Early this year, we provided our look into the crystal ball to see what was on the FCC’s agenda for broadcasters in the coming year. Yesterday, the FCC published in the Federal Register its own list – its Semiannual Regulatory Agenda – listing an inventory of the matters at the FCC awaiting Commission action. The
radio ownership rules
Supreme Court to Hear Appeal of Third Circuit Rejection of FCC Changes to Broadcast Ownership Rules
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.
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Challenge to Radio Station Purchase Helps Define FCC Radio Ownership Limits in Arbitron Markets
With the FCC closed because of the Federal government shutdown so no new decisions will be coming out for the time being, we get to look at some of the issues and decisions that we didn’t get a chance to write about when they first came out. One of the cases we overlooked raised the question of whether the FCC cares about a broadcaster’s market share when it goes to buy a new radio station, or will it simply apply the numerical station ownership limits set out in the rules? Based on a decision released last month (note that the link to the decision may not work during the shutdown), the rules which set numerical limits on how many radio stations one party can own in a market are pretty much decisive in the FCC’s determination of whether or not a party can buy a station in a market. Even if the advertising or audience market share of the buyer is very high, the fact that there are other stations in a market providing competitive opportunities makes questions of audience share essentially irrelevant. The case also addresses two other interesting aspects of the FCC’s analysis of radio holdings in a market – which stations are included in the station count for a market, and when a station being silent means that it will no longer be counted as a competitive voice in the market.
The case involved the purchase of a radio station in the Roanoke-Lynchburg, Virginia market. The Buyer already owned four FM stations in the market, and was buying a fifth. Another owner contended that the ownership of those stations would give the Buyer a share of the advertising market of more than 50%, which the petitioner claimed would impede competition and make it difficult for minorities and other new entrants to buy stations in the market. The Media Bureau rejected the arguments, finding that, as there are at least 45 stations in the market, ownership of 5 FM stations in the market is permissible under the rules established back in 1996, and revised in 2003. The numerical limits were found by the Media Bureau to represent the FCC’s judgment of what represented a sufficient limit on one party’s ownership of stations in a market. While a company that owns the maximum number of stations in a market may have a very large share of the advertising market, the decision concluded that the Commission, when adopting the numerical caps, made the determination that the numerical caps were more reliable than a market share analysis. Even when an owner owns the maximum number of stations allowed under the rules, there are numerous other competitive outlets in the market. As market shares can change over time, the numerical limits were found to be determinative. So the Media Bureau would not upset that policy decision in a case like this.…
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FCC Releases Agenda for First Workshop on Revisions to its Multiple Ownership Rules – Localism and Economic Competition Issues Included
The FCC has released the agenda for its Workshop on the multiple ownership rules (about which we wrote here). The workshop will span three mornings (November 2-4), and will include live testimony from a different panel each morning. The first panel will include the academic perspective on ownership rules, the second the view from "public interest organizations", and the third from industry representatives, though the participants on that panel are, at this point, the most unsettled. The Commission also requests written comments from the public, which can be filed through November 20. As we wrote when this topic first came up last month, these workshops are the first step in the FCC’s consideration of the multiple ownership rules – a review that it is required to conduct once every 4 years – with 2010 being the year in which such review is required.
The Commission sets out a series of questions that it would like to have addressed. These questions include:
- The FCC is required by statute to consider the rules governing local radio ownership, local television ownership, radio-TV cross-ownership, broadcast-newspaper cross-ownership and the dual network rule. The Commission asks if it should consider other rules in the context of this proceeding.
- In assessing ownership rules, should the Commission treat each rule in isolation, or should it look at all media together and attempt to craft more general rules addressing media consolidation as a whole in relevant markets?
- Should rules that are adopted be "bright line" rules, that limit entities to specific numbers of stations, or should the Commission make a case by case determination of whether a combination is in the public interest, subject to some general principles?
- Should the Commission address the traditional concepts of competition, diversity and localism to this proceeding, or come up with new ways of looking at these concepts, or different concepts to assess ownership goals?
- How should the FCC analyze competition, localism and diversity in today’s marketplace? What are the relevant markets for analysis? What metrics should be used?
- What studies or analysis should the FCC use to inform its decisions on these topics.
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