local radio ownership rules

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Press reports following a speech this week by the head of the Department of Justice’s Antitrust Division have many in the broadcast industry paying attention. In response to a question following a speech at a DC conference by Makan Delrahim, the chief of the DOJ’s Antitrust Division, he is reported to have said that the DOJ will be holding a workshop to assess whether online advertising should be considered in assessing the local television marketplace, and whether the facts should support a change in the Department’s assessment of mergers by considering online advertising as part of the same competitive market as local TV advertising. Why is this important?

In recent years, particularly in its review of combinations such as last year’s proposed Sinclair-Tribune merger, the DOJ has looked only at the marketplace for over-the-air television in assessing a transaction’s likely competitive impact, refusing to look at the competition for viewers and advertisers that now comes from online sources like YouTube, Facebook and the many other digital platforms competing in today’s media marketplace. Were the DOJ to conclude that digital platforms are indeed part of the same market as TV, there is a greater likelihood that transactions previously questioned on antitrust grounds could see a more favorable reception from the DOJ. This could also have an impact on radio ownership – where the FCC is just about to embark on its own review of the local radio ownership rules.
Continue Reading DOJ Reportedly to Review Impact of Digital Advertising on Broadcast Merger Review

The agenda for the FCC’s December 12 open meeting is to be released today. As has become customary, the Chairman yesterday blogged about the issues to be considered at the meeting. For broadcasters, there are two matters of interest. The first will be the initiation of the next Quadrennial Review of the FCC’s ownership rules…

While September is one of those months with neither EEO reports nor Quarterly Issues Programs or Children’s Television Reports, that does not mean that there are no regulatory matters of importance to broadcasters. Quite the contrary – as there are many deadlines to which broadcasters should be paying attention. The one regulatory obligation that in recent years has come to regularly fall in September is the requirement for commercial broadcasters to pay their regulatory fees – the fees that they pay to the US Treasury to reimburse the government for the costs of the FCC’s operations. We don’t know the specific window for filing those fees yet, nor do we know the exact amount of the fees. But we do know that the FCC will require that the fees be paid before the October 1 start of the next fiscal year, so be on the alert for the announcement of the filing deadline which should be released any day now.

September 20 brings the next Nationwide Test of the EAS system, and the obligations to submit information about that test to the FCC. As we have written before (here and here), the first of those forms, ETRS Form One, providing basic information about each station’s EAS status is due today, August 27. Form Two is due the day of the test – reporting as to whether or not the alert was received and transmitted. More detailed information about a station’s participation in the test is due by November 5 with the filing of ETRS Form Three. Also on the EAS front, comments are due by September 10 on the FCC’s proposal to require stations to report on any false or inaccurate EAS reports originated from their stations. See our articles here and here.
Continue Reading September Regulatory Dates for Broadcasters – Annual Regulatory Fees; Nationwide EAS Test; Comment Dates on FM Translator Interference, Audio Competition, Children’s Television Requirements, and Reimbursement for LPTV and FM Repacking Costs; and More

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 FCC routinely, at the request of Congress, does a study of the Video Marketplace. That study is submitted to Congress so that Congress can use it as a factual basis for any legislative issues that may come up dealing with the TV marketplace. The FCC has not previously done this sort of routine study of the audio marketplace. However, in recent legislation, Congress included a requirement that the FCC, in the last quarter of every even numbered year, provide such a report. Yesterday, the FCC released a Public Notice asking a number of questions about the marketplace, to which they seek information to be included in the report.

The questions asked include:

  • The identification of players in the audio marketplace, and a description of their business models and competitive strategies
  • The trends in service offerings and consumer behavior
  • Whether or not there is competition between the players in the marketplace
  • Ratings, revenue and subscriber information about players in the market
  • Information about investment in the market, and the deployment of new technologies
  • Information about what is needed for entry into the market
  • Information as to who has recently entered the market, and who has exited it
  • Regulatory barriers to entry and competition in the marketplace

The FCC is looking for data from 2016 and 2017, as well as any new information that is available from this year.  What will this data be used for?
Continue Reading FCC Asks for Comments on the State of the Audio Marketplace – A Precursor to Reviewing the Radio Ownership Rules?

The National Association of Broadcasters radio board last week voted on a proposal to revise the FCC rules limiting the number of stations that one company can own in a radio market. This proposal was forwarded to the FCC for consideration in the next Quadrennial Review of the FCC’s ownership rules, scheduled to commence at some point later this year, in a letter delivered to the FCC’s Chief of the Media Division. The NAB suggests that one party should be able to own up to 8 FM stations in any of the Top 75 Nielsen radio markets. It proposes that there should be no FCC ownership limits in markets smaller than the Top 75, and that AMs do not need to be counted against the ownership limits. Owners who incubate the ownership of stations by new entrants into broadcasting would be allowed to own up to two additional FM stations in a market. Why would the NAB take this position?

The letter sets forth many of the same issues that we cited in our article on radio ownership here. Competition is significantly different than it was in 1996, when the current rules setting limits at 8 stations in a market (only 5 of which can be AM or FM) in the largest markets, and in the smallest markets, only two stations (one AM and one FM). As we wrote in our April article, competition for listening like Pandora, Spotify or even YouTube did not exist in 1996 (not arriving on the scene for another decade). Changes in competition for local advertising has been even more dramatic, with some sources showing that over 50% of local advertising revenue (the bread and butter of local radio) is now going to digital competitors – with Facebook, Google, and even the digital music services selling advertising to local advertisers throughout the country, even in the smaller markets.
Continue Reading NAB Asks For Changes in FCC Local Radio Ownership Rules – What’s Next?

With the NAB Convention upon us, and much of the talk being centered on television issues including the repacking of the TV band after the incentive auction, the conversion to the next-generation of TV transmission as allowed by the new ATSC 3.0 transmission standard, and the effects of the FCC’s changes in the local television ownership rules and the reinstatement of the UHF discount in connection with the national ownership cap, it almost seems like radio is an afterthought. The FCC is considering some matters of interest to radio, including how to revitalize the AM band, and it has taken steps to revitalize individual AM stations through the use of FM translators. And the FCC is apparently considering changes in FM through the creation of a new class of C4 stations (see our post here). Yet, in recent ownership orders from the FCC, while TV ownership rules have been dramatically relaxed in the face of new video competition so that local TV owners can more robustly address their challengers, there were no corresponding changes in the radio rules. In the last ownership proceeding (which we summarized here), other than making changes to the embedded market rules (potentially affecting only radio stations in the suburbs of New York and Washington), and allowing ownership joint ownership of radio with TV and newspapers through the abolition of the cross-ownership rules that had limited or prohibited those combinations, radio ownership rules themselves have not been subject to any real changes in ownership limits since those limits were set in the wake of the 1996 Telecommunications Act. The FCC did make some changes early in this century when it adopted Arbitron (now Nielsen Audio) markets as the way in which competition in rated markets is defined, but the numbers of stations that one party can own has not changed since those numbers were established in the 1996 Act – even though Congress gave the FCC the authority to review and revise the rules to insure that they remained in the public interest.

While there have been no changes in the ownership rules for radio, think about the changes that have taken place in the competitive environment since 1996. At that point, streaming was something only a few technologically-forward people even knew existed. Pandora did not launch its streaming service for another decade, and Spotify was even further behind – not launching in the US until 2011. Even those few people who knew that audio streaming existed in 1996 would never have thought that they could listen to a streaming service in their cars. Apple was not offering a streaming music service – in fact it had not even introduced the iPod (introduced in 2001) or the iTunes store (2003) – both now about to become technological relics themselves because of technological changes. Given that there was no iPod, there were obviously no podcasts to bring audio storytelling to the millions who now listen to their favorite programming through the multitude of services that provide podcasts on almost any subject. There was no Alexa to bring Amazon and other music services into the home – in fact Amazon itself had only begun selling books online in 1995. Even Sirius XM (then Sirius and XM as two competing companies) had not initiated their services at the time of the 1996 Act – as XM did not start providing service to consumers for another 5 years (with Sirius launching a year later). And the pace of change for audio technology is not slowing.
Continue Reading What’s Next for the FCC’s Radio Ownership Rules? – Do Changes in the Audio Marketplace Justify Changes in Ownership Limits?

The FCC’s Order released at the end of August deciding the issues in its Quadrennial Review of its ownership rules is over 100 pages long. The full document, with the dissents from the Republican Commissioners, required regulatory impact statements and similar routine attachments totals 199 pages. The Order addresses many issues. For TV, it declines to change the local ownership rules, readopts the decision to make Joint Sales Agreements into attributable interests (thus effectively banning them in many markets, though making some tweaks to the grandfathering of existing JSAs), and adopts new rules for reporting shared services agreements. The Order retains the newspaper-broadcast and radio-television cross-ownership rules. It takes limited new steps to encourage minority ownership (principally re-adopting the rule that allowed small businesses to acquire and extend expiring construction permits for new stations and to buy certain distressed properties, see our article about that old rule here), but does not adopt any racial or gender preferences for broadcast ownership. It also ends consideration of using TV channels 5 and 6 for the migration of AM radio and other new audio services including those targeted to new entrants into broadcast ownership (see one of our articles about that proposal here). And it rejects most proposals to change the radio ownership rules. Today, with the NAB Radio Show just two days away, we will look closer at the radio rules, and will cover many of these other aspects of the decision in coming days.

Perhaps the biggest “ask” for changes in the rules came from numerous radio groups that requested changes in the “subcaps” that apply to radio ownership. For instance, in the largest radio markets, one owner can hold up to 8 stations, but only 5 can be in any one service (AM or FM). Some parties had hoped to be able to own more FM stations in a market, particularly given the growing levels of competition in the audio marketplace from satellite and online radio. Some AM owners looked to hold more than the current maximum number of AMs in a market as a way to provide economies of scale that might help to preserve and strengthen the struggling AM radio industry. The Commission rejected such changes.
Continue Reading FCC’s Decision on the Quadrennial Review of the Multiple Ownership Rules – Part 1 – Radio Issues

On February 8, 1996, the Telecommunications Act of 1996 was signed into law by President Bill Clinton.  While the Act had significant impact throughout the communications industry, the impact on broadcasters was profound, and is still being debated.  The Act made changes for broadcasters in several major areas:

  • Lengthened license renewals to 8 years for both radio and TV, and eliminated the "comparative renewal"
  • For radio, eliminated all national caps on the number of radio stations in which one party could have an attributable interest and increased to 8 stations the number one party could own in the largest radio markets
  • For television, raised national ownership caps to having stations that reached no more than 35% of the national audience, with no limits on the number of stations that could be owned as long as their reach was under that cap.
  • Allocated spectrum that resulted in the DTV transition

Obviously, the DTV spectrum began the profound changes in the way television is broadcast, and led to the current debate as to whether over-the-air television should be further cut back in order to promote wireless broadband (see our recent post on the FCC’s current proceeding on this issue).  While the other changes have now been in effect for 15 years, the debate over these provisions continue.  Some argue that the renewal and ownership modifications have created too much consolidation in the broadcast media and lessened the broadcaster’s commitment to serving the public interest.  Others argue that, in the current media world, these changes don’t go far enough. Broadcasters are under attack from many directions, as new competitors fight for local audiences (often with minimally regulated multi-channel platforms, such as those delivered over the Internet) and others attack broadcasters principal financial support – their advertising revenue. Even local advertising dollars, traditionally fought over by broadcasters and newspapers (with some competition from billboards, direct mail and local cable), is now under assault from services such as Groupon and Living Social, and from other new media competitors of all sorts.  With the debated continuing on these issues in the current day, it might be worth a few looking back at the 1996 changes for broadcasters, and their impact on the current broadcast policy debate.Continue Reading On the 15th Anniversary of the Telecommunications Act of 1996, The Effect on Broadcasters is Still Debated