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The report, prepared by BIA/Kelsey, a company specializing in the financial analysis of media companies, interviewed a number of broadcasters in markets with and without newspaper/broadcast cross-owned combinations to attempt to determine if broadcasters (and minority broadcasters in particular) would identify cross-ownership as a principal competitive concern in these markets. The report concludes that there was little evidence of such cross-ownership as being the cause of financial concerns. Yet, already, certain citizens groups have come out with comments challenging the conclusions reached by the study. See, for instance, these comments of Free Press.

It seems clear that there will always be those who object to any sort of media consolidation – even between newspapers struggling to maintain their place in the media mix in many markets and broadcasters. We have repeatedly posed the question, as originally raised by one member of the DC trade press, if the newspaper-broadcast cross-ownership rule will outlive the newspaper itself. With the continued controversy, and the possibility that the decision will simply be pushed aside until the next Quadrennial review of the multiple ownership rules, that may well be the case.

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).

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 Media Bureau's decision on the purchase of the CBS affiliation was based on the analysis of the rules that currently prevent the combination of any of the Top 4 rated stations in a market.  As the FCC noted, the rule prohibiting the combination looks at the situation at the time of the acquisition of a station.  The FCC, when it adopted the Top 4 rule, specifically stated that it would not penalize stations that grew their audience.  Thus, an owner with a Top 4 TV station could acquire another low rated station in the market, and if that second station eventually grew its audience so that it also became a Top 4 station in that market, the owner would not be penalized for its success.  The review is limited to occurring at the time of the proposed acquisition of the second station.  As no acquisition was proposed in this case (Raycom already owned the second station), the Bureau determined that there was nothing to review.  The Commission did note, however, that in connection with subsequent licensing decisions (e.g. a sale of the combined operation), the situation could be reviewed again - specifically stating that the combination could not be sold together should both stations remain in the Top 4 and the rules remain unchanged.

The shared services agreement with the new MyTV affiliate was also found to be within the FCC's previous decisions approving such agreements (see, e.g. our summaries of cases here and here).  The licensee was deemed to have an economic interest in the success of the station, as it received 70% of station revenues (from which it would have to pay it's operational costs, plus a $208,333 monthly payment to Raycom for the services that Raycom provides).  The public interest groups contended that the reality of the situation was that the licensee of the MyTV station would probably receive little money from station operations, as the potential profits would be eaten up by the monthly payments to Raycom.  The Media Bureau rejected that assertion, finding that the 70% share from which a payment to the shared service provider was within the scope of prior agreements approved by the FCC.

The FCC also found that the licensee of the MyTV station was in control of the station - that there was no unauthorized transfer of control.  Some of the specific factors looked at by the FCC in determining that the licensee maintained control included the following:

• The licensee had a full-time General Manager and General Sales Manager, and leased 4 employees from Raycom, and those 4 employees were specifically supervised and answered directly to the station's employees and performed services only for the station (and not for Raycom's stations)
• The General Manager helped produce the news run on the station (produced with Raycom), and, on a daily basis, vetoed programming offered by the MyTV Network
• The General Manager scheduled station programming, bid for syndicated programming, and negotiated agreements for local programming
• The General Manager produced two editorials each week, that were run on the station
• The General Manager produced a weekly programming report, sent to the station's owner

Based on these facts, and the financial arrangements set out above, the Bureau concluded that the licensee maintained sufficient control over the station based on prior precedent.

 As we wrote last month, Commissioner Copps already stated, when it began its online public inspection file proceeding, that these agreements were an evasion of the ownership rules.  In this case, the Bureau did not seem very comfortable in making the decisions it did, promising to revisit these issues in the upcoming Notice of Proposed Rulemaking on the revisions of the FCC's multiple ownership rules.   Recent press reports indicate that that notice is circulating among the Commissioners now, and will probably be released for public comment soon - probably without any relief from the local TV duopoly rules being proposed.  With the NPRM set to examine shared services agreements, these issues are bound to be matters of serious contention for the next year, as the ownership proceeding makes its way through the Commission.   And this case may not be at an end either, as an appeal to the full Commission is possible.  So look for the very contentious arguments on this very contentious issue to continue. 

These legal obligations require the FCC to jump through a few more hoops before they adopt any new rule - adding another set of factors to analyze in their decision making.  Addressing these procedural issues usually takes an extra page or two at the end of any FCC decision - often a fairly rote analysis, but once in a while giving rise a point of appeal for some party to a particular case or proceeding.  But many times these appeal issues would be ones that would have been raised based on the merits of the decision in assessing whether the decision served the public interest -even without these statutory obligations. 

As to imposing deadlines on FCC actions, in recent years, the FCC has adopted its own shot clocks for many different kinds of actions.  The Media Bureau several years ago adopted processing standards for routine applications, and the Bureau has done a very good job of meeting those and often exceeding those standards.  It is not the routine processing that is usually the problem for the FCC (at least in recent years).  While everyone wants their application processed faster than it is, for the most part the FCC does a quite good job of disposing of the usual application for regulatory approval.   But it's the novel or complex or highly contested cases which are the ones where artificial deadlines, no matter how well intentioned, may not serve the public.  While in some cases, the regulatory drag does kill transactions, especially in rulemaking proceedings, it can also stop FCC actions before there is a clear path to a decision in the public interest.  A rush to a decision can often lead to a bad decision - or a decision where one side or the other takes a big loss, rather than some sort of compromise decision (or at least a decision where something that the side that might otherwise think that it lost at least gets some protections) that often develops over time. 

As difficult decisions take time, the deadlines sometimes get in the way, or are ignored, or become meaningless or mired in politics.  The constant review of the FCC multiple ownership rules has been going on since the early 1990s (if not before) and recent press reports hint that the Notice of Proposed Rulemaking that may be coming out of the FCC with proposals that will insure that fights continue for the foreseeable future.  While Congress has mandated a Quadrennial Review of the ownership rules, the 2003 decision on these rules ended up, after appeals, being rolled into the 2007 decision, which itself was overturned on appeal, and that action is at least a partial cause of the FCC missing the 2011 date for the current Quadrennial review.  With the Notice of Proposed Rulemaking only being considered - and once released it will require more public comment and further consideration before any final decision - my prediction is that the final decision won't be out until after the 2012 elections. But I'm not sure that this long-term consideration is not better than pushing to complete a review quickly, as who knows what would be the result of a rushed action. 

While legislative fixes for regulatory decision making may sound appealing, they may well just add to that delay but requiring more analysis and I- dotting and T-crossing before any decision can be reached.  Certainly, Congress and the public need to keep up the pressure for expeditious decision-making, but whether more rules and governing statutes need to be added to the thicket that must be navigated before anything is ever done remains to be seen. 

In the interim, the FCC rules that were in effect prior to the decision will govern newspaper-broadcast cross ownership issues.  Those rules effectively forbid most combinations.  The FCC has been extending existing combinations that sought waivers while this proceeding ran its course, and has not been flooded with new requests for combinations given the economics of the newspaper (and broadcast) business in recent years.  So effectively little will change while the FCC further considers this matter. As some have observed before, the cross ownership rule may well outlive the newspaper.

On the diversity issue, the Court focused on substance - specifically the FCC's decision to base qualifications for a number of diversity preferences on an applicant being a Qualified Small Business under the rules of the Small Business Administration. The Court felt that the FCC's objectives should have focused more on increasing diversity by adding women and minorities to the ownership of broadcast stations, not on small businesses. The evidence presented to the Court indicated that minority ownership of small businesses was not significantly higher than current minority ownership of broadcast stations, so relying on the small business definition would not appreciably increase minority ownership. The FCC had not used racial and gender classifications, or those dealing with "socially and economically disadvantaged businesses" ("SDBs"), as the Commission felt that there were no constitutionally acceptable basis for determining who would qualify for such preferences. One of the problems, as the Court stated several times, was that the FCC did not have data on the race and gender of broadcast owners to determine if there was a basis for adopting a preference based on those factors.  To pass constitutional muster, a racial preference has to remedy some past discrimination, and the FCC has to know if there is in fact evidence of discrimination in broadcast ownership to even attempt to meet that test.  The new Ownership Reports, as we reported when they were first adopted, are designed to remedy that lack of information.  Because the rules adopted did not result in the goals that the FCC announced - the increase in the diversity of ownership of the broadcast media - the Court determined that the FCC had to further consider these policies.

Both of these issues are headed back to the FCC for further consideration.  How will this consideration take place?  It will be consolidated into the FCC's current quadrennial review of the ownership rules.  We wrote about the questions that the FCC asked in initiating the proceeding here, and we are waiting for the Commission to come out with some more specific proposals for new rules in a Notice of Proposed Rulemaking.  With the guidance from the Court as to the specificity that it deems necessary in any such NPRM, and with the recent announcement that certain academic studies on ownership issues are available for review, that NPRM will no doubt begin to take shape over the next few months.  So, maybe one day (our guess would be late in 2012), the Commission will reach a decision in its 2010 quadrennial review which answers these questions left over from the 2003 Order (though even then, any order will likely not be final).  Ownership arguments are ones that never seem to be completely resolved, so look for us to be writing about these issues far into the future. 

Radio Issues

Radio has fewer unique issues on the front burner in Washington, but at least one is of incredible significance - the performance royalty.  Here are some of the issues facing radio broadcasters:

Performance Royalty:  Even though the performance royalty will have to start from scratch in the new Congress after dying in the Congressional session that just ended (despite having cleared both the House and Senate Judiciary committees for the first time), advocates of the royalty have made clear that they will be pushing on this bill again in the new session of Congress which began this week.  Look for the settlement talks with the NAB to restart now that everyone has returned from their holidays.  As with most issues, this is not an easy one, as the NAB put what many broadcasters thought was its best deal on the table in the Fall, only to have that deal rejected out of hand by the pro-royalty forces.  So don't look for any quick resolution of the issues this year. 

LPFM/FM Translator Issues: At the very end of 2010, Congress passed the long-delayed legislation clearing LPFM stations to operate on channels that are third-adjacent to full power FM operations.  Look to the FCC to adopt rules to implement this legislation, and to finally resolve the issues of what to do with the FM translators left from the 2003 translator window.

General Broadcast Issues

There are numerous issues before the FCC that affect both radio and television broadcasters, some of which have been pending for many years, ripe for resolution, while others are raised in proceedings that are just beginning.  These include:

Multiple Ownership Rules Review:  Last year, the FCC issued its Notice of Inquiry to start its Quadrennial Review of the FCC's ownership rules.  Broadcasters hope that the FCC looks at the relaxation of small market duopoly rules for television and the sub-caps (limiting the number of AM and FM stations that one party can own) for radio, while some public interest groups are seeking tighter rules on ownership, including potentially cracking down on shared service agreements in television.  While the FCC had hoped to have this proceeding close to resolution by this point, the Commission has yet to even issue a Notice of Proposed Rulemaking setting out specific proposals, as certain academic studies on which the FCC planned to rely in making conclusions about the media marketplace, have been delayed.  Delay in resolving ownership issues should  really not be a surprise, as the appeals of the 2003 FCC decision revising the ownership rules, and of the FCC's decision in 2007 slightly relaxing the broadcast-newspaper cross-ownership rules, are still pending.  Look for more action in this proceeding, though probably no decision, this year.

Localism Rules and the Future of Media:  FCC's proposals to impose specific rules on how broadcasters serve the public interest, advanced in its "localism proceeding," are over 5 years old.  The rules that it adopted for television stations mandating on-line public files and detailed reporting on the quantity of news, public affairs, local programming, civic programming , election programming, independently produced programming and many other categories of programing, were adopted over 3 years ago, but have never become effective.  Some had thought that the FCC might be spurred to final action on some of these proposals after its special task force on the Future of Media issued its report as to how media should best serve the needs and interests of residents of their communities.  That report was supposed to have been issued by the end of 2010.  Obviously, that target was not met, so the consideration of all the localism issues seem to be stalled.  But don't be surprised to see that report in the first part of this year, spurring more FCC discussion about these issues - though probably in the form of further comments on the meaning of the report and the impact of its findings on these pending proceedings. 

EEO Rules:  The FCC recently issued some fines for EEO violations by broadcasters, but there are fundamental issues about the FCC's policies that have not been addressed in the 7 years since these rules were first adopted.  Proposals to extend the rules to part time employees, and to require the filing of FCC Form 395 (the form that classifies all employees by race and gender), are still pending.  Also pending are proposals sought in requests for reconsideration of the adoption of the EEO rules that would make the EEO rules comport with today's reality - such as the proposals to allow Internet-based EEO recruiting.  More recently, minority organizations suggested that the enforcement of the rules be suspended until they could be made tougher, as these organizations did not believe that the rules were sufficiently stringent to encourage diversity in the broadcast workforce.  Maybe this will be the year that some of these outstanding issues are finally resolved.

Political Rules:  As more and more money makes its way into the broadcast marketplace for political advertising following the Supreme Court's Citizens United decision, some have suggested that a comprehensive review of the FCC's political rules is in order.  These rules were last reviewed almost 20 years ago, and since then, there have been major campaign reform acts (e.g. the McCain-Feingold campaign reform act or BCRA), and significant Supreme Court decisions repealing portions of that Act.  Sales practices at broadcast stations have also changed, and the FCC has a long-outstanding proceeding on how Internet-based ad sales of remnant broadcast advertising inventory affect lowest unit rates.  With this being an off year before what will no doubt be a huge political year in 2012, if the FCC is going to review the political rules, this would be the time that it should be done.

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Many other issues may be decided through Court actions.  We just saw a ruling on indecency issues this week, and the appeals on that subject may well bring the issue back to the Supreme Court.  So expect more thrashing about on indecency this year, as a final court decision will likely be some ways down the road. 

While not really DC issues, copyright proceedings to determine ASCAP and BMI rates for both radio and TV could also be important.  Renewing old agreements or, particularly for radio, the potential reduction of obligations for music royalties to these organizations, are likely to be the subject of litigation that will take place this year.  Noncommercial broadcasters may also have to asses these issues, as the Copyright Royalty Board has just issued a notice commencing a proceeding to decide the royalties paid ASCAP, BMI and SESAC by noncommercial broadcasters for the next 5 years.

With their online activities becoming more and more important to broadcasters, actions that could affect advertising and on-line programming become ever more important.  One of the major areas likely to be considered this year that could affect online businesses is in the area of privacy regulation.  Both the FTC and the Commerce Department recently issued proposals for privacy regulation (see summaries of these reports from our firm's Broadband Law Advisor Blog, here and here), and Congress has been considering this area as well.  Look for more action here, and assess its potential impact on Internet advertising, recommendation software and other business practices. 

These are but some of the legal and regulatory issues that will be facing broadcasters in the upcoming year.  Each year, we make these predictions, and there are always numerous other issues arise that we did not anticipate.  So watch the trade press and the pages of this blog to see what trouble Washington can make for broadcasters as this year progresses.

The Commissioner suggested that a relaxation of the ownership rules, which is currently under consideration (see our post on the pending Notice of Inquiry on the multiple ownership rules), could help existing media companies compete in the new media world.  We've written before about the concern that the prohibition against the cross-ownership of broadcast stations and daily newspapers (except in the largest markets where waivers are available, see our post here) might well outlast the newspaper.  But there are other issues to be debated - whether to allow radio broadcasters to own more stations in their markets (to compete with Internet and satellite radio which can both provide hundreds of channels of programming to any market).  And whether to allow television consolidation in smaller markets where economic realities seem to be dictating that independent television stations may not be able to survive.  These efforts will, of course, be subject to debate, as many still react with an almost automatic suspicion of more media consolidation (see our post on the opposition to shared services agreements in the TV world).  These issues, too, should play out in more detail in the coming months, as the FCC releases its Notice of Proposed Rulemaking on reform of the multiple ownership rules, where it will set out in more detail potential changes in the ownership rules that it will seriously consider in its Quadrennial review of these rules.  Watch for more on this proceeding, probably late in the year. 

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. 

These decisions make clear that the Commission is carefully thinking about its position on these agreements.  While there is no certainty where that thinking will come out (whether it will uphold its current policy or evolve its thinking on the matter), the issue is clearly being considered.  We have written about how certain public interest groups have targeted these agreements for FCC scrutiny in some of the preliminary hearings on its quadrennial review of its multiple ownership rules, and we expect more discussion of them in coming months.  Supporters of these agreements, who believe that they provide the only way that many smaller television stations can survive in today's media marketplace, will no doubt be heard as well.  Watch for this debate to unfold in coming months.