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Local television ownership:  The FCC tentatively concludes that the current rule, limiting TV combinations to the ownership of two stations in a market, but only where there will be 8 independently owned stations in the market after the combination, and only where the combination is not of two of the top 4 rated stations in the market.  The FCC asks for comments on that conclusion, and on a number of other issues including:

• Whether, in a digital world, it should look at ownership on a DMA basis, rather than relying on Grade B contours that really were an analog concept.  This would be similar to what the FCC does in radio - looking at how many stations are owned and how many voices are in a market based on Arbitron-defined markets
• Should there be waivers of the prohibitions on combinations of stations in smaller markets, where stations might not otherwise be able to support themselves, or support news programming, if they were independently owned?  What standards should govern such waivers?  Do combining stations need to be failing, or does there simply need to be some other public interest benefit of the combination?
• Is the prohibition against the Top 4 stations combining sufficient to preserve diversity in a market, or should a Top 5 or Top 6 rule be adopted?
• Should the sale of an affiliation be regulated, so that a Top 4 station owning a second lower ranked station could not buy the affiliation agreement of another Top 4 station - taking advantage of the FCC's policy of evaluating Top 4 status only in connection with the sale of a license (a reaction to the Honolulu case where a sale of an affiliation took place - see our article here)
• Do digital multicasting, new technologies, and other competition in the video marketplace affect the FCC's tentative conclusions?

Local Radio Ownership:  The current rules place limits on the number of stations that can be owned in each market based on the number of competitors who are in that market.  In the smallest market, one owner can have interests in two stations - one AM and one FM.  In the largest (markets with 45 or more radio stations), one owner can hold up to 8 stations, no more than 5 of which can be AMs or FMs.  The FCC proposes to keep these rules in place, but asks questions including:

• A number of broadcast groups suggest that limits not have the AM and FM subcaps - so that one owner could hold up to 8 AMs or 8 FMs in a single market.  While the FCC tentatively rejects those proposals, the Commission asks for more comments, including whether just allowing 8 AMs under common ownership might be a good idea
• Do Internet radio, satellite radio and other technologies pose a sufficient competitive force in local markets that they should be considered in an ownership analysis?
• Does digital HD radio, with multicasting opportunities, in any way affect the need for the rules, or minimize the need for liberalization of the rules?
• In the largest of markets, should one owner be allowed to hold more than 8 stations - i.e. should the FCC set up tiers where there one owner could own more stations - say allowing ownership of 10 stations in a market of more than 55 stations?
• In what circumstances should waivers of these limits be permitted?

Newspaper/Broadcast Cross-Ownership: The current rules prohibit a newspaper operator from owning a radio or TV station in the same area the newspaper serves.  In 2007, the FCC proposed relaxing that prohibition in the Top 20 markets, and also provided for waivers in smaller markets.  The Third Circuit overturned this decision based on the lack of public comment.  The FCC now proposes that a rule similar to the 2007 decision be adopted, but asks for comments as to exactly what standards should be used to evaluate proposed combinations.  The tentative conclusion is that, in the Top 20 markets, radio/newspaper ownership should be allowed, and newspaper/TV combinations be allowed if the TV station is not a Top 4 station and there are at least 8 voices in the market (one would think that the 8 voices test would be met in every Top 20 market).  But the FCC asks a number of questions including:

• Should the rules be addressed on a DMA basis, rather than on a Grade A contour methodology as is currently the case for TV/newspaper combinations?
• Should cross-ownership be based on tiers established by the number of media voices in a market?  Are the Top 20 markets significantly different than smaller markets?
• Are there circumstances where a waiver should be granted to permit combinations in smaller markets?
• Should additional factors be evaluated in permitting combinations in Top 20 markets? 

Radio-Television Cross-Ownership:  The current rules permit same-market combinations of radio and TV stations based on the number of other voices in a market, but the ownership of a TV station will set for that owner an ownership limit for radio stations lower than that which would normally apply for radio ownership in that market.  The FCC proposes to do away with any restrictions on radio and television ownership - allowing one owner to have the maximum number of each type of station that would be permitted in that market.  This is based on a finding that radio and television stations are not viewed as substantial substitutes by either advertisers or consumers.  The FCC asks for comments on this conclusion.

Dual Network Rule:  The rule currently prohibits the combination of any of the Top 4 commercial networks (ABC, NBC, CBS and Fox).  The FCC concluded that these networks still serve a much larger audience than any cable network or any other broadcast network, and are very important to both advertisers and viewers.  Based on the important role that the networks play, the Commission proposed retaining the rule.  It asks for comments on this conclusion.

Shared Services Agreements:  Given the controversy in Hawaii (summarized here) and the issues that have been raised by public interest groups suggesting that shared services agreements and similar arrangements evade the FCC ownership prohibitions, the FCC has asked if these kinds of agreements should be made "attributable", i.e. if they should count as if they are an ownership interest subject to the ownership rules.  Comments are sought on a number of questions including:

• What are the benefits of such agreements, and the perceived detriments?
• How should SSAs be defined, if a rule against them is adopted?
• Should the FCC not even try to define an SSA, but instead adopt a broader rule that encompasses any kind of significant relationship with a competing station?  (This would seem to imply a return to an old FCC "cross-interest" policy that prohibited substantial interests in competing stations, a policy that was abandoned decades ago as the FCC felt that bright line tests set by the ownership rules should determine what is permitted and what is not)
• The FCC also notes that it has had an open proceeding on the attribution of TV Joint Sales Agreement - radio JSAs having been made attributable years ago, though it gives no indication of when that proceeding will be resolved.

Diversity:  In connection with each of these rules, the FCC asked for comments on the impact that its proposals would have on the ownership of broadcast stations by members of minority communities, and whether other changes in each of these rules would somehow better serve its interest in encouraging diversity in ownership of the media.

Other Issues:  The FCC also summarized a number of studies that it conducted on media ownership and its effect on news, diversity of viewpoints, localism and minority ownership.  The FCC asks for comments on the findings of these studies.

This is a very important proceeding that will be sure to generate much controversy, and much discussion.  When will it be resolved?  My observations are that these proceedings always take much longer than anyone expects.  Moreover, given their potential to be quite controversial, they are not usually decided before a big election, like that coming up in November.  My prediction - don't look for a decision for another year (maybe during the December holidays next year?).  Be ready to file your comments when the date is announced, and participate in the upcoming debate. 

The Commission is also, on a different track, completing its Future of Media proceeding (which we have summarized before).  That proceeding also looks at whether and how the local news and information needs of today's consumer are being met by the media, and how those needs will be met in the future.  This study, too, is expected sometime near the end of the year.  There have been discussions by those involved in these proceedings that the ownership review, while not formally tied to the Future of Media study, will nevertheless look at the findings of that review to inform its discussion of the ownership issues facing the FCC.  If that is in fact the case, and the Future of Media report is not completed until the end of the year, how can the modification of the ownership rules that relies on this study be completed before the end of the year?

The majority of the Commission is new since the last ownership review was completed in late 2007.  Given the emphasis on so many new issues since that time (including the broadband roll out and the proposals to reclaim some of the television spectrum for wireless broadband uses), one wonders if the Commission really will have the capacity to move quickly on the ownership review, which always involved many controversial issues.  And, with issues such as shared service agreements, newspaper-broadcast cross-ownership, television duopoly in small markets, and revisions to local radio ownership rules all seemingly on the table, there is no lack of controversy that will face the Commission this year.  So, prepare your comments, and get ready to let the FCC know what you think by the July 12 deadline.

In assessing the continued effectiveness of its rules or, as the Communications Act puts it, whether these rules "are necessary in the public interest as the result of competition," the Commission set out the multiple goals that these rules are supposed to serve, and asked for comments as to how each such goal should be assessed, and how conflicts between these goals should be resolved.  The goals which the Commission seeks to serve by its ownership rules, and some of the issues addressed in connection with each of those goals, include:

• Competition - the Commission asks for comments on how to measure whether competition exists in a marketplace, how to define the market in which the competition is being evaluated, and what sort of competition it should be assessing.  The Commission suggests many different types of competition which may be relevant to its analysis, including: 
  • Competition between stations for the same viewers or listeners
  • Competition between services (e.g. radio, TV, etc) for the attention and time of the audience
  • Competition between stations for advertising revenue
  • Competition as it affects program providers
• Localism - the Commission asks many questions about localism and the impact of media ownership regulation on localism, including:
  • Whether the traditional focus of localism - the selection of programming responsive to local needs and interests and the quantity and responsiveness of local news - are all that the Commission should look at in assessing localism.  The Commission even asks how "news" should be defined, if news is indeed the appropriate measure of localism.
  • What other metrics can be used to asses localism?
  • Should the Commission attempt to measure the consumer's interest in "local" programming in making its decisions as to whether goals of localism are met by particular rules?
  • Should the Internet and other sources of information be assessed in determining local needs for programming from broadcasters?
  • How exactly do structural ownership regulations contribute to assuring localism?
  • Are the needs of advertisers and program content creators relevant to an analysis of the localism factor?
  • Whether minorities and other identifiable groups within a community are served by local stations, and to what extent each such group needs a separate voice in order to be served
• Diversity - many of the same questions that are considered under the Competition and Localism factors are also discussed under the Diversity criterion.  The Commission asks about various kinds of diversity, and seeks comments on how these various measures of diversity can be assessed, and which are the most important to the FCC's analysis.  Some of the differing diversity issues include:
  • Program diversity - maximizing the difference in programming on stations, which might actually be aided by common ownership, as a common owner is likely to program different things so as to not compete with itself
  • Viewpoint diversity - getting independent viewpoints on important issues to a community
  • Source diversity - whether the source of viewpoints needs to itself be different to serve the public interest, e.g. the same owner could program a conservative talk radio station and a modern rock radio station that might have different viewpoints on issues, but does the fact that one company is behind both have a public interest impact?
  • Outlet diversity - should the Commission be looking to maximize the number of independently owned stations in a market, and should diversity of the owners of these stations be an important goal (i.e. should minority ownership be a goal of the ownership rules)?

These are but highlights of the issues raised in connection with each of the Commission's identified goals.  Many more specific questions about how each of these goals can be best achieved, how to measure the achievement of the goals, and what factors need to be considered in connection with each of these goals, are all part of the NOI.  To get the full impact of the questions being asked, you need to read the full NOI.

The Commission also recognizes that these goals may at times conflict, and asks how these conflicts should be resolved.  It also asks what other issues should be considered.  For instance, should the impact of ownership rules on the status of "investigative journalism" be an important goal in the proceeding?  If so, how is this to be measured and defined. 

The Commission asks what kinds of rules are best to achieve the FCC's goals.  Which of the following types of rules should it choose?

• Bright line rules - these would be rules like those currently in place for local ownership.  If you meet certain numerical limits, your application is granted, no matter what other factors may be in place.  It has the advantage of ease of application and certainty for the parties, but may not take into account all public interest factors
• Case-by-case analysis - this would require that the FCC adopt policies, but not specific numerical rules.  The FCC would have to evaluate each proposed combination on its own merits, and independently assess whether that combination would serve the public interest.  While having the advantage of being flexible enough to catch any issues, it would also be time-consuming and costly, both for applicants and the Commission, and outcomes would not be certain
• Hybrid approach - this approach would use bright line limits, but allow public interest factors to be applied in certain cases to permit or deny certain combinations, regardless of their compliance with the numerical limits, if there are special circumstances.

In addition, that FCC asks if it should apply a broad, cross-media approach - looking at all media in a market, not just analyzing radio with other radio, or TV with other TV.  If so, how would a broader analysis work?

Two other questions were tossed into the end of the NOI.  One asked how the transition to digital operations should affect the rules, as TV no longer has the Grade A and Grade B contours that are specified in the current rules.  The Commission also asks about the National Broadband Plan, and how the FCC's interest in reclaiming some of the TV spectrum, and in the expansion of broadband generally, should impact the multiple ownership analysis.

This is obviously a very broad inquiry, requiring very detailed analysis and much thought to answer the many questions raised by the Commission, but which we have only touched on here. Yet the FCC provides only 30 days for comments, and 15 days for replies (all dates measured from the Federal Register publication, which will occur at some point in the near future).  So get your thinking caps on, and let the FCC know your opinions, so they can figure out where to go from here.