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NAB Disappointed in Wheeler’s Ownership Proposal

Association says it is time to "end this indefensible FCC charade"

Text has been updated to add reaction from Commissioner Ajit Pai.

U.S. commercial broadcasters are disappointed, to put it mildly, that Federal Communications Commission Chairman Tom Wheeler isn’t proposing bigger changes in ownership regulations.

Wheeler is circulating an item among the commissioners that would retain many existing broadcast ownership restrictions, despite calls from various quarters to relax rules to reflect the modern marketplace. The item is part of a rules review process that the FCC is supposed to conduct every four years but that is now years overdue.

“While advances have changed the ways in which many consumers access entertainment, news and informational programming, traditional media outlets remain of vital importance to their local communities,” Wheeler’s office stated in a fact sheet released Monday. “Our analysis indicates that the ownership restrictions remain necessary in the public interest, though the realities of the media marketplace require some targeted modifications of a number of the rules.”

The National Association of Broadcasters expressed frustration.

“We’re disappointed that Chairman Wheeler continues to ignore the will of both the courts and Congress by proposing to retain broadcast ownership rules that long ago outlived their usefulness,” stated NAB Executive Vice President of Communications Dennis Wharton. He questioned why the FCC would still bar common ownership of two TV stations or broadcast/newspaper combinations in a local market while “mammoth mergers” like those of AT&T/DirecTV and Charter/Time Warner Cable are pushed through.

“Ultimately, NAB hopes the five-member FCC, Congress or the courts end this indefensible FCC charade, and that meaningful ownership reform is adopted for the benefit of the millions of Americans reliant on free and local broadcasting,” Wharton said.

The item proposes to retain most of the rules for local radio ownership as well as broadcast and newspaper cross-ownership, with a series of minor modifications:

• Local Radio Ownership Rule: At present, the number of radio stations in a market that may be commonly owned is tiered and depends on the number of full-power stations in the market. Wheeler’s item retains the existing rule, with minor clarifications to assist the Media Bureau in processing license assignment/transfer applications.

• Radio/Television Cross-Ownership Rule: This states that the number of commercial radio and TV stations an entity may own in a market is tiered, with the amount of common ownership permitted depending on compliance with the local TV and radio ownership rules and the number of independently owned media voices that would remain in the market. Wheeler’s item would retain the existing rule, with a modification to address the transition to digital television broadcasting.

• Newspaper/Broadcast Cross-Ownership Rule: This states that a full-service broadcast station and a daily newspaper may not be commonly owned if the station’s contour completely encompasses the newspaper’s city of publication. Wheeler would retain the existing ban though with an exception for failed or failing entities, and the commission would consider waivers. The trigger for the rule also would be modified to consider the relevant Nielsen television or radio market, if any, and to replace the prior analog television contour with a digital contour to reflect the transition to digital television broadcasting.

[Read the FCC fact sheet including a list of the current ownership limits.]

Other issues being circulated for vote by the full commission include whether to carry out the Third Circuit’s remand of diversity issues, to readopt the small business revenue-based eligible entity standard, to readopt the TV JSA attribution rule and to adopt a definition of shared services agreements, among other items.

The quadrennial review is intended to be conducted every four years to ensure that the rules reflect the state of the marketplace. The last formalized review, however, was completed in 2007. A proceeding was initiated in 2010 but was not finalized and was incorporated into the current 2014 proceeding.

During a speech at the New Jersey Broadcasters Association’s annual conference last week, Commissioner Michael O’Rielly reiterated his support for eliminating current cross-ownership bans.

“Broadcasters have so much to contribute in terms of diverse, local content, but are being kept on a regulatory leash, and given an artificially-narrowed range of options to navigate this new territory,” O’Rielly said then. “As the commission moves forward, it must first and foremost take a realistic view of the current market,” as well as include non-broadcast and non-newspaper competitors in its analysis — such as pay-TV providers, over-the-top video, websites, streaming music services or satellite radio — who are not currently beholden to the commission’s media ownership rules.” Changing this definition, he said, “could set the table for us to better promote localism, competition and diversity by thoughtfully removing outdated restrictions to media combinations,” he said.

His fellow Republican Commissioner Ajit Pai said the media ownership proposal reflects a world that existed in the 1970s as opposed to the media marketplace of today. He noted the commission’s approval of two multi-billion dollar cable mergers and AT&T’s acquisition of DirecTV, and expressed bewilderment that the FCC would object to a newspaper owning a single radio station. “Whatever the motivation for the chairman’s proposal, it has nothing to do with the evidence in the record, principled decision-making or the law,” Pai said in a statement released the day after the release of the media ownership proposal.

Often ready with a quotable or amusing aside, Pai added: “Indeed, given current trends, it is likely that the commission’s newspaper-broadcast cross-ownership restrictions will outlive the print newspaper industry itself.”