quadrennial review of FCC ownership rules

Last week, Chairman Pai gave a speech to the Media Institute in Washington, talking about his deregulatory accomplishments during his tenure as FCC Chairman.  Central to his speech was the suggestion that the broadcast ownership rules no longer made sense, as they regulate an incredibly small piece of the media landscape, while digital competitors, who are commanding a greater and greater share of the market for audience and advertising dollars, are essentially unregulated.  Not only are they unregulated, but the digital services that compete with broadcasting are owned and financed by companies who are the giants of the US economy.  In his speech, he noted that the company with the most broadcast TV ownership is dwarfed in market capitalization by the companies offering competing video services.

While the Chairman’s speech concentrated on television, mentioning radio only in passing, we note that many of these same issues are even more at play in the audio entertainment marketplace.  When the Chairman two months ago offered remarks on the hundredth anniversary of the first commercial radio station in the US, he recognized that radio has played a fundamental role in the communications world over the last century.  But that role faces more and more challenges, perhaps exaggerated by the pandemic when in many markets listeners are spending less time in cars where so much radio listening takes place.  There are many challenges to over-the-air radio as new sources of audio entertainment that sound and function similarly are more and more accessible to the public and more and more popular with listeners.  Over-the-air radio is already less a distinct industry than a part of the overall audio entertainment marketplace competing with streaming services, podcasts, satellite radio and other audio media.  These changes in listening habits are coupled with a change in the advertising marketplace, as the digital media giants now take over 50% of the local advertising market that was once the province of radio, television and newspapers.
Continue Reading Outgoing FCC Chairman Pai Calls for Modernization of Media Ownership Rules – Audio Competition Issues for the New FCC To Consider  

There were several reports in the broadcast trade press today about an article in the Hill newsletter from retiring Congressman Greg Walden about his proposals to increase diversity in broadcast ownership.  Congressman Walden, a former broadcaster, seeks in his Broadcast Diversity in Leadership Act to foster minority ownership and ownership by new entrants by establishing in legislation an incubator program similar to the one adopted by the FCC in 2018, but put on hold by the Third Circuit Court of Appeals in their decision on broadcast ownership (which is now before the Supreme Court – see our post here).  While, given the short time before the end of the Congressional session, the Congressman’s bill stands little chance of passing both houses of Congress and being adopted before the end of the year, the bill is worth reviewing as it has the support of both the NAB and minority-advocacy organizations, so it could well resurface in a new Congress.

The bill adopts much of the framework of the FCC’s incubator program (which we outlined in our article here).  Under the proposed legislation, an existing broadcaster could work with an aspiring broadcaster to help that new entrant purchase and operate a broadcast station. The bill asks the FCC to adopt rules outlining the support that could be provided to the new entrant, including training, financing and access to resources of the established broadcaster. The established broadcaster could even hold a non-controlling equity interest in the emerging broadcaster, as long as the new entrant retains control.  In exchange for providing the services or financing, if the incubation is determined to be successful after a two-year period, the existing broadcaster would be allowed to acquire one station in a similarly sized market that exceeded the current cap on broadcast ownership allowed by Section 73.3555 of the Commission’s rules.  So, if the existing broadcaster operates in a market where one party can only own 6 stations, it could acquire a seventh.
Continue Reading Congressman Walden Urges Adoption of Broadcast Diversity in Leadership Act – An Incubator Program to Assist New Entrants to Broadcast Ownership

The 2017 deregulatory changes to the FCC’s ownership rules have been on hold since December 2019, when the decision of the US Court of Appeals for the Third Circuit, overturning those rule changes, became effective (see our post here).  The court’s decision has put any broadcast ownership changes on hold (including potential changes in the radio ownership rules which were not part of the 2017 FCC decision) while the FCC contemplated how to deal with the fallout from the Third Circuit’s decision.  The potential for another way forward arose last week when the Supreme Court decided to hear the appeal of the Third Circuit decision – granting a petition for “cert” (a petition asking the Court to hear the appeal) – the announcement of that grant coming out on Friday.

As we wrote here, the Third Circuit rejected the FCC’s 2017 ownership rule changes, finding that the FCC had done an inadequate job of assessing how prior ownership relaxations had affected the ability of minorities and other potential new entrants to break into the ranks of broadcast ownership.  Despite arguments from the FCC that it had already analyzed the impact of changes on new entrants and taken steps to mitigate any adverse impact, the Court seemed to be directing the FCC to do a more searching analysis of the historical impact of the relaxation of ownership restrictions on new entrants.  Because this analysis would affect any ownership rule change, including those proposed for radio (see our article here), the decision effectively froze further FCC consideration of all broadcast ownership rule changes.
Continue Reading Supreme Court to Hear Appeal of Third Circuit Rejection of FCC Changes to Broadcast Ownership Rules

The FCC yesterday released a Public Notice calling for public comment on the state of the communications marketplace so that it can prepare a report to Congress – a report that is required every even-numbered year.  The Notice calls for comments on the state of competition in various sectors of the communications industry – including for audio and video.  The inclusion of audio in this report is relatively new – being included for the first time two years ago (see our article here).  Comments in this proceeding are due on April 13, with replies due May 13.

The Audio Competition Report prepared two years ago was very important in informing the FCC as to the state of competition in that segment of the market.  Comments filed with the Commission on the report were incorporated in the record of the FCC’s Quadrennial Review Notice of Proposed Rulemaking which entertained the possibility of changes in the ownership rules for broadcast radio in light of the substantial competition that comes from digital audio sources (see our article here on the Quadrennial Review NPRM).  Whether this year’s report will be as crucial is unknown, as the Third Circuit Court of Appeals decision on the FCC’s 2017 ownership rule changes have, for now, put all broadcast ownership changes on hold while the FCC (and the Department of Justice) decide whether to appeal that case to the Supreme Court or to attempt to answer the Third Circuit’s concerns that the FCC had not sufficiently addressed the impact of changes in its ownership rules on minority ownership (see our articles here and here).  While these decisions are being made, it appears that all ownership changes are on hold.
Continue Reading FCC Seeks Comments on the State of the Communications Marketplace – Including for Audio and Video

Most years, at some point in January, we look into our crystal ball and try to see some of the legal and regulatory issues likely to face broadcasters.  We already provided a calendar of the routine regulatory filings that are due this year (see our Broadcaster’s Regulatory Calendar).  But not on that calendar are the policy issues that will affect the regulatory landscape in the coming year, and into the future.  This year, the biggest issue will no doubt be the November election.  Obviously, broadcasters must deal with the many day-to-day issues that arise in an election year including the rates to be charged political candidates, the access to airtime afforded to those candidates, and the challenges associated with the content of issue advertising that non-candidate groups seek to transmit to the public.  The election in November will also result in a President being inaugurated in just less than a year – which could signal a continuation of the current policies at the FCC or potentially send the Commission in a far different direction.  With the time that the election campaigns will demand from Congress, and its current attention to the impeachment, Congress is unlikely to have time to tackle much broadcast legislation this year.

The broadcast performance royalty is one of those issues likely on hold this year.  While it was recently re-introduced in Congress (see our article here), it is a struggle for any copyright legislation to get through Congress and, in a year like the upcoming one, moving a bill like the controversial performance royalty likely will likely not be high on the priorities of Congressional leaders.  This issue will not go away – it will be back in future Congresses – so broadcasters still need to consider a long-term strategy to deal with the issue (see, for instance, our article here on one such strategy that also helps resolve some of the music royalty issues we mention later in this article).
Continue Reading Looking Ahead to the Rest of 2020 – Potential Legal and Regulatory Issues For the Remainder of the Year

In September, a three-judge panel of the US Court of Appeals for the Third Circuit released a 2-1 decision overturning the FCC’s 2017 decision modifying many of its ownership rules (see our summary of the Court decision here, and our review of the 2017 decision here).  The Court’s decision not only upset the plans of many media companies for acquisitions based on the changes adopted in the 2017 decision, but also dashed the hope of many radio companies for timely changes in the radio ownership rules that are under consideration by the FCC in its next Quadrennial Review of its ownership rules (see our summary of the issues in the current Quadrennial Review here).  Last week, both the FCC and a number of industry groups who were parties to the Third Circuit case filed Petitions asking that all of the sitting judges on the Third Circuit vote to rehear the decision of the three-judge panel.

The panel’s decision did not find that any of the rule changes adopted by the Commission (including the abolition of the newspaper-broadcast cross-ownership prohibition) were not justified by changes in the media marketplace.  Instead, the panel voided the FCC’s decision because it did not believe that the FCC had enough historical data on minority and female ownership to be able to judge the affects of any ownership changes on diversity of ownership in the media industry.  The FCC Petition for Rehearing centered on an argument that the Commission had plenty of data to support its conclusions – and that Courts have never required government agencies to have perfect information in making any decision.  Instead, agencies are only required to have sufficient factual data to justify their conclusions.  The FCC argued that, where the information that is sought by the panel might simply not exist and where the panel’s insistence on the information has held up the FCC’s attempts to modernize its media ownership rules for a decade and a half as the same judges keep rejecting FCC attempts to justify its ownership decisions, the full Court should step in and conduct a rehearing.  The industry parties emphasized how the decision was overbroad – overturning all aspects of the FCC’s decision – even parts that had not been challenged by the petitioning parties.  The industry participants also pointed to the fact that real hardships were being imposed on media companies as the FCC had not been able make changes in its ownership rules to reflect the changes in the industry that had occurred in what may have been the most dynamic 15 years in the history of the mass media.  With these requests for rehearing on file, what is next?
Continue Reading Third Circuit Asked to Rehear Decision Overturning FCC Ownership Rule Changes – Where Do We Go from Here? 

The FCC announced on Friday that it will be hosting a symposium on the state of the broadcast industry on November 21.  On that day, there will be a panel in the morning on the state of the radio industry and one in the afternoon on television.  The Public Notice released Friday lists a diverse group of panelists, but says little beyond the fact that the forum will be occurring.  What could be behind the Commission’s decision to host this session?

The FCC is working on its Quadrennial Review of its ownership rules (see our articles here and here).  There were many who expected that review to be completed either late this year or early next, with relaxation of the radio ownership rules thought to be one of the possible outcomes.  Of course, quick action may have been derailed by the decision of the Third Circuit Court of the Appeals to vacate and remand the Commission’s 2017 ownership order.  The court’s decision unwinds the FCC’s 2017 order which included abolition of the broadcast newspaper cross-ownership rule and the rule that limited one owner from owning two TV stations in the same market unless there were 8 independent television operators in that market – see our article here on the 2017 decision and our article here on the Third Circuit’s decision.  The basis of the Third Circuit decision was that the FCC did not have sufficient information to assess the impact of its rule changes on minority ownership and other potential new entrants into broadcast ownership.  If the FCC did not have enough information to justify the 2017 decisions, many believe any further changes in its rules are on hold until the FCC can either satisfy the court’s desire for more information on minority ownership or until there is a successful appeal of that decision.  Even though FCC changes to its ownership rules may be in abeyance, the November 21 forum can shed light on the current state of the industry and why changes in ownership rules may be justified.
Continue Reading FCC To Hold Symposium on Radio and TV Industry – What Does it Mean for Broadcast Regulation?

The license renewal cycle, about which we have been warning broadcasters for at least the last year (see, for instance, our posts here, here and here), is now upon us. June 3 is the filing deadline for license renewals for radio stations in Maryland, DC, Virginia and West Virginia. Radio stations (including FM translators and LPFMs) licensed to any community in any of those states should be filing their renewal applications in the FCC’s Licensing and Management System (LMS) by Monday’s deadline. The new FCC forms, as we wrote here, have been available since early May, so the renewal and the accompanying EEO program report should either be on file or ready to be filed in LMS by the June 3 filing deadline. These stations should also be running their postfiling license renewal announcements on the 1st and 16th of June, July and August. Radio stations in the next renewal group, in North and South Carolina, should begin their license renewal pre-filing announcements on June 1st and 16th as well, informing the public about the upcoming filing of their renewals due on August 1. See this article on pre-filing announcements for more information.

In addition, broadcasters in Arizona, Idaho, Maryland, Michigan, Nevada, New Mexico, Ohio, Utah, Virginia, West Virginia, Wyoming, and the District of Columbia that are part of an Employment Unit with 5 or more full-time employees should also be preparing to add to their online public inspection file their Annual EEO Public File Report. This report is due to be added to their online public files by June 1. A link to this report should also be placed on the station’s website, if it has a website.
Continue Reading June Regulatory Dates for Broadcasters – License Renewal, EEO Reports, Reg Fee Comments, Ownership Appeal Argument and More

With the June 3 filing deadline fast approaching for license renewals for radio stations in Maryland, DC, Virginia and West Virginia, stations (including FM translators and LPFMs) licensed to any community in any of those states should be beginning to prepare their applications. As we wrote here, the FCC forms should be available next week, so once May 1 rolls around, early birds in those states can start to file their renewal applications and the accompanying EEO program report. These stations should also be running their pre-filing license renewal announcements on the 1st and 16th of May. Radio stations in the next renewal group, stations in North and South Carolina, should be prepared to begin their license renewal pre-filing announcements in June – so in May they should be recording and scheduling that announcement to run for the first time on June 1 (see this article on pre-filing announcements for more information).

While May is one of those months with no other regularly scheduled regulatory filing deadlines, it is full of other FCC deadlines including comment dates in several proceedings of importance to broadcasters. In addition, broadcasters in Arizona, Idaho, Maryland, Michigan, Nevada, New Mexico, Ohio, Utah, Virginia, West Virginia, Wyoming, and the District of Columbia that are part of an Employment Unit with 5 or more full-time employees should also be preparing to add to their online public inspection file their Annual EEO Public File Report – due to be added to their files by June 1.
Continue Reading May Regulatory Dates for Broadcasters – License Renewal Activities and Lots of Comment Dates

Questions about regulations from Washington don’t disappear just because you are spending time in Las Vegas, and this week’s NAB Convention brought discussion of many such issues. We’ll write about the discussion of antitrust issues that occurred during several sessions at the Convention in another post. But, today, we will report on news about more imminent actions on other issues pending before the FCC.

In his address to broadcasters at the conference, FCC Chairman Pai announced that the order on resolving translator interference complaints has been written and is now circulating among the Commissioners for review. The order is likely to be adopted at the FCC’s May meeting. We wrote here about the many suggestions on how to resolve complaints from full-power stations about interference from FM translators. While the Chairman did not go into detail on how the matter will be resolved, he did indicate that one proposal was likely to be adopted – that which would allow a translator that is allegedly causing interference to the regularly used signal of a full-power broadcast station to move to any open FM channel to resolve the interference. While that ability to change channels may not resolve all issues, particularly in urban areas where there is little available spectrum, it should be helpful in many other locations.
Continue Reading Regulatory Issues from the NAB Convention: License Renewals, ATSC 3.0, Translator Interference, Ownership Rules, and Children’s TV