FCC Approves Ownership Rule Changes

FCC Federal Communications Commission RadioInsight Premium ReportUpdate 11/16: The FCC voted to approve the ownership rule changes on a party line by a 3-2 vote with one addition not previously revealed that will impact the sub-markets in the New York and Washington DC metropolitan areas.

The approved changes are:

  • Eliminating the newspaper/broadcast cross-ownership rule preventing a company from operating a newspaper and a broadcast outlet in the same market.
  • Eliminating the radio/television ownership subcaps so a television station no longer counts towards the limit of eight radio stations (maximum of five on each band) that a company can own.
  • Eliminating the requirement that at least eight independently owned television stations must remain in the market following the combination of two television stations in a market
  • Modifying the ban against common ownership of two top-four rated tv stations in a market to allow waivers on a case-by-case basis
  • Eliminating the JSA Attribution Rule requiring television stations to count a station it sells more than 15% of ad time for under the ownership cap.
  • The FCC is also going to allow waivers in certain circumstances for companies to exceed the eight station limit in embedded markets of New York and Washington DC. For example, Connoisseur Media who pushed for this modification, must count its 2 AMs and 4FMs in the Nassau/Suffolk market towards its cap in the New York market and is concurrently blocked from purchasing stations in similar embedded markets like Monmouth/Ocean NJ.

    The two Democratic commissioners came out on the warpath against the changes.

    Unsurprisingly the NAB came out in support of the changes with President Gordon Smith stating:

    “NAB thanks the FCC for voting today to reform outdated broadcast media ownership rules. These rules are not only irrational in today’s media environment, but they have also weakened the newspaper industry, cost journalism jobs and forced local broadcast stations onto unequal footing with our national pay-TV and radio competitors. We are grateful the Commission has adopted a common-sense approach to media regulations that will foster innovation, reinvestment in investigative reporting and better service to our tens of millions of listeners and viewers.”

    Original Report 10/26: Ajit Pai has revealed the ownership rule changes he intends to propose in a blog post.

    There will be five modifications, two of which will have impact on radio. The first change will be to eliminate the newspaper/broadcast crossownership rule. Pai also proposes eliminating the radio/television crossownership limits so that a company can own a full suite of outlets in both mediums. Third will be a modification to the television ownership rules to eliminate the eight-voices test and incorporate a case-by-case review into the top-four restriction. That would allow a company to own two stations in most television markets.

    The biggest change will be the elimination of the attribution rule for television joint sales agreements. A company could own two television outlets and handle the sales for others. The fifth and final proposal is to establish an incubator program to encourage greater diversity in and new entry into the media business by seeking comments on what the program should entail.

    After the changes are approved in the biggest markets with 45 or more radio stations one company can now own eight radio stations (still only five on one band), two television stations, and a newspaper as well as have a JSA with another company to manage sales for additional television stations.

    No changes will be made to the radio ownership caps or the subcaps on the amount of AM or FM stations one owner can have in a market. The full Notice of Proposed Rulemaking can be read here.

    Original Report 10/25: After striking down the Main Studio Rule at the FCC’s October meeting, next up on FCC Chairman Ajit Pai’s agenda is to vote on changes to ownership rules.

    Reuters reports that Pai told a congressional panel that the rules changes will be voted on at their next open meeting with the full proposal to be released on Thursday. Among the possible rules to be eliminated are the newspaper/broadcast cross-ownership rule preventing a company from owning a newspaper and broadcast outlet in the same market, counting radio and television stations towards the same market cap, the subcaps on the amount of AM or FM stations allowed in a market, the television eight voices test, and embedded-market overlaps.

    1. Cory says

      Could the FCC settle the market cap issue before the ETM/CBS deal closes? If so, do you think ETM pulls some stations out of their divestitures, or are these divestitures needed anyway since the market revenue cap isn’t being changed here?

      1. Eric Jon Magnuson says

        This is probably a moot issue now, but even if yesterday’s proposal did include a significant loosening of radio-specific ownership rules (e.g., subcaps), I wouldn’t think that there’d be any final decisions from the FCC within the next several weeks. And, Entercom is trying its darnedest to have the deal close in roughly a few weeks (by mid-November)–although, of course, it could still take longer. Beyond that, most (possibly even all) of the remaining issues with the deal involve the DOJ instead.

    2. only1moore says

      I can see companies like Sinclair take advantage of this move.

    3. rollosmokes says

      How I’m interpreting it is this way:

      This FCC wants to do away with all remaining ownership restrictions, thus allowing the big broadcasters to continue consolidating all that they can (before they eventually begin to cannibalize themselves) but they still want to encourage diversity…diversity in what??

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