A few weeks ago, we wrote about just how outmoded the FCC’s prohibitions on the cross ownership of newspapers and broadcast stations were in an era when newspapers seem to be going out of business at an alarming rate. We quoted a DC trade press reporter who had mused that the newspaper-broadcast cross-ownership rule could well
At the end of last year, we wrote about the decision of the Detroit newspapers to go to a 3 day a week publication schedule, and asked the question that we had heard posed by a writer for one of the communications trade publications – "will the FCC rules limiting the cross-ownership of broadcast stations and daily newspapers outlive the newspaper itself." In the last few weeks, that question has become even more relevant. The FCC’s decision to relax the cross-ownership restrictions in December 2007 drew widespread condemnation from many big-media opponents, and even attempts to overturn the decision, even though its direct effect was limited to the nation’s largest markets. One now wonders whether, with the current economic condition of newspapers and broadcast stations, the rules should not be revisited, for purposes of further relaxing those rules, not tightening them.
In the last few weeks, we’ve seen a major newspaper in Denver stop its presses for the last time, and companies owning papers in many major markets, including Minneapolis, Philadelphia and New Haven, all declare bankruptcy. At the same time, papers in San Francisco and Seattle have warned that they may also shut down if there are not significant savings found or new buyers. Even venerable papers like the New York Times have been the subject of shut-down rumors, and the Wall Street Journal and other papers in the Rupert Murdoch empire have been said to be dragging down the profits of the News Corporation.
Yesterday, the Detroit Free Press and the Detroit Morning News, which operate their publication and distribution operations through a joint operating agreement, announced that they will cut back on the physical publication of their papers – publishing full editions delivered to homes only three days a week. On other days, the papers will publish an abbreviated version, available only on newsstands. The papers will not abandon news coverage the remainder of the week, but will instead concentrate on their on-line presence, showing the power of the Internet to disrupt traditional media. As we said years ago in one of our first posts on this blog – New Media Changes Everything, and it seems that this is just another indication of how true that is. The broadcast media, particularly radio, has often looked at the advertisers served by the daily paper as a ripe source of new business, and may well see the Detroit change as a major business opportunity. But does it also change the FCC’s consideration of the multiple ownership rules applicable to radio and television cross-ownership with newspapers?
The FCC’s multiple ownership rules prohibit the ownership of a broadcast station and a "daily" newspaper that serve the same area. The rules define a daily paper as one that is "published" at least four days each week, and is circulated "generally in the community." Here, the Detroit papers arguably will not meet that 4 day a week requirement – at least for a publication that is generally circulated throughout the community. Of course, some may argue that the abbreviated newsstand copy constitutes a daily publication but one would assume that, sooner or later, even that will disappear. Thus, while there has been so much controversy about the Commission’s decision of one year ago (summarized here) deciding that combinations of broadcast properties and newspapers in Top 20 markets were presumed to be permissible, while those in smaller markets were not, one questions whether this still makes any sense in today’s marketplace where seemingly few can profitably publish a daily paper in most markets, and no one seems to want to rescue the many papers that have fallen on hard times.
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.
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
With a possible decision looming on December 18 on the Chairman’s proposal to loosen the newspaper-broadcast cross-ownership rules (see our summary here and here), the FCC this week granted two applications involving the sales of the Tribune Company and of the Clear Channel television stations, where the decisions focused on the application of the multiple ownership rules – and where the Commission granted multiple waivers of various aspects of those rules – some on a permanent basis and many only temporarily. And, in the process, both of the Commission’s Democratic Commissioners complained about the apparent prejudgment of the cross-ownership rules and one complained about the role of private equity in broadcast ownership. Both decisions are also interesting in their treatment of complicated ownership structures and, at least under this administration, evidence the Commission’s desire to stay out of second guessing these structures.
In the Clear Channel decision, the Commission reviewed the proposed ownership of the new licensee by an affiliate of Providence Equity Partners. As there were no objections to the proposed sale, the FCC approval process was somewhat easier than it might have been – though the Commission did seem to be somewhat troubled by the fact that Providence was already a shareholder with an interest attributable under the multiple ownership rules in Univision Communications, which had stations in a number of markets in which the Clear Channel television stations operate. The Commission approved the sale, giving Providence 6 months to come into compliance with the ownership rules – and conditioning the initial closing of the Clear Channel sale on Providence meeting divestiture requirements that it had promised to observe in connection with the Univision acquisition, and had not yet complied with (in fact the Commission recently asked for comments on a proposal by Providence to come into compliance in the Univision case by simply converting their interest in Freedom Communications, which has interests in Univision markets, into a nonvoting interest which would not be attributable under Commission rules)
In a Public Notice released today, FCC Chairman Kevin Martin announced his intention to modify only the newspaper-broadcast cross-ownership rule, among all of the multiple ownership rules under consideration. That rule prohibits ownership of a broadcast station and daily newspaper in the same market. Somewhat surprisingly, Martin proposes to leave all other multiple ownership rules untouched. And his proposal only suggests clearing the combination of a newspaper and either a television station or a radio station in the Top 20 markets, and only if the TV station is not among the Top 4 rated stations in the market. Any other combination would be presumed to be prohibited, though a showing could be made to rebut that presumption.
As we have previously written, Chairman Martin has long signaled his desire to modify or eliminate the newspaper-broadcast cross-ownership rule. His specific proposal was also described in an op-ed piece he wrote for today’s NY Times, and which is attached to the FCC Public Notice. It would allow ownership of a daily newspaper and one broadcast station (radio or TV, but not both) in the top 20 DMAs (i.e. TV markets). Even then, Martin would prohibit common ownership of a newspaper and any of the top four TV stations in that market, and would require that there be at least eight independently owned media voices (daily newspapers and full-power TV stations) following the transaction.
Martin does not otherwise propose any changes to the other multiple ownership rules currently under consideration, including limits on local TV and radio ownership, as well as the national TV ownership cap that counts UHF stations at 50% of their actual audience. Martin’s editorial makes clear that he would also scrap the Commission’s former "cross media" limits that were remanded back to the FCC by the U.S. Court of Appeals in the 2004 Prometheus decision. The "cross media" limits would have weighted various media within a market to determine what level of media ownership would be permitted in that market.
In an unusual action, Commissioner Michael Copps last week publicly released a letter he wrote to Chairman Martin ( whose office is just down the hall from Copps’ office on the Eighth Floor of the FCC’s headquarters in Washington) urging the Chairman to initiate a proceeding to determine if the News Corporation’s acquisition of the Wall Street Journal is in the public interest. Copps points to the fact that the company currently owns another daily newspaper published in New York (the New York Post) as well as two full power television stations (WWOR and WNYW) in the market. While recognizing that the FCC has previously ruled that national newspapers should not be counted for purposes of the FCC’s newspaper- broadcast cross ownership limitations which currently bar local ownership of broadcast stations and daily newspapers in the same area. This exception for national papers was principally decided in connection with Gannett’s USA Today, headquartered in the Washington DC area, where Gannett also owns a TV station. Copps argues that, despite the USA Today precedent, this situation nevertheless demands further review for two reasons: 1) the local concentration of two TV stations and two widely-read local newspapers and 2) the national concentration that will result in two of the five most widely read newspapers in the country being commonly owned with one of the four major television networks, as well as the owner of many other outlets of communication spread throughout the country.
One seemingly unique aspect of the Copps request is that he is asking that the FCC investigate the acquisition of a newspaper, over which the FCC has no direct jurisdiction. In fact, in the past, TV companies have purchased newspapers that they could not own consistent with the cross-ownership rules, with the understanding that they would divest one of these interests by the time that the next license renewal for the television station came up (or ask for a waiver of the rules at that time). This would be necessary as the FCC would have jurisdiction over the duopoly through the renewal application. In recent years, there have been companies which have bought newspapers in their television markets, taking the risk that, by the time the television station renewal was filed, the FCC’s cross-ownership rules would have changed. And they are now left pursuing waivers in connection with their renewal applications. In this case, while the FCC would not have jurisdiction over the acquisition of the Journal, they would have jurisdiction over the pending TV renewal applications.