Modernizing the Mother of All Media Regulations

Yesterday, the Federal Communications Commission (FCC) at long last announced its intention to reform its woefully outdated broadcast ownership rules. At its open meeting in November, the FCC plans to vote on an order eliminating the ban on owning a print newspaper and any radio or TV station in the same market; removing the restrictions on owning radio stations along with a TV station in the same market; revising the rule that very strictly limits the ownership of TV stations in local markets; and reversing its previous decision effectively banning the joint sale of even modest amounts of advertising time by two same-market TV stations. The FCC also plans to establish an incubator program to promote the ownership of broadcast outlets by new entrants and seeks comment on the details of that program. NAB has for decades supported measures, including an incubator program, to promote new entry and increased diversity in the broadcast industry.

To say that these changes are past due is an understatement. The FCC has strictly regulated the local ownership of broadcast outlets since the World War II era. It adopted rules prohibiting the common ownership of TV stations serving substantially the same area in 1941, and similar rules for FM and AM stations in 1940 and 1943. Over three-quarters of a century later, the FCC still prohibits the common ownership of two TV stations in most markets. The two cross-ownership rules are positively youthful by comparison, dating only from the 1970s.

Clearly, not every long-standing FCC rule should be eliminated or modified just because of its age. But the broadcast ownership rules fail to reflect today’s digital media marketplace, and the FCC’s past failures to update its rules flew in the face of Congress’ directive that the Commission must every four years determine whether its rules remain “necessary in the public interest as the result of competition” and “repeal or modify” those that are not.

Most importantly, these rules for years have caused real harm to daily newspapers and their readers, the public’s free, over-the-air broadcast services and local TV stations’ ability to compete against consolidated pay-TV and broadband providers and huge social media and technology companies.

The absurdity of the broadcast ownership rules is made clear when juxtaposed against the FCC’s treatment of every other industry within its purview. For example, about a year after the FCC refused to grant a six-month temporary waiver of the radio/TV cross-ownership rule to facilitate the assignment of a single full-power TV station and related satellite and low-power stations, it approved the merger of AT&T and DIRECTV and then the combination of Charter, Time Warner Cable and Bright House. Notably, no FCC media ownership rules stood in the way of those massive mergers creating two pay-TV and broadband behemoths.

The Commission even has maintained its now 42-year-old ban on radio or TV broadcasters owning or significantly investing in print newspapers, despite the precipitous decline of the newspaper industry, as well chronicled over the past decades including by a website called Newspaper Death Watch. While giant social media, technology and pay-TV/broadband companies face no barriers in acquiring daily newspapers, the owner of just a single radio or TV station remains barred from having an ownership interest in a local paper.

The FCC’s past decisions retaining the local ownership rules depended upon the agency closing its eyes and covering its ears to avoid recognizing what is clear to any consumer with a TV remote or a smart phone – that local broadcast stations and newspapers do not exist in a vacuum and that broadcasters and newspaper owners must compete with myriad other outlets for viewers, listeners, readers and advertisers. Indeed, in other contexts, the FCC has proclaimed that the “Internet is America’s most important platform for economic growth, innovation, competition [and] free expression.”

The action yesterday, in contrast, shows that the FCC finally not only recognizes the realities of the 21st century media marketplace, but also is willing to take the manufactured political heat that will undoubtedly accompany this update of the rules. While some opponents of any rule changes likely will pretend that the FCC’s action was undertaken for the benefit of one TV station company (which doesn’t even own any newspapers), reform of these restrictions are, in fact, essential for the broadcast industry to flourish.

Political rhetoric aside, actual evidence – including dozens of studies by the FCC and private parties – shows that broadcast stations cross-owned with newspapers produce more and higher quality news and informational programming and that TV stations with higher revenues produce more local news and public affairs programming. Combinations between two TV stations, between radio and TV stations and between broadcast stations and newspapers create economies of scale permitting broadcast outlets to maintain or increase their provision of local news, weather, sports and emergency journalism. And make no mistake – broadcast services offered free, over-the-air to the public are costly to provide. Covering a significant emergency or natural disaster, such as a hurricane, can easily cost stations hundreds of thousands of dollars, with the expense of coverage (e.g., overtime for personnel, equipment, etc.) and advertising lost due to 24/7 coverage of the emergency. The public clearly values this service, as a survey following Hurricane Harvey found that 89 percent of respondents in Texas cited local broadcast TV as their top choice for information about the storm.

Stations struggling to compete against much larger and less regulated entities, and lacking the necessary financial and personnel resources, are simply unable to offer extensive local services. TV stations in medium and small markets lacking a substantial advertising base often are unable to maintain local news operations at all. As long ago as 2002, the trade press and publications like the Columbia Journalism Review were documenting the elimination of local news at stations across the country, due to economic stresses. The reformed local TV rule will permit two local stations to combine and jointly bear the substantial costs of maintaining local news operations, improving their weather and sports coverage, obtaining popular entertainment programming, purchasing equipment and upgrading their plant. Empirical studies have shown that TV stations commonly owned or in a joint services agreement with another station in the same market are more likely to carry local news and public affairs programming.

Despite the availability of many other options, consumers value their local TV and radio stations. As the cost of pay-TV services inexorably rise, more viewers are cutting the cord and increasingly relying in whole or in part on over-the-air broadcasting. And the Pew Research Center last year found that civic engagement is strongly tied to local news habits, especially the frequent consumption of local TV news. Modernizing the FCC’s ownership rules and other outdated regulations that unnecessarily hobble local broadcast stations will benefit consumers in communities across the country. As the Commission concluded 25 years ago when loosening its local radio ownership rules, a broadcaster’s “ability to function in the ‘public interest, convenience and necessity’ is fundamentally premised on its economic viability.” NAB and its members are pleased that the current Commission has recognized this basic truth.