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FCC To Commence 2018 Quadrennial Review At December Open Meeting

November 27, 2018

The Federal Communications Commission has released the draft meeting agenda for its December 2018 open meeting, which includes a Notice of Proposed Rulemaking (NPRM) commencing the 2018 quadrennial review of certain of the agency’s broadcast ownership rules. This review will be the latest in a series conducted pursuant to the Telecommunications Act of 1996, which requires the agency to periodically examine the covered rules and determine whether they remain “necessary in the public interest as the result of competition,” and to repeal or modify any rule that does not meet that standard. The draft 2018 NPRM tees up for review (1) the Local Radio Ownership Rule, (2) the Local Television Ownership Rule, and (3) the Dual Network Rule, and asks for comment on several diversity-related proposals that the agency has previously considered. With respect to the specific rules under review, the draft NPRM recognizes that the media marketplace in which broadcasters compete has undergone “dramatic changes” since the late 1990s when agency first began the periodic media ownership reviews, but does not reach any tentative conclusions regarding whether these developments warrant changes to any of the rules at issue. Nor does it deal with the national television ownership rule or the so-called “UHF discount,” which are the subject of a separate pending proceeding.

Insofar as the Local Radio Ownership Rule is concerned, the draft NPRM asks broadly whether the rule remains necessary to promote competition, diversity, or localism. In addition, the draft NPRM seeks comment on the market definition that the FCC should use to evaluate the continued validity of the rule, and whether any justification exists to broaden the market to include audio-based media other than local broadcast radio. In addition, the draft NPRM asks whether the FCC should modify its current tier-based approach under the local radio ownership rule – which allows varying levels of common ownership in Nielsen Audio Metro Markets with 45-plus, 30-44, 15-29, and 14 or fewer radio stations – whether by adopting different tiers, drawing the lines between tiers differently, or abandoning a tiered approach altogether. The draft NPRM further seeks comment on how the agency should address areas outside of Nielsen Audio Metro Markets; whether it should retain, modify, or eliminate the AM/FM subcaps; and how it should treat transactions involving smaller markets that are “embedded” within a larger Nielsen Audio Metro Market.

Regarding the Local Television Ownership Rule, the draft NPRM seeks comment on whether the rule serves the FCC’s policy goals of competition, diversity, or localism. As with respect to the local radio rule, the draft NPRM asks questions concerning the proper market definition to be used, including whether to modify the relevant market to include sources other than local broadcast video programming and how, if at all, the FCC’s market definition analysis should take into account the analytical framework that the Department of Justice applies to local television issues. In addition, the draft NPRM seeks comment on whether the current two-station limit should be loosened or tightened. The draft NPRM also asks whether the FCC should alter either the general prohibition on owning two stations ranked among the top-four in a market, or the case-by-case approach to evaluating requests to own two top-four stations, that exist under the current rule. In addition, the draft NPRM seeks comment on issues related to multicasting, satellite stations, low power television stations, the implications of the next generation broadcast television transmission standard (ATSC 3.0) on local television ownership issues, and the disclosure of shared services agreements.

Related to the Dual Network Rule, the draft NPRM asks whether the rule is necessary to promote competition, localism, or diversity. In particular, the draft NPRM seeks comment on whether the big-four broadcast networks remain a unique force in the provision of primetime entertainment programming and/or a “strategic group” in the national advertising market. In addition, the draft NPRM asks whether the Dual Network Rule is still needed to preserve a balance of power between the big four networks and their local affiliates, whether the rise of online video platforms has altered the network-affiliate dynamic, and whether allowing mergers among the big-four networks would impede the ability of local affiliates to make programming decisions that serve local needs.

As to diversity-related proposals, the draft NPRM seeks comment on several proposals that the FCC has considered in previous quadrennial reviews. The draft NPRM asks whether the agency should extend cable procurement-type requirements – which require cable systems to seek to encourage minority and female participation in their businesses – to broadcasters. In addition, the draft NPRM seeks comment on whether the FCC should attempt to develop a model for market-based, tradeable “diversity credits” that could be redeemed by a station buyer to offset increased concentration that would result from a proposed transaction. Finally, the draft NPRM asks questions about alternative formulas aimed at creating media ownership limits that promote diversity.

The FCC will vote on the draft NPRM at its December 12 open meeting.

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