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FCC sets new media ownership rules

6/2/2003

WASHINGTON - The Federal Communications Commission (FCC) today unveiled its long-awaited broadcast ownership rules, to cheers from some American media comglomerates, jeers from others.

It was a close vote among the five U.S. commissioners (3-2) for the changes which, according to American news reports, fell along Republican-Democrat party lines. The changes are geared towards relaxing the rules surrounding media company expansion. While some of the corporations love the ruling, others do not.

"The real issue is that the FCC has basically used a sledgehammer when they should've used a scalpel to correct the rule," Andrew Levin, senior vice-president of government affairs for Clear Channel Communications, the largest American radio station owner told Reuters. "It's going to result in much worse problems than the ones they were trying to solve. The new definition of the radio market is arbitrary and untested."

Other published reports Stateside suggest that the decision will be reviewed by the U.S. Senate and some of it could be changed.

The FCC says the rules "are enforceable, based on empirical evidence and reflective of the current media marketplace." Today's action represents the most comprehensive review of media ownership regulation in the agency's history, spanning 20 months and encompassing a public record of more than 520,000 comments.

The new limits on broadcast ownership are carefully balanced to protect diversity, localism, and competition in the American media system. "The FCC concluded that these new broadcast ownership limits will foster a vibrant marketplace of ideas, promote vigorous competition, and ensure that broadcasters continue to serve the needs and interests of their local communities," said its release.

Here are some of the highlights:
Dual network ownership prohibition (originally adopted 1946): The FCC retained its ban on mergers among any of the top four national broadcast networks saying the prohibition promotes competition and localism

"The FCC determined that its existing dual network prohibition continues to be necessary to promote competition in the national television advertising and program acquisition markets. The rule also promotes localism by preserving the balance of negotiating power between networks and affiliates. If the rule was eliminated and two of the top four networks were to merge, affiliates of those two networks would have fewer networks to turn to for affiliation," said the decision.

Local TV multiple ownership limit (originally adopted in 1964): The new rule now states:
* In markets with five or more TV stations, a company may own two stations, but only one of these stations can be among the top four in ratings.
* In markets with 18 or more TV stations, a company can own three TV stations, but only one of these stations can be among the top four in ratings.
* In deciding how many stations are in the market, both commercial and non-commercial TV stations are counted.
* The FCC adopted a waiver process for markets with 11 or fewer TV stations in which two top-four stations seek to merge. The FCC will evaluate on a case-by-case basis whether such stations would better serve their local communities together rather than separately.

"The FCC determined that its prior local TV ownership rule could not be justified on diversity or competition grounds," says the decision. "The FCC found that Americans rely on a variety of media outlets, not just broadcast television, for news and information. In addition, the prior rule could not be justified as necessary to promote competition because it failed to reflect the significant competition now faced by local broadcasters from cable and satellite TV services."

As well, the new rule "permits local television combinations that are proven to enhance competition in local markets and to facilitate the transition to digital television through economic efficiencies," it said.

National TV ownership limit (originally adopted in 1941): The FCC incrementally increased the 35% limit to a 45% limit on national ownership.
* A company can own TV stations reaching no more than a 45% share of U.S. TV households.
* The share of U.S. TV households is calculated by adding the number of TV households in each market that the company owns a station. Regardless of the station's ratings, it is counted for all of the potential viewers in the market. Therefore, a 45% share of U.S. TV households is not equal to a 45% share of TV stations in the U.S.
* On March 31, 2024, there were 1,340 commercial TV stations in the U.S. Of these 1,340 stations, Viacom owns 39 TV stations (2.9%), Fox owns 37 (2.8%), NBC owns 29 (2.2%) and ABC owns 10 (0.8%).

The FCC found that the current 35% level did not strike the right balance of promoting localism and preserving free over-the-air television for several reasons.
1. The record showed that the 35% cap did not have any meaningful effect on the negotiating power between individual networks and their affiliates with respect to program-by-program preemption levels.
2. The record showed the broadcast network owned-and-operated stations served their local communities better with respect to local news production. Network-owned stations aired more local news programming than did affiliates.
3. The record showed that the public interest is served by regulations that encourage the networks to keep expensive programming, such as sports, on free, over-the-air television.

The FCC also said that the record supports maintaining the UHF discount. It decided to maintain that when calculating a company's national reach because it currently serves the public interest. The Commission found that more than 40 million Americans still have access only to free, over-the-air television.

Local radio ownership limit (originally adopted in 1941): The FCC found that the current limits on local radio ownership continue to be necessary in the public interest, but that the previous methodology for defining a radio market did not serve the public interest. The radio caps remain at the following levels:

* In markets with 45 or more radio stations, a company may own eight stations, only five of which may be in one class, AM or FM.
* In markets with 30 to 44 radio stations, a company may own seven stations, only four of which may be in one class, AM or FM.
* In markets with 15 to 29 radio stations, a company may own six stations, only four of which may be in one class, AM or FM.
* In markets with 14 or fewer radio stations, a company may own five stations, only three of which may be in one class, AM or FM.

"Although Americans rely on a wide variety of outlets in addition to radio for news, the FCC found that the current radio ownership limits continue to be needed to promote competition among local radio stations," it explained. "By guaranteeing a substantial number of independent radio voices, this rule will also promote viewpoint diversity among local radio owners."

Cross-media limits: This rule replaces the broadcast-newspaper and the radio-television cross-ownership rules. The new rule states:

*In markets with three or fewer TV stations, no cross-ownership is permitted among TV, radio and newspapers. A company may obtain a waiver of that ban if it can show that the television station does not serve the area served by the cross-owned property (i.e. the radio station or the newspaper).
* In markets with between four and eight TV stations, combinations are limited to one of the following: A daily newspaper; one TV station; and up to half of the radio station limit for that market (i.e. if the radio limit in the market is 6, the company can only own 3) OR A daily newspaper; and up to the radio station limit for that market; (i.e. no TV stations) OR Two TV stations (if permissible under local TV ownership rule); up to the radio station limit for that market (i.e. no daily newspapers).
* In markets with nine or more TV stations, the FCC eliminated the newspaper-broadcast cross-ownership ban and the television-radio cross-ownership ban.

"The FCC concluded that neither the newspaper-broadcast prohibition nor the TV-radio cross-ownership prohibition could be justified for larger markets in light of the abundance of sources that citizens rely on for news," it said. "Moreover, the FCC found that greater participation by newspaper publishers in the television and radio business would improve the quality and quantity of news available to the public."

Radio and TV transferability limited to small businesses: The FCC's new TV and radio ownership rules may result in a number of situations where current ownership arrangements exceed ownership limits. The FCC grandfathered owners of those clusters, but generally prohibited the sale of such above-cap clusters. The FCC made a limited exception to permit sales of grand-fathered combinations to small businesses as defined in the Order.

For the entire, enormous release (far bigger than the edited version you see here), along with commentary from the five (yes, just five!) American Commissioners, click here.

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