FCC Plans Public Workshops to be Held in Connection with Its Review of Broadcast Ownership Rules

In a Public Notice issued yesterday, the FCC announced that it would do a series of open "workshops" in connection with its review of the broadcast multiple ownership rules - the rules that restrict the number of radio or television stations which one party can own and which restrict the cross-ownership of radio and TV stations and newspapers in the same market.  The FCC is poised to begin its quadrennial review of the ownership rules in 2010.  The open proceedings just announced (without details of how many workshops will be held) will be used to gather information for the Commission's review of the rules. According to the public notice "the Commission will seek viewpoints and information from a broad range of experts; consumers; public interest and trade associations; labor unions; media industry representatives, both traditional and new; and other interested persons,"  as the first step in this review process. So what is this all about?

As part of the Telecommunications Act of 1996, the FCC was instructed to do a regular review of broadcast multiple ownership rules, seemingly with the intent of reducing the prohibitions of those rules as part of the general deregulatory spirit of that Act.  Originally, proceedings were to review the rules every two years, a Biennial Review.  However, those reviews kept dragging on and becoming consolidated with each other so Congress eventually amended the law to require that the review take place only once every four years.  But each time the FCC has taken action on the rules, especially any time there has been any liberalization, there has been a major outcry from consumer groups that they were left out of the process.  Perhaps the just announced hearings are an attempt to short circuit that protest by getting the public involved even before the process begins.

Some of the fears of the public being left out of the process arose in connection with the ownership review that was completed in the summer of 2003, when the FCC concluded that local television ownership rules could be relaxed, as could the prohibitions against the cross-ownership of radio, TV and/or newspapers in the same market.  Then-Chairman Michael Powell was criticized by many for leading this reform without any serious public input.  After the decision was made, Commissioners Copps and Adelstein led their own public hearings around the country, causing the Chairman to initiate a series of his own public hearings on the performance of broadcasters in serving their communities, which led to the still-unresolved localism proceeding

But even with hearings, the Commission isn't assured that there will be no public outcry when it changes its rules.  In late 2007, after the localism hearings and hearings on the changes in the ownership rules, the Commission finally got around to its re-consideration of the 2003 decision, which had been thrown out by the Court of Appeals, .  The 2007 decision, loosening only the cross-ownership rules between television stations and daily newspapers in the largest markets, was met with a hail of protests that the public didn't have a sufficient opportunity to comment on the final rules themselves before the Commissioners voted on them (even though the Chairman did reveal his tentative conclusion a month before it was voted on, giving the public a limited comment period).  Even with all that public input, the decision was met with a Congressional hearing and serious complaints about the process

Whether the Commission, whenever it finally gets around to completing the upcoming quadrennial review, will let the public review and comment on any new rules before they are finally adopted remains to be seen.  But, seemingly, no matter what the decision and the process by which it is made, someone will be disappointed and will complain that the process was unfair.  Perhaps that is just the essence of Washington. 

David Oxenford Updates Kansas Broadcasters on Washington Legal Issues

David Oxenford provided a legal update on Washington issues to the Kansas Association of Broadcasters Annual Convention in Topeka on October 19, 2009.  His presentation - What Broadcasters Need to Know About What to Expect from Washington in 2009-2010 - discussed issues including the proposed broadcast performance royalty, localism and multiple ownership proceedings at the FCC, LPFM changes, and advertising and sponsorship identification policies.

A copy of Dave's PowerPoint presentation is available here.   

Push to Complete Multiple Ownership Overhaul By the End of the Year

According to an article yesterday in Broadcasting and Cable Online, and another article in the New York Times today, Chairman Martin of the FCC is looking to complete the multiple ownership proceeding (which we summarized here) by the middle of December.  According to the Times article, the Chairman is looking for relaxation of the current newspaper-broadcast cross ownership rules - the prohibition on the ownership of a broadcast station and a daily newspaper in the same market.  What the Chairman has in mind for the rules regarding local radio and television ownership is less clear.  But, no matter what is planned, forces are already mustering to attempt to delay the Commission action.

Contemplating a December action is certainly aggressive.  The Commission had promised to complete the two sets of public hearings - one on the ownership rules and a second on the localism provided by broadcasters - before reaching conclusions in this case.  Each set of hearings still has a final hearing to be held.  The Commission has yet to officially announce the date and location of either of these final hearings - though press reports have indicated that the Commission may look to hold one at the end of the month on the West Coast, and the final hearing in Washington, DC in early November.  In addition, the Commission has just received the final set of comments on the proposals to foster minority ownership, which the Third Circuit had indicated was to be part of the analysis in this proceeding when it stayed the effect of most of the Commission's 2003 multiple ownership decision and remanded that decision to the FCC for further consideration.  With the comments on minority ownership just having been filed, and comments on the Commission's own studies on the effect of consolidation not not due until next week (see details), and replies due early next month, does the Commission really have time to consider the issues raised in these comments in this proceeding and reach a December decision, or will some issues need to be delayed for independent consideration?  Seldom has the FCC finished any proceeding within a month and a half of the end of the public comment period - much less an important and controversial one like multiple ownership.

While the Commission's direction on newspaper cross ownership seems clear, less certain is the final result on the issues of the local ownership of broadcast stations.  While some television stations have pushed for greater ability to combine the ownership of local television stations, especially in smaller markets where such combinations can now only be established through waivers based on severe financial hardship (which take a very long time to process) or through arrangements that stop short of complete ownership or even direct combination of programming (see our description of one such shared service agreement, here).  With the increased costs of digital operations and other business challenges, many small market stations have been hoping for some regulatory relief, though convincing the Commission to allow less ownership diversity in small markets is always a difficult sell - no matter how good the economic justifications. 

Following the Commission's 2003 multiple ownership decision, the only significant portion of the decision to become effective was the tightening of the radio ownership rules.  While there have been some calls to relax the local ownership rules for radio, these calls seems somewhat muted -especially when contrasted with the calls from newspaper owners to be allowed back into broadcasting, and even when compared with the pleas of small market television for more ability to combine operations.  But, in connection with recent transfers of control of several large radio companies, there are numerous radio stations held in trust, awaiting disposition.  These trusts were formed because, after the 2003 tightening of the rules, certain local radio clusters were no longer in compliance with the rules.  The transfers of control triggered a divestiture requirement.  Could companies look to relief from the divestiture requirements through these upcoming rule changes?  And could the outcome of the proposed XM-Sirius merger affect the decision on local radio ownership?  If the Department of Justice and the Commission allow the merger by finding that these companies are not forming a monopoly in the satellite radio market because they are instead part of a larger market for audio services, wouldn't radio also be part of that greater market, and wouldn't that call for allowing more consolidation?  If one company can own 300 channels in a market, why should another be restricted to 8 (or maybe 13 or 18 should one consider what would happen if FM multicasting in the new IBOC digital radio format becomes more prevalent)?

Already, the anti-consolidation forces are beginning to muster opposition to any rapid resolution of the proceeding.  According to yesterday's Broadcasting and Cable report, the Senate Commerce Committee promised a hearing on the plans to bring the case to a close, while at least two Senators (a Democrat and a Republican) have already written the FCC a letter asking for a delay in the proceeding.   The anti-consolidation forces are also rallying to stop the decision (see the Press Release from the Stop Big Media Coalition, here). 

With so many questions to be answered, and the opposition that is already forming, we will see if the December decision is a real target - or but a trial balloon floated to see if anyone was paying attention.