CommLawBlog : Broadcast & Communications Lawyers & Attorneys : Fletcher Heald & Hildreth Law Firm : Telecommunications, FCC Regulation, Communications Act

Rather than pull the plug publicly, it did so in a letter (dated January 6, 2012), sent to the applicants but not officially released or broadly publicized.  According to the letter, the application involved “a division of time, not a division of spectrum”.  That's an interesting – and arguably meaningless – distinction, since today’s digital TV signal is a commingled stream, where the separate .2 and .3 channels are created by interleaving data bits rather than partitioning a 6 MHz channel into independent smaller frequency blocks.  And, the FCC continued, “channel sharing arrangements quite different from that proposed here have become the subject of an outstanding Notice of Proposed Rule Making”, referring to the 2010 channel-sharing proposal.  The Commission, however, declined to say exactly how its proposal is different from ION’s or how any differences (whatever they were) might have affected its evaluation of the proposal.

It’s neither unusual nor unreasonable for the FCC to shy away from a novel proposal if a similar idea is already under study in a formal rulemaking proceeding. But when the Commission is struggling to entice broadcasters to operate jointly on a single TV channel, what message does the Commission send when it summarily flushes a very similar proposal down the drain?  Why not just fold the ultimate disposition of the ION/Urban proposal into the rulemaking?  Or how about granting that proposal on a temporary, experimental basis as a kind of “test-drive” for the channel-sharing approach?

In its own huffing and puffing about spectrum re-purposing, the Commission has spent considerable energy trying to allay broadcasters’ suspicions that channel-sharing might put them in a deep hole.  How are television licensees supposed to interpret the fact that, when given the chance (by the ION proposal) to demonstrate that channel-sharing will not put broadcasters behind the eight ball, the Commission has apparently blown the notion off without offering any explanation?

FHH’s client, the Community Broadcasters Association (CBA), filed comments noting that this “share-time” approach is not the ticket to achieving greater minority and small-business access to media; rather, the ION/Urban approach would merely establish Urban as a new “gatekeeper” with whom minority programmers would have to deal to gain access. (And let’s not forget that 49% of Urban would be owned by ION.) While not a “minority” organization, the CBA does represent grass-roots efforts of local, low-power television broadcasters across the country, a large percentage of which count minorities among their owners.

Interestingly, the ION/Urban proposal was opposed by a number of entities with a decidedly “minority” bent. The Africa Channel, Gospel Music Channel, and SiTV (a Latino cable network) filed a joint petition arguing that the ION/Urban deal is a gimmick to get around must-carry restrictions. If it succeeds, they observed, it will be the smaller minority programmers who will suffer, as cable capacity will be used up by subdivided full power stations and become unavailable to smaller minority programmers.  They said that the proposal for “amoeba-like” subdividing of a TV channel is nothing more than an attempt to circumvent the limits of the must-carry rules.   

They also noted that: the Urban/Johnson programming proposal is vague (a point which even the supporting parties were forced to acknowledge), while existing minority programmers have existing schedules that are real; and the traditional FCC “share-time” concept involves two separate stations subdividing the hours of the day, not one station subdividing its spectrum.

Meanwhile, Entravision – the prominent Spanish-language media company – chimed in with comments asserting that the proposal is an attempt to circumvent must-carry rules and give big business another foot in the door to cable carriage.  Entravision pointed out that today’s must-carry system, as a practical matter, is for the benefit of only small stations because almost all large stations choose retransmission consent.  (Entravision appears to fear that if NCTA brings another challenge to the entire must-carry scheme based on the ION/Urban proposal, NCTA may win, and small independent full power stations will be the losers.  For that matter, so will Class A and LPTV stations with must-carry, although Entravision doesn’t mention them specifically.)

NCTA also opposed the proposal, but that was to be expected.

In the non-FCC arena, we have also learned of at least one website which has expressed strong concerns about the deal from a minority perspective.

So the much-touted minority support for the proposal is less than universal. It will be interesting to see how the deal – which reportedly has been heavily promoted by outgoing Chairman Kevin Martin – fares in the early days of the Obama administration.

Ordinarily, assignment applications (and  other major applications, for that matter) are treated as “restricted proceedings” under the Commission’s ex parte rules. Under those rules, if anybody wants to communicate with people at the Commission about a restricted proceeding, that communication has to be in writing with copies served on all other parties.  (While oral communications are at least theoretically possible, they may be made only if all other parties are present to hear the communication – a requirement which tends to put a damper on such things as a practical matter.)  The idea is that everybody with an interest in the proceeding should know what everybody else is telling the Commission.

When an otherwise restricted proceeding is accorded “permit-but-disclose” status, one-sided communications with FCC staff – including phone calls and in-person meetings – are fair game.  The only proviso is that the party making such ex parte communications must file a summary of the communication with the Commission; that summary then gets placed in the public file, available for anybody who happens to run across it.

While the after-the-fact written summary approach may seem a reasonable accommodation likely to keep everybody posted as to the flow of information into the Commission, experience suggests that such summaries may not be completely effective for that purpose.  While Commission rules require more, often such summaries seem a bit sparse, content-wise.  And even those that seem to provide a reasonably detailed description of what was actually said do not fully communicate the “feel” of the conversation.  Tone of voice, facial expressions, body language, seemingly offhand banter or comments are lost in the usually terse summary, and yet such factors can be as important as, or even more important than, the bland information set out in the summary.

The trouble is, of course, that since the only description you’re getting is from the folks who were in on the conversation/meeting, you have no way to dispute the accuracy of the summary.  This provides opportunities for some to engage in considerably more forceful lobbying than might otherwise be possible.  The Commission’s “permit-but-disclose” designation certainly does nothing to discourage any interested party, whether for or against the proposal, from trying to work some behind-the-scenes magic.

According to the Commission, classifying a proceeding as “permit-but-disclose” “permit[s] broader public participation.”  We’re not really sure why that would be so, since enabling one-on-one tête-à- têtes between (a) FCC officials and (b) advocates for only one side of the debate would ordinarily seem to limit, rather than expand, “public participation”.  But that’s the Commission’s story, and it’s sticking to it.

The fact that the ION/Urban application has been accorded permit-but-disclose status suggests that things may start to heat up at the Portals.  It’s possible that Chairman Martin sees the ION/Urban application as his last chance to require the cable industry to carry all (or most) digital streams in the post-DTV transition universe.  Commissioners Copps and Adelstein, long-time supporters of diversity (including increases in minority presence in the media), may see the ION/Urban deal as a step in the right direction, even if Urban’s owner, Robert Johnson, may not represent the type of grass-roots local programmers Copps/Adelstein might prefer. In any event, things may be getting interesting. Anyone with an interest in the proposal should be sure to keep an eye on notices of ex parte contacts in the Commission’s Daily Digest.

By the way, the current deadline for comments remains December 26, but it’s hard to imagine that the FCC is going to slam the door all that tight. We shall see.

Of course, the notion that digital streams might be treated as separately licensable “stations” is novel, to say the least. But don’t try to tell that to ION/Urban. To read their application, this is just a straightforward arrangement which falls comfortably under the Commission’s “share time” rule. (That rule may be found in Section 73.1715 of the FCC’s rules – good luck finding any reference in that rule to digital streams, though.)

The “separate licenses” component is an essential element of the proposal because ION and Urban are specifically asking, as part of their application, that the FCC rule that the cable and satellite must-carry rules will require MVPD carriage of Urban’s separate digital channels as well as ION’s primary stream programming. The must-carry rules accord carriage rights to “stations”, not “streams” – hence the insistence of ION/Urban on making sure that whatever Urban ends up with will be called licensed “stations”. This will likely be one of the most controversial elements of the new proposal, as the Commission has thus far resisted intensive efforts to secure must-carry rights for more than one digital stream in the face of vehement opposition by the cable and satellite industries. 

Even if the Commission were to adopt the concept, appeals will almost certainly follow. It’s far from clear that the proposed ION/Urban approach will get a judicial thumbs-up. Further, the mere fact that must-carry issues would be back before the courts could be bad news, since that might provide the courts an opportunity to throw out the entire concept of must-carry, much to the chagrin of many broadcasters.

Before the FCC gets to the must-carry issues, it will have to address the proposed “share-time” approach. Historically, the concept of share-time agreements has been limited primarily to radio stations, with two (or more) licensees sharing a given frequency by allotting each sharer particular time periods during which it could operate. In other words, parties to a share-time deal would not be able to operate simultaneously; rather, one party would operate the station for a while, then it would turn off its operation and the other party would turn on, and so forth, all according to a precise schedule set out in their respective licenses. Informal contacts with the FCC’s staff indicate that the sharing (and simultaneous operation) of digital television channels, combined with the issuance of separate licenses to multiple operators on the digital channels, would be difficult to sell to the staff. But, of course, the staff is not the Commission and the past is not always prologue. A new Democratic-controlled FCC may be enthused about the ION/Urban proposal, as would be Chairman Martin, whose views on cable regulation are not generally sympathetic to cable.

And doubtless in an effort to appeal both to Martin and to the ascendant Democratic administration, the ION/Urban proposal is larded with features likely to attract their favorable attention. Johnson, of course, is an African American who happens not to own any full-power TV stations. As a result, Urban (controlled by Johnson) is being pitched as a “new entrant in the broadcasting industry”. So the proposal would boost minority ownership, a strong plus in the eyes of many at the Commission.   (To be sure, some might question whether this is precisely what is contemplated by the popular notion of “diversity”. After all, Johnson is a billionaire with extensive media ties, and he would control only 51% of Urban – while ION, a non-minority entity with its own stable of full-power TV stations, would own the remaining 49%.)

And Urban is promising to launch a new programming format, including informational and issue-oriented programming targeted to serve the interests of African American viewers and other “underserved” persons in the 42 markets. Details on exactly what that programming might consist of are sketchy at this point, and Urban’s promise is somewhat porous. (“Urban will retain the flexibility to adapt its format to changing viewer needs and interests and other programming that is available in the marketplace.”) But the notion of minority-targeted programming in 42 TV markets provides a potentially irresistible sizzle – despite the fact that any FCC decision based on proposed programming would be subject to huge practical problems (f’rinstance, how would the Commission define “minority-targeted” programming, and how would the Commission define “underserved” persons, and what would happen if the licensee elected to abandon that programming – would the Commission attempt to impose its own programming preferences?)

The proposed share-time licensing approach raises interesting questions about the extent to which a TV licensee can (or should) control the use of the spectrum. If, as ION/Urban suggest, a DTV license really consists of multiple separate licenses, and if the licensee chooses not to use all of the separately licensable channels, why should that licensee be the one to decide who should be the “licensee” of the unused portions? Why should not the Commission make that call through, say, an auction process? Such an approach would open significant opportunities to smaller entrepreneurs, including, for example, numerous LPTV licensees. Additionally, it’s not clear how the ION/Urban approach would jibe with other proposals (e.g., Media Access Project’s “S Class” plan) for fostering greater diversity in media ownership.

Finally, it must be noted that the ION/Urban application is sparse on details. It doesn’t even include a copy of the assignment agreement governing the proposal – curiously, ION/Urban claim they don’t have to provide it with their application. The share-time agreement (which the applicants did file) is all of two pages long. It includes only the most generalized description of the arrangement and the ownership structure of Urban, providing that “the Parties will further specify the detail of their investments in Urban following the execution of this agreement.”

Still, the Commission is clearly taking the new share-time proposal quite seriously. The FCC has issued a public notice inviting comments or petitions on the proposal, although how anyone might be expected to comment on the application as it presently stands is something of a mystery. Let us know if you wish to participate.