The Federal Communications Commission will vote next month on ending a rule that prevents joint ownership of newspapers and TV or radio stations in the same geographical market.
The change is part of a larger overhaul of media ownership rules announced yesterday by FCC Chairman Ajit Pai. Currently, the FCC says its newspaper/broadcast station cross-ownership rule "prohibit[s] common ownership of a daily newspaper and a full-power broadcast station (AM, FM, or TV) if the station's service contour encompasses the newspaper's city of publication."
Pai is proposing to eliminate that rule and others. He announced the move during an FCC oversight hearing in Congress yesterday, saying he wants to "pull the government once and for all out of the newsroom."
Pai also proposes eliminating a local radio/TV cross-ownership rule that prohibits one entity from owning more than two television stations and one radio station in the same market unless that market meets certain size criteria. There would still be some restrictions on the number of stations one entity could own in a market because separate TV and radio ownership rules will remain on the books.
The FCC will vote on the proposal on November 16. It will likely pass because Pai leads a 3-2 Republican majority.
Strict rules are no longer necessary because the news market is much different than it was more than 40 years ago when the rules were enacted, Pai told lawmakers:
The marketplace today is nothing like it was in 1975. Newspapers are shutting down. Many radio and TV stations are struggling, especially in smaller and rural markets. Online competition for the collection and distribution of news is even greater than it ever was. And just two Internet companies [Google and Facebook] claimed 100 percent of recent online advertising growth. Indeed, their digital ad revenue alone this year will be greater than the market cap of the entire broadcasting industry. And yet the FCC's rules still presume that the market is defined entirely by pulp and rabbit ears.
Changes benefit Sinclair and other large broadcasters
But Pai's critics say the rules he wants to eliminate are still important for preserving a diversity of viewpoints in local media. FCC Commissioner Mignon Clyburn, a Democrat, told members of Congress that the planned changes would "roll back the best elements of our media ownership rules... the already consolidated broadcast media market will become even more so, offering little to no discernible benefit for consumers."
Pai's latest plan continues a string of proposals that benefit Sinclair Broadcast Group, Advocacy group Free Press said. The FCC previously relaxed a separate broadcast TV station ownership limit, potentially allowing Sinclair to complete an acquisition of Tribune Media Company and reach 72 percent of TV-owning households in the US.
"Ajit Pai's disastrous proposal is tailor-made for Sinclair and other giant broadcast chains that push often slanted or cookie-cutter content over the public airwaves," Free Press CEO Craig Aaron said. "He's fulfilling a longstanding industry wish list and ignoring how decades of runaway media consolidation have significantly harmed local news and independent voices. The FCC has routinely failed—and been repeatedly scolded by the courts for doing so—to consider how gutting these rules will impact already abysmally low levels of broadcast ownership by women and people of color."
FCC Commissioner Jessica Rosenworcel, a Democrat, yesterday told Congress that there should be an investigation into how "all of [the FCC's] media policy decisions seem to be custom-built for this one company."
"I think any broadcaster reaching more than 70 percent of United States households would be unprecedented," Rosenworcel said. "I'm also concerned that if you look at the series of media policy decisions that has been made by this commission, they all seem to serve Sinclair Broadcasting's business plans."
Industry lobbyists cheer FCC's move
Lobbyists for broadcasters applauded Pai's announcement. The National Association of Broadcasters said:
For 40 years, policymakers and the courts have blessed countless mega-mergers among national telco, cable and satellite program giants, while at the same time blocking broadcast/newspaper or radio/TV combinations in single markets. This nonsensical regulatory approach has harmed the economic underpinning of newspapers, reduced local journalism jobs, and punished free and local broadcasters at the expense of our pay TV and radio competitors.
Pai defended his approach to media diversity, telling Congress that his proposal would "establish an incubator program to encourage greater diversity in and new entry into the media business and seek comment on what the details of that program should be."
But another Pai move announced earlier this week eliminated a decades-old rule that required TV and radio stations to maintain studios in the local communities they serve. Critics said this change will make it easier for large companies to buy many stations across the country without having to maintain a local presence in each market.
The rest of the changes
Besides eliminating the aforementioned cross-ownership rules, Pai's latest plan would relax a few other restrictions.
The current local TV ownership rule lets an entity own up to two TV stations in the same market if "at least one of the stations is not ranked among the top-four stations in the market and at least eight independently owned television stations would remain in the market following the combination," the FCC said in a summary of Pai's plan.
Pai's plan would eliminate the "eight-voices" part of that rule. The top-four provision won't be completely done away with, but the FCC will use a case-by-case evaluation process to give exceptions to entities that want to combine two top-four stations in the same market.
Pai also proposed eliminating a restriction on joint sales agreements (JSAs) in which one station sells the advertising time on another station.
Under the current rule, "If the first station could not own the second station under [other] FCC rules, it would also be prohibited from selling more than 15 percent of that station’s advertising time," law firm Davis Wright Tremaine explains. This rule would be eliminated if Pai's proposal is adopted.
Pai did not propose any changes to the existing local radio ownership rule. Under this rule, "the total number of radio stations that may be commonly owned in a local radio market is tiered, depending on the total number of full-power commercial and noncommercial radio stations in the market," the FCC said. "For example, in markets with 45 or more radio stations, an entity can own no more than eight commercial radio stations, no more than five of which may be in the same service (AM or FM)."
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