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In this proceeding, the procedure has been somewhat different.  The Commission's Notice of Proposed Rulemaking really did not suggest any proposed rules - instead just asking a number of questions that gave little guidance as to what the Commission was really thinking about doing to reform the ownership  rules (see our summary here).  The original Notice was much more akin to a Notice of Inquiry, which asks for general guidance on a subject, and then usually leads to a more specific Notice of Proposed Rulemaking.  Here, the Chairman's Public Notice was really the public's first look at what the proposed revisions to the rules would look like - and the suggestions seem to be those of the Chairman only, not those of the full Commission (or even necessarily a majority of the Commissioners).  And, instead of providing an opportunity for comments and replies and informal lobbying and advocacy, the Public Notice gives only a single date of December 11 for comments, and then seems to contemplate an FCC decision the next week (leaving no time for informal lobbying after the comment date, as there is a 7 day quiet period, where no lobbying is permitted, before a decision to be made at an FCC open meeting). 

In looking at the specifics of the proposal, one is struck by how many issues it leaves unanswered.  One would think that these issues will have to be addressed in any final order issued by the Commission.  The Notice of Proposed Rulemaking asked about a number of subjects that seem to have been ignored by the Chairman's proposal.  For instance, small market television stations have long been clamoring for some relief from the rules that only allow TV combinations in markets where there are eight separate TV owners.  Small market owners have long contended that in the very small markets the only way to start a station that is not affiliated with a major market is to run it in combination with another station - and certainly the only way to be able to afford local news on one of these stations is to have a second station that can share the costs.  And with the costs of the digital transition fast upon stations in these market, who have a limited revenue base from which to pay for the costs of the digital conversion (costs that are essentially the same as the costs for a large market station with far greater revenue opportunities), many of these smaller stations are hurting economically.  Yet there is no mention of small market duopoly relief in the Chairman's proposal.  Given that the US Court of Appeals, in a case brought by Sinclair Broadcasting, ruled that the Commission needed to provide more justification for its rules limiting TV duopolies to markets where there would be 8 independent owners after any combination, and prohibiting combinations among the Top 4 stations in a market, it would seem that this issue needs to be addressed and justified in any order of the FCC. 

Large market TV operators were also looking for some opportunities.  In the 2003 order, the FCC allowed one entity in the very largest markets to own up to three TV stations.  No such proposal is contained in the Chairman's proposal. 

Radio, too, was hoping for some clarifications of the ownership rules that went into effect in 2004.  The radio rules adopted in the FCC's 2003 Multiple Ownership reform order were the only rules from that order that actually went into effect.   And those rules actually tightened the rules that were previously in effect - determining the number of stations in a market based on Arbitron market definitions rather than by contour overlaps.  As this reduced the number of stations in a number of markets, and the number of stations in a market determines how many stations one party can own, a number of issues were raised.  Many of the issues dealt with grandfathering of preexisting interests.  While the Commission grandfathered most combinations that existed at the time that the rules were adopted, that grandfathering protection would disappear in most cases upon an assignment or transfer.  While the FCC allowed grandfathering to continue if there was a transfer caused by the death of a shareholder, it made no provisions for grandfathering where there is a transfer that takes place over time in employee-owned or other closely-held businesses,  where continuity of ownership remains, though a technical transfer may have occurred.  The rules also forfeited grandfathering protection if there was a city of license change for any station in the cluster - even if that city of license change was from one community in an Arbitron market to another in the same market.  Some parties asked for reconsideration of that rule - again something not addressed, and much more important given the recent Commission decisions easing city of license changes to make it easier for radio stations to improve their technical facilities (see our posts, here and here)).

The 2003 Order also, for the first time, made radio Joint Sales Agreements attributable interests (meaning that stations subject to such agreements count as if they are owned by the party doing the advertising sales in assessing that party's compliance with the multiple ownership rules), and gave parties two years to divest themselves of any JSA which would result in a combination that would exceed the ownership rules.  A number of parties asked for reconsideration of that ruling - asking for further grandfathering of those agreements to preserve the economic benefits of the parties.  Parties also asked for clarification or other relief of situations in some geographically large Arbitron markets, where some parties need two lower power stations to cover a market.  Should those lower power stations count the same as a high power station that might alone cover the entire market.  The Third Circuit Court of Appeals decision which overturned most of the 2003 ownership rules seem to require that the Commission address the rationale for the strict reliance on the number of stations in a market in deciding ownership limitations without any consideration of the coverage or audience of such stations.  Again, there is no mention of any consideration of that issue in the Chairman's notice.  The Notice of Proposed Rulemaking in this proceeding also asked for a permanent definition of a radio market in areas not served by Arbitron - and there certainly has been no specific proposal made in that regard.

Thus, the Chairman's Public Notice would seemingly not signal the end of the ownership debate, as there remain many, many unanswered questions raised in this and other related proceedings.  So, even if the newspaper- broadcast issue is resolved next month, the Commission's multiple ownership work appears to be far from complete. 

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.

At last night's Chicago field hearing, the two Democratic Commissioners expressed their concern about a rush to judgment.  Commissioner Copps, in his Remarks at the hearing, expressed concern over the short time frame given for comments on the issues raised by the Further Notice.  Commissioner Adelstein suggested that the Commission appoint an independent panel of experts to review the ownership studies and report back to the FCC before any decision on the ownership rules is made. 

At this week's Future of Music Policy Summit in Washington, DC, a legal assistant to Commissioner Adelstein expressed concern over this rush to reach a decision, suggesting that the Chairman wanted to see the decision out before his term ended, and was looking for a decision early next year.  Several Congressional staffers on a panel about Capitol Hill activities that affect the music industry, as well as Senator Dorgan of North Dakota, all also expressed concerns about FCC action in this area, and indicated that both the House and the Senate intended to hold hearings on media consolidation this Fall, before any decision can be reached.

With battle lines being drawn, there are likely to be stormy times ahead in the multiple ownership debate.  In 2003, with a Republican-controlled Congress, there were a number of bipartisan Congressional attempts to roll back the FCC's relaxation of the ownership rules before the Third Circuit Court or Appeals blocked most of those reforms.  With a Democratic Congress, who knows what would come of any FCC relaxation of those rules in the coming months.  But we may well see that issue play out - and perhaps become a political football in the upcoming elections.