The FCC this week released the full text of its decision on the revision of the multiple ownership rules that it adopted at its December 18 meeting. While the text goes into great detail on the decision to relax the newspaper-television cross ownership restrictions (causing the ruling to be condemned by consolidation critics), the order is very brief in addressing the numerous other issues with the multiple ownership rules that were raised in this proceeding. Television broadcasters sought greater opportunities to consolidate in local markets, and radio broadcasters requested reconsideration or clarification of various aspects of the Commission's 2003 decision adopting Arbitron market definitions as the basis of the determining how many radio stations are in a particular market. These requests were all rejected, some summarily. Will these parties who were denied relief from the FCC protest as loudly as the critics of the decision with respect to the relaxation of the TV-newspaper cross ownership limits?
We summarized the decision with respect to the newspaper television rules here. That summary was based on the statements made at the December 18 meeting and on the press release issued that day which provided a brief summary of the Commission's decision. The outline we provided in December was basically accurate, and there were few surprises about the newspaper-television cross ownership rules in the text. The Commission was very thorough in documenting the basis for its decision that newspapers and television stations could be commonly controlled without adversely affecting the public interest, citing a legion of studies supporting their decision, while carefully refuting the studies supplied by consolidation critics. However, the remainder of the decision, dealing with other aspects of the multiple ownership rules which the Commission refused to change, contained reasoning which was far more limited. In some cases, particularly dealing with radio issues, the reasoning was almost absent.
About the only new information found in the text dealing with the newspaper-television cross interest decision was the details of several waivers granted by the Commission allowing the permanent continuation of certain existing combinations of newspapers and television stations. The majority decision emphasized several factors favoring those waiver grants, including the economies recognized by these combinations, the increased public service that these economies permitted, and the business stability promoted by the permanent waivers. This decision prompted significant objections from the Democratic Commissioners arguing that many of the owners who had been granted waivers had entered into the cross-ownership situation knowing that the combinations were not permitted by the rules in effect at the time, so that looking at business stability was rewarding these owners for making a decision that they knew was contrary to the FCC rules (the Commission could not block the purchase of a newspaper by a broadcast station owner, but could later refuse to grant a television station a license renewal if their owners had acquired a newspaper). The Democrats argued that the standards used to permit these waivers would permit almost any waiver - reinforcing their position that the standards written into the rules would allow far too many combinations to go forward.
The Commission did, however, hold off on grants of certain newspaper-television combinations where the combinations involved more than one newspaper or television station in the same market. In those cases, the Commission stated that it would hold additional proceedings to determine if these existing combinations should be permitted to continue. With these waiver decisions, and the Democratic opposition, public interest groups have already indicated that they will appeal the Commission's relaxation for the ownership rules.
What has drawn less attention and, so far, less protest, are the ownership rules that the Commission did not relax. On the issue of TV duopoly, the Commission was facing a remand from the US Court of Appeals, which had questioned the FCC rules limiting local ownership combinations of television stations to situations where there would be eight separate TV owners in a market after the combination, and prohibited combinations of any of the top 4 stations in a market. The text of the decision, rather than relying on well-developed analysis of detailed economic showings submitted by the parties (as was done in the analysis of the newspaper-television analysis), the Commission cited some anecdotal evidence submitted by a few parties, and came to the conclusion that it would not change it rules. No significant analysis is given to arguments that in smaller television markets, to have a viable fourth station, a combination is necessary.
On the TV duopoly issue, there was at least some discussion and analysis. Radio received even less consideration. The Third Circuit, in remanding the Commission's 2003 decision, asked the Commission to determine whether its numerical limits on the number of AM and FM stations that one party could own made sense - especially as stations have different coverage areas and different size audiences. Should all of the stations count the same? The Commission read the court's question at its most narrow - whether the Commission should allow more AM stations to be co-owned than allowed by the current limits. The Commission concluded that some AM stations still are successful (again based on a few examples of AM stations that are still rated well rather than an extensive economic analysis of the AM radio segment of the industry), and concluded that the cap on AM ownership should not be relaxed.
The question asked by the Court could be read in a much broader context, that the Commission should consider the relative power and reach of stations before determining how much they should count in any multiple ownership analysis. At least one party raised exactly that issue - whether a small Class A FM stations should count the same in a multiple ownership analysis as a large Class C FM station. One example was posed where two Class A stations that are simulcasting in order to cover a geographically large market. Should those two stations really count twice as much toward a licensee's ownership limits as a Class C station that totally encompasses the area served by the two Class A stations? The Commission chose not to address that issue, concluding only that the rules that it had adopted had not been specifically overturned by the Court, so there was no reason to revisit them now.
Similarly, several parties asked for reconsideration of other aspects of the radio rules, including the rules dealing with grandfathering of ownership situations that did not comply with the rules adopted in 2003. The Commission indicated that some grandfathering provisions would be dealt with in the Diversity order decided on at the December 18 meeting (though the full text of what was decided still has not been released). Other clarifications or requests for reconsideration - including proposals for grandfathering of existing Joint Sales Agreements (or simply reconsidering the decision to make joint sales agreements attributable) were denied, basically with no reason except that the rules were adopted in 2003, not overturned by the Court, and therefore the FCC decided not to revisit the issue now. As the Commission obviously decided to reconsider some aspects of the 2003 decision (e.g the grandfathering provisions considered in the diversity proceeding), how they can ignore other issues simply based on the fact that the Commission once decided the issue? The purpose of reconsideration is to give the Commission an opportunity to revisit and review a decision that it made earlier, to consider points not examined or potentially decided incorrectly when the initial decision was made. To refuse to even address the substance of the issues raised on reconsideration seems to defeat that purpose.
In short, with the issues that were decided, and those that were not, its likely that we have not heard the last of the ownership debate. Court appeals are probable, and legislative intervention is even possible (Senator Dorgan has reportedly promised to introduce a resolution to overturn the decision). So keep watching this space.