Last week, as we noted in our weekly summary of regulatory actions of importance to broadcasters, the US Court of Appeals for the D.C. Circuit issued an Order directing the FCC to complete its 2018 Quadrennial Regulatory Review of its broadcast ownership rules by December 27, 2023, or show cause why the National Association of Broadcasters’s (NAB) Petition for Writ of Mandamus should not be granted. The NAB’s petition, filed in April 2023, requests that the D.C. Circuit compel the FCC to conclude the agency’s still-pending 2018 review. Neither last week’s order, nor any mandamus order that could be issued by the Court should the FCC fail to finish its review by December 27, will compel any particular decision. Instead, such an order would only require that the FCC finish the review started in 2018 (see our article here on the start of that review process).
The Quadrennial Review process is mandated by Congress. Every four years, the FCC is required to review its local ownership rules and determine which ones remain in the public interest. The NAB’s argument to the Court has been that the FCC failed to meet its statutory obligation by not completing the 2018 review last year. In December, we wrote about the FCC’s failure to complete the Quadrennial Review, and how the inaction has forestalled any review of the issues that were teed up in that review. What were those issues?
The issues before the FCC include possible changes in the local radio ownership rules, the dual network rule (prohibiting one company from controlling two of the top 4 broadcast TV networks), and the adoption of specific standards for approving waivers to allow the combination of two of the top 4 TV stations in a market, all issues teed up in the 2018 Quadrennial Review. The local TV rule was last reviewed in 2017, when the FCC eliminated the rule requiring that there be 8 independently owned and operated TV stations in a market before any combination of the ownership or programming of two television stations in the same market would be allowed, and also eliminating the absolute prohibition on combinations of two of the top 4 TV stations in a market – allowing such combinations on a showing that the combination would be in the public interest (but specifying no objective standard for such combinations). The 2017 order also eliminated the restrictions on the ownership combinations of local broadcast stations and daily newspapers in the same market, and any restrictions on radio-television combinations in the same market. See our summary of the 2017 decision here.
The radio rules, however, have been largely unchanged since 1996, when they were initially adopted by Congress. Even though there has been significant change in the competitive environment, where radio stations compete for local advertising sales with digital giants that did not even exist in 1996 and now take the majority of advertising dollars from every radio market, and radio also must compete for audience with digital audio services which also did not exist in 1996 (and now take the majority of listening time from younger audiences), the ownership rules remain unchanged. See our articles here and here for more on the change in the competitive landscape, and our article here on the NAB’s proposal for a significant change in the radio ownership rules.
Changes in the dual network rule once seemed unnecessary, as it would be hard to imagine two of the Top 4 TV networks wanting to combine. But times have changed, and linear TV is no longer the dominant force it once was. More and more viewing is now done through on-demand, digitally delivered video services, and there has been press speculation about the potential sale of some of the major television networks. Right now, FCC rules would restrict any such sale of one top 4 network to another top 4 network – a rule now under review in the pending 2018 Quadrennial Review.
In addition to the proposal to provide some specificity for the combination of two of the top 4 TV stations in any market, the 2018 Quadrennial Review also looks at TV shared services agreements and other aspects of the local ownership rules. With 90 days to reach a decision, the FCC staff will no doubt be undertaking immediate review of all of the issues on the table in this review. We’ll be watching to see if a decision is reached in that time and if any decision that is reached takes into account the real changes in the broadcast marketplace that have occurred since 1996.