In January, the FCC released a decision addressing 14 petitions for reconsideration dealing with the new TV duopoly and cross-ownership rules.
The new TV duopoly rule, effective in November 1999, permits an entity to own two television stations licensed in the same DMA if: (1) the grade B contours of the stations do not overlap, or (2) one of the two stations is not ranked in the top four by Nielsen and at least eight independently owned TV stations (including NCE-TV stations) would remain post-merger.
The new radio-TV cross-ownership rule, adopted at the same time, permits an entity to own up to two television stations (if permitted under the TV duopoly rule) and any of the following radio station combinations in the same market:
- Up to six radio stations in any market where at least 20 independent “voices” would remain in the DMA post-merger (“voices” are radio or TV stations, daily newspapers, cable systems or radio stations with reportable Arbitron shares in the DMA).
- Up to four radio stations in any market where at least 10 independent voices would remain post-merger.
- One radio station (AM or FM) notwithstanding the number of independent voices in the market.
- In those markets where the rule will allow parties to own eight outlets in the form of two TV stations and six radio stations, a party can own, alternatively, one TV station and seven radio stations.
The revisions to the TV duopoly rule drew the most fire, with petitioners seeking reconsideration of the amended rule's requirements regarding (1) geographic scope, (2) the requirement that at least one of the stations being acquired not be among the four highest-ranked stations in the DMA, (3) the requirement that eight independently-owned stations remain in the DMA after a merger, and (4) the policy, also adopted in 1999, that waivers of the duopoly rule would be considered only in cases of failed, failing or unbuilt stations.
Petitioners argued that common owners would not run the same programming on multiple stations in the same market, and therefore would not hurt diversity. The Commission rejected that argument, but addressed the question of how to resolve a tie for market rank. In such cases, duopoly applicants will now have to submit detailed tie-breaker information on audience share.
The Commission also acknowledged that its decision to require eight broadcast TV stations remain in the market was an exercise in line-drawing. However, the Commission said that it was a justified approach because the line was drawn in a way that preserves a reasonable balance of efficiencies and robust diversity in a market.
However, the Commission relaxed its duopoly rule so that it only will count as among the eight market stations those stations whose Grade B signal contours overlap with the Grade B contours of at least one of the stations in the proposed combination. The intent of the modification is to prevent common ownership in geographically large DMAs where one party could own two overlapping stations even though most of the stations in the DMA do not serve the area served by those two. A similar rule will apply to media voices. The only television stations that will be counted toward the eight stations that need to remain in the market are those that are independently-owned and operating full-power stations within the DMA of the TV station's community of license which have Grade B signal contours that overlap with the Grade B signal contour of one of the TV stations involved in the merger.
The Commission reaffirmed its decision not to permit the transfer of a duopoly unless it adheres to rules or waiver standards in place at the time of the transfer, and continued to allow common ownership of two TV stations if they are licensed to communities in different DMAs, even if their Grade B contours overlap.
The recent order also reaffirmed the Commission's earlier decisions to (1) count noncommercial stations and daily newspapers as voices in a market, (2) to grandfather radio and TV combinations previously formed pursuant to a waiver, and (3) to prohibit the transfer of a radio/TV combination unless it meets a waiver standard.
The Commission also affirmed its earlier decision to grandfather television station LMAs entered into before Nov. 5, 1996, through the conclusion of the 2004 biennial review. It rejected the requests that it allow existing LMAs, especially grandfathered LMAs, to convert to duopolies. The option will not be extended to existing LMAs because, although the parties to existing LMAs may have had reasonable expectations of being able to maintain an LMA entered into before the Commission expressed an unequivocal LMA policy, those same parties have no such reasonable expectation of automatic conversion to duopolies.
Harry C. Martin is an attorney with Fletcher, Heald & Hildreth PLC, Arlington, VA.
Radio stations in the following locations must file their biennial ownership reports on or before June 1, 2001: Arizona, DC, Idaho, Maryland, Michigan, Nevada, New Mexico, Ohio, Utah, Virginia, West Virginia and Wyoming.