Partisan Politics To Blame Again|
Federal Communications Commission voted to change the nation's media ownership
rules, raising television ownership caps to 45 percent and permitting
television-newspaper cross-ownership. Although the number of radio stations a
single company or individual may own in each market did not change, there were
changes in radio market definitions.
but true fact is these changes were enacted due to one political party being in
the majority at the FCC. The party line vote was 3-2.
the FCC's press release describing the Commission's June 2nd vote on media
SETS LIMITS ON MEDIA CONCENTRATION
Unprecedented Public Record Results in Enforceable and Balanced Broadcast
Washington, D.C. - The Federal Communications Commission (FCC) today adopted new
broadcast ownership rules that 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
stated that its 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.
Responds to Congressional and Court Directives
In the 1996 Telecommunications Act, Congress mandated that the FCC review its
broadcast ownership rules every two years to determine "whether any of such
rules are necessary in the public interest as a result of competition." The Act
requires the FCC to repeal or modify any regulation it determines to be no
longer in the public interest. The FCC's decision today found that all of the
broadcast ownership rules continue to serve the public interest either in their
current form or in a modified form.
court decisions reversing FCC ownership rules emphasized that any limits must be
based on a solid factual record and must reflect changes in the media
marketplace. In the Fox v. FCC decision, for example, the court said the FCC had
"provided no analysis of the state of competition in the television industry" or
even an explanation as to why the rule in question was necessary to either
safeguard competition or enhance competition.
Report and Order adopted today is based on a thorough assessment of the impact
of ownership rules on promoting competition, diversity, and localism. This
careful calibration of each rule reflects the FCC's determination to establish
limits on broadcast ownership that will withstand future judicial scrutiny.
Limits Protect Viewpoint Diversity
The FCC strongly affirmed its core value of limiting broadcast ownership to
promote viewpoint diversity. The FCC stated that "the widest possible
dissemination of information from diverse and antagonistic sources is essential
to the welfare of the public." The FCC said multiple independent media owners
are needed to ensure a robust exchange of news, information, and ideas among
developed a "Diversity Index" in order to permit a more sophisticated analysis
of viewpoint diversity in this proceeding. The index is "consumer-centric" in
that it is built on data about how Americans use different media to obtain news.
Importantly, this data also enabled the FCC to establish local broadcast
ownership rules that recognize significant differences in media availability in
small versus large markets. The objective is to ensure that citizens in all
areas of the country have a diverse array of media outlets available to them.
Rules Promote Competition and Choice for Americans
The FCC affirmed its longstanding commitment to promoting competition by
ensuring pro-competitive market structures. The FCC said it is clear that
competition is a policy that is intimately tied to its public interest
responsibilities and one that the FCC has a statutory obligation to pursue. The
FCC said consumers receive greater choice and more innovative services in
competitive markets than they do in markets where one or more firms exercise
Although the primary concern of antitrust analysis is in ensuring economic
efficiency through the operation of a competitive market structure, the FCC's
public interest standard brings a closer focus to the American public. Thus, the
FCC has a public interest responsibility to ensure that broadcasting markets
remain competitive so that the benefits of competition, including lower prices,
innovation and improved service are made available to Americans.
acknowledged that cable and satellite TV service compete with traditional
over-the-air broadcasting. Today Americans enjoy a significant amount of choice
for seeking news and information and thus the new rules limiting local and
national TV ownership are designed to better reflect this additional
competition. The FCC found that pro-competitive ownership limits must account
for the fact that broadcast TV revenue relies exclusively on advertising;
whereas cable and satellite TV service have both advertising and subscription
also explained that because viewpoint diversity is fostered when there are
multiple independently owned media outlets, the FCC's competition-based limits
on local radio and local TV ownership also advance the goal of promoting the
widest dissemination of viewpoints.
Localism Affirmed as Important Policy Goal
The FCC strongly reaffirmed its goal of promoting localism through limits on
ownership of broadcast outlets. Localism remains a bedrock principle that
continues to benefit Americans in important ways. The FCC has sought to promote
localism to the greatest extent possible through its broadcast ownership limits
that are aligned with stations' incentives to serve the needs and interests of
their local communities.
analyze localism in broadcasting markets, the FCC relied on two measures: local
stations' selection of programming that is responsive to local needs and
interests, and local news quantity and quality. Program selection is an
important function of broadcast television licensees and the record contains
data on how different types of station owners perform. A second measure of
localism is the quantity and quality of local news and public affairs
programming by different types of television station owners. This data helped
the FCC assess which ownership structures will ensure the strongest local focus
by station owners to the needs of their communities.
Reiterates Importance of Promoting Minority and Female Ownership
The FCC strongly reaffirmed its longstanding objective of encouraging greater
ownership of broadcast stations by minorities and women. The FCC said this will
benefit radio and television audiences by promoting greater diversity,
innovation, and competition. The FCC furthered its objective of creating greater
opportunities for new entrants in the broadcasting industry by carving out
special transactional opportunities for small businesses, many of which are
owned by minorities and women.
Limits on Concentration Serve the Public Interest
In sum, the modified ownership rules adopted today provide a new, comprehensive
national and local regulatory framework that will serve the public interest by
promoting competition, diversity and localism. Today's Report and Order adopts a
set of cross-media limits to replace the newspaper/broadcast and
radio/television cross-ownership rules; modifies the local television multiple
ownership rule; strengthens the local radio ownership rule by modifying the
local radio market definition; incrementally modifies the national television
ownership rule; and retains the dual network rule. A summary of the broadcast
ownership rules adopted today is attached.
also adopted a Notice of Proposed Rulemaking on defining non-Arbitron radio
markets. Details are included in the attached summary.
summary of the Broadcast Ownership Rules adopted on June 2, 2003
DUAL NETWORK OWNERSHIP
PROHIBITION: (originally adopted 1946)
FCC retained its ban on mergers among any of the top four national broadcast
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.
LOCAL TV MULTIPLE OWNERSHIP LIMIT: (originally adopted in 1964)
The new rule 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.
Limit Enhances Competition and Preserves Viewpoint Diversity
The FCC determined that its prior local TV ownership rule could not be justified
on diversity or competition grounds. 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. This is the
first local TV ownership rule to acknowledge that competition.
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. Finally, the new rule's continued ban
on mergers among the top-four stations will have the effect of preserving
viewpoint diversity in local markets. The record showed that the top four
stations each typically produce an independent local newscast.
viewpoint diversity is fostered when there are multiple independently owned
media outlets, the FCC's competition-based limits on local TV ownership also
advance the goal of promoting the widest dissemination of viewpoints.
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, 2003, 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%).
National Cap Protects Localism and Preserves Free Television
The FCC determined that a national TV ownership limit is needed to protect
localism by allowing a body of network affiliates to negotiate collectively with
the broadcast networks on network programming decisions.
also found that the current 35% level did not strike the right balance of
promoting localism and preserving free over-the-air television for several
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 ("O&Os")
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,
Record Supports Maintaining UHF Discount
* The FCC decided to maintain the "UHF Discount" when calculating a company's
national reach because it currently serves the public interest. The FCC said
that more than 40 million Americans still have access only to free, over-the-air
* Evidence in the record demonstrates that UHF stations have smaller signal
coverage areas than VHF stations, which has a very real impact on UHF stations'
ability to compete.
* The UHF discount has promoted the entry of new broadcast networks into the
market. These new networks have improved consumer choice and program diversity
for all Americans, including those with and without cable and satellite TV
* For these reasons, the FCC maintained a 50% discount for calculating the
national reach of UHF stations. However, the FCC determined that when the
transition to digital television is complete, the UHF discount would be
eliminated for the stations owned by the four largest broadcast networks. The
FCC will determine, in a future biennial review, whether to include any other
networks and station group owners in the UHF discount sunset. The FCC drew this
distinction to ensure that its resolution of the UHF discount issue will
properly account for its goal of encouraging the formation of new, over-the-air
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
* In markets with 45 or more radio stations, a company may own 8 stations, only
5 of which may be in one class, AM or FM.
* In markets with 30-44 radio stations, a company may own 7 stations, only 4 of
which may be in one class, AM or FM.
* In markets with 15-29 radio stations, a company may own 6 stations, only 4 of
which may be in one class, AM or FM.
* In markets with 14 or fewer radio stations, a company may own 5 stations, only
3 of which may be in one class, AM or FM.
Radio Limit Promotes Competition and Viewpoint Diversity
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. Competitive radio
markets ensure that local stations are responsive to local listener needs and
tastes. By guaranteeing a substantial number of independent radio voices, this
rule will also promote viewpoint diversity among local radio owners.
Geographic Arbitron Markets Implemented
The FCC replaced its signal contour method of defining local radio markets with
a geographic market approach assigned by Arbitron. The FCC said that its signal
contour method created anomalies in ownership of local radio stations that
Congress could not have intended when it established the local radio ownership
limits in 1996. The FCC closed that loophole by applying a more rational market
definition than radio signal contours. The FCC said applying Arbitron's
geographic markets method will better reflect the true markets in which radio
radio stations licensed to communities in an Arbitron market are counted in the
market as well as stations licensed to other markets but considered "home" to
* Both commercial and noncommercial stations are counted in the market. The FCC
determined that the current rule improperly ignores the impact that
noncommercial stations can have on competition for listeners in radio markets.
* For non-Arbitron markets, the FCC will conduct a short-term rulemaking to
define markets comparable to Arbitron markets. These new markets will be
specifically designed to prevent any unreasonable aggregation of station
ownership by any one company.
* As an interim procedure for non-Arbitron markets, the FCC will apply a
modified contour method for counting the number of stations in the market. This
modified contour approach minimizes the potential for additional anomalies to
occur during this transition period, while providing the public a clear rule for
determining the relevant radio markets.
* In using the contour-overlap market definition on an interim basis, the FCC
made certain adjustments to minimize the more notorious anomalies of that
system. Specifically, the FCC will exclude from the market any radio station
whose transmitter site is more than 92 kilometers (58 miles) from the perimeter
of the mutual overlap area. This will alleviate some of the gross distortions in
market size that can occur when a large signal contour that is part of a
proposed combination overlaps the contours of distant radio stations and thereby
brings them into the market.
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 4 and 8 TV stations, combinations are limited to one
of the following:
(A) 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
(B) A daily newspaper; and up to the radio station limit for that market; (i.e.
no TV stations) OR
(C) Two TV stations (if permissible under local TV ownership rule); up to the
radio station limit for that market (i.e. no daily newspapers).
markets with nine or more TV stations, the FCC eliminated the
newspaper-broadcast cross-ownership ban and the television-radio cross-ownership
Promotes Diversity and Localism
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. Nor were those
rules found to promote competition because radio, TV and newspapers generally
compete in different economic markets. 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.
the FCC replaced those rules with a set of Cross-Media Limits (CML). These
limits are designed to protect viewpoint diversity by ensuring that no company,
or group of companies, can control an inordinate share of media outlets in a
developed a Diversity Index to measure the availability of key media outlets in
markets of various sizes. The FCC concluded that there were three tiers of
markets in terms of "viewpoint diversity" concentration, each warranting
different regulatory treatment.
* In the tier of smallest markets (3 or fewer TV stations), the FCC found that
key outlets were sufficiently limited such that any cross-ownership among the
three leading outlets for local news - broadcast TV, radio, and newspapers -
would harm viewpoint diversity.
* In the medium-sized tier (4-8 TV stations), markets were found to be less
concentrated today than in the smallest markets and that certain media outlet
combinations could safely occur without harming viewpoint diversity. Certain
other combinations would threaten viewpoint diversity and are thus prohibited.
* In the largest tier of markets (9 or more TV stations), the FCC concluded that
the large number of media outlets, in combination with ownership limits for
local TV and radio, were more than sufficient to protect viewpoint diversity.
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
grand-fathered 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.
taking this action, the FCC sought to respect the reasonable expectations of
parties that lawfully purchased groups of local radio stations that today,
through redefined markets, now exceed the applicable caps. The FCC also
attempted to promote competition by permitting station owners to retain any
above-cap local radio clusters but not transfer them intact unless there is a
compelling public policy justification to do so. The FCC found two such
justifications: (1) avoiding undue hardships to cluster owners that are small
businesses; and (2) promoting the entry into the broadcasting business by small
businesses, many of which are minority- or female-owned.