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.
Update – February 25, 2009 – The change in fees did not become effective as planned – see our post here.
Months ago, the FCC announced that the fees paid by broadcasters (and other services) for the processing of applications and other filings would be going up. It was only recently that the notice was published…
The press was abuzz yesterday with the news that Julius Genachowski is apparently the pick of the Obama Administration for the position of FCC Chairman. Mr. Genachowski was at the FCC during the Reed Hundt Administration, and has since worked in the private sector in the telecommunications industry, including work with Barry Diller and running a DC-based venture capital fund. From the positive reactions that the appointment has received from all quarters, the choice would seem to be a great one. But, in looking at some of the reactions, you have to question whether everyone has to be reading what they want to see into the new Commission. For instance, while the NAB has praised the choice of Genachowski (stating that he "has a keen intellect, a passion for public service, and a deep understanding of the important role that free and local broadcasting plays in American life"), so too did media-reform organization Free Press ("This moment calls for bold and immediate steps to spur competition, foster innovation and breathe new life into our communications sector. With his unique blend of business and governmental experience, Genachowski promises to provide the strong leadership we need.") What will this appointment really mean for broadcasters?
In short – who knows? When Kevin Martin was appointed Chairman of the FCC, few would have imagined that a former communications attorney, a person deeply involved in the Bush campaign, and a former staffer of FCC Commissioner Harold Furtchgott-Roth (perhaps the most free market Commissioner ever) would have supported sustained, wide-reaching inquiries into the underbrush of FCC regulation – e.g. localism, embedded advertising, indecency. So we can’t really know what a Chairman will do until he does it. The Washington Post and the Wall Street Journal both suggest that the new chairman will be focused on Internet issues, and may be less interested in indecency – but who knows?
2009 – a new year, and a whole new cycle of regulatory requirements. We wrote last week about the potential for changes in regulations that may be forthcoming but, like death and taxes, there are certain regulatory dates each year that broadcasters need to note and certain deadlines that must be met. Those dates…
Come the New Year, we all engage in speculation about what’s ahead in our chosen fields, so it’s time for us to look into our crystal ball to try to discern what Washington may have in store for broadcasters in 2009. With each new year, a new set of regulatory issues face the broadcaster from the powers-that-be in Washington. But this year, with a new Presidential administration, new chairs of the Congressional committees that regulate broadcasters, and with a new FCC on the way, the potential regulatory challenges may cause the broadcaster to look at the new year with more trepidation than usual. In a year when the digital television transition finally becomes a reality, and with a troubled economy and no election or Olympic dollars to ease the downturn, who wants to deal with new regulatory obstacles? Yet, there are potential changes that could affect virtually all phases of the broadcast operations for both radio and television stations – technical, programming, sales, and even the use of music – all of which may have a direct impact on a station’s bottom line that can’t be ignored.
With the digital conversion, one would think that television broadcasters have all the technical issues that they need for 2009. But the FCC’s recent adoption of its “White Spaces” order, authorizing the operation of unlicensed wireless devices on the TV channels, insures that there will be other issues to watch. The White Spaces decision will likely be appealed. While the appeal is going on, the FCC will have to work on the details of the order’s implementation, including approving operators of the database that is supposed to list all the stations that the new wireless devices will have to protect, as well as “type accepting” the devices themselves, essentially certifying that the devices can do what their backers claim – knowing where they are through the use of geolocation technology, “sniffing” out signals to protect, and communicating with the database to avoid interference with local television, land mobile radio, and wireless microphone signals.
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.
With Barack Obama’s historic victory just sinking in, all over Washington (and no doubt elsewhere in the country), the speculation begins as to what the new administration will mean to various sectors of the economy (though, in truth, that speculation has been going on for months). What will his administration mean for broadcasters? Will the Obama administration mean more regulation? Will the fairness doctrine make a return? What other issues will highlight his agenda? Or will the administration be a transformational one – looking at issues far beyond traditional regulatory matters to a broader communications policy that will look to make the communications sector one that will help to drive the economy? Some guesses, and some hopes, follow.
First, it should be emphasized that, in most administrations, the President has very little to do with the shaping of FCC policy beyond his appointment of the Commissioners who run the agency. As we have seen with the current FCC, the appointment of the FCC Chairman can be the defining moment in establishing a President’s communications policy. The appointment of Kevin Martin has certainly shaped FCC policy toward broadcasters in a way that would never have been expected in a Republican administration, with regulatory requirements and proposals that one could not have imagined 4 years ago from the Bush White House. To see issues like localism, program content requirements and LPFM become such a large part of the FCC agenda can be directly attributed to the personality and agenda of the Chairman, rather than to the President. But, perhaps, an Obama administration will be different.
Last week, the FCC released a Public Notice asking for comments on whether it should begin a Section 403 investigation into the use of Arbitron’s Portable People Meter ("PPM"). A coalition of broadcast groups, the "PPM Coalition," principally comprised of broadcasters providing service to minority communities, sought the investigation as a way of delaying the implementation of the PPM technology next month in a number of large broadcast markets. In their request, which can be found on the Minority Media and Telecommunications Council website, the PPM Coalition argues that the investigation is justified based on the Commission’s objectives (and various administrative and legislative mandates) to improve minority ownership in broadcasting. The PPM Coalition contends that methodology problems in PPM implementation result in artificially low ratings for minority owned stations. These parties argue that, if the system is implemented, a number of minority-programmed stations will disappear. Arbitron has argued that the Commission does not have the jurisdiction to regulate ratings services (who are obviously not FCC licensees) or the methodology that they use. Comments on the request for an investigatory hearing are due on September 24, and replies on October 6 (two days before the PPM system is to be implemented in eight markets).
Section 403 of the Communications Act gives the Federal Communications Commission the power to conduct investigations of any complaint of any violation of its rules or of provisions of the Communications Act, or to explore any other matter relating to the provisions of the Act. Such investigations are often conducted before an Administrative Law Judge, but can be conducted before the Commission itself, and allow the FCC to use full discovery techniques (e.g. document production requests and depositions) and to conduct an evidenciary hearing. In the past, the process was used much more frequently. It has been used both to investigate specific complaints of possible misconduct by individual licensees, and to conduct broader inquiries into business practices in a regulated industry to decide if FCC regulation was necessary. For instance, in the 1960s, there was an investigation into network practices to determine if those practices required FCC action to regulate the network-affiliate relationship. In recent years, the power has been rarely used, and when used has tended to relate to specific allegations of misconduct to determine if the FCC should bring some sort of enforcement action against a regulated entity.
The FCC this week issued fines to two broadcasters for issues in connection with the ownership of their stations – in one case the fine was issued simply because the broadcaster did timely not file three consecutive FCC Form 323 Biennial Ownership Reports . In the second case, the fine was for not requesting FCC approval for a transfer of control of the licensee of the broadcast station. These cases serve as a reminder that broadcast ownership is closely regulated by the FCC, that broadcasters need to report that ownership once every two years as required by the rules, and to seek approval before any change in control of any company that holds an FCC license.
The station that failed to file the three ownership reports was fined $6000. As disclosed on the licensee’s license renewal application, the licensee had not filed 2001 and 2003 ownership reports at all, and filed the 2005 report late and did not put it in the station’s public inspection file. Biennial Ownership Reports on FCC Form 323 must be filed by the licensees of AM, FM and TV station licensees once every two years, on the anniversary date of the filing of their license renewal applications by all licensees except where the licensee is an individual or a general partnership of natural persons (as opposed to a partnership that contains corporations or other business entities as partners). We regularly send reminders to our clients about the filing of ownership reports. For more details on the requirements for the biennial filing, see our advisory for reports that were due on August 1 here, and see our schedule of broadcast filing dates for the remainder of 2008 to see if your station has a biennial filing deadline this year).