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  • Jerianne Timmerman 10:15 am on August 20, 2015 Permalink
    Tags: media ownership   

    The Mandatory “Upgrade” the FCC Forgot 

    In a blog last week claiming credit for “upgrading” the FCC’s “media rules” to reflect today’s marketplace, FCC Chairman Tom Wheeler neglected to even mention the mother of all media rules, the broadcast ownership restrictions. Unfortunately, this conspicuous omission should come as no surprise. Despite Congress expressly requiring the FCC to regularly update its ownership rules, the Commission has repeatedly – even serially – failed to modernize those restrictions.

    The FCC has strictly regulated the multiple ownership of broadcast outlets since the World War II era. The Commission prohibited in 1941 the licensing of a TV station under the same ownership as another station broadcasting in substantially the same area – and nearly 75 years later, the Commission still prohibits the common ownership of two TV stations in most markets. By comparison, other FCC ownership restrictions – such as the disco-era ban on common ownership of a newspaper and a single radio or TV station in the same market – are merely middle-aged, rather than senior citizens. If the FCC’s criteria for determining whether its rules should be eliminated depends primarily on their age – as the Chairman’s blog implied with regard to the “50-year old” program exclusivity rules – then the almost octogenarian ownership rules should be long gone from the FCC’s books.

    Much more importantly, the FCC’s failure to update its ownership rules flies 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. While the Commission may be fulfilling its obligations under the 2014 Satellite Television Extension and Localism Reauthorization Act, as the Chairman specifically noted, the FCC at the same time has cavalierly disregarded its obligation under the Telecommunications Act of 1996 to complete the 2010 quadrennial ownership review.

    As the D.C. Circuit Court of Appeals suggested in an earlier ownership case, the Commission’s failure to make the determinations required by statute for retaining its ownership rules indicates its inability to do so. Retaining the current newspaper/broadcast cross-ownership ban, for example, would require the Commission to show that competition and diversity in the media marketplace have not changed since 1975. Obviously, that is impossible to show, as the owners of newspapers, TV stations and radio stations have made clear starting in 1996 when the Commission first requested comment on reforming the cross-ownership ban. Despite last week’s story about updating FCC rules to “better reflect today’s media marketplace,” the cross-ownership prohibition stands unchanged, nearly two decades since the Commission began reexamining it.

    In irresponsibly delaying reform of its ownership rules, the Commission has had to deny the existence of competition to TV and radio stations and newspapers. For example, even though the FCC, according to Chairman Wheeler, is “updat[ing] the [broadcast] Contest Rule for the Internet age,” the agency – seemingly with a straight face – previously dismissed competition in the video marketplace from pay-TV and online sources as being of “limited relevance” for its review of the local broadcast TV ownership rule. And, as newspapers continue to disappear, the Commission effectively ignored the hundreds of millions of Americans that use the Internet, and dismissed evidence showing consumers moving away from newspapers to online news sources, because the Internet is not available to all Americans. So while the Internet, according to the Commission earlier this year, “drives” the U.S. economy and serves “every day” as a “critical tool” for Americans to “conduct commerce, communicate, educate, entertain, and engage in the world,” in the alternate universe of broadcast regulation, it merits only a change in the FCC’s contest disclosure rules (which, notably, apply only to over-the-air broadcasting and no other medium).

    For decades, NAB and its members have fought to truly modernize the FCC’s media rules by reforming unfair and inequitable broadcast ownership restrictions – rules that do not apply to broadcasters’ increasingly consolidated video and audio competitors, including cable, satellite and online. Rather than indulging in misplaced self-praise over eliminating rules that are as important as ever in the video marketplace, the Commission must stop willfully and blatantly ignoring its statutory duty to, borrowing a phrase from Chairman Wheeler, promote the “public interest” and “help ensure the continued viability” of free, over-the-air broadcast service. Particularly in an era of overpriced subscription services offered by companies with rock-bottom customer service ratings, American consumers deserve a viable – indeed, a thriving – free option.

     
  • jmago2014 12:31 pm on March 11, 2014 Permalink
    Tags: , JSA, media ownership   

    Looking to the Law 

    As a General Counsel – now at NAB and formerly of the FCC – I tend to believe that adhering to the law is a good thing.  That is why I am very troubled by the broadcast ownership order now circulating at the Commission and the blog posts filed by senior FCC officials supporting it.

    The very first line of the Chairman’s blog post makes it surprisingly clear that the agency must take a closer look at the law before moving forward on the proposed order. His post describes the FCC’s quadrennial obligation to review the broadcast ownership rules as one to “determine if they need to be modified to serve the public interest.”  That is not the law.

    Section 202(h) of the 1996 Telecommunications Act which imposes the quadrennial review requirement on the FCC was adopted as part of a deregulatory framework. The statute states that the Commission “shall determine whether any [broadcast ownership] rules are necessary in the public interest as the result of competition.” And, it goes on to say that the Commission “shall repeal or modify any regulation it determines to be no longer in the public interest” (emphasis added).

    Given this directive, I find it very hard to understand how one could conclude that reaching back to a docket from 2004 to increase regulation of joint sales agreements (JSAs) without any consideration of the larger picture or change in the marketplace is consistent with the directive of Section 202(h).

    I am even more perplexed and troubled that the apparent basis of the decision to declare television JSAs attributable is a sweeping and inaccurate generalization that JSAs necessarily create de facto ownership and thus violate existing ownership rules.  The blogs do not reference or apparently consider the very significant database of JSAs that resides at the FCC. Instead, they draw conclusions from Securities and Exchange Commission (SEC) filings.  Those filings respond to rules and goals established by the SEC for a very different purpose than FCC licensing. SEC filings are not a part of FCC precedent or law.

    Indeed it is striking that the blogs make no reference to the decades old FCC indicia of control: decision-making authority over programming, personnel and financing. Those indicia led the FCC staff to approve at least 50 JSA arrangements since 2011, making clear in their review that the licensee must control at least 85% of programming and retain at least 70% of net advertising revenue. Also, to pass muster, the terms of the deal must apply at least 20% of station value to the license value.  The FCC is not free to ignore precedent.

    Similarly, as a matter of law, the FCC is not free to simply ignore the record before it. Here, basing a decision on gross generalizations that JSAs are intended to get around ownership rules is wrong.  Adhering to the law in this case requires the agency to take a hard look at the evidence in its own records and consider the presentations made by NAB and others – presentations that demonstrate the varied nature and very real public interest benefits of television JSAs.

    Finally, adhering to the law in this case means taking the directive of Section 202(h) seriously. The Commission must look at the local television ownership rules in light of current competitive conditions. That cannot mean starting another never-ending quadrennial review while tightening restrictions on local broadcast stations alone. 

     
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