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

• retain, for the most part, the existing media ownership rules, including the local radio ownership rules, the dual network rule, and the local television ownership rule (with minor modification);
• toss the existing blanket ban on newspaper/broadcast cross-ownership (NBCO), replacing it with a modified version that would allow some cross-ownership in the largest markets; and
• repeal the radio/television cross-ownership rule entirely. 

In ominous news for some broadcasters, the FCC requests comment on whether it should treat shared services and news sharing agreements as attributable interests, although it stops short of proposing rules to that effect. 

In response to the Third Circuit’s decision overturning its diversity rules, the Commission notes that it doesn’t have enough information to re-instate those rules. Accordingly, it asks for suggestions on how it could get such information or otherwise take actions to encourage minority and female ownership.

Finally, the NPRM requests comment on the 11 media ownership studies it released in the last year. 

On the Big Picture side, the NPRM reflects the FCC’s inclination to retain the traditional broad policy goals of its ownership rules, i.e., increasing competition, localism and diversity. (Notably, the notion of formally adding other goals – like the “protection” of local news/journalism – is apparently dead for now, although we would not be surprised if the Commission’s final Order mentions such goals at least a few times.) With these goals tentatively identified (or, more accurately, re-identified), the Commission addresses its five main media ownership rules.

Here’s the nitty-gritty. 

Local Television Ownership: Currently, an entity is allowed to own two television stations in the same DMA, but only if one of two conditions is met: (1) if there is no Grade B contour overlap between the commonly owned stations; or (2) if at least one of the commonly-owned stations is not ranked among the top-four stations in the market (“top-four prohibition”) and at least eight independently owned television stations remain in the DMA after ownership of the two stations is combined (“eight-voices test”).

The Commission figures that this rule is still necessary to promote competition. While the FCC acknowledges the availability of non-broadcast video services (e.g., cable, Internet), the Commission thinks that broadcasters compete against themselves in a market separate from non-broadcast operators. (One basis for that conclusion: non-broadcast video services do not change their programming based on decisions taken by local television stations and, to some extent, in response to local concerns at all.) So the local ownership rules would remain in place.

In place, that is, except for the “Grade B exception”. The Commission is proposing to eliminate that option entirely, meaning that same-DMA duopolies would have to satisfy the top-four/eight-voices tests, which the Commission would keep in place. (But the Commission nonetheless still poses a wide variety of questions – some likely to be controversial – about the possible need to revise or replace either or both of those tests.)

Tossing the Grade B exception would raise a number of practical issues – like whether and, if so, how, to grandfather any existing situations that would not satisfy an ownership regime lacking the Grade B exception.

The NPRM also asks whether the DTV-spawned potential for multicasting should affect local ownership rules.

Local Radio Ownership: Along the same lines as the local TV ownership rules, the Commission proposes generally to keep its local radio ownership limits, complete with AM/FM subcaps. This tentative conclusion is based on the view that broadcast radio constitutes a market unto itself, separate from satellite and Internet services. Again, however, the Commission poses a wide range of questions about possible alternatives, so it’s impossible to say for sure whether the status quo will remain the status quo once all is said and done. 

Among the questions posed are a number relating to the competitiveness of the AM service. The Commission is currently of the opinion that AM operators may still suffer some competitive disadvantages, and that the AM/FM subcaps assist in easing, if not overcoming, those disadvantages. But the availability of on-line streaming, HD radio technology and FM translators for rebroadcasting AM signals may also help level the playing field. 

Newspaper/Broadcast Cross-Ownership (NBCO): Perhaps the greatest source of controversy in the past two quadrennial reviews has been the NBCO rule, which flatly prohibits any common ownership of a daily newspaper and a broadcast station in the same market. The rule has been in place since 1975 – since efforts in 2002 and 2006 to change it were overturned by the Third Circuit.

As the FCC now sees it, the NBCO rule doesn’t have any impact on competition – in fact, newspaper/broadcast combinations could well serve the goal of localism. On the other hand, the Commission remains tentatively convinced that such combinations pose a risk to diversity, and particularly viewpoint diversity – so some restrictions on cross-ownership remain necessary. In assessing “diversity”, the Commission discounts (as it did in 2002 and 2006) the impact of the Internet as a source of news.  The web isn’t a significant source of independent local news, in the FCC’s view, largely because it doesn’t provide significant independent newsgathering, as opposed to commentary; plus, the local news sites that do exist tend to draw very small audiences compared to daily newspapers and local broadcast stations.

The Commission’s solution: Continue to prohibit newspaper/broadcast cross-ownership, BUT declare that, presumptively, certain combinations in the top-20 DMAs are acceptable, while combinations in other markets may be permissible if they satisfy a complicated waiver standard. This approach incorporates certain elements of the version of the rule proposed in the 2006 ownership review, with some twists. (One such twist under consideration: cross-ownership of any newspaper in a TV station’s DMA would be prohibited, not just those newspapers published within the station’s Grade A contour.)

The prohibition would preclude (a) TV/daily newspaper combinations if the paper is published in the TV’s DMA, and (b) radio/daily newspaper combinations if the paper is published within the 2.0 mV/m contour (for AM stations) or 1.0 mV/m contour (for FM’s). The presumptive waiver would then permit combination of a single radio station and daily newspaper in the top-20 DMAs. Common ownership of a single TV and daily newspaper in the top-20 DMAs would also be permitted, as long as the television station was not ranked in the top four and if at least eight “major media voices” would remain in the market.

The Commission may not be wedded to the radio/newspaper prohibition, though. The NPRM specifically asks whether that aspect of the NBCO rule could simply be eliminated, since radio stations tend not to constitute “primary outlets that contribute to local viewpoint diversity”. 

As with the rest of the NPRM, this portion poses a raft of questions both conceptual and practical. Again, grandfathering generally, and the transferability of grandfathered combinations, are among the particular concerns.

Radio/Television Cross-Ownership: In perhaps the lone clearly deregulatory aspect of the NPRM, the Commission proposes to totally toss its existing limits on radio/television cross-ownership. According to the FCC, radio and TV stations don’t compete for advertising in the local market and don’t, from the perspective of listeners/viewers, serve as substitutes for one another. The Commission also doesn’t fear that elimination of this prohibition  is likely to result in significant consolidation.

The Commission’s analysis in this portion of NPRM raises interesting contrasts with the remainder of the NPRM. Elimination of the radio/TV cross-ownership prohibition is said here to be justified in part because broadcast stations generally face increasing competition from non-broadcast sources of news and entertainment (including particularly the Internet), and the “primary marketplace for news is shifting”. Perhaps so, but the Commission discounted the effect of competition from such non-broadcast services in its analysis of its rules governing local radio, local TV and newspaper/broadcast ownership limits.

Dual Network Rule: The existing prohibition on a single entity owning any two of the top-four English-language television networks (ABC, CBS, NBC, or Fox) would be retained. In the Commission’s tentative view, the top-four networks remain categorically different from their competitors in terms of both viewership and advertising rates. As a result, a combination of any two networks would have a negative effect on competition among the networks, and affiliated stations, for programming and the sale of advertising time.

In addition to the specific ownership rules, the NPRM also addresses a number of other areas touching on the general notion of media ownership:

Diversity Order Remand: Last July the Third Circuit rejected all FCC rules based on the agency’s definition of “eligible entity”. Those rules had been adopted as part of the Commission’s efforts to increase minority and female ownership of broadcast properties. There are constitutional limits on a governmental agency’s ability to engage in decisionmaking based on race, gender or ethnicity, of course, so the Commission adopted an alternative approach. Using the concept of “eligible entities” – a revenue-based term defined essentially by the Small Business Administration – the Commission hoped to benefit minorities and women without expressly carving out set asides based on constitutionally suspect categories.

The Third Circuit seemed to feel that the Commission had not shown that offering a benefit to businesses with low revenues necessarily served the stated goals of increasing female and minority ownership. So the court voided all the Commission’s rules and policies based on the “eligible entity” concept and ordered the Commission to address the problem in this quadrennial ownership review.

In the NPRM, the Commission essentially punts, concluding that it still doesn’t have a sufficient evidentiary record to permit it to address the Third Circuit’s concerns. As a result, while the NPRM requests comment on how it might support or replace its definition of eligible entities, it proposes pushing off resolution of the issue to the 2014 quadrennial review. The Commission does conclude that promoting diversity in ownership, and particularly female and minority ownership, remain important policy goals, and requests comment on other, non-eligible entity-based, ways in which it can accomplish those goals. 

Media Ownership Studies: In the 2010 NOI, the Commission commissioned 11 studies to provide data that would support its analysis of the media ownership rules. It has since released the final reports of these studies, as well as peer review information and the data sets underlying the reports. In doing so, the Commission made clear that it didn’t want comments on the reports then. For anyone inclined to comment on those studies, now is the time. The NPRM invites comments on any or all of the 11 studies. 

Attribution Standards: Finally, at the end of the Christmas stocking that is the NPRM, we get to the lump of coal for broadcasters. The Commission asks whether it should revise its rules to make certain arrangements between stations – such as shared services agreements, local news sharing arrangements, agreements related to joint retransmission consent negotiations and the like – attributable to the stations’ owners. Expanding the concept of “attribution” to include such contractual relationships would impose considerably greater constraints on many broadcasters, since “attributable” interests trigger the Commission’s media ownership rules.

The proposal to expand attribution standards arises from a number of complaints and petitions for rulemaking focusing on arrangements between and among various stations. The complainants allege that various parties, primarily television stations, are attempting to circumvent the ownership rules through contractual arrangements that allow stations to work together to produce news, or manage other station operations.   The NPRM requests comments on why, whether, and if so, how, its attribution rules should be adjusted to address such arrangements. 

The filing dates for comments and reply comments on the NPRM have not yet been set. Check back here for updates.

This is an extraordinarily wide-ranging proceeding. While the Commission’s particular proposals appear to involve little if any substantial change from the status quo, let’s not forget the extraordinary litany of questions on which the Commission has sought comments. Having at least posed those questions in the NPRM, the Commission could follow up with comprehensive and dramatic rule changes veering far afield of the seemingly benign “proposals” described in the NPRM. Attention should be paid.

It appears that OMB had a number of concerns about the survey as it was initially presented. The materials available for review at the OMB website reflect a major league overhaul of the Commission’s “Supporting Statement” along with a number of tweaks to the survey itself.

The Supporting Statement now consists of 23 pages, split up into two separate sections. That’s in contrast to the original version of the Supporting Statement filed back in November – which weighed in at a meager four pages. (Oddly, the original version appears to have gone missing from the OMB website. No worries – we kept a copy; you can read it here.) The first section (presumably from somebody at the Commission, although it’s unsigned and unattributed) now waxes eloquent about “competition” and “diversity” and “localism”. According to the Commission, the survey will, among other things, “collect information on consumers’ perception of the quality and quantity of the local content provided.” 

But the only survey question focused on “localism” reads

A media environment with low localism provides very little or no information on local news and events. With medium localism, there is some local information, and it reflects some of the interests of your community. With high localism, the information reflects many of the issues and interests of your community.

Consider the sources of information from your media environment. Please indicate their level of localism [on a three-level scale, i.e., “Low”, “Medium” or “High” localism].

Later questions solicit the respondent’s “satisfaction” (on a five-point scale) with the level of “localism” which he/she perceives to be available. The concept of “satisfaction” is not defined in any discernable way. Neither is “localism” or “local content” (other than through a reference to “examples” like reports on “school sporting results”, “city/county elections” or “neighborhood crime”). The words “quality” and “quantity” don’t appear in the survey at all.

With all due respect, it’s difficult to see how that survey question (even with follow-ups about the undefined notion of “satisfaction”) could possibly produce any useful information at all about “consumers’ perception of the quality and quantity of local content” available to them. 

And are consumers’ “perceptions” a meaningful consideration in any event? If “localism” really is a valid regulatory concern, shouldn’t the Commission be concerned about the nature, amount and source of “local” programming actually available? (With respect to the Commission’s self-serving description of the regulatory significance of “localism”, readers might want to take a look at these Comments (continued here and here) and this law review article for a different perspective on the subject of localism.)

The second part of the new-and-improved Supporting Statement appears to have been prepared by the non-FCC folks who drafted the survey. To say that it’s technically challenging is an understatement. Be sure to have a dictionary on hand if you try to read it. (Sample terms: “cross-sectional regression analysis”, “exogenously”, “collinearity”, “dichotomous”, “bivariate probit”, “computationally intractable”)

It’s also got a boatload of stuff like:

A linear approximation to the household conditional utility function is:

U^* = β₁COST + β₂ADVERTISING + β₃DIVERSITY + β₄LOCALISM

+ β₅MULTICULTURALISM + e                                                                       

where U^* is (unobserved) utility, β₁ is the marginal disutility of COST, β₂, β₃, β₄ and β₅ are the marginal utilities for the media environment features, ADVERTISING, DIVERSITY, LOCALISM and MULTICULTURALISM, and e is a random disturbance.

We’ve established in previous posts that this particular blogger is not a probs/stats jock, so you won’t find me criticizing this end of things. But even if we assume the fancy math is all exactly right, doesn’t the validity of the results depend ultimately on the validity of the data being fed into all those fancy equations?

In addition to the Supporting Statement (Parts A and B), the OMB website now also includes a “Response to OMB Review” apparently submitted by somebody on the survey design team who seems to have been responding to more or less specific OMB questions. The interesting point here is that it looks like OMB actually did critique the original version of the survey in some detail.

Not that it did much good.

Oh sure, at OMB’s suggestion, the original reference to USA Today (at Question 42, about “diversity”) has been changed to The Wall Street Journal. And where, in the same question, the original version parenthetically assigned political values to “CNN news (more liberal)” and “Fox news (more conservative)”, those parenthetical descriptions have gone away in the new version.   Another change – in Question 48, the following “example of multiculturalism” has been deleted:

[N]ews outlets that, rather than only reporting negative news from African American or Hispanic neighborhoods, such as robberies and shootings, provide a balanced story of “what is going on” in these neighborhoods.

But when OMB questioned the “vagueness of the features of the media environments” or the use of “Low”, “Medium” and “High” as descriptives for levels of, e.g., “localism” and “multiculturalism”, the survey designers simply declined to make any changes.

And with those changes and non-changes, OMB has approved the survey. Kind of. The survey has been cleared only for “the focus group and pre-test portions”, meaning that when those preliminary hurdles have been crossed, any additional changes will have to be sent back to OMB for further review. OMB also imposed several technical conditions.

Notwithstanding the conditions and possible further review, though, it appears that OMB is not going to stand in the way of the deployment of the Consumer Survey. It will be interesting to see whether the FCC and its contractors ever get around to administering the survey. After all, back in November, the Commission took the position that any delay in administering the survey “will make the contractors’ already tight deadlines unworkable.” OMB still hasn’t fully approved the survey, we’re now half-way through January, and it’s hard to imagine that those deadlines that were “already tight” two months ago have become any more “workable”. 

But where there’s a will, there generally turns out to be a way. Ostensible reliance on extended fact-finding is something agencies like to trot out when their rulemaking actions are appealed. Cynical observers might suggest that the survey is just an effort to generate a nice batch of seemingly scientific statistics to cite in support of whatever conclusions the Commission would like to reach. The near total absence of useful definitions of crucial terms, together with other obvious shortcomings (e.g., an apparent failure to clearly delineate “broadcast” from “nonbroadcast” sources of video programming), does nothing to dispel such musings. It’ll be interesting to see how this plays out – but don’t be surprised if you hear a lot more about the survey when the FCC tries to move forward with its Quadrennial Review.

Once there, click on the link to “Consumer Survey (2010).pdf”, which appears in the “Instrument File” column of the table on that page. (We’ve helpfully marked that in the illustration above.) The Survey should pop up on your screen as a PDF file. As we suggested in our last post, it makes for interesting reading.

But wait, there’s more. If you go to this other page at the OMB site, you’ll find links to three additional documents. One (identified as “Supporting Statement A”) is the supporting statement we provided a link to in our earlier post about the Survey. No real news there.

But the other two are pretty interesting in their own right.

“Supporting Statement B” sheds some light on how the Survey will be administered. Turns out the perfessors who designed the Survey have subbed out the actual conduct of the operation to a company (Knowledge Networks, or “KN”). KN will send the Survey to “a random sample of the U.S. population, potentially obtaining information from an estimated 5,000 households.” Statement B contains a lot of impressive stuff about statistical this and estimation that – stuff that, frankly, this blogger doesn’t fully grasp (“Dammit, Jim, I’m a communications lawyer, not a probabilities and statistics expert”). 

It’s all apparently intended to provide assurance that we should have confidence in the accuracy of the Survey results. For example, Supporting Statement B advises that, because the Survey will be conducted online, KN will be able to determine how long it takes any particular respondent to answer any particular question. According to KN, “[t]his gives the contractor a natural measure of the certainty the respondent feels in his or her answer. This information is useful in ameliorating the effects of hypothetical bias.” Perhaps that’s valid, but might the response time be affected not only by the respondent’s “certainty” in his/her answer, but also the respondent’s desire to get on with his/her life sooner rather than later, or possibly the respondent’s need to go to the bathroom, answer the phone, get a bite to eat, etc., while plowing through the 25-page Survey?

Another example: KN has developed a number of strategies to assure accurate response from “low-education and cognitively challenged respondents”. One such strategy involves “re-asking questions through a confirmation exercise if it is apparent from inconsistencies in the survey answers that the respondents do not understand the survey questions”. But if the respondent didn’t understand the survey questions the first time through, will “re-asking” those questions really help?

The bottom line here is that Supporting Statement B strives mightily to soothe us all as to the likely accuracy of the Survey’s results. The problem is that there remains a “black box” sense to the whole thing. And, to some of us not intimately familiar with probs and stats, that sense is not helped by the fact that devices supposedly designed to improve accuracy might also be seen as opportunities to put one’s thumb on the scale.

The third document (file name: “Emergency Letter (Consumer Survey). pdf”) linked on the OMB page is the FCC’s explanation about why the Survey needs to be approved by OMB on an “emergency” basis. And the answer is . . . well, you should read it yourself, because maybe we’re missing something.

The Commission notes that the Survey would be conducted in connection with the statutorily-mandated Quadrennial Broadcast Ownership inquiry. That’s undoubtedly true, but why does that require “emergency” treatment? The FCC doesn’t say.

The FCC then advises that it was unable to award the bid for the Survey until September 30 “[d]ue to a significant delay in obtaining funding”. We all know how that goes, but that explains only why it’s taken so long to get to this point – it does not explain why getting the Survey approved by November 22 is important. The Commission does say that the contractor “is required to submit a draft of the study” to the FCC by January 5, 2011, with the final study due by January 31, 2011. Where those deadlines came from, though, and why they are apparently etched deeply in stone is not disclosed.

So the “emergency” here is apparently that the FCC has established a deadline – based on what, the Commission doesn’t say – and in order to meet that deadline, it would like the Survey to get moving pronto. We strongly suspect that if a broadcaster seeking “emergency” FCC action relied on this kind of showing, the Commission would routinely reject it out of hand – but that just goes to show what happens when the shoe’s on the other foot.

One aspect of the Commission’s “emergency” claim is particularly troubling. It seems clear that the (presumably) FCC-established deadline for completion of the final report is driving the bus here, which seems backwards. If the Survey is intended to provide useful insight into the issues on the table, shouldn’t the researchers be given the time they need to complete their survey thoroughly and analyze the resulting data completely first, before the Commission can even start to set deadlines for wrapping things up? This apparent Deadline-Über-Alles approach does not inspire confidence here.

And let’s take a look at the Survey schedule, if the FCC does get OMB approval on November 22. According to Statement B, KN plans to run the Survey past not one, but two focus groups. We’re guessing that that’s likely to take at least a couple of days. If OMB gives the Survey its blessing on November 22 (the Monday of Thanksgiving week), it seems unlikely that the focus groups will have been conducted, the results compiled, and any adjustments to the Survey made before, say, December 1. So let’s say the Survey gets deployed to the random universe of 5,000 folks on 12/1. Supporting Statement B says that respondents will have “a two-to-four week period to reply”. That means that the responses won’t all be in until after Christmas. But the draft report is due to the Commission on January 4. Is that schedule really consistent with an interest in achieving the most accurate and reliable report which might meaningfully contribute to the resolution of important questions?

If you have any thoughts about any of this, you have until November 22, 2010, to pass them along to the FCC and/or OMB. And as we suggested in our earlier post, since the FCC seems to expect OMB approval on November 22, it would probably be a good idea to get comments in sooner rather than later.

The consumer survey will be used in a determination to define a performance metric related to the public interest goals the Commission seeks to promote through its media ownership rules. The Consumer Survey will be used to examine the impact of local media market structure on consumer satisfaction with available broadcast radio and television service. The Consumer Survey will collect information regarding how much time people spend with various media and how people get news and information. The Survey will ask respondents to rate, on a numerical scale, their current satisfaction with the overall local media environment and with components such as broadcast television, broadcast radio, and newspapers. The Survey will also include questions asking respondents to rate their current satisfaction with the local news, local public affairs, and other locally oriented media content. This survey will be distributed via the Internet to a nationwide sample of consumers, and the Commission anticipates approximately 5,000 responses to the survey.

The proposed survey was supposed to be available at the OMB website on November 5. As of 4:00 p.m. on November 5 it wasn’t there, although a very helpful FCC staffmember assured us that the survey (and an accompanying “Supporting Statement”) had been sent to OMB for posting around noon. We don’t doubt her on that, since she also very kindly sent us copies of both. We were going to include our own link to the Survey, but we noticed that its front page bears an ominous copyright notice (claiming ownership by the surveyors, not the FCC), so out of an excess of caution, we’ll hold off on including a link until it shows up on the OMB site. But we will include a copy of the FCC's Supporting Statement here – to tide you over until OMB catches up. (Remember, you have only 17 days to comment, so every minute counts!)

A quick look-see at the survey suggests that there may be plenty of reason to comment.

For openers, the survey is titled “Choosing information from your media environment: What are the options?” That doesn’t sound like it’s gearing up to measure “consumer satisfaction”, but what the heck – it’s just the title.

Remember how the Commission said in its Federal Register notice (quoted above) that the survey would, among other things, inquire about “satisfaction” with “broadcast television” and “broadcast radio”? Well, it doesn’t really do that, mainly because it makes no serious effort to distinguish between “broadcast” services and NONbroadcast services (such as satellite radio, satellite TV, or cable). And when the survey does allude to such differences, it does not do so in a helpful manner. To wit: “Broadcast TV channels are free, over the air if you have good reception, e.g., ABC or NBC. They are often re-transmitted by the cable or satellite company, but they are still broadcast channels.” All true, sort of.

And even if we could accept that rough-hewn definition of “broadcasting”, it really doesn’t make any difference. That’s because, in what appear to be the pay-off questions seeking comparisons among the various different types of “media”, the survey lists merely “radio” and “TV” as options, without reference to broadcast vs. nonbroadcast. And the ultimate question about “satisfaction” (that would appear to be Question No. 51) doesn’t even distinguish among the different types of media – rather, it asks about the respondent’s level of satisfaction with his/her “overall media environment”.

So how is this survey going to provide any useful information at all about “broadcast ownership”?

There are other problems. For example, the survey doesn’t attempt to define for the respondent’s benefit the concept of “satisfaction” as it is used in the survey. How, then, can we know that one respondent’s definition of “satisfaction” is even remotely equivalent to another’s – much less what, precisely, any particular respondent might mean by “satisfaction”.

And while the survey poses questions about the availability of “localism” and “multiculturalism” in the respondent’s media environment, the definitions of those two terms are interesting, but not particularly useful from a regulatory perspective.

Eschewing any effort to provide, like, real definitions, the survey opts instead for “examples”. For “localism”, the survey refers to “reports on: school sporting results, local council meetings, city/county elections, neighborhood crime, local heroes who give their time to the community, or job layoffs at a local factory.” For multiculturalism, the examples offered are “reports on: the Cinco de Mayo celebration, female wage inequality, or programs that help people with disabilities find a job.” Oh yeah, and “news outlets that, rather than only reporting negative news from African American or Hispanic neighborhoods, such as robberies and shootings, provide a balanced story of ‘what is going on’ in these neighborhoods.”

Those may, of course, be perfectly valid examples of the surveyors’ understanding of “localism” and “multiculturalism”. But remember, this survey is supposed to be used by the FCC to develop FCC policy concerning broadcast ownership. Unless the basic terminology used in the survey correlates with some precision to corresponding FCC terminology, it is difficult to see how the survey could produce any data that the FCC could legitimately use. Needless to say, however the FCC may have conceived of “localism” heretofore, it has not defined it like the survey does. Ditto for “multiculturalism”.

The survey includes an elaborate series of questions in which the respondent is asked to indicate a preference between two different mixes of five variables (i.e., “cost”, “advertising”, “diversity”, “localism”, and “multiculturalism”). Again, it’s not at all clear how these questions will generate any data properly useable in an assessment of broadcast ownership.

Don’t take our word for it. Click on the survey when it shows up on the OMB site and wander through its 25 pages. (Try to do so in 15 minutes, though – that’s the time the surveyors estimate will be needed to complete it. Presumably that time estimate does not include the time necessary to locate all your recent bills for newspaper, satellite radio, cable/satellite TV and/or Internet service – all of which are required to answer a number of the questions. 15 minutes? Good luck with that.)

Over and above the survey itself, the FCC’s submission to OMB sheds no light on precisely how the survey will be administered. We know that the surveyors plan to distribute it to about 5,000 people over the Internet, but who those lucky few are and how they will be chosen is a mystery. (Despite its Internet-based delivery, the survey will be available to folks who don’t have home access to the Internet. That’s because the surveyors plan to provide such folks with “free netbook computers and Internet access”. Other “non-specific survey incentives” will be provided to respondents to “maintain a high degree of panel loyalty”.  Where can we sign up?)

Oh, and by the way, according to the FCC’s Supporting Statement, the survey cost $88,300 to produce. Those would be our tax dollars at work.

Anyone interested in commenting on the survey has until November 22, 2010 to do so. You should bear in mind, though, that the FCC has asked OMB to approve the survey on the 17th day, so it might be a good idea to file comments sooner rather than later. (Of course, if the FCC is already expecting OMB approval on November 22, what are the chances that the opportunity to file comments with OMB is likely to be much more than a charade?)

Just as Sisyphus did not undertake his own chore voluntarily, the FCC’s repeated efforts to review its media ownership regulation have been mandated by Higher Authority – in this case Congress which, in the 1996 Telecom Act, ordered the Commission to review these rules every four years to determine if they remain “necessary in the public interest as a result of competition”. Amid persistent, often acrimonious, controversy, the Commission has dutifully done so, and is now doing so again – even though the results of its previous reviews still aren’t final.

The inquiry this time is extremely broad, requesting comment not only on existing rules but also on the “fundamental questions” related to media ownership regulation, the answers to which it hopes will guide the rest of this proceeding. Acknowledging the “profound” changes in the media marketplace in recent years, the NOI assures readers that the Commission has “no preconceived notions” about the ultimate outcome of the proceeding. 

The fact that the Commission chose to kick off this proceeding with an NOI probably means that it’ll be quite some time before we can expect to see any new rules adopted. The last ownership review began with a Notice of Proposed Rulemaking (NPRM) in July, 2006, and the FCC’s decision wasn’t released until February, 2008 – and though that decision was promptly appealed, briefing of the case in the Court of Appeals has still not wrapped up, which means that a decision in that forum is still at least months away. 

This time, the Commission will need to evaluate comments and reply comments on last week’s NOI before it even issues an NPRM. (By issuing an NOI, the Commission may be attempting to avoid some of the criticism directed at its handling of the 2006 proceeding, i.e., that the NPRM there failed to propose specific rules. In the NOI, the Commission has promised that the NPRM it eventually develops from comments on the NOI will “invite comment on proposals for regulations”.)

In addition to input on the ownership rules themselves, the NOI requests comment on the “analytical framework” to be used in evaluating those rules – like what factors should be considered in determining if those rules advance its public interest goals and, if they don’t, what rules would. Noting its continued commitment to the public interest goals of competition, diversity, and localism, the Commission questions how those goals should be defined and whether there are other goals it should attempt to achieve through its ownership rules. 

The five particular rules are at issue in the quadrennial review are: (1) the local television ownership rule; (2) the local radio ownership rule; (3) the newspaper/broadcast cross-ownership rule; (4) the radio/television cross-ownership rule; and (5) the dual network rule. The NOI also requests comment on whether the Commission has any authority to revise the national television ownership limit, currently set by statute at 39 percent. 

The bulk of the NOI is devoted to discussing how to define the Commission’s policy goals in relation to its media ownership rules.  The NOI identifies four groups of “participants in the media marketplace” – consumers, advertisers, content creators, and “platform owners” (i.e. broadcasters, newspapers, cable systems) – and requests comment on how the rules, and the Commission’s policy goals, affect each.

The NOI also questions how to relate the FCC’s policy goals (localism, competition, and diversity) to the media ownership rules. In particular, the Commission wants to know how: 

• to define the policy goals of localism, competition, and diversity;
• to promote those goals in the current media marketplace;
• these goals are relevant to each of the four types of marketplace participants;
• to measure whether these goals are met by any given ownership structure;
• to tell when a goal has been met; and
• to balance the three policy goals if they are in conflict.

And the Commission also asks whether new or revised rules would help to meet these goals

Evidencing the Genachowski Commission’s oft-stated desire to be more “data-driven”, the NOI also questions whether its policy goals are quantifiable and whether any studies or projects should be examined or commissioned to analyze the ownership rules. 

In addition to the very broad invitation for comments on amorphous policy issues relating to ownership regulation, the NOI poses a number of more specific questions for each of the three stated policy goals.

Competition: The Communications Act specifically ties the Commission’s review of its media ownership rules to competition. So the NOI asks how competition should be defined in today’s media marketplace and how to determine whether combined ownership of multiple outlets helps or harms competition. Other concerns on the table include: 

• how to define relevant geographic and product markets, since the Commission will be evaluating competitiveness of markets, not individual firms. Also, how should other factors, such as competition from the Internet and the current financial difficulties facing traditional media, affect this analysis.
• how should “consumer welfare” (in the FCC’s view, the true goal of increased competition), be measured since traditional price competition may not apply to a free broadcast product.
• whether, and if so, how, to assess competition between different media platforms, including competition for content, competition for ownership of media outlets, and competition in advertising prices. 
• the impact of the ownership rules on specific demographic groups, including minority ownership of media outlets and the provision of programming serving particular demographic groups.  

 Localism: The NOI also seeks comment on how to define localism in the context of the media ownership rules and how to promote it, however it is ultimately defined. If localism is defined (as it traditionally has been) by analysis of locally responsive programming, what types of programming should count in this analysis, and how can they be quantified? If local consumers are satisfied by their local media, would this be sufficient to show that the localism goal is being met? Are there other ways to measure localism, such as by looking at local programming inputs (i.e., local hiring or spending on local news). And on a broader scale, do locally produced content or local ownership actually matter? Finally, and potentially very importantly, a footnote requests comment on the “ease and usefulness” of the broadcast license renewal process, suggesting that the Commission could attempt to address that process in the context of this ownership review, as various public interest groups have urged it to do for some time.

Diversity: The NOI requests comment on how to define diversity. It identifies five historical approaches to diversity – program diversity, viewpoint diversity, source diversity, outlet diversity, and minority and female ownership – and questions the relative importance of each and how to measure them. The NOI seeks comments on the tentative conclusion that the relevant geographic market in which to evaluate diversity is the area in which “all citizens have [roughly] the same range of media choices”. Also, should diversity be measured looking at each media platform individually or by evaluating some combination of outlets?

The Commission recognizes that there may be some tensions between and among these three policy goals, and questions how any conflicts among them should be resolved. Also, are there any additional policy goals that should be considered? And how do the existing ownership rules serve these goals? Just to be sure that nothing is overlooked, the NOI also asks for comment on any other pertinent issues. 

With respect to the five particular ownership rules under consideration, the Commission raises a number of relatively specific questions, including: 

Local television ownership rule: Are the “eight voices” test and/or the “top four” restriction still relevant and, if so, how they should be evaluated? Should compliance still be evaluated using television contours and, if so, what contours to use in the post-DTV transition world?   If the rule is retained, should the failed/failing station waiver criteria also remain in place? 

Local radio ownership rule: Does it continue to make sense to retain separate sub-caps for AM and FM radio stations? How, if at all, should such factors as LPFM stations, competition from other media, or market share be considered in crafting a local radio ownership rule?

Newspaper/Broadcast Cross-Ownership: Would relaxation of the newspaper/broadcast cross-ownership rule help newspapers survive in a way that would increase local news and information? If the rule were to be retained, what types of waivers should be available? If the rule were to be relaxed, what factors should be examined in determining when to allow combinations – and in particular, should market share be considered and how should voices in the market be measured? Finally, should radio and television be treated differently for purposes of this rule?

Radio/Television Cross-Ownership: Should (and if so, how) the existing rule for counting voices in the market be adapted to account for recent technological and competitive developments? How should the Commission justify a decision to retain the current numerical limits and under what circumstances should waivers be available? 

Dual Network Rule: Should the dual network rule continue to specifically prohibit mergers between ABC, CBS, NBC, and Fox?  If it’s retained at all, should the rule be revised to more generally target mergers between networks with specific characteristics? If so, what should those characteristics be?

Finally, the NOI questions the type of regulatory regime that should be implemented if the existing rules are revised. Alternatives include bright-line rules, a case-by-case approach, or some kind of hybrid approach – and the FCC asks for comment on the relative merits of each. In an echo of its 2003 revision of the rule, the Commission also asks for comment on whether it should replace its existing rules with a “broad cross-media approach” to regulation.

Lastly (and really not at all surprisingly), the Commission asks how, if at all, its National Broadband Plan is relevant to media ownership.  

Notably absent from the NOI is any significant discussion of the appeals of the Commission’s 2008 ownership order that are currently pending in the U.S. Court of Appeals for the Third Circuit. The outcome of that proceeding could obviously have a significant impact on the Commission’s regulation of media ownership. Media parties and public interest parties filed briefs with the Third Circuit on May 17. The Commission’s brief should be filed in the coming weeks, and should shed some additional light on the current Commission’s views on the underpinnings of its media ownership regime. Although the Commission in the NOI does not specifically address the pending Third Circuit appeal, the questions raised there are clearly relevant here.    

While the Commission can’t be faulted for launching this NOI – it is, as noted above, required by Congress to do so – the utility of the exercise is, at best, questionable. Why, after all, should the agency undertake an analysis of ownership rules the validity of which has still not been resolved by the courts? And more fundamentally, what purpose is served by opening yet another proceeding in which the Commission is attempting to come up with specific regulations to address broad issues and policies which the Commission has still not been able to define? One obvious example – the Commission identifies “localism” as a basic “policy goal”, but the Commission doesn’t define “localism” and, instead, solicits comments on how to define it. That’s bad enough, but let’s not forget that, in 2004, the Commission adopted an inquiry focused specifically on “localism”. That proceeding (MB Docket No. 04-233) is still pending.  And yet, here comes the Commission again, asking the same fundamental, definitional questions.

How can the Commission be expected to rationally develop rules to address basic policies which the Commission has not defined, despite the fact that it’s been trying for years to do so? And further complicating the problem is the fact that the impact of media on the public is subject to constant change as a result not of governmental regulation, but technological change and private consumer choice – neither of which is readily controlled by the government. That means that, in attempting to formulate ownership rules, the FCC is shooting at a constantly moving target. And since the time-line for adoption of ownership rules is measurable in years (as we have seen in the past two ownership review proceedings), the likelihood that the Commission will be able to formulate rules in 2010 that will be meaningful in, say, 2013, appears relatively small.

Nevertheless, the FCC, like Sisyphus, starts to roll its rock back up the hill because that’s its fate.

The filing dates for comments and replies have not been set, but check back here for updates; if there’s anything you ever wanted to tell the FCC about broadcast ownership, this is your chance.