The state of the audio industry will no doubt be a crucial consideration in the next Quadrennial Review of the FCC’s ownership rules, expected to start late this year or early next. But, before that Review begins, the FCC has been tasked by Congress to write a report on the state of competition in
The text of the FCC’s decision on the attribution of Joint Sales Agreements for multiple ownership purposes, and the termination of the 2010 Quadrennial Review of the ownership rules and the start of the 2014 Quadrennial Review, has now been released by the FCC. In a slim 211 pages of text, plus another 24 pages of concurring and dissenting opinions, there is more than enough for broadcasters, lawyers and regulators to digest for weeks. The Order addresses in detail the matters that had already been made public – the attribution of TV JSAs, the further examination of TV shared Services Agreements, and tentative decisions to not fundamentally change any of the Commission’s other ownership rules (with the possible exception of a favorable inclination to look at elimination of the radio-newspaper cross-ownership)(see our summary here). But there are many details to be examined as to how the Commission reached the decisions that it did and the nuances of the decisions that were made (e.g. the waiver policy that would allow some JSAs to remain in place – the Commission’s decision does not provide much detail – essentially saying that they will grant waivers to deserving JSAs that serve the public interest, but providing little detailed guidance as to what would make a good waiver case, except to say that temporary or short-term waivers were better than long-term ones, and that ones where there was little sharing of other services are better than ones where there is more sharing). We will cover all of these areas in more detail over the next few days.
But there were some interesting and less expected nuggets that popped out in a first read of the Order, and have not been much covered elsewhere. For TV, these include the tentative decision to replace the TV Grade B contour with the digital Noise Limited Service Contour for determining whether an individual or entity can own two TV stations in the same market. Instead of allowing ownership where the Grade B contours do not overlap, the Commission proposes to allow that ownership where the NLSC do not overlap, and to grandfather any combinations that would be affected by this rule change. Similar small but significant issues were also raised for radio.…
Continue Reading The Text of the FCC’s Order on JSAs and Other Broadcast Ownership Issues is Released – Part One, Hidden Nuggets on TV and Radio Market Definitions
With the FCC closed because of the Federal government shutdown so no new decisions will be coming out for the time being, we get to look at some of the issues and decisions that we didn’t get a chance to write about when they first came out. One of the cases we overlooked raised the question of whether the FCC cares about a broadcaster’s market share when it goes to buy a new radio station, or will it simply apply the numerical station ownership limits set out in the rules? Based on a decision released last month (note that the link to the decision may not work during the shutdown), the rules which set numerical limits on how many radio stations one party can own in a market are pretty much decisive in the FCC’s determination of whether or not a party can buy a station in a market. Even if the advertising or audience market share of the buyer is very high, the fact that there are other stations in a market providing competitive opportunities makes questions of audience share essentially irrelevant. The case also addresses two other interesting aspects of the FCC’s analysis of radio holdings in a market – which stations are included in the station count for a market, and when a station being silent means that it will no longer be counted as a competitive voice in the market.
The case involved the purchase of a radio station in the Roanoke-Lynchburg, Virginia market. The Buyer already owned four FM stations in the market, and was buying a fifth. Another owner contended that the ownership of those stations would give the Buyer a share of the advertising market of more than 50%, which the petitioner claimed would impede competition and make it difficult for minorities and other new entrants to buy stations in the market. The Media Bureau rejected the arguments, finding that, as there are at least 45 stations in the market, ownership of 5 FM stations in the market is permissible under the rules established back in 1996, and revised in 2003. The numerical limits were found by the Media Bureau to represent the FCC’s judgment of what represented a sufficient limit on one party’s ownership of stations in a market. While a company that owns the maximum number of stations in a market may have a very large share of the advertising market, the decision concluded that the Commission, when adopting the numerical caps, made the determination that the numerical caps were more reliable than a market share analysis. Even when an owner owns the maximum number of stations allowed under the rules, there are numerous other competitive outlets in the market. As market shares can change over time, the numerical limits were found to be determinative. So the Media Bureau would not upset that policy decision in a case like this.
Last week, the US Senate passed a resolution of disapproval, which seeks to overturn the FCC’s December decision relaxing the multiple ownership rules to allow newspapers and television stations to come under common ownership in the nation’s largest markets (see our summary of the FCC decision here). This vote, by itself, does not overturn that decision. Like any other legislation, it must also be adopted by the House of Representatives, and not vetoed by the President, to become law. In 2003, the last time that the FCC attempted to relax its ownership rules, the Senate approved a similar resolution, but the House never followed suit (perhaps because the decision was stayed by the Third Circuit Court of Appeals before the House could act). In this case, we will have to see whether the House acts (no dates for its consideration have yet been scheduled). Even if the House does approve the resolution, White House officials have indicated that the President will veto the bill, meaning that, unless there is a 2/3 majority of each house of Congress ready to override the veto, this effort will also fail.
The reactions to this bill passing the Senate have been varied. The two FCC Democratic Commissioners, who both opposed any relaxation of the ownership rules, each issued statements praising the Senate action (see Commissioner Copps statement here and that of Commissioner Adelstein here). The NAB, on the other hand, opposed the action, arguing that the relaxation was minimal, that it was necessary given "seismic changes in the media landscape over the last three decades" (presumably referring to including the economic and competitive pressures faced by the broadcast and newspaper industries in the current media environment), and that it ought not be undone by Congressional actions.
In a recent decision, the FCC interpreted its radio multiple ownership rules in a case involving changes in an Arbitron market. The FCC’s rules restrict the number of radio stations that one company can own in a market based on how many stations are in that radio market. In situations where stations are rated in an Arbitron market, the number of stations is determined by how many stations are in that Arbitron market, as determined by data compiled by the financial analysis firm BIA. In this case, while the application to acquire the station was pending, BIA came out with its first list of stations that it considered to be in the newly created Arbitron market. That list showed that, in the new market, the Buyer already owned more stations than allowed by the rules, so acquisition of this additional station was prohibited. The case stands for the proposition that, while changes in Arbitron markets that allow an acquisition to take place must have been in place for two years to become effective (to prevent owners from gaming the system by making short-term changes), changes that adversely affect the ability of an owner to acquire a station become effective immediately.
According to the decision, at the time that the application in question was filed, the station to be bought was listed by BIA as being in the Manchester, New Hampshire Arbitron market. The number of stations owned by the Buyer in Manchester was such that the acquisition of the station was permissible at the time the application was filed. However, Arbitron announced the creation of a new Concord radio market just before the filing of the FCC application for approval of the transfer of control of the radio station. Soon after the filing of the application, BIA released its list of stations in the new Concord market, and it included a number of the stations owned by Buyer, including the station it was proposing to acquire. In the new Concord market, the Buyer would have too many stations to permit the acquisition of this station under the restrictions set out in the multiple ownership rules.
The FCC this week released the full text of its decision on the revision of the multiple ownership rules that it adopted at its December 18 meeting. While the text goes into great detail on the decision to relax the newspaper-television cross ownership restrictions (causing the ruling to be condemned by consolidation critics), the order is very brief in addressing the numerous other issues with the multiple ownership rules that were raised in this proceeding. Television broadcasters sought greater opportunities to consolidate in local markets, and radio broadcasters requested reconsideration or clarification of various aspects of the Commission’s 2003 decision adopting Arbitron market definitions as the basis of the determining how many radio stations are in a particular market. These requests were all rejected, some summarily. Will these parties who were denied relief from the FCC protest as loudly as the critics of the decision with respect to the relaxation of the TV-newspaper cross ownership limits?
We summarized the decision with respect to the newspaper television rules here. That summary was based on the statements made at the December 18 meeting and on the press release issued that day which provided a brief summary of the Commission’s decision. The outline we provided in December was basically accurate, and there were few surprises about the newspaper-television cross ownership rules in the text. The Commission was very thorough in documenting the basis for its decision that newspapers and television stations could be commonly controlled without adversely affecting the public interest, citing a legion of studies supporting their decision, while carefully refuting the studies supplied by consolidation critics. However, the remainder of the decision, dealing with other aspects of the multiple ownership rules which the Commission refused to change, contained reasoning which was far more limited. In some cases, particularly dealing with radio issues, the reasoning was almost absent.
Yesterday’s unique Public Notice outlining Chairman Martin’s proposals for reform of the multiple ownership rules (which we summarized here) is a surprisingly restrained and limited approach to relaxation of the ownership rules – proposing to relax only the newspaper-broadcast cross-ownership prohibitions, and only in the Top 20 TV markets. Moreover, the reform would only allow the combination of a daily newspaper and a single radio or TV station, and the newspaper-TV combination would only be allowed if the TV station is not one of the Top 4 ranked stations in the market. While the extremely limited nature of the proposed relief has not stopped critics of big media from immediately condemning the proposal (see the joint statement of Commissioners Copps and Adelstein, here), much less attention has been paid to those multiple ownership issues that the Chairman’s proposal does not seem to address – including TV duopoly relief in small markets and clarifications to the radio ownership rules requested by a number of broadcasters who sought reconsideration of the changes that arose from the 2003 ownership reforms.
The Chairman’s Public Notice is itself a new approach to regulation – putting out for public comment (due by December 11) an action of the Commission just before that action is to be taken. Usually, the Commission proposes a set of rule changes in a Notice of Proposed Rulemaking, and the Notice provides time for interested parties to comment and then reply to each other’s comments. Once all the written comments are submitted to the Commission, parties and their representative often make informal visits to the FCC to argue about the suggestions that have been made, and eventually, after much consideration, the Commission’s staff writes up a decision which is vetted by the Commissioners and their staff, and voted on by the full FCC. Usually, these final decisions are shrouded in secrecy – though outlines of the proposals are often the subject of informed gossip and rumor, rarely does anyone see the full set of rules that the Commission is considering until after the decision is made.