FCC Tweaks Cross-Ownership Rules

By Radio Ink - Dec. 18, 2007

WASHINGTON -- Despite pressure on Chairman Kevin Martin from Congress to delay the vote, the FCC this morning amended its newspaper-broadcast cross-ownership rules but made no changes to its local radio ownership and radio-television cross-ownership limits.

Under the new cross-ownership rule, the FCC will consider combinations of either a radio or TV station with a newspaper on a case by case basis, but will face a presumption that any combination will not be in the public interest. "This is a high hurdle," said FCC attorney Jamila-Bess Johnson, who presented the rule at the agency's monthly meeting this morning. "The applicants must prove that merger would create more, relevant voices."

In the nation's top 20 markets, any radio station can combine with a major newspaper, but only television stations outside of the top four according to Nielsen ratings data may merge with a newspaper. Also, any proposed newspaper/TV combo in the top 20 markets must demonstrate that eight independent voices will remain in the market post-merger.

All proposed mergers outside of the top 20 markets will face the case-by-case review. Among the criteria that will be considered include the level of media concentration in the market, and whether the combined entity will bring more local news to the market. The applicants must also demonstrate that the broadcast and newspaper entities will maintain their own staffs, and retain independent editorial standards.

Other criteria to be considered are the financial health of the individual entities. In the case of broadcast outlets, if a station has been dark for at least four months or is in bankruptcy, it will be considered a "failing" or "falied" business by the FCC. The FCC will also consider if the station has posted negative cash flow for the previous three years. A station's ratings data will also be considered.

If a merger applicant can demonstrate that a proposed combination will result in a new source of news, and will generate at least seven hours of new local news programming per week on a broadcast station, the presumption that the combination will not serve the public interest will be reversed.

While considerable time was spent on the details of the new cross-ownership rule, a scant few sentences were dedicated to discussion of the local radio ownership rule. These limits were remanded by the Third Circuit Court of Appeals in 2003 for further justification by the FCC. In her prepared remarks, Johnson noted simply that the current limits are structured under caps created by Congress, and are being retained.

Commissioner Deborah Taylor-Tate in her remarks, however, stated that the remarks of citizens who spoke out about radio consolidation at the six public hearings on the rule review weighed in the decision, and noted that large radio groups like Clear Channel and CBS are voluntarily divesting some of its radio stations. "This is a sign of the market working," she said, adding that these divestitures may improve minority and small business ownership of broadcast outlets.

Improving ownership among those groups is a hot button issue for Democrats Michael Copps and Jonathan Adelstein, who are in the minority on the five-member commission. In prepared comments at today's meeting, both expressed dismay that more isn't being done with today's vote to encourage minority and small business ownership.

The commission also retained its existing radio/television cross-ownership limits. Under these caps, one owner can control up to two television and six radio stations in a market where twenty independent voices will exist post merger, and can control two television and four stations in a market where ten independent voices will exist post-merger.

A handful of representatives from anti-media consolidation group Code Pink charged towards the commission dais just as the five commissioners were preparing to vote, with claims that included, "This vote is a sham," "The public interest is not being served by this commission, and "On behalf of the public we want to stop this vote." The activists were escorted from the room by FCC security.
Read more in Radio Ink

House Subcommittee To Investigate FCC

By Radio INK - Dec. 6, 2007
WASHINGTON -- December 4, 2007: House Commerce Committee Chairman John Dingell (D-MI) told FCC Chairman Kevin Martin in a letter Monday that he's concerned about "procedural breakdowns" at the FCC and that the Commerce Committee's Subcommittee on Oversight and Investigation will be conducting a probe into the agency.

"Given several events and proceedings over the past year, I am rapidly losing confidence that the commission has been conducting its affairs in an appropriate manner," Dingell wrote to Martin. Though he said it's not true in the case of every proceeding, Dingell said that "a trend appears to be emerging of short-circuiting procedural norms, suggesting a larger breakdown at the agency."

He continued, "For instance, the commission does not put the text of proposed rules out for notice and comment; there is little public notice of certain proposed commission actions; and commissioners are often not informed of the details of draft items until it is too late to provide the necessary scrutiny and analysis that is so important to reasoned decisionmaking."

Martin and the four other FCC commissioners are all on the witness list for a hearing on media ownership by Commerce's Subcommittee on Telecommunications and the Internet, set for 9:30 a.m. tomorrow.

House Subcommittee Questions FCC On Media Ownership

By Radio INK - Dec. 6, 2007
WASHINGTON -- December 5, 2007: The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing Wednesday focusing on media ownership and other issues before the FCC, with FCC Chairman Kevin Martin and all four Commissioners in attendance.

Commerce Committee Chairman John Dingell (D-MI) in his opening statement reiterated the points he made in his letter to Martin earlier this week, saying he's seen "too much sniping among the Commissioners" and adding, "We've heard too many too many tales of short-circuited decisionmaking processes."

"The FCC appears to be broken," Dingell said. "The victim of this breakdown is a fair, open, and transparent regulatory process." He said it would be "intolerable" to let the situation continue and added, "This is why I've asked the Subcomittee on Oversight & Investigation of this committee to review how the agency is conducting its business."

As Martin began his prepared testimony, he stated that he is committed to "a robust marketplace of ideas" that is focused on "competition, diversity, and localism." He then ran down the FCC's efforts in the current media-ownership proceeding, citing the six public hearings, 10 commissioned studies, and extended public comment periods in the proceeding, then moved on to the rationale behind what he called his "relatively minor" proposal to loosen the newspaper-broadcast cross-ownership ban in the top 20 markets.

Martin cited past and pending personnel cuts at major-market newspapers to support his point that the newspaper industry is struggling and said, "We cannot turn a blind eye to the financial condition in which these companies find themselves." Allowing cross-ownership "may help forestall erosion" in the industry by allowing newsgathering and other costs to be shared.

On ownership diversity, Martin pointed to the FCC's recent revision of the low-power FM rules and said he has circulated an order that is designed to "promote diversity by increasing and expanding broadcast-ownership opportunities for small businesses, including minority- and women-owned businesses."

That order, he said, adopts most of the Minority Media and Telecommunications Council's proposals and those of the FCC's own Diversity Committee.

FCC Commissioner Michael Copps began his testimony by saying the FCC is "lurching dangerously off-course" and "giving short shift to pressing problems."

He said Martin's proposal is not a "moderate relaxation" of the newspaper-broadcast ban, but an opening for cross-ownership waivers in all markets. The conditions for a waiver, he said, "are as tough as a bowl of Jell-O," then got a laugh when said, "I have about as much confidence that a proposed combination will be turned down as I do that the next commission meeting will start on time."

Copps repeated his oft-stated desire for a new localism proceeding and called Martin's scheduled December 18 vote on his ownership proposal "an unseemly rush to judgment."

Adelstein began, "No issue on our agenda has more far-reaching consequences for the future of our democracy than this one," and cited the "bipartisan chorus of opposition to media consolidation." He echoed Copps' point that the waiver guidelines are too loose, though he said they amount to a "wet noodle" rather than Jell-O.

When the questioning began, Subcommittee Chairman Ed Markey (D-MA), asked whether the waiver requirements for markets below the top 20 is a "high hurdle, or just a speed bump." Martin said he intended the requirements to be a hurdle and said, "I absolutely would be willing to work with [the other Commissioners] on finding language to make them feel more comfortable that this is a high hurdle."

Later, Rep. Chip Pickering (R-MS) asked if the waiver conditions constitute a loophole that would "allow someone to drive a truck through." Martin responded, "It's not true that it is a loophole you can drive a truck through." He said the FCC has always allowed waiver filings, though the presumption under the new rules would be that newspaper-broadcast cross-ownership waivers in smaller markets would be against the public interest.

The waiver conditions would also take financial distress into account, he said -- "as we traditionally have in waivers" -- as well as the properties' willingness to "start new news -- if they're willing to create a new local news voice."

Copps, however, said, "This is a loophole. These factors that we are going to consider are so generic, they're so porous -- maybe it's the new media-ownership sponge, I don't know what it is -- but they scare the heck out of me."

Adelstein said that even if a property promises just "10 minutes more of news a year" or "one half-hour special," that would qualify for a waiver, and added, "I can't imagine a more porous standard."

Martin responded, "We did not say that would qualify for a waiver. That's not what the order says. What we said is, you can apply for a waiver, and these are the criteria we would consider. We did not say that you would qualify for it."

But Adelstein insisted, "The waiver standard says 'more news.' That's the only standard -- 'more news.' So what is 'more news'? There's no definition if it's five minutes, 10 minutes, or 50 hours. So theoretically, under that standard, 10 minutes can qualify."

Subcommittee Ranking Member Fred Upton (R-MI), who in his opening statement expressed support for further deregulation of radio ownership, asked why Martin hasn't supported radio deregulation. "The numbers are in," Upton said, "and we know that the [radio] industry is doing far worse today than at any time in the past. Isn't this the same situation you're trying to address for newspapers?"

Martin responded, "The most significant difference in what was occurring in the radio market and the newspaper-broadcast cross-ownership ban is that the radio market and the radio owners received some significant amount of ownership relief in 1996." In contrast, the newspaper-broadcast ban has been in place since 1975.

Reps. Hilda Solis (D-CA) and Charles Gonzalez (D-TX) both addressed ownership diversity, and Gonzalez asked Martin about the biggest obstacles to minority ownership and how the FCC plans to address the issue. "The two biggest obstacles are access to capital and access to new stations," Martin said. The FCC is addressing that, he said, by identifying where new stations are available; opening other broadcast avenues, such as LPFM; and waiving some rules for new entrants to the industry, including allowing expired construction permits to designated entities and changing the equity-plus-debt rule so other broadcasters can help finance new entrants. Martin also noted that the commission has unanimously supported the return of the minority tax certificate.

Solis raised the issue of private equity ownership in media and "transparency on who the owners really are" in those cases. "What steps will you take to make that known?" she asked. Martin said the same rules for ownership attribution apply to private equity owners as to any other, but Copps said, "Private equity is transforming the media-ownership environment."

Copps went on, "Instead of publicly held corporations, which you can at least track, and file 10(K) forms with the SEC, you have these private money funds which don't have to file. I can't find out who owns what." He said, "How can I do my job of protecting the public interest if I can't even find out who owns what?"