Talk about outside-the-box thinking. In a deft attempt to snag FCC-blessed mandatory cable carriage for non-primary digital streams – an issue which the FCC has managed to dodge for years – ION Media Networks and BET founder and billionaire Robert Johnson have lobbed in an assignment application which, if granted, would likely have profound effects on the DTV television industry. And by stirring more than a dash of “diversity” flavoring into the mix, ION and Johnson are looking to take advantage of the fascination with diversity that has gripped the Commission for the last year or two (and which will almost certainly continue to grip it in the upcoming Obama administration).

The FCC has invited public comment on (or petitions to deny) the proposal. The current deadline for comments/petitions is December 26. Merry Christmas.

The application, filed by ION and a new Johnson-controlled company (Urban Television LLC), proposes the “assignment” of the licenses of 42 television stations currently held by ION. But ION would not be letting go of its stations in any conventional sense. Rather, Urban is proposing to buy “licenses” to operate on a second digital stream of each of ION’s stations. In other words, ION and Johnson are asking the FCC to treat non-primary digital streams as separate, and separately licensable, authorizations. The proposal contemplates that Urban would hold a separate license for its operations in each of the 42 markets, while ION would continue to hold its own licenses in those same markets.

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.