiated power at 100 meters tower height - giving a station a protected coverage radius of approximately 15 miles (though actual coverage may differ depending on factors including terrain and the proximity of other stations).  Also note that simply finding an empty channel does not get you a station.  Instead, a party who finds a channel in an area that they would like to serve must then petition the FCC to "allot" the channel to a specific community that they want to serve.  That proposal is processed by the FCC's staff and, if acceptable, placed on public notice when other parties can comment on the proposal or file counterproposals suggesting the use of the frequency at some other location.  Once the Commission reviews any comments, they will decide whether to allot the channel.  If and when an allotment is made, it still isn't ready for application.  Instead, the FCC saves new allotments and periodically puts out lists of these new allotments available for application - a "window" notice as a precursor to a possible auction.  Interested parties can then file with the FCC indicating interest in the channel and, if more than one person expresses interest in the channel (which virtually always happens), the channel will be auctioned to the highest bidder (though new entrants do get some bidding credits).  All told, the process can take several years from the discovery of the available channel to the award of the construction permit.  But, while the process may not be fast, this new tool provided by the Commission has made it somewhat easier.

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Posted on July 14, 2007 by David Oxenford

Congress Asks FCC to Answer Questions about Private Equity Ownership of Media Properties

In March, we wrote about the concurring opinion of Commissioner Copps in connection with the sale of Univision Communications, where the Commissioner asked whether it was in the public interest to allow the sale of broadcast companies to private equity firms.  That theme has now been picked up by Congress, as Congressman John Dingell, Chairman of the House Energy and Commerce Committee, and Ed Markey, Chairman of the Telecommunications Subcommittee, jointly sent a letter to the FCC asking for answers to a series of questions about the impact of private equity ownership of media and telecommunications facilities.  The letter, here, cites the Univision case, the acquisition of Clear Channel and the sale of a number of Radio One radio stations to private equity firms, and suggests that these firms may be more interested in cutting expenses and maximizing profits to the detriment of the public interest.  The letter asks a number of questions about whether the FCC has adequate information about such ownership to assess its impact on the public interest.

The questions posed by the letter include the following:

  • Whether the FCC currently tracks ownership of media properties by private equity companies.
  • Whether the FCC has assessed the impact of private equity ownership on localism and, if it has not, should it
  • Whether the FCC has adequate information to assess the impact of media ownership by these companies on multiple ownership considerations
  • Whether the Commission's Equity-Debt Plus rules need to be revised to take account of private equity ownership
  • If the ownership of these entities is sufficiently public and transparent for the Commission to review that ownership.

The letter was addressed to Chairman Martin, and he was given until July 20 in which to respond.

As we wrote before, one wonders if the Commission has the manpower and expertise to assess the true impact of private equity in the broadcast field.  How could the Commission make distinctions between private equity funds and other companies that provide financing and investment to broadcast entities?  Don't all companies have the same incentive to maximize profits?  Various banks, finance companies and investment funds have invested in broadcast properties forever, and the Commission's rules seem to have been able to deal with such investment without serious problem.  Why would these investment vehicles be any different? The Commission has rules, like the Equity-Debt Plus rules that limit the financial investments that companies can have in competing media outlets.  One would think that the enforcement of these rules would be sufficient to govern any potential for anitcompetitive effects of private equity.  Similarly, private equity should not affect localism any more than any other non-local management.

Nevertheless, these issues will no doubt be considered in the upcoming proceedings on localism and multiple ownership (whenever those issues are ultimately considered by the FCC).  As Congress examines the role of private equity in other sectors of the economy, expect that these issues won't disappear anytime in the near future.  
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