FCC begins its quadrennial review of media ownership

Talk about your Sisyphean tasks. The FCC has announced that it is starting to roll the rock of ownership regulation back up the hill, again. In a sweeping Notice of Inquiry (NOI) that highlights in a number of ways the overwhelming complexity of its chore, the Commission has invited comments on virtually any aspect – practical, theoretical, conceptual, you name it – of its regulation of media.

If you have something (anything, really) to say about media ownership, here’s your chance.

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.