WASHINGTON, D.C.—In the long-running regulatory saga of the FCC’s station ownership rules, the U.S. Court of Appeals for the D.C. Circuit has issued a ruling giving the Federal Communications Commission 90 days to complete the 2018 quadrennial review of ownership rules or show cause why NAB’s petition for mandamus should not be granted.

The FCC had decided to go ahead with its 2022 Quadrennial Review of ownership rules even though it hadn’t completed the 2018 review. 

In December of 2022, FCC noted that the Commission has not yet adopted final rules in the 2018 Quadrennial Review, which has been delayed by extensive litigation, but stressed that the agency remains “cognizant of the statutory obligation to review the broadcast ownership rules every four years. Just as the previous (2018) quadrennial review was initiated in December of 2018, we seek to commence this subsequent (2022) review before the end of the 2022 calendar year….Accordingly, the Media Bureau finds that initiating the 2022 Quadrennial Review despite the pendency of the 2018 Quadrennial Review is appropriate in this instance.”

The NAB objected and in April filed suit with the Court of Appeals seeking to force the FCC to complete the 2018 review. 

In response to the ruling, NAB President and CEO Curtis LeGeyt said that the “NAB applauds the Court for recognizing the vital importance of the FCC completing its long overdue 2018 quadrennial review. Today, broadcasters’ service to communities across the country is imperiled by the Commission's failure to modernize its decades-old media ownership rules. This ruling is an important step to compel a review that the record makes clear is necessary to allow local broadcasters to more fairly compete and deliver our trusted, locally-focused programming in a transformed media marketplace.”

“NAB looks forward to actively engaging with the FCC to forge a path forward and reinforce the essential service provided by free, local broadcast stations in communities across the country,” LeGeyt continued. 

WASHINGTON, D.C.—The National Association of Broadcasters (NAB) has written to the FCC asking the commission to temporarily delay its 2022 quadrennial review of the broadcast ownership rules until it finishes the 2018 review. 

The NAB made the proposal in response to the FCC seeking public comments into the 2022 Quadrennial Review. In asking for public comment, the FCC noted that it was starting the 2022 review even though it hadn’t completed the 2018 review. 

The FCC is required by the Telecommunications Act of 1996 to review ownership rules every four years but hasn’t completed the task since 2014. 

In its filing, the NAB argued that: “Apart from violating a congressional deadline, an incomplete but still pending 2018 review also makes it challenging, if not impossible, for stakeholders to submit useful and relevant comments to inform a distinct 2022 review. NAB accordingly asks the FCC to expeditiously conclude its 2018 proceeding and then move forward with the 2022 review, as Congress intended.”

“More specifically, the Commission has no authority to delay or to forego the 2018 review or to effectively roll that quadrennial review into the required 2022 review,” the NAB asserted. 

The NAB also rejected the FCC’s explanation for proceeding with the 2022. The FCC had  said their was president for starting the 2022 review without completing the 2018 review by arguing that it started the 2014 review even though the 2010 review hadn’t been completed. “But the Public Notice overlooks the Third Circuit’s previous disapproval of that very maneuver in Prometheus III,” the NAB noted. 

The NAB also stressed the urgency of completing the 2018 review. “Since that time, competition in the media and advertising markets has grown quickly and substantially, resulting in increasing dominance by large and unregulated digital platforms,” the filing said. “As multiple courts, including the Supreme Court, have indicated, failure to timely conclude the 2018 quadrennial review is contrary to the FCC’s duties to `regularly reassess' how its ownership rules function to `keep pace' with industry developments and the marketplace, and to `promptly' repeal or modify any unnecessary rules."

“The record in the 2018 proceeding, moreover, is complete and undoubtedly ripe for review,” the filing noted. “Numerous parties, including NAB, spent considerable time, effort, and expense in commenting in Spring 2019 and then submitting supplemental comments and reply comments on September 2 and October 1, 2021, respectively, at the FCC’s request.”

“NAB therefore implores the FCC to finalize the 2018 review by March 31, 2023, and then proceed with the 2022 quadrennial so that review is concluded in at least a somewhat timely fashion, consistent with Section 202(h),” the NAB concluded. 

“Notably, the FCC’s approach here risks turning either the 2018 or the 2022 quadrennial into a pointless and burdensome exercise for stakeholders,” the NAB also noted. “By setting deadlines for interested parties to comment in the 2022 review on the ownership rules as they exist today (i.e., prior to completion of the 2018 review), the Public Notice implies the Commission is not likely to alter those rules as a result of the 2018 quadrennial, when (or if) that review is eventually resolved….Thus, it seems possible, if not probable, that NAB and other stakeholders expended significant time and resources to prepare multiple sets of comments, data, and studies in the 2018 proceeding for no real purpose.”

The author is an attorney with Fletcher, Heald & Hildreth, on whose blog this article originally appeared.

On Dec. 12, 2018, the Federal Communications Commission issued a Notice of Proposed Rulemaking commencing the 2018 Quadrennial Review of the commission’s media ownership rules.

The FCC is required under Section 202(h) of the Communications Act to review most of its broadcast ownership rules every four years to determine whether the rules continue to be in the public interest (and to repeal any rules that no longer serve the public interest) because they ensure a competitive broadcast marketplace. (Importantly, the national television ownership cap is excluded from the quadrennial review process).

These proceedings usually involve court challenges and typically take years to complete — as demonstrated by the fact that the commission did not complete the 2010 and 2014 quadrennial reviews until 2017.

In the NPRM, the commission is specifically reviewing its local radio and television ownership rules, as well as the “dual network” rule. The FCC is also considering the adoption of several diversity-related ownership proposals proffered by the Multicultural Media, Telecom and Internet Council.

Each of these items under the commission’s consideration are reviewed below. Despite its name, the NPRM does not in fact propose any specific rules, but rather requests comment broadly on any changes that should be made to these ownership rules. Instead, Chairman Ajit Pai requested an “intellectually honest conversation” about the current state of the media marketplace, and that any changes to the rules would “follow where the facts take us.”

LOCAL RADIO OWNERSHIP RULE

The Local Radio Ownership Rule limits both the total number of radio stations an entity may own within a local market and the number of radio stations an entity may own in that market within the same service (AM or FM). Currently, the FCC divides markets into four tiers based on their size, allowing an entity to own more stations in larger markets. The rule currently permits entities to own up to five commercial radio stations in the smallest of markets (14 stations or less) — no more than three of which may be in the same service — and up to eight commercial radio stations in the largest of markets (45 stations or more) — no more than five of which may be in the same service.

The FCC requested comment on whether the Local Radio Ownership Rule should be eliminated, modified or remain the same in light of any changes to the broadcast marketplace. As in past quadrennial reviews, the commission seeks comment on whether it should modify or eliminate any, all, or none of: the relevant market definitions, market size tiers, numerical limits and AM/FM subcaps.

The commission also requested comment on the National Association of Broadcasters’ proposal that the commission relax its radio ownership limits due to increased competition for listeners and advertisers posed by other services including streaming services, satellite radio, podcasts, Facebook and YouTube.

Specifically, NAB proposes that entities in the top 75 Nielsen Audio Metro markets be permitted to own up to eight commercial FM stations and an unlimited number of AM stations. NAB proposes that all ownership limits on radio stations be eliminated in all other markets.

The FCC is also seeking comment on:

• whether the interim contour-overlap methodology should be made permanent;
• the issue of embedded market transactions;
• the impact that eliminating or modifying the rule would have on minority and female broadcast ownership; and
• whether the relevant markets should be defined as to encompass the increasing competition broadcasters face from satellite radio and online audio sources.

LOCAL TELEVISION OWNERSHIP RULE

The Local Television Ownership Rule limits the number of full-power television stations an entity may own within the same local market. The rule permits entities to own up to two television stations in the same market so long as no more than one of those stations is a “top-four” station within that market. As of last year, however, entities may request waiver of the “top-four” rule under certain circumstances.

The commission in the NPRM requested comment on whether changes in the television marketplace and the video programming distribution industry necessitate elimination, modification or retention of the current rule. Notably, in light of the evolving video marketplace, the FCC requested comment on whether:

• the local television market definition should be expanded to include non-broadcast sources of video programming such as multichannel video programming distributors and online video distributors; as well as social media platforms and Internet websites; and
• if the rule were to be maintained, the numerical limit and the “top-four” rule could be adjusted or eliminated to ensure continued competition in the television marketplace.

DUAL NETWORK RULE

The Dual Network Rule prohibits ownership of multiple television stations affiliated with two or more of the Big Four broadcast networks (ABC, CBS, Fox and NBC). A version of this rule, which effectively prohibits a merger between or among the Big Four Networks, has existed since the 1940s.

The commission requested comment on whether current competition in the television and advertising marketplace mandates the elimination, modification, or retention of this rule. Specific focus was placed on whether increased competition from OVDs necessitated changes to the rule given the commission’s previous findings regarding the promotion of broadcast localism.

MMTC PROPOSALS

The commission requested comment on MMTC’s three diversity-related proposed amendments to the media ownership rules:

1. the extension of cable procurement requirements to broadcasters;
2. the development of a model for market-based “diversity credits” to serve as an alternative to prescribed ownership limits; and
3. the adoption of formulas creating media ownership limits that promote diversity.

Under the cable procurement requirement, cable systems must encourage minority and female entrepreneurs to conduct business with all aspects of a cable system’s operations. Cable systems may accomplish this obligation by recruiting qualified entrepreneurs from a pool of sources likely to representative of female and minority interests. Specifically, the FCC requested comment on whether the Communications Act permitted the adoption of such a rule for broadcasters, and if so, whether the rule would aid in increasing broadcast ownership diversity.

MMTC also proposed that the FCC should adopt a system of “diversity credits” which could be traded between broadcasters and “redeemed” by station buyers to offset increased ownership concentrations resulting from a station acquisition.

The proposal centers on the idea that a transaction deemed to promote diversity — for example the breakup of a local radio ownership cluster or the sale of station to a socially and economically disadvantaged business — could provide the seller with “diversity credits.” These credits could then be used by the seller to have a greater concentration of media ownership than otherwise permitted by the commission’s rules. Comment was sought on whether the Communications Act provided the FCC with authority to implement such a system, and if so, whether such a system would be feasible in increasing diversity in the broadcast industry.

MMTC’s third diversity-related proposal concerned the adoption of either a “Tipping Point Formula” or “Source Diversity Formula” to be used in establishing media ownership limits and promoting broadcast ownership diversity.

The Tipping Point Formula is a methodology for determining whether a transaction would result in the reduction of the amount of available revenue for supporting independent operators in a given radio market to an unsustainable level. If so, the transaction would be barred for having a negative impact on ownership diversity in that market. In contrast, the Source Diversity Formula is not limited to the radio service. The formula, however, relies on a complicated set of variables to assess whether a market manifests strong, moderate, or only slight diversity, which would then be used to assess the permissibility of a given transaction. The FCC requested comment on the feasibility of these proposals, and whether their adoption would aid in encouraging broadcast ownership diversity.

Comment deadlines had not yet been published at press time. File comments in MB Docket No. 18-349 atwww.fcc.gov/ecfs/.