June 3, 2016 - 2:09 pm
By Michael O'Rielly | Commissioner

Last week, in its “third go-round” with the Commission’s media ownership rules, the U.S. Court of Appeals for the Third Circuit struck down the 2014 rule change requiring ownership attribution for broadcast joint sales agreements (JSAs), while admonishing the Commission for its continued failure – for nearly a decade – to complete the statutorily-mandated Quadrennial Review of media ownership rules.  The court’s patience has clearly worn thin, given its not-so-veiled threat that it may be justified in wiping all the rules off the books if the Commission does not act quickly.  Given the increased attention on this issue, it seems an appropriate time to outline some of my basic principles to guide our review and reform effort.  To be clear, my principles discussed below reflect the current make-up of the Commission, not an ultimate proposal if the power structure or participants were different. 

Since its illegitimate ban on JSAs two years ago, the Commission has continued flying in the face of clear Congressional directives and reality itself – namely, that the overall media marketplace is more competitive and diverse than ever before and warrants less regulation, not more.  Social media giants, like Twitter and Facebook, are moving quite explicitly onto the turf of news providers, while content proliferates with breathtaking speed across the Internet and moves over-the-top into American living rooms and mobile devices.  Meanwhile, traditional video providers are developing more and more sophisticated systems for selling local advertising and delivering local content. 

Broadcasters and newspapers have much to contribute in terms of diverse, local content, but many have been left fighting, some for their very survival, with an artificially-narrowed range of options.  In general, they should be set free to compete on equal footing with all of their fellow content providers, not kept on an unnecessary and unfair regulatory leash.  The Quadrennial Review was created precisely to avoid this outcome by freeing media ownership rules from the most powerful force in Washington, if not physics: inertia.

In light of all the development in the dynamic media marketplace, it would be extremely difficult to rationalize any effort to further restrict the media ownership rules last effectively amended in 1999, or even to leave them as-is.  Many of them seem like quaint relics when viewed through a 2016 lens.  If a struggling newspaper needs an investor, why should we consider it a greater danger for a local broadcaster to get involved than for an Internet billionaire who lives thousands of miles away?

The Commission can better promote localism, competition, and diversity – and be consistent with the public interest – by thoughtfully removing outdated restrictions to media combinations.  Specifically, the following principles should receive priority consideration in the media ownership reform effort to come:

  • Reasonably Define Markets:  As with all Commission issues, definitions matter, and accordingly, our definition of the markets in which newspapers, radio stations, and television stations operate is the source of much line drawing in the application of the media ownership rules.  In the 2014 Quadrennial Review FNPRM, the Commission shockingly refused to acknowledge any non-broadcast or non-newspaper competitors as market participants.  Think about how misguided that is.  As part of this year’s review, the Commission must take a realistic market view and account for the significant role that competitors such as MVPDs, over-the-top video providers, websites, streaming music services, and satellite radio play in the 2016 media marketplace.
  • Eliminate cross-ownership bans:  Consumers are demanding 24/7 access to media content on numerous platforms, but artificial silos created by the cross-ownership bans are keeping broadcasters and newspapers from innovating into multi-platform entities that could better serve these needs.  Evidence of synergies already exist in the form of grandfathered combinations and giving the opportunity for more, with additional outlets and platforms, could generate a boom in local content or perhaps prevent a further erosion from occurring in some markets.  Eliminating the restrictions on newspaper/radio and radio/television combinations, as the 2014 FNPRM suggested, would be a proper start to reform our ownership rules, while the newspaper/television limits should follow the same course rather than face some type of incremental relief.  If the Commission is serious about preserving localism and perhaps the newspaper industry, it should remove these artificial barriers keeping the most likely interested and qualified investors – local broadcasters – on the sidelines.
  • Eliminate Duopoly Rule: Perhaps restricting common ownership of two television stations in the same market may have made sense in 1964, when consumers only had a handful of programming options.  Four decades later, surrounded by thousands of new options, how can the FCC justify maintaining this rule in its current form?  In many markets, duopolies or even triopolies could strengthen the overall state of broadcasters and allow stations to concentrate more resources on bringing more and higher quality local content to their viewers.  At the very least, some of the conditions attached should be eliminated or relaxed.  For example, the “Eight Voices Test” was previously struck down by DC Circuit in 2004, and a previous Commission concluded that it could not be justified.  It makes even less sense now.  Why exactly eight in every case?  This condition disproportionately impacts stations in small and mid-sized markets, more frequently preventing these stations, and their viewers, from accessing the benefits and efficiencies a combination could provide. 
  • Provide More Waivers and Grandfathering: To the extent that any of the rules are left unchanged and my views are ignored, the Commission should, at a minimum, reform current waiver processes to make them clear and realistically obtainable, provide more opportunities for waivers, and allow grandfathering of existing combinations.  The market size waivers proposed by various parties could mitigate the constrictive impact of these outdated rules on broadcasters in smaller markets.  The Commission has properly grandfathered existing combinations in many contexts, and this policy should continue and expand wherever possible, such as by allowing grandfathered combinations to be freely transferrable.  Additionally, the Commission should follow through on its proposal to grandfather radio intra-market community of license changes. 
  • Resist Reinstating the JSA Ban: This rule has met its demise in the Third Circuit, and should not be resurrected under any circumstances.  Congressional input both before, and even more so, after this ill-advised change has been crystal clear: JSAs have served the public interest well in many circumstances, and the Commission’s rules should not be interpreted to prevent them.
  • Reject Additional Restrictions: Public advocacy groups have clamored for additional tightening of the ownership rules.  Proposals such as eliminating the UHF discount and limiting shared services agreements are completely illogical if the underlying rules are not properly addressed and modernized at the same time.  To add further restrictions would harm the media industry and those it serves, including underrepresented populations.  

The Commission’s recently released Annual Video Competition Report included a masterpiece of understatement: “[b]roadcast television stations face changing technology,” and noted their decreasing share of viewers and advertising.  There is no question that today’s expansive media marketplace has had a significant impact on television stations, radio stations, and newspapers.  Fairness – and our compliance with the statute – demands an equally significant impact on our media ownership rules.