The FCC yesterday released a Notice of Inquiry, formally beginning its Quadrennial Review of the Multiple Ownership Rules.  While the FCC informally began the process of the Congressionally-mandated review of the ownership rules last November through a series of informational panels and workshops, the Notice of Inquiry ("NOI") provides the first formal opportunity for the public to comment on the ownership rules.  The FCC will take the comments that it receives in response to the NOI, and formulate some more specific proposals on how it plans to change the current rules (if at all), which will then be released for additional comments in a Notice of Proposed Rulemaking.  The NOI is a broad-ranging document that gives little indication of the FCC’s final direction in this proceeding – though it does go into detail as to how the media marketplace has changed in recent years, citing declining advertising revenues, and more media outlets providing competition to broadcasters for both audience and advertising revenues.   The NOI posed dozens of detailed questions asking how the Commission should assess the various aspects of the ownership rules, and what impact the changes in the media marketplace should have on its consideration of rule changes.

The FCC is concerned with all aspects of its media ownership rules.  Thus, it sets out that it will explore the following rules:

  • The Local Television Ownership cap, which limits owners to two stations in markets where there are at least 8 competing television owners and operators, and which forbids combinations of the top 4 stations in any market.  Television operators, particularly in smaller markets, have been urging the Commission to allow more consolidation in those markets so that stations can provide better service to their communities.  They argue that the current limits preclude small market consolidation, which is most needed in these markets where the costs of operation are not significantly lower than in large markets, but where revenue opportunities are far more limited.
  • The Local radio ownership caps, that currently limit owners to 8 stations in the largest markets, no more than 5 of which can be in any single service (i.e. AM or FM).  Some radio owners contend that these limits no longer make sense given the competition for audio listening from so many sources (including satellite and Internet radio, who can provide unlimited formats in any market).  Other issues include whether AM and FM still need to be treated separately, and even whether AM should be counted to the same degree as FM in a multiple ownership analysis.
  • The Newspaper-Broadcast cross-ownership rule, that forbids cross-ownership of broadcast stations and daily newspapers without a waiver – which, as the result of changes in the cross-ownership rules in 2007, will be granted on a more liberal basis, but only in the top 20 markets.  Given the economic state of the newspaper industry, many seek the repeal of this rule in its entirety. As we have written before, will the newspaper cross-ownership rule outlive the newspaper?
  • The Radio-Television cross-ownership rule, which limits the number of radio and television stations that can be owned by a single party in a single market
  • The Dual Network Rule, that prohibits the common ownership of any of the top 4 television networks.

Each of these rules is up for review, and numerous questions have been asked, and issues identified, for consideration in this proceeding. 

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.