The Commission has announced the next in its series of media ownership workshops, this one to address financial issues facing the media industry. The workshop, part of the Commission’s 2010 quadrennial review of its ownership rules, will be held on January 12, 2010 at the FCC, and will address, in the FCC’s words: "the current financial
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.
At its December meeting, at the same time as it adopted rules relaxing the newspaper-broadcast cross-ownership rules, the FCC adopted new rules to expand diversity in the ownership of broadcast stations, encouraging new entrants into such ownership. The full text of that decision was just released last week, providing a number of specific rule changes adopted to promote diverse ownership, as well as a number of proposals for changes on which it requests further comment. Comments on the proposed changes will be due 30 days after this order is published in the Federal Register. As this proceeding involves extensive changes and proposals, we will cover it in two parts. This post will focus on the rule changes that have already been made – a subsequent post will cover the proposed changes. The new rules deal not only with ownership rule modifications, but also with issues of discrimination in the sale of broadcast stations and in the sale of advertising on broadcast stations, new rules that leave some important unanswered questions.
The rules that the Commission adopted were for the benefit of "designated entities." Essentially, to avoid constitutional issues of preferences based on race or gender, the definition of a designated entity adopted by the Commission is based on the size of the business, and not the characteristics of the owners. A small business is one designated as such by the Small Business Administration classification system. Essentially, a radio business is small if it had less than $6.5 million in revenue in the preceding year. A television company is small if it had less than $13 million in revenues. These tests take into account not only the revenue of the particular entity, but also entities that are under common control, and those of parent companies. For FCC purposes, investment by larger companies in the proposed FCC licensee is permissible as long as the designated entity is in voting control of the proposed FCC licensee and meets one of three tests as to equity ownership: (1) the designated entity holds at least 30% of the equity of the proposed licensee, or (2) it holds at least 15% of the equity and no other person or entity holds more than 25%, or (3) in a public company, regardless of the equity ownership, the designated entity must be in voting control of the company.
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.
The FCC today adopted Commissioner Martin’s proposal for limited multiple ownership relaxation, adopting a presumption in favor of approving the common ownership of a broadcast station and a daily newspaper in the Top 20 television markets (we wrote about that proposal here). But the grant of such combinations would not be automatic, but instead would be considered on a case-by-case basis, so opposition to any merger could be submitted to the FCC. Under the rules announced today, newspaper-television combinations would not be entitled to the presumption in favor of grant if they involved one of the Top 4 ranked television stations in a market, or if there would be fewer than 8 independent media voices (full power TV or significant daily newspapers that are not commonly controlled) after the combination. As for the other multiple ownership rules, from what was said at the meeting, no change at all will be made. We addressed some of the many multiple ownership issues before the Commission that were apparently either not addressed or will not be changed in our post, here.
As the full text of the decision has not been released, details of how the Commission addressed every issue are not available. From the comments of the Democratic Commissioners who dissented from the decision, changes were being made to the standards adopted today throughout the night and as early as an hour before the meeting was held (see Commissioner Copps’ impassioned statement against the new rules, here, where he details the last minute revisions). Given the last minute nature of the final order, it may be a while before the full text is released. However, from statements made today and from the Commission’s press release, some details of the decision are known. They are summarized below.
The FCC has released its agenda for its December 18 meeting – and it promises to be one of the most important,and potentially most contentious, in recent memory. On the agenda is the Commission’s long awaited decision on the Chairman’s broadcast multiple ownership plan relaxing broadcast-newspaper cross-ownership rules (see our summary here). Also, the FCC will consider a Further Notice of Proposed Rulemaking on Localism issues (pending issues summarized here) following the conclusion of its nationwide hearings on the topic, as well as an Order and Further Notice of Proposed Rulemaking on initiatives to encourage broadcast ownership by minorities and other new entrants (summary here). For cable companies, the Commission has scheduled a proposed order on national ownership limits. And, in addition to all these issues on ownership matters, the FCC will also consider revising its sponsorship identification rules to determine if new rules need to be adopted to cover "embedded advertising", i.e. product placement in broadcast programs. All told, these rules could result in fundamental changes in the media landscape.
The broadcast ownership items, dealing with broadcast-newspaper cross-ownership, localism and diversity initiatives, all grow out of the Commission’s attempts to change the broadcast ownership rules in 2003. That attempt was largely rejected by the Third Circuit Court of Appeals, which remanded most of the rules back to the FCC for further consideration, including considerations about their impact on minority ownership. The localism proceeding was also an outgrowth of that proceeding, started as an attempt by the Commission to deal with consolidation critics who felt that the public had been shut out of the process of determining the rules in 2003, and claiming that big media was neglecting the needs and interests of local audiences.
Continue Reading FCC Meeting Agenda for December 18 – Potentially One of the Most Important in Recent Memory – Multiple Ownership, Localism, Minority Ownership, Product Placement and Cable TV National Ownership Caps
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.