quadrennial review of FCC ownership rules

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It looks like the FCC’s long-delayed multiple ownership proceeding won’t be decided this summer. The FCC has asked for public comment on the report submitted by the Minority Media and Telecommunications Council ("MMTC") addressing the likely impact on minority ownership of broadcast stations of allowing more media cross-ownership. Moths ago, the FCC delayed the resolution of the proceeding to allow for the submission of this report (see our article here). The issue of minority ownership, and the impact of any ownership deregulation has been one of the big obstacles to any decision in this proceeding. Relaxation of the newspaper/broadcast cross-ownership prohibitions have been proposed, and one might think that the preservation of newspapers might be of paramount importance to the FCC.  In fact, the Commission has been concerned about complaints from certain “public interest” groups who fear the impact that such combinations would have on the potential for more minority ownership. So this report was commissioned by MMTC, an organization dedicated to promoting minority ownership in all media. Now that the report has been submitted, the FCC needs to wait for public comment on its findings before any decisions in the ownership proceeding are made. Comments on the report are due on July 22, and Replies can be filed through August 6.

The FCC has already delayed the ownership proceeding at least once while taking comments on minority ownership issues. See our article from December, when the FCC asked for comments on the impact of cross-ownership on the prospects for minority ownership. The call for the December comments was initiated by the release of an FCC summary of minority ownership gleaned from FCC ownership report filings. In filings made in response to the FCC’s December comment deadline, some parties suggested that the findings of the FCC data revealed that minority ownership prospects were bleak, and that cross-ownership would make them bleaker, while others suggested just the opposite. Others contended that the two questions really were not related – that there were other reasons, like the lack of access to capital, that really explained the difficulties that all potential new media entrants have.  The release of the new study is quite likely to prompt a similar response, with comments likely to present a spectrum of opinions. Continue Reading FCC Seeks More Comments on the Effect of Newspaper-Broadcast Cross Ownership on Minority Ownership of Broadcast Stations

The FCC’s multiple ownership proceeding was going to be decided at last, before Christmas, or at least that was what was suggested by many news reports as recently as early last week. Published reports suggested that a draft proposal was circulating at the FCC, and that it was expected to be acted on in December – perhaps at or before next week’s open meeting. That timetable now seems to be out the window, as the FCC has asked for additional comments on the summaries of the information gleaned from the FCC Form 323 Ownership Reports as to minority and female ownership of broadcast stations released late last month. The summary of those reports showed low levels of minority ownership in many parts of the broadcasting world. As the Third Circuit’s remand of the last multiple ownership order (which we summarized here) was based in part on the Commission’s failure to address the impact that its minor liberalization of the newspaper-broadcast cross-ownership rules would have on minority ownership, this request for additional comments seems addressed, at least in part, to addressing that perceived deficiency.

The request for comments gives a short deadline, with comments due the day after Christmas, and Replies on January 4. This indicates that there still is a push to get the ownership proceeding resolved early next year. With this push on, it seemed like a good time to review some of the more controversial issues likely to be addressed in the upcoming order.

 

The area where the most arguments seem to be centered, and the one most likely to be impacted by the data on minority ownership, is the cross-ownership rules. In the Notice of Proposed Rulemaking in this proceeding (see our summary here), the Commission proposed dropping the remaining restrictions on radio-television cross-ownership, and relaxing the newspaper-broadcast cross-ownership restrictions, which the FCC attempted to do in 2007, only to be rebuffed by the Third Circuit. We have observed how some pundits in Washington have mused that the newspaper-broadcast cross-ownership restrictions may well outlive the daily newspaper, and that seems to be the debate now, as advocates of relaxation argue that combinations will help economically challenged newspapers, while also promoting more news on broadcast stations in such combinations. Opponents, on the other hand, fear that combinations will lessen minority ownership in markets – either by foreclosing opportunities for minority buyers, or by buying minority-owned stations. Continue Reading Multiple Ownership Decision Delayed – What Issues Are Being Debated?

Since the start of the FCC’s examination of its multiple ownership rules in anticipation of its Quadrennial Review of these rules, the question of TV shared services agreements has been one raised by public interest groups, suggesting that combinations of local TV stations for news or sales purposes are not in the public interest…

The FCC issued its Notice of Proposed Rulemaking in its reexamination of its multiple ownership rules, suggesting limited changes in its rules governing the number of interests that one person or company can have in media outlets in a particular community.  The FCC’s tentative conclusions leave most of the current rules in place – including rules that limit the number of radio and TV stations that one entity can own in a market, and rules prohibiting combined ownership of daily newspapers and TV stations in the same market.  The Commission also proposed keeping the dual network rule, prohibiting the combination of any of the four major TV networks.  Shared Services Agreements were another issue addressed by the FCC – proposing to examine SSAs and and other news and program sharing agreements between otherwise independent stations.  The FCC did propose the abolition of one rule – the rule that currently limits the ownership of radio and TV stations in the same market.  In the NPRM, the FCC suggested that other ownership rules could be waived in some instances, so the details of waivers and exceptions could become an important aspect of any final decision in this proceeding.  All of these conclusions are tentative, and the Commission asks many questions about each of its tentative conclusions and asks for public comment on its ideas.  The public can formally weigh in with comments for 45 days after the NPRM is published in the Federal Register, and file replies 30 days later.  After that, there is sure to be much lobbying of the Commissioners before any final decision is made.

This proceeding combines several on-going proceedings.  The Commission started its required Quadrennial Review of the ownership rules over two years ago with a series of public hearings, and a Notice of Inquiry.  The Commission also is dealing with the clean-up of its last review of the ownership rules, which was embodied in a controversial decision reached late in 2007 (see our summaries here and here).  The Third Circuit Court of Appeals threw out significant parts of that decision, finding that the FCC’s relaxation of the newspaper-television rules had not been the subject of adequate notice to the public, and that the FCC had ignored its obligations to take steps to promote minority ownership of the media.  Some parties seeking repeal of the newspaper-television cross-ownership rules have asked the Supreme Court to review the Third Circuit decision – but this NPRM looks to reexamine many of these issues in the event that the Supreme Court doesn’t otherwise preempt their decision.    Below we’ll take a look at specific questions raised by the NPRM.Continue Reading Multiple Ownership Proposals Released By FCC – Abolish Radio-TV Cross-Ownership Rules, Leave Most Other Rules In Place, Examine Shared Services Agreements

In an eagerly anticipated case involving TV stations in the Honolulu market, the FCC’s Media Bureau determined that a programming swap that permitted one company to hold the licenses of both the NBC and CBS affiliates in a single market, and to also provide technical and office services and news programming to a third station in the market, was permissible under current rules.  However, the Commission warned that it would consider in its upcoming Notice of Proposed Rulemaking in its Quadrennial Review of the multiple ownership rules whether similar situations should be permitted in the future, and seemingly implied that even this combination could be subject to further review in future licensing proceedings.  The permissibility of shared services agreements has been a question raised by public interest groups for quite some time (see our post here), and has also been raised by certain cable and satellite television operators as such combinations can result in one broadcaster negotiating carriage agreements for multiple stations in a market.  Based on this case, and the issues raised in connection with previous decisions, this will no doubt be a very controversial topic when the Commission considers the upcoming multiple ownership proceeding.

The Honolulu case began with one owner – Raycom – holding two licenses in the market – one an NBC affiliate, and the other an affiliate of the MyTV Network.  As there are 8 independently owned television stations serving Honolulu, the combination of these two stations, only one of which is a Top 4 station in the market, was permissible.  Raycom then entered into a deal with the owner of the local CBS affiliate, where the parties swapped call letters and network affiliations.  Raycom also purchased many of the non-license assets of the station, and received an option to purchase the station, and agreed to pay the licensee, over time, $22 million.  Raycom also entered into a shared services agreement with the owner of the station that had become the MyTV affiliate where Raycom would provide back office services, sales personnel, and a physical location for the station’s studio and transmitting antenna, in exchange for 30% of the stations revenues, and a flat monthly payment.  As detailed below, the Commission determined that the swap of call letters and network affiliations was not subject to review at this time as there was no licensing transaction before the FCC, and the shared services agreement did not violate current FCC policies.Continue Reading FCC Says TV Shared Services Agreement and a Combination of Two Top 4 Network Affiliates in One Market is Permissible – For Now

In recent weeks, there seems to be a competition to make the FCC more responsive, and to mandate that, before it adopts any new regulations, it take into account the costs of the proposed regulations and the burden that they place on those being regulated.  The Communications and Technology Subcommittee of the House Energy and Commerce Committee adopted a bill (The FCC Process Reform Act of 2011) that would, if adopted by the full House and the Senate, require that the FCC, before adopting any new regulations, take several steps to make sure that regulations were really necessary (see a summary of House bill here).  Before adopting any rule, the Commission would have to survey the marketplace, determine that there was a market failure or specific consumer harm, then take into account the cost of complying with regulations before the new regulations are adopted.  The proposed legislation would also require that the FCC adopt deadlines on many FCC actions ("shot clocks"), perhaps in response to a Study commissioned by the House Committee looking at the length of time that many FCC proceedings take.  The FCC adopted its own proposals for making its regulations less burdensome by reviewing the continuing need for existing rules, following the President’s call for all agencies to take such action.  The FCC report, after making the seemingly obligatory bows to broadband adoption that the Commission seeks to foster, talked about many of the same issues that the Congressional committee seemed to be addressing – deleting unnecessary regulation wherever possible.  What changes will these efforts bring to the FCC?

Call me cynical, but I doubt that the proposed changes will really lead to any significant differences in the way that the FCC does business.  The FCC is already bound by all sorts of laws that demand that it take into account many of the same considerations that are included in the plans of Congress and the FCC.  The Paperwork Reduction Act has already stopped certain regulations from going into effect, including the Form 355 (which sat in limbo for 4 years and the FCC is only now considering reviving in a somewhat more abbreviated form).  The FCC also must take into account the Regulatory Flexibility Act, looking at the impact of any regulation on small entities who would be subject to any new rule.  Congress itself has already enacted other requirements that the FCC review regulations on a periodic basis – for instance the required Quadrennial Review of the FCC’s multiple ownership rules.  And what do these accomplish?Continue Reading Congress and the Commission Look to Make FCC More Responsive and to Take Costs Into Account in Making New Rules – Will It Work?

The Third Circuit Court of Appeals has once again questioned the FCC’s determinations on broadcast ownership issues. In a decision just published, Prometheus Radio Project v FCC, the Court reviewed the FCC’s 2007 actions relaxing the newspaper-broadcast cross-ownership rules and adopting policies to increase diversity in broadcast ownership.  These FCC decisions had followed a prior decision of the Third Circuit determining that the FCC’s 2003 Ownership Order, relaxing many FCC ownership rules, was not adequately justified.  The FCC’s subsequent actions on cross ownership were set out in its 2007 order, relaxed the newspaper broadcast cross ownership rules in larger markets through a policy based on certain presumptions that, when met, justified the common ownership of newspapers and radio and television stations in larger markets (and, in some cases, in smaller markets too)( see our summary of this order here and here).  The diversity order, released in 2008 (summarized here and here), adopted a number of rules and policies meant to encourage diversity in media ownership.  In this new decision, the Court found that both the decision as to the newspaper cross ownership rules and the one dealing with diversity policies were wanting, and sent these matters back to the FCC for further consideration. At the same time, the Court upheld the FCC’s decisions not to change the local television ownership rules (allowing common ownership of 2 TV stations only when there are at least 8 independently owned stations in a market, and where the combined stations are not both among the Top 4 in their markets) and to retain the sub-caps for radio ownership (the rules that allow one entity to own up to 8 stations in a single market, as long as there are no more than 5 in any single service, i.e. AM or FM).

The discussion of the newspaper-broadcast cross-ownership rules was entirely procedural.  While certain public interest groups had argued that the 2007 revision to the cross ownership rules allowed too many broadcast-newspaper combinations, a number of media companies argued that it allowed too few.  The Court didn’t address either contention, instead focusing on the process by which the FCC adopted the rules.  When the Court addressed the 2003 rule changes, it sent that decision back to the Commission questioning the basis for the "diversity index" that the FCC had adopted to measure when transactions resulted in too much concentration in a market, and specifically instructed the FCC to give the public notice and an opportunity to comment on the specifics of any new proposal that was adopted.  The Court felt that there were too many obvious flaws in the diversity index which could have been discovered if the public had been given a chance to review its details before it was adopted.  In asking for comments following the Court’s remand, the recent decision concluded that the FCC had given the public only a cursory description of the issues that it would consider on remand with respect to the cross-ownership issue when the FCC issued its request for public comment.  The substance of the Commission’s policies which were adopted, setting out presumptions in favor of cross-ownership in larger markets and against it in smaller markets, was not suggested in the request for public comment, but instead was first floated in a newspaper Op-Ed by then FCC Chair Kevin Martin.  While the FCC asked for comment on that proposal, parties were given less than a month to file comments, and a draft decision embodying the proposal was already circulating at the FCC before the comment period had even ended. This process prompted much outcry at the contentious FCC meeting at which these rules were adopted (see our summary here).  The Court looked at this process, and determined that the public had not been given an adequate opportunity to address the specifics of the FCC proposal, and had given the appearance of having pre-judged the outcome of the case.  Thus, this week’s decision sent the FCC’s 2007 order back to the FCC to seek more public comment, and to develop rules based on those comments. Continue Reading Court Tells FCC to Give More Consideration to Newspaper-Broadcast Cross Ownership Rules and to Policies to Promote Broadcast Ownership By Minorities

Every year, about this time, I dust off the crystal ball to offer a look at the year ahead to see what Washington has in store for broadcasters.  This year, like many in the recent past, Washington will consider issues that could fundamentally affect the broadcast industry – for both radio and TV, and affecting the growing on-line presence of broadcasters.  The FCC, Congress, and other government agencies are never afraid to provide their views on what the industry should be doing but, unlike other members of the audience, they can force broadcasters to pay attention to their views by way of new laws and regulations. And there is never a shortage of ideas from Washington as to how broadcasters should act.  Some of the issues discussed below are perennials, coming back over and over again on my yearly list (often without resolution), while others are unique to this coming year.  Issues unique to radio and TV, and those that could affect the broadcast industry generally, are addressed below.

Television Issues

Spectrum issues have been the dominant TV concerns in past years, first with the digital transition, and more recently with the "white spaces" rulemaking and the proposals advanced as part of the FCC’s Broadband Plan to reclaim part of the TV spectrum for wireless broadband uses.  These issues remain on the FCC’s agenda, as do new issues dealing with the carriage of television stations by cable and satellite television providers.  Specific issues for TV include:

Spectrum reclamation:  The initial proposals for the reclamation of part of the TV spectrum for wireless broadband were laid by the FCC’s Notice of Proposed Rulemaking released in November, looking at how the TV spectrum could be used more efficiently, and how incentive auctions encouraging some TV stations to vacate their channels could be conducted.  Congress still has to pass legislation to allow such auctions, and it will probably also mandate a spectrum inventory to determine if the reclamation of the TV spectrum is really necessary to provide for wireless broadband needs.  At the same time, some TV operators have begun to talk about television stations themselves providing broadband service with their excess spectrum.  While Congress will probably act on the auction bills this year, and there will be much debate about the details of the reallocation issue, so don’t expect final resolution of this matter in 2011.

White Spaces:  The FCC has authorized the operation of wireless devices in the television spectrum, resolving many of the concerns about interference to television operators by requiring all wireless users to protect operating TV channels in specific areas based on databases of existing users, not on spectrum sensing techniques.  But implementation issues still need to be worked out – including finding parties to compile and administer the databases to make sure that all existing spectrum users who are to be protected are registered.  Expect action on these matters this year, but no actual white spaces use until after these implementation efforts are completed.

LPTV Digital Transition:  While many members of the general public may consider the digital television transition to be complete, many Low Power TV stations and TV translators are still operating in analog.  The FCC has commenced a proceeding to require the transition of these stations to digital, suggesting that the transition be complete as early as the end of 2012.  Expect controversy on this issue.  Many LPTV stations feel that being forced incur the costs to covert to digital is premature and could imperil broadcast service, especially to rural areas and minority populations who rely on translators and LPTV stations, if spectrum repacking caused by any future repurposing of TV spectrum for broadband forces further technical changes.  These issues will be considered by the Commission this year.

Retransmission Consent Reform:  At the end of 2010, there was much controversy over retransmission consent issues, as there were instances where broadcasters and cable operators and other multichannel video programming distributors had difficult negotiations over the carriage fees to be paid to the TV stations.  FCC sources stated at the end of the year that a proceeding will be initiated to determine if the rules governing the negotiation process should be changed.  The multichannel video programming distributors and some public interest groups argue that the FCC should protect viewers who may have their TV service disappear if a TV station does not reach a deal with a MVPD, while the broadcasters argue that the ability to remove the station is the heart of the negotiation, and removing the risk of the MVPD losing the right to carry the station would negate the negotiation.  Look for this proceeding to commence early in the year but, as it will no doubt be very controversial, it may take some time to resolve.

DMA Boundary Issues:  The FCC has also begun a proceeding to look at DMA boundaries that cross state lines to see if every television viewer should be guaranteed to receive service from cable or satellite providers of a station in his or her state.  Television stations fear that this guarantee could upset traditional television markets, and could have an impact on retransmission consent negotiations in border counties.  Comments in this proceeding are due on January 24th, 2011.Continue Reading Gazing Into the Crystal Ball – What Washington Has In Store For Broadcasters in 2011

FCC Commissioner Meredith Atwell Baker recently delivered a speech in Washington, DC, where she addressed calls for the government to take action to assist the traditional media deal with the economic issues brought about by the new media.  From time to time, there have been calls for the government to assist the traditional media, either through some sort of direct subsidies, or through regulatory changes that could assist in their news coverage to make these entities competitive in the new media world.  While the Commissioner’s speech did not detail those efforts, calls have, for the most part, not suggested direct government subsidies to support traditional news media sources.  Instead, more indirect efforts have been suggested to insure that these media sources continue to serve their communities.  Calls have been made to change tax laws to allow newspapers to operate as nonprofit entities (while still soliciting advertising).  In a draft FTC option paper, there was a suggestion of taxing commercial media to provide more support to noncommercial public broadcasting entities.  Other proposals have been more direct – simply mandating more news and public affairs programming from broadcasters (with little or no discussion of the source of the revenues for such mandates).  In her speech, the Commissioner noted that some suggestions may be forthcoming from the FCC’s own Future of Media report due at the end of the year (see our summary of the issues that they are exploring here), but she seemed to rule out these types of proposals, instead suggesting that the Commission could assist companies meet the new media challenge by loosening FCC restrictions on ownership.

The Commissioner suggested that no government action to bail out the media is necessary to preserve service to the public – citing the many examples of how that service is provided through new media sites that serve all sorts of communities and community groups – providing timely and detailed information on specific topics, often on a neighborhood level.  We have made that same point on these pages – the new media is already filling any void that may exist in local media coverage.  Some of these sites are produced by old media companies – as TV stations, newspapers and others develop microsites targeted to very local needs and interests.  Other sites are totally independent – developed by local interest groups or new media entrepreneurs.  So how can the Commission help these sites to develop?Continue Reading FCC Commissioner Baker Suggests No Government Support for Media, But Possible Relaxation of Broadcast Ownership Rules

The FCC yesterday released a Notice of Inquiry, formally beginning its Quadrennial Review of the Multiple Ownership Rules.  While the FCC informally began the process of the Congressionally-mandated review of the ownership rules last November through a series of informational panels and workshops, the Notice of Inquiry ("NOI") provides the first formal opportunity for the public to comment on the ownership rules.  The FCC will take the comments that it receives in response to the NOI, and formulate some more specific proposals on how it plans to change the current rules (if at all), which will then be released for additional comments in a Notice of Proposed Rulemaking.  The NOI is a broad-ranging document that gives little indication of the FCC’s final direction in this proceeding – though it does go into detail as to how the media marketplace has changed in recent years, citing declining advertising revenues, and more media outlets providing competition to broadcasters for both audience and advertising revenues.   The NOI posed dozens of detailed questions asking how the Commission should assess the various aspects of the ownership rules, and what impact the changes in the media marketplace should have on its consideration of rule changes.

The FCC is concerned with all aspects of its media ownership rules.  Thus, it sets out that it will explore the following rules:

  • The Local Television Ownership cap, which limits owners to two stations in markets where there are at least 8 competing television owners and operators, and which forbids combinations of the top 4 stations in any market.  Television operators, particularly in smaller markets, have been urging the Commission to allow more consolidation in those markets so that stations can provide better service to their communities.  They argue that the current limits preclude small market consolidation, which is most needed in these markets where the costs of operation are not significantly lower than in large markets, but where revenue opportunities are far more limited.
  • The Local radio ownership caps, that currently limit owners to 8 stations in the largest markets, no more than 5 of which can be in any single service (i.e. AM or FM).  Some radio owners contend that these limits no longer make sense given the competition for audio listening from so many sources (including satellite and Internet radio, who can provide unlimited formats in any market).  Other issues include whether AM and FM still need to be treated separately, and even whether AM should be counted to the same degree as FM in a multiple ownership analysis.
  • The Newspaper-Broadcast cross-ownership rule, that forbids cross-ownership of broadcast stations and daily newspapers without a waiver – which, as the result of changes in the cross-ownership rules in 2007, will be granted on a more liberal basis, but only in the top 20 markets.  Given the economic state of the newspaper industry, many seek the repeal of this rule in its entirety. As we have written before, will the newspaper cross-ownership rule outlive the newspaper?
  • The Radio-Television cross-ownership rule, which limits the number of radio and television stations that can be owned by a single party in a single market
  • The Dual Network Rule, that prohibits the common ownership of any of the top 4 television networks.

Each of these rules is up for review, and numerous questions have been asked, and issues identified, for consideration in this proceeding. Continue Reading FCC Issues Multiple Ownership Notice of Inquiry – Formally Begins Quadrennial Review With Lots of Questions To Assess the Impact of Media Consolidation