Federal Register, Volume 77 Issue 12 (Thursday, January 19, 2012)

[Federal Register Volume 77, Number 12 (Thursday, January 19, 2012)]
[Proposed Rules]
[Pages 2867-2904]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-148]

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Vol. 77

Thursday,

No. 12

January 19, 2012

Part IV

Federal Communications Commission

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47 CFR Part 73

2010 Quadrennial Regulatory Review; Proposed Rule

Federal Register / Vol. 77 , No. 12 / Thursday, January 19, 2012 /
Proposed Rules

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MB Docket Nos. 09-182 and 07-294; FCC 11-186]

2010 Quadrennial Regulatory Review

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, section 202(h) of the Telecommunications Act
of 1996 requires the Commission to review its broadcast ownership rules
quadrennially to determine whether these rules are necessary in the
public interest as a result of competition. This document solicits
comment on proposed changes to the broadcast ownership rules in
compliance with this requirement. In addition, this document solicits
comment on certain aspects of the Commission's 2008 Diversity Order
that the U.S. Court of Appeals for the Third Circuit remanded and
directed the Commission to address in this proceeding. This document
solicits comment also on potential changes to the Commission's
broadcast attribution rules.

DATES: The Commission must receive written comments on or before March
5, 2012 and reply comments on or before April 3, 2012. Written comments
on the Paperwork Reduction Act proposed information collection
requirements must be submitted by the public, Office of Management and
Budget (OMB), and other interested parties on or before March 19, 2012.

ADDRESSES: Federal Communications Commission, 445 12th Street SW.,
Washington, DC 20554. In addition to filing comments with the
Secretary, a copy of any comments on the Paperwork Reduction Act
information collection requirements contained herein should be
submitted to the Federal Communications Commission via email to
PRA@fcc.gov and to Nicholas A. Fraser, Office of Management and Budget,
via email to Nicholas_A._Fraser@omb.eop.gov or via fax at (202) 395-
5167.

FOR FURTHER INFORMATION CONTACT: Hillary DeNigro, Industry Analysis
Division, Media Bureau, FCC, (202) 418-2330. For additional information
concerning the PRA proposed information collection requirements
contained in the Notice of Proposed Rulemaking, contact Cathy Williams
at (202) 418-2918, or via the Internet at PRA@fcc.gov.

SUPPLEMENTARY INFORMATION: This Notice of Proposed Rulemaking, in MB
Docket Nos. 09-182; 07-294, FCC 11-186, was adopted and released on
December 22, 2011. The complete text of the document is available for
inspection and copying during normal business hours in the FCC
Reference Center, 445 12th Street SW., Washington, DC 20554, and may
also be purchased from the Commission's copy contractor, BCPI, Inc.,
Portals II, 445 12th Street SW., Washington, DC 20054. Customers may
contact BCPI, Inc. at their Web site http://www.bcpi.com or call 1-
(800) 378-3160.

Initial Paperwork Reduction Act of 1995 Analysis

This Notice of Proposed Rule Making may result in a new or revised
information collection requirement. If the Commission adopts any new or
revised information collection requirement, the Commission will publish
a notice in the Federal Register inviting the public to comment on the
requirement, as required by the Paperwork Reduction Act of 1995, Public
Law 104-13 (44 U.S.C. 3501-3520). In addition, pursuant to the Small
Business Paperwork Relief Act of 2002, Public Law 107-198, see 44
U.S.C. 3506(c)(4), the Commission seeks specific comment on how it
might ``further reduce the information collection burden for small
business concerns with fewer than 25 employees.''

I. Synopsis of the Notice of Proposed Rulemaking

A. Introduction

1. Pursuant to a statutory mandate under the Telecommunications Act
of 1996, the Commission seeks comment in this Notice of Proposed
Rulemaking on the Commission's media ownership rules and proposed
changes thereto. The Commission is required by statute to review its
media ownership rules every four years to determine whether they ``are
necessary in the public interest as the result of competition.'' A
challenge in this proceeding is to take account of new technologies and
changing marketplace conditions while ensuring that the media ownership
rules continue to serve the Commission's public interest goals of
competition, localism, and diversity. The Commission is also seeking
comment on economic studies analyzing the relationship between local
media market structure and the policy goals that underlie the
Commission's media ownership rules. In addition, the Commission seeks
comment in this proceeding on the aspects of the Commission's 2008
Diversity Order (73 FR 28361, May 16, 2008, FCC 07-217, rel. Mar. 5,
2008) that the Third Circuit remanded in Prometheus Radio Project v.
FCC (Prometheus II).
2. The proliferation of broadband Internet and other new
technologies has had a dramatic impact on the media marketplace.
Consumers are increasingly turning to online and mobile platforms to
access news content and audio and video programming. For example, in
2010 and in the first quarter of 2011, satellite radio and TV
companies, which offer both satellite and online access to content,
have reported growth in subscribership. Similarly, content providers
are increasingly looking to the Internet and other new media platforms
to bypass traditional media and reach consumers directly. Social media
sites are empowering individuals to share news and information in real
time, becoming tools of social interaction and revolution throughout
the world.
3. For the broadcast and newspaper industries, the growth of these
new technologies both challenges established business models and
provides opportunities to reach new audiences and generate new revenue
streams. Broadcast and newspaper consumption in traditional forms is in
decline, and advertising revenues have been shrinking in recent years.
Some broadcast and newspaper outlets have contracted the size of news
staffs in response. These economic realities have sounded an alarm for
some who are concerned that non-traditional media sources are not
adequate substitutes for the provision of local news and information by
broadcasters subject to public interest obligations. In voicing such
concerns, some commenters have asserted that the Commission's media
ownership limitations remain vitally important, as increased
consolidation places control of programming choices in the hands of too
few owners, limiting diversity and underserving the needs of local and
minority communities.
4. In short, the media marketplace is in transition, particularly
as a result of broadband Internet; but new media are not yet available
as ubiquitously as traditional broadcast media. The nation has not yet
reached universal deployment or adoption of broadband. Too much of the
country is unserved or underserved by broadband, and the average
broadband speed available to consumers varies in different areas and
lags behind some other nations. Broadband adoption remains under 70
percent, meaning that tens of millions of Americans do not have access
to news and other programming on the Internet.

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Some parts of the population, including minorities, people with
disabilities, and low-income Americans, have much lower rates of
broadband adoption. Access to sufficient broadband speeds is critical
for consumers to take full advantage of today's online programming and
applications, including access to media content through streaming
technology and downloading programs. According to one estimate, more
than 14 million Americans do not have access to broadband
infrastructure that can support today's applications. Much of the
content available by streaming and downloads requires minimum broadband
speeds. The Commission is taking important steps to close this digital
divide, but much work remains.
5. The Commission began this proceeding with a series of workshops
held from November 2009 through May 2010. Participants in the workshops
discussed the scope and content of the review process. Thereafter the
Commission released a Notice of Inquiry (75 FR 33227, June 11, 2010,
FCC 10-92, rel. May 25, 2010) (NOI) on May 25, 2010, seeking comment on
a wide range of issues to help us determine whether the current media
ownership rules continue to serve the Commission's policy goals. The
NOI sought input on developments in the marketplace since the last
review and on whether the Commission should adopt alternatives to
bright-line, sector-specific rules. It also sought comment on the
Commission's fundamental goals of competition, localism, and diversity
and how to balance these goals when they conflict. In response,
industry participants and representatives, public interest groups, and
members of the public filed a significant number of comments.
6. To provide data on the impact of market structure on the
Commission's policy goals of competition, localism, and diversity, the
Commission commissioned eleven economic studies, which were conducted
by outside researchers and Commission staff. The Commission previously
released the studies to allow parties additional time to review the
data and analyses and now is seeking formal comment on them herein. As
discussed herein, the Commission reaffirms that its media ownership
rules are necessary to further the Commission's longstanding policy
goals of fostering competition, localism, and diversity. In particular,
the Commission reaffirms that a major goal of the rules is to encourage
the provision of local news, and the Commission invites suggestions
about how that goal can be further achieved.
7. In Prometheus II, the Court of Appeals for the Third Circuit
considered appeals of the Commission's review of the media ownership
rules in the 2006 Quadrennial Review Order (73 FR 9481, February 21,
2008, FCC 07-216, rel. Feb. 4, 2008). As discussed in more detail
below, the court affirmed the Commission's decision to retain the local
television and radio rules to protect competition in local media
markets. The court also affirmed the Commission's decision to retain
the dual network rule based on potential harm to competition that would
result from mergers of the top four networks. The court also affirmed
the Commission's conclusion to retain the radio/television cross-
ownership rule as well as, in part, to retain the local radio rule
based on the benefits to the Commission's diversity goal. Moreover, the
Third Circuit vacated and remanded the newspaper/broadcast cross-
ownership rule as modified by the Commission in the 2006 Quadrennial
Review Order, concluding that the Commission failed to comply with the
notice and comment provisions of the Administrative Procedures Act. As
discussed in more detail below, the court also vacated and remanded a
number of measures adopted in the Commission's 2008 Diversity Order,
which the Commission now addresses in this proceeding.
8. As discussed in detail herein, as part of its regular review of
broadcast ownership rules required by the Communications Act, the
Commission proposes the elimination of one rule and suggests leaving
the others largely unchanged. The Commission believes that the public
interest is best served by these modest, incremental changes to the
Commission's rules. Recognizing current market realities, the
Commission seek comment on the following proposals:
Local Television Ownership Rule. The Commission
tentatively concludes that it should retain the current local
television ownership rule with minor modifications. Specifically, the
Commission proposes to eliminate the Grade B contour overlap provision
of the current rule. The Commission tentatively concludes that it
should retain the prohibition against mergers among the top-four-rated
stations, the eight-voices test, and the existing numerical limits. In
addition, the Commission seeks comment on whether to adopt a waiver
standard applicable to small markets, as well as appropriate criteria
for any such standard. Also, the Commission seeks comment on whether
multicasting should be a factor in determining the television ownership
limits.
Local Radio Ownership Rule. The Commission proposes to
retain the current local radio ownership rule. The Commission also
seeks comment on modifications to the rule and whether and how the rule
should account for other audio platforms. The Commission proposes to
also retain the AM/FM subcaps, and seeks comment on the impact of the
introduction of digital radio. The Commission seeks comment on whether
to adopt a waiver standard and on specific criteria to adopt.
Newspaper/Broadcast Cross-Ownership Rule. The Commission
tentatively concludes that some newspaper/broadcast cross-ownership
restrictions continue to be necessary to protect and promote viewpoint
diversity. The Commission proposes to use Nielsen Designated Market
Area (DMA) definitions to determine the relevant market area for
television stations, given the lack of a digital equivalent to the
analog Grade A service contour. The Commission proposes to adopt a rule
that includes elements of the 2006 rule, including the top 20 DMA
demarcation point, the top-four television station restriction, and the
eight remaining voices test. The Commission seeks comment on these
proposals and whether to incorporate other specific elements and
factors of the 2006 rule.
Radio/Television Cross-Ownership Rule. The Commission
proposes to eliminate the radio/television cross-ownership rule in
favor of reliance on the local radio rule and local television rule.
The Commission believes that the local radio and television ownership
rules adequately protect the Commission's localism and diversity goals
and seeks comment on this proposal.
Dual Network Rule. The Commission tentatively concludes
that the dual network rule remains necessary in the public interest to
promote competition and localism and should be retained without
modification.
9. Minority and Female Ownership. As noted above, the Commission
seeks comment in this proceeding on the aspects of the Commission's
2008 Diversity Order that the Third Circuit remanded in Prometheus II.
Specifically, the court vacated and remanded a number of measures
adopted in the Diversity Order that were designed to increase ownership
opportunities for ``eligible entities,'' including minority- and women-
owned entities, because it determined that the Commission's revenue-
based eligible entity definition was arbitrary and

[[Page 2870]]

capricious. The court directed the Commission to address this issue in
the course of the 2010 Quadrennial Review. As directed by the court,
the Commission invites views on how its ownership rules and policies
can promote greater minority and women ownership of broadcast stations.
The Commission will explore a broad range of potential actions it might
take to that end, consistent with judicial precedent.

B. Policy Goals

10. The Commission reaffirms that media ownership rules are
necessary to further the Commission's longstanding policy goals of
fostering competition, localism, and diversity. In the NOI, the
Commission sought comment on how these goals should be defined and
measured and on whether there are additional goals the Commission
should consider. The Commission did not receive many specific comments
on defining, measuring, and evaluating the performance of the
Commission's policy goals, and the Commission invites such comment
again. In particular, the Commission describes and seeks comment below
on the Commission's 11 Media Ownership studies that evaluate the impact
of local media market structure on the Commission's policy goals. In
addition, the Commission invites parties to submit their own studies
evaluating the impact of particular market structures on the
Commission's goals. Below, the Commission discusses its competition,
localism, diversity, and other policy goals. The Commission also
discusses how it should evaluate the costs and benefits of the media
ownership rules.
11. Competition. As the Commission noted in the NOI, because
broadcast content is available for free to end users, broadcast
competition cannot be assessed in the same manner as in many other
markets. Specifically, the Commission cannot examine changes in price
to assess the impact of different levels of ownership concentration.
Accordingly, the Commission sought comment on a variety of potential
ways to assess competition in the media marketplace. The Commission
discussed whether competition among broadcast outlets is likely to
benefit consumers by making available programming that satisfies
consumer preferences.
12. The Commission reaffirms its longstanding commitment to ensure
that media markets are competitive. The Commission strives to set
ownership rules that create a marketplace in which broadcast
programming meets the needs of consumers, and the Commission believes
competition is a key means to that end. Moreover, the Commission
reaffirms the Commission's previous findings that the local ownership
rules should be analyzed in the context of local markets. The
Commission finds however that for the Dual Network rule, competition is
appropriately analyzed in the national advertising and programming
markets.
13. Localism. In the NOI, the Commission sought comment generally
on how to define and promote localism in the context of the media
ownership rules, including whether its traditional localism goal needs
to be redefined in light of today's media marketplace.
14. The Commission reaffirms its commitment to promote localism
through the media ownership rules. At its core, localism policy is
``designed to ensure that each station treats the significant needs and
issues of the community that it is licensed to serve with the
programming that it offers.'' The media ownership rules, as part of the
Commission's overall regulatory framework, seek to promote a
marketplace in which broadcast stations ``respond to the unique
concerns and interests of the audiences within the stations' respective
service areas.'' The Commission continues to evaluate the extent of
localism in broadcasting markets by determining whether programming is
responsive to local needs and interests. The Commission's focus
continues to be on news and public information programming. The
Commission continues to believe that these types of programming are
relevant to evaluating the extent of localism as it exists in local
markets. While the Commission's core commitment to promoting localism
in media remains undiminished, the Commission also recognizes that
changes in the marketplace and changes in consumer preferences may
impact aspects of localism in today's marketplace. Thus, the Commission
believes that the appropriate definition of localism today, in the
digital age, may not be the same definition as in decades past.
15. As a result of the growing availability of the Internet and the
proliferation of wireless technology, consumers are accessing news and
public affairs programming through their computers and electronic
devices. Moreover, the potential for hyper-local Web sites and blogs to
provide consumers with local news and information, such as
neighborhood-specific news and events, may contribute to meeting the
current or future needs and interests of local communities. As
consumers continue to rely more and more on additional, multiple
sources of local news, the Commission seeks comment on whether, and
how, to reevaluate localism to account for changes in the way consumers
get local news.
16. Diversity. In the NOI, the Commission sought comment on how to
define and measure diversity in today's marketplace to determine
whether the current media ownership rules are meeting the Commission's
diversity goal. The Commission has relied on its media ownership rules
to ensure that diverse viewpoints and perspectives are available to the
American people in the content they receive over the broadcast
airwaves. The policy is premised on the First Amendment, which ``rests
on the assumption that the widest possible dissemination of information
from diverse and antagonistic sources is essential to the welfare of
the public.'' The Commission historically has approached the diversity
goal from five perspectives: viewpoint, outlet, program, source, and
minority and female ownership diversity. In the 2002 Biennial Review
Order (68 FR 46286, August 5, 2003, FCC 03-127, rel. July 2, 2003), the
Commission concluded that program diversity is best achieved by
reliance on competition among delivery systems rather than by
government regulation and that the media ownership rules ensure
competition in local markets. In addition, the Commission concluded
that source diversity was not one of the diversity goal objectives of
the media ownership rules. The Commission reaffirms those conclusions.
The Commission has regulated media ownership as a means of enhancing
viewpoint diversity based on the premise that diffuse ownership among
media outlets promotes the presentation of a larger number of
viewpoints in broadcast content than would be available in the case of
a more concentrated ownership structure. The Commission previously has
discussed two schools of thought on the relationship between ownership
and diversity. On one side is the notion that the more independently
owned outlets there are, the greater the viewpoint diversity. The
concept is that 51 station owners will provide more diverse viewpoints
than 50 station owners. The second school of thought is that
concentrated ownership will provide an opportunity for diverse content.
According to this view, an owner of multiple stations in a local market
will provide a variety of programming and viewpoints in order to gain
the widest audience and market share. It can be questioned whether the
latter approach is as likely to provide the public with information
from ``diverse and

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antagonistic sources.'' The Commission seeks comment on this issue and
on how the Commission should account for this aspect of its diversity
goal in any rules the Commission might adopt.
17. The Commission reaffirms its belief that media ownership limits
are necessary to preserve and promote viewpoint diversity. Furthermore,
the Commission also reaffirms its conclusion that viewpoint diversity
is generally promoted by competition among independently owned media
outlets. The Commission believes that a key measure of how well the
Commission's current rules promote the Commission's overall diversity
goal is the availability of local news and information, and the
Commission examines that availability herein as it relates to local
ownership structure and the level of civil engagement.
18. Minority and Female Ownership. In the NOI, the Commission
sought comment on a variety of questions regarding the impact of the
ownership rules on minorities and females, including minority and
female ownership of broadcast stations. The Commission asked how its
localism goal should be defined and measured as applied to historically
underserved minority communities. The Commission sought comment on what
aspects of localism are most relevant specifically to minority
communities, as well as on the effect of consolidated ownership on the
availability of a variety of diverse viewpoints to women and minority
consumers. The NOI asked if women and minorities are increasing their
ownership shares in companies that are content providers or in other
aspects of media production aside from station ownership.
19. There were only limited comments on these issues. According to
Diversity and Competition Supporters (DCS), significant barriers to
entry for minority ownership remain in both the traditional and new
media industries. DCS states that minority-owned stations are more
likely than non-minority owned stations to provide programming geared
toward minority audiences and that minority communities are underserved
as a result of the lack of minority media ownership. DCS supports
measures that facilitate minority media ownership.
20. The Commission tentatively concludes that its policy goals of
competition, localism, and diversity are the appropriate framework
within which to evaluate and address minority and female interests as
they relate to the media ownership rules. The Commission seeks comment
on this tentative conclusion. The Commission also seeks additional
comment on how the proposed framework for each of the media ownership
rules, as explained herein, would affect minority and female ownership
opportunities.
21. Additional Policy Goals. In the NOI, the Commission sought
comment on whether it should consider any other formal policy goals, in
addition to the Commission's competition, diversity, and localism
goals, in determining ownership limits in this proceeding.
Specifically, the Commission sought comment on whether to consider the
impact of the media ownership rules on the availability to all
Americans of news and information, including national news and
information. The Commission also sought comment on whether it should
consider the impact of its rules on investigative journalism, and
whether any specific aspects of the National Broadband Plan, including
issues related to broadband access, are relevant to the media ownership
rules. The Commission tentatively concludes not to adopt any other
formal policy goals in this proceeding. As described above, the
Commission's longstanding policy goals of competition, localism, and
diversity are broadly defined to promote the core responsibilities of
broadcast licensees. The Commission notes that its media ownership
rules seek to further consumer welfare by promoting the availability of
community-responsive news and public affairs programming from a variety
of sources. The Commission seeks comment on its tentative conclusion
not to adopt any policy goals other than competition, localism, and
diversity in this proceeding.
22. Balancing the Costs and Benefits of Limiting Media
Combinations. The Commission seeks information that will help it
balance the positive benefits of the ownership limits in promoting the
Commission's policy goals against the costs that specific limits may
impose on consumers and firms. The Commission has discussed in broad
terms in this section the policy goals it seeks to promote. Section V
of the Notice of Proposed Rulemaking presents the studies that the
Commission commissioned to quantify the influence of the Commission's
rules on the policy goals. In particular, Media Ownership Study 2
quantifies the benefits and costs of particular media market structures
on consumers. The Commission seeks comment on the appropriate use of
this study in quantifying the impact of the media ownership rules on
consumers and balancing the positive effects on consumers with any
adverse effects on firms.
23. The Commission's studies do not address the direct impact
ownership limits have on media outlets. The Commission seeks detailed
information on the benefits that would accrue to media outlets from
entering into combinations that currently are impermissible. What are
the cost-savings associated with a combination of two TV stations in
markets where duopolies are not currently permitted? What are the
sources of those cost savings? Are the savings a one-time event or are
they recurring? Do they vary by the size of the market or the
popularity of the TV station? The Commission seeks similar detailed
estimates of cost savings for the combination of radio stations as well
as cross-media combinations between newspapers, TV stations, and radio
stations. Commenters should document to the extent possible the sources
and methods of their estimates.
24. How should the Commission balance the effects of its rules on
consumers with those on firms, in particular, media outlets? Should
each receive equal weight? How should the Commission account for
situations in which the costs and the benefits of a change in the rules
occur at different points in time? The Commission encourages commenters
to provide examples of the suggested balancing of the Commission's
rules.

C. Media Ownership Rule Proposals

1. Local Television Ownership Rule
a. Introduction
25. As discussed in the NOI, in the 2006 Quadrennial Review Order,
the Commission determined that the then long-standing local television
ownership rule promotes competition within local television markets.
Consistent with this conclusion, the Commission retained that rule. The
rule allows an entity to own two television stations in the same DMA
(duopoly rule) only if there is no Grade B contour overlap between the
commonly owned stations, or at least one of the commonly owned stations
is not ranked among the top-four stations in the market (top-four
prohibition) and at least eight independently owned television stations
remain in the DMA after ownership of the two stations is combined
(eight-voices test). The court in Prometheus II upheld the Commission's
decision in the 2006 Quadrennial Order to retain the local television
ownership rule, specifically concluding that the Commission was
justified in retaining the top-four prohibition, the eight-voices test,
and the duopoly rule.

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26. Based on the record in this proceeding, the Commission
tentatively concludes that the local television ownership rule, with
certain modifications discussed below, remains necessary in the public
interest as a result of competition. The Commission tentatively agrees
with the Commission's previous determination that the local television
ownership rule is necessary to promote competition. While the
Commission proposes to adopt a local television ownership rule to
advance its competition goal, the Commission seeks comment on whether
the proposed rule also is necessary to promote the Commission's
localism and viewpoint diversity goals.
27. As discussed in greater detail below, the Commission proposes
to eliminate the Grade B contour overlap provision of the current rule
and seek comment on this proposal. The Commission tentatively concludes
that it should retain the prohibition against mergers among the top-
four-rated stations. The Commission proposes to also retain the eight-
voices test and the existing numerical limits, but seek comment on
whether modifications to either the voice test or numerical limits is
warranted. In addition, the Commission seeks comment on whether to
adopt a waiver standard applicable to small markets, as well as
appropriate criteria for any such standard. Also, the Commission seeks
comment on whether and how the digital transition and multicasting may
impact television ownership limitations. Finally, the Commission seeks
comment on the impact of the proposed rule on minority and female
ownership.
b. Background
28. In the NOI, the Commission sought comment on whether to retain
the current rule, including the eight-voices test, the top-four
prohibition, and the contour overlap definition. It also asked whether
relaxation of the rule is warranted in small markets to help
broadcasters achieve efficiencies sufficient to compete with other
video programming providers.
29. Television broadcasters generally support relaxing the local
television ownership rule, asserting that they face decreased revenues,
as a result of both increased competition from nonbroadcast video
programming providers and the recent economic downturn. Broadcasters
assert that the efficiencies gained from combined ownership will allow
them to compete better in today's changing marketplace. According to
broadcasters, common ownership can increase viewpoint diversity, as
owners of multiple stations seek to capture the greatest possible
audience share by diversifying their news and public interest program
offerings among co-owned properties. In addition, they contend that the
cost savings generated by common ownership allow stations to add local
newscasts and other locally oriented programming.
30. Public advocacy groups, on the other hand, caution the
Commission against using current economic conditions as a justification
for relaxing the local television ownership rule. UCC et al., for
example, assert that every U.S. industry was impacted by the declining
economy and that signs suggest that the broadcast television industry
has emerged from the downturn. Moreover, they contend that, if certain
stations cannot survive in the current economic climate, then the
public interest is best served by allowing new entrants to become
broadcasters or finding new uses for the broadcast spectrum. In
addition, public advocacy groups assert that further consolidation will
reduce viewpoint diversity through reductions in female and minority
ownership and the loss of independent news operations. Contrary to the
broadcasters' assertion, the public advocacy commenters cite to studies
that have found that consolidation does not lead to increases in local
programming, suggesting that additional consolidation would not serve
the Commission's localism goal.
31. In the media ownership studies, the Commission sought data to
help determine how best to structure a local television ownership rule
to satisfy the Commission's policy goals. Particularly relevant to the
local television rule, Media Ownership Study 1 examines whether common
ownership of stations affects the amount of local news provided by
television stations in the local market. The study does not find
significant evidence that common ownership affects local media usage or
programming. In addition, Media Ownership Study 4 analyzes, at both the
market level and the station level, the relationship between media
ownership and the amount of local news and public affairs programming
provided in a local television market. The study suggests that multiple
ownership in a local market does not impact the amount of local
information programming at the market level or at the station level.
Media Ownership Study 9 provides a theoretical analysis of the impact
of media ownership structure on viewpoint diversity, finding that more
independent outlets can increase viewpoint diversity in a market.
c. Discussion
32. Market. Broadcasters generally assert that they are facing
increased competition from new technologies, which has led, at least in
part, to a reduction in advertising revenues, which could threaten the
financial viability of local television stations. Broadcasters contend,
therefore, that the Commission should modify the local television
ownership rule to permit increased common ownership in local markets.
33. The Commission proposes that the local television ownership
rule continue to focus on promoting competition among broadcast
television stations in local television viewing markets. The Commission
tentatively concludes that the video programming market is distinct
from the radio listening market. The Commission finds that local
broadcast television stations compete directly with each other,
particularly during the parts of the day in which these stations do not
transmit the programming of affiliated broadcast networks. The
Commission previously has determined that the video programming market
includes both broadcast television stations and cable networks.
Moreover, the Commission recognizes that viewers are increasingly able
to access current network programming (both broadcast and cable) and an
increasing array of video programming alternatives via the Internet,
including on mobile devices. However, competition between local
television stations and cable networks may be of limited relevance,
because national cable networks generally do not alter their
programming decisions based on the actions of individual local
television stations. Competition in local markets among local
television stations and programming alternatives available via the
Internet may be similarly limited, as these alternatives compete
largely in national markets and are not likely to respond to conditions
in local markets. The Commission seeks comment on whether the
development of local and hyperlocal Web sites should alter this
analysis. The Commission seeks data in support of alternative
conclusions, for example, that nonbroadcast video programmers modify
programming decisions based on the actions of individual local
television stations.
34. The Commission also seeks comment on the impact of alternative
video platforms on the continued viability of broadcast television
stations. While the growth of MVPDs and Internet delivery of video
programming is undeniable, the impact of this growth

[[Page 2873]]

on the broadcast television industry is unclear. While broadcast
television's share of television viewing has been on the decline,
broadcast network programming remains popular. Viewership, however,
appears to be fractured between local affiliates, the Internet, and
other mobile platforms. Is there evidence that viewers find broadcast
television stations to be interchangeable with new technologies, or is
broadcast television unique? If it is unique, what characteristics
define it as such? Should the Commission determine that, contrary to
its tentative conclusion, the local television ownership rule should
focus on promoting competition among broadcast television stations and
alternatives to broadcast television stations in local markets, the
Commission seeks comment below on whether and how to include these
alternatives in the rule, either in the eight-voices test or any
alternate framework the Commission may adopt for determining whether to
permit common ownership in a local market.
35. Moreover, the Commission seeks comment on whether the product
market for review of the local television rule should include more than
video programming. For instance, some of the alternative sources of
locally oriented content, such as Web sites and blogs, may not be
entirely in video form. Is the relevant product market expanding from a
video-only market to one that also contains non-video sources of local
news and information? The Commission tentatively concludes that,
although the relevant product market may expand beyond video
programming over time, it has not done so at this point. Evidence
suggests that, in the aggregate, Internet-only Web sites provide only a
small amount of local news content. The Commission has not seen
evidence that non-video information sources modify programming
decisions based on the actions of local television stations or vice
versa. The Commission seeks comment on these tentative conclusions.
36. Contour Overlap. The current local television ownership rule
employs a Grade B contour overlap test for determining whether to allow
common ownership of television stations. The Grade B contour is an
analog contour that is no longer relevant now that television stations
have completed the digital transition and ceased broadcasting in
analog. The Commission sought comment in the NOI on whether an overlap
provision or some reliance on contours in the local television
ownership rule was still necessary or whether the Commission should
rely on geographic areas, such as a television DMAs. NAB asserts that
the Commission should, to the extent feasible, maintain a contour-based
approach for the local television ownership rule. Grant Group asks the
Commission to grandfather existing combinations in the event an
alternate approach is adopted and to permit the sale of grandfathered
combinations to a single party.
37. The Commission believes that eliminating the contour approach
is necessary to be consistent with today's marketplace realities.
Therefore, the Commission tentatively concludes that it will eliminate
the Grade B contour approach and rely solely on Nielsen DMAs. Because
of the Commission's mandatory carriage requirements, MVPDs generally
will carry all the broadcast stations assigned to the DMA in which they
are located. These MVPDs are also likely to carry most major cable
networks. Therefore, the DMA most accurately captures the universe of
broadcast and MVPD video programming available to viewers. As such, any
combination of stations in a particular DMA could have an impact on the
levels of competition in that local market. However, the current rule
permits certain mergers between stations that compete in the same
market simply because of a lack of Grade B contour overlap--a factor
that may not have any significant impact on the level of competition
between those stations. Therefore, the Commission tentatively concludes
that eliminating the contour-overlap requirement in favor of the DMA-
based approach would result in a more consistent application of the
local television ownership rule. Moreover, the Commission believes that
the grandfathering provisions discussed below will preserve existing
ownership combinations, thus avoiding disruption of settled
expectations and alleviating any negative impact this change could have
on the provision of television service in rural areas. The Commission
seeks comment on these tentative conclusions.
38. The Commission previously adopted a geographic market
definition for the local radio rule. In the radio context, Arbitron
Metro market definitions were found to be an industry standard and to
represent a reasonable definition of the geographic market within which
radio stations compete. Adopting Arbitron Metro markets was found to
improve the Commission's ability to preserve and promote competition by
more accurately identifying actual geographic markets; more accurately
measuring concentration levels in local markets; and providing for a
more consistent application of the local radio ownership rule. The
Commission has long recognized in the television ownership rule that
DMAs are the relevant geographic market in which television stations
compete, and the Commission expects that a DMA-based approach here will
achieve benefits similar to those found in adopting the Arbitron Metro
market standard in the radio context. Finally, unlike Arbitron Metro
markets, which do not cover large portions of the United States and its
territories, the DMA-based approach covers the entire country and
includes all television stations. In instances where a station's
community of license is located in one DMA but the station is assigned
by Nielsen to another DMA the station will be considered to be within
the DMA assigned by Nielsen for purposes of this rule. In addition,
Puerto Rico, Guam, and the U.S. Virgin Islands, which are not assigned
a DMA by Nielsen, each will be considered a single DMA.
39. The Commission recognizes, however, that a DMA-based approach
may disproportionately impact certain DMAs that have unique
characteristics. For instance, in a geographically large DMA two
stations may be so far removed from one another that the stations do
not actually compete over-the-air (though they are both carried by
MVPDs throughout the DMA). While the Grade B provision of the existing
rule allowed common ownership of those stations, a DMA-based approach
could prohibit common ownership. Therefore, the Commission seeks
comment on whether and how to accommodate such a situation and other
types of situations in which the Grade B provision allowed ownership of
stations but a DMA-based rule would prohibit common ownership. The
Commission seeks comment on how frequently such situations arise. The
Commission tentatively concludes to grandfather ownership of existing
combinations of television stations that would exceed the ownership
limit under the proposed local television ownership rule by virtue of
the change to a DMA-based approach. Compulsory divestiture is
disruptive to the industry and a hardship for individual owners, and
any benefits to the Commission's policy goals would likely be
outweighed by these countervailing considerations. Consistent with the
Commission's previous decisions, the Commission seeks comment regarding
whether to allow the sale of combinations only if the station groups
comply with the local television ownership rule in place at the

[[Page 2874]]

time the transfer of control or assignment application is filed. The
Commission would continue to allow pro-forma changes in ownership and
involuntary changes of ownership due to death or legal disability of
the licensee. Are the Commission's policy goals served by allowing
grandfathered combinations to be freely transferable in perpetuity,
irrespective of whether the combination complies with the local
television ownership rule? What is the effect on the stations if they
are sold separately? Is it possible that such a rule could have the
unintended consequence of causing a station to close? The Commission
seeks comment on these tentative conclusions.
40. Top-Four Prohibition. The top-four prohibition prevents mergers
between two of the top-four-rated stations in a local market, subject
to the other provisions of the local television ownership rule. In the
previous media ownership proceeding, the Commission retained the top-
four prohibition because mergers between these stations ``would be the
most deleterious to competition.'' Such mergers would often result in a
single firm obtaining a significantly larger market share than other
firms in the market and would reduce incentives for local stations to
improve programming that appeals to mass audiences. The Commission also
found that a significant ``cushion'' of audience share continued to
separate the top-four stations from the fifth-ranked station. The
Commission also found that mergers involving two top-four stations
would harm competition in the local broadcast television advertising
market. The Commission tentatively concludes that this market does not
have a direct impact on consumers and should not be a focus of the
Commission's inquiry. The Commission seeks comment on these tentative
conclusions. The Commission tentatively concludes that retaining the
top-four prohibition is necessary to promote competition for the
reasons set forth in the 2006 Quadrennial Review Order. The Commission
continues to believe that this rationale supports retention of the top-
four prohibition, and the Commission seeks comment on these tentative
conclusions.
41. The Commission seeks comment also on the impact of the top-four
prohibition on its localism goal. NAB supports mergers among the top-
four stations in a local market because it argues that many of these
stations cannot afford to produce local news independently. Allowing
these stations to combine, they argue, could lead to increased news
offerings. The Commission notes, however, that evidence suggests that
the majority of top-four stations are already originating substantial
amounts of local news. Moreover, there is generally a drop off between
the fourth- and fifth-rated station in the market in the amount of
local news broadcast. Based on this evidence, it is not clear that
permitting mergers among top-four stations generally would result in
additional local news or other local programming. The Commission seeks
comment on these issues. The Commission also seeks information
regarding whether the amount of local news provided between the top
four stations and any others depends upon the size of the market and a
community's ability to support multiple news outlets. As discussed in
greater detail below, with respect to a potential waiver standard
applicable to small markets, the Commission seeks comment on whether
permitting common ownership in small markets, even between top-four
stations, would promote additional local news.
42. In addition, the Commission seeks comment on whether it should
retain the top-four prohibition to also promote the Commission's
viewpoint diversity goal. Media Ownership Study 9's theoretical
analysis shows that a market structure with four firms--two firms
presenting each viewpoint--provides efficient information transmission,
and the experimental work confirms the value of competition among
outlets with similar viewpoints. Although the Commission recognizes the
limitations of this finding for the Commission's analysis, since a top-
four prohibition does not guarantee the theoretical result, Media
Ownership Study 9 provides some support for maintaining at least four
strong independent outlets. Furthermore, the Commission recognizes
that, in some instances, there may be other significant sources of
viewpoint diversity in a market (e.g., local newspapers or local radio
stations). Nonetheless, because evidence suggests a link between more
independent television outlets and increased viewpoint diversity in a
market and given the significance of television as a source of local
news and information, retaining the top-four prohibition should advance
the Commission's viewpoint diversity goal. The Commission seeks comment
on Media Ownership Study 9's findings, as well has how the top-four
prohibition impacts the Commission's viewpoint diversity goal.
43. Furthermore, the Commission invites commenters to provide
evidence demonstrating why a different criterion might be more
appropriate. For example, would it be more appropriate to impose a top-
five or the top-six prohibition in all markets or in certain markets?
If so, why?
44. Unlike the other ownership rules discussed here, the top-four
component of the Commission's local television ownership rule relies on
the in-market ranking of the stations to be commonly owned, and this is
subject to change over time. Accordingly, the rule specifies that the
ranks of the stations are to be determined ``[a]t the time of
application to acquire or construct the station(s) * * *.'' If, at that
time, both stations are ranked among the top-four stations in the
market, common ownership would not be permitted. The Commission's local
television ownership rule intends, then, to prohibit an entity from
acquiring two top-four stations. However, a broadcaster that owns two
television stations located in the same market will not be required to
divest a station ``if the two merged stations subsequently are both
ranked among the top four stations in the market.'' The Commission
adopted this approach to encourage licensees to improve the quality of
the programming and operations of their stations and so not to
constrain commercial activity that is designed to effect such
improvements.
45. The point of applicability of the top-four prohibition at the
time of an application to the Commission creates a potential for
evading the intent of the rule. Accordingly, the Commission seeks
comment on whether and, if so, how it should address circumstances in
which a licensee obtains two in-market stations, both of which are
ranked among the top-four stations in the market through agreements
that may be considered the functional equivalent of a transfer of
control or assignment of license in the context of this rule, but that
do not require an application or prior Commission approval. For
example, an existing licensee with two stations, one of which is among
the top four stations in the market, purchases the network affiliation
of another top-four-ranked market station and airs that network's
programming on its second, lower-ranked station. The licensees party to
this transaction also exchange call signs. As a consequence, the
second, lower-ranked station becomes a top-four-ranked station and the
licensee now controls two top-four-ranked stations in the market, but
no application has been filed and none was required. How, if at all,
should the Commission address such circumstances? Should the Commission
amend the top-four prohibition to apply to these types of transactions?
Should the Commission focus on instances

[[Page 2875]]

where licensees swap network affiliations, regardless of whether other
types of agreements that impact station operation are also executed?
How, if at all, should the Commission address situations where a
network offers an existing duopoly owner (one top-four station and one
station ranked outside the top four) a top-four-rated affiliation for
the lower-rated station, perhaps because the network is no longer
satisfied with the existing affiliate station and the duopoly owner has
demonstrated superior station operation (i.e., earned the affiliation
on merit)? Does such a transaction undermine the Commission's local
ownership rules or goals? If so, how would the Commission craft a rule
to address such circumstances, while at the same time not unduly
constraining beneficial commercial activities?
46. Eight-Voices Test. Under the eight-voices test, a merger
between two in-market stations will not be permitted unless there are
at least eight independently owned commercial and noncommercial
televisions stations remaining in the market post merger, subject also
to the top-four prohibition. The Commission, in the previous media
ownership proceeding, determined that it was necessary to retain the
eight-voices test in order to promote competition. Specifically, the
Commission determined that maintaining a minimum of eight independently
owned-and-operated television stations in a market would ensure that
each market includes the four major networks (i.e., ABC, NBC, CBS, and
Fox) and four independent competitors, and thus would spur competition
in program offerings, including local news and public affairs
programming. The Commission found that maintaining four independent
competitors was necessary to offset the competitive advantage generally
held by the top four stations in a market. In addition, the Commission
continued to count only full-power television stations as voices
``because the local television ownership rule is designed to preserve
competition in the local television market.'' The Commission proposes
to retain the eight-voices test for the reasons set forth in the 2006
Quadrennial Review Order and seeks comment on this proposal. The
Commission notes that the current eight-voices test relies on Grade B
contour overlap to determine whether a voice is counted. Consistent
with the Commission's decision to eliminate the Grade B contour overlap
provision from the local television ownership rule, the Commission
proposes to also eliminate the Grade B contour overlap criterion from
the eight-voices test and rely instead on stations' inclusion in the
same DMA as a basis for applying the rule. The Commission seeks comment
on this proposal. Do any changes in the television marketplace warrant
modification of the eight-voices test? For example, would adopting a
six- or seven-voices test better promote the Commission's competition
goal while allowing for additional common ownership?
47. Though the Commission proposes to retain the eight-voices test,
including the decision to exclude nonbroadcast television media from
the voice count, in the event the Commission determines it is
appropriate to consider alternative sources of video programming in the
local television ownership rule, the Commission seeks comment
specifically on whether market conditions have changed since the 2006
quadrennial proceeding such that the Commission should consider
alternative sources of video programming in the voice count. If the
Commission should consider additional sources of video programming, how
should the Commission account for those sources in the local market?
Should noncommercial stations be included in figuring out the number of
voices in the market? Or should the Commission consider as an
additional voice video programming delivered via MVPDs or Internet
video programming if such programming is available to a certain portion
of the local market? If so, what should the threshold be and what
source or sources of data should the Commission rely on in determining
whether the threshold is met? Should the Commission consider adoption
rates? Should the Commission consider, and if so how, the local or non-
local nature of the voice?
48. As an alternative to the eight-voices test, the Commission
seeks comment on whether to adopt a different framework for determining
whether to permit common ownership in a local market. For example, the
Commission could adopt a tiered approach, similar to the local radio
ownership rule, in which numerical ownership limits are based on market
rankings, such as the number of full-power television stations in the
DMA or the Nielsen DMA rank (based on television households). As
discussed below, the Commission tentatively proposes to retain the
duopoly rule; therefore, any tiered approach the Commission may adopt
would be limited to two tiers (i.e., markets where an entity could own
up to two stations and markets where an entity could own only one
station). Under such a tiered approach, how should the Commission
determine the number of stations/Nielsen DMA rank associated with each
tier? Do markets with similar numbers of television stations share
particular characteristics and, if so, what are those characteristics?
Do DMAs of a similar Nielsen rank share certain characteristics even
though there may be a significant difference in the number of
television stations? For example, the Commission has previously
determined that the top 20 DMAs are more vibrant and have more media
outlets than lower-ranked DMAs. What would be the benefits and/or
drawbacks of such an approach in the television ownership rule?
49. If the Commission were to adopt an approach other than the
eight-voices test and determine that it is appropriate to consider
alternative sources of video programming, should the Commission include
alternative sources of video programming in the new test, and, if so,
how? For example, could video programming delivered via MVPDs or the
Internet be considered an additional market participant (i.e., the same
as an additional broadcast television station) so long as a certain
portion of the market has access to one or more of these services? In
that case, what should that threshold be and what source or sources of
data should the Commission rely on in determining whether the threshold
is met? Should adoption also be considered? If the Commission were to
rely on Nielsen DMA rank, how would the Commission incorporate these
alternative sources into the rule, as Nielsen's ranking system does not
take such sources into account? Do DMAs of a certain size share certain
characteristics with respect to deployment and adoption of MVPDs and
broadband Internet service?
50. Numerical Limits. Under the current rule, a licensee can own up
to two stations (i.e., a duopoly) in a market, subject to the
requirements discussed above. The Commission concluded in the 2006
Quadrennial Review Order that the duopoly rule remained necessary in
the public interest to protect competition despite the increase in
media outlets within the last decade. The Commission also declined to
tighten the ownership limits, finding that the potential significant
benefits from joint ownership permitted under the current rule
outweighed claims of harm to diversity and competition.
51. The Commission proposes to retain the current numerical limits.
Based on the record in this proceeding, the Commission has not observed

[[Page 2876]]

sufficient changes in the marketplace to allow an entity to own more
than two television stations in a local market. Moreover, the
Commission notes that not every licensee owns the maximum number of
stations permissible under the existing duopoly rule. Therefore, if the
owner of a single station (or, singleton) believes the potential
benefits of common ownership are necessary to compete effectively in a
market where additional duopolies are permitted; there are
opportunities to combine with other singletons under the existing rule.
In addition, the Commission does not believe that the record in this
proceeding supports limiting ownership to a single station in all local
television markets. The Commission seeks comment on these tentative
conclusions. For example, is there evidence that the current rule has
produced actual harms to the Commission's policy goals such that
tightening the numerical ownership limits would be justified?
Alternatively, is there evidence that existing duopolies in the largest
markets require additional common ownership to compete effectively, or
that there are additional benefits in allowing existing duopolies to
acquire additional stations?
52. Market Size Waivers. Commenters have raised concerns that
prohibiting all mergers in small markets could prevent broadcasters in
these markets that may be facing severe competitive pressures from
realizing potential efficiencies that could be achieved through
allowing common ownership, even of top-rated stations, which could in
turn promote the Commission's fundamental policy goals. Therefore, the
Commission seeks comment on whether it should adopt a waiver standard
for stations in markets where the proposed rule would limit station
ownership to a single station for all licensees in the market and how
such a standard would affect the Commission's policy goals. In the
event the Commission determines such a waiver standard is appropriate,
the Commission seeks comment below on how such a standard should be
structured.
53. The Commission seeks comment specifically on whether allowing
certain combinations in small markets, even between top-four stations,
would promote additional local news. The Local TV Coalition asserts
that outside of the largest markets often only a few dominant stations
can afford an independent news operation because stations in these
markets earn less revenue than stations in large markets. Sainte
Sepulveda, which owns one station in a small market and entered into
sharing agreements with another in-market station, asserts that the
savings generated by these sharing agreements are insufficient to
implement a local newsgathering and production facility. According to
NAB, stations in small markets are earning less profit than stations in
large markets. In addition, NAB provides data that stations in small-
and medium- sized markets spend less on their news operations than
stations in large markets both in absolute terms and as a percentage of
total station budget. NAB also submits data demonstrating that these
stations provide less local news content and devote less station staff
to news production than stations in large markets. The Commission seeks
comment on whether adopting a waiver standard for small markets would
promote more news offerings in these markets. In particular, the
Commission notes that there is some evidence to suggest that markets
with six or fewer stations may be less able to support four local
television news operations. Should a market size waiver standard take
this information into account? Would allowing mergers under this
proposed standard result in a loss of viewpoint diversity in those
markets? If so, would such mergers produce sufficient gains in
competition and/or localism to overcome the reduction in viewpoint
diversity?
54. The Commission requests comment also on the criteria it should
adopt for any market size waiver standard. Should the Commission adopt
some or all of the current failed/failing station waiver policy? What
financial documentation should the Commission require? Alternatively,
should the Commission adopt a standard based simply on structural
considerations--the size of the market and the number of outlets? For
example, should the Commission permit a combination if the number of
independent media owners in the market post merger would be at least
two or three? If so, what independent media owners should the
Commission consider? Would this approach create a race to merge that
would reward the first to do so and foreclose other market stations
from achieving similar competitive advantages? Should the Commission
consider the combined market share of the stations seeking to combine
ownership? For example, should one of the criteria for a waiver be that
the proposed station combination would not exceed a certain percent of
the audience or revenue share in the local market? Should the
Commission require the applicants to make affirmative commitments to
initiate/increase local news offerings? If so, should the Commission
require the station owner to demonstrate compliance with that
commitment and for how long? Should the Commission adopt specific
penalties for noncompliance? What other factors should the Commission
consider?
55. Finally, should the Commission consider alternative definitions
of the markets in which this waiver approach would apply? For example,
should the Commission adopt a less restrictive definition of those
``small markets'' in which the rule would apply, perhaps by including
those markets where a single duopoly would be permitted under the
proposed rule? The Commission invites comment on whether these markets
might benefit if top-four combinations were permitted, with some
restrictions, so that sufficient critical mass could be achieved to
support more and/or better local news and public affairs programming.
For example, it may be that in such markets the top four stations do
not all produce local news and that only two or three news operations
could be supported by the market. In these circumstances, should the
Commission consider permitting mergers among top-four stations but not
between the number one and number two stations, or some variant
thereof, if such an outcome would increase the quantity and quality of
local programming provided? The Commission seeks comment on this
approach and on the practical components of any rules to govern such
situations.
56. Multicasting. The digital television transition was completed
on June 12, 2009. As a result, all full-power television stations are
now broadcasting in digital and have the ability to use their available
spectrum to broadcast not only their main program stream but also, if
they choose, additional program streams, an activity commonly referred
to as multicasting. UCC et al. argue that the ability to multicast
justifies a return to the Commission's previous single-station rule.
According to UCC et al., multicasting allows broadcast stations to
provide multiple program streams without acquiring an additional in-
market station. Furthermore, Time Warner Cable (TWC) argues that
multicasting permits stations to create ``virtual duopolies'' by
affiliating with multiple networks and multicasting their programming.
TWC identified a report asserting that 68 instance of dual affiliation
exist that involve the Big Four networks. On the other hand, Belo and
NAB argue that multicasting is not a substitute for duopoly ownership
and does not justify retaining or tightening the local television
ownership rule.

[[Page 2877]]

They note that multicast channels have difficulty attracting
advertisers because these channels are not entitled to must-carry
rights and typically lack established programming line-ups.
Furthermore, not all stations will elect to air multiple program
streams, instead using the available spectrum to provide mobile video,
high-quality, high-definition (HD) programming, or other innovative
services.
57. With the digital transition complete, the Commission seeks
comment on whether the transition has eliminated the need for the local
television ownership rule to permit common ownership in local
television markets. Specifically, does multicasting replicate the
potential benefits to station owners and viewers associated with owning
a second in-market station (e.g., efficiency gains and improved
programming) or are there benefits unique to common ownership that
cannot be replicated by multicasting? If the Commission finds that
multicasting does replicate the potential benefits of common ownership,
both to station owners and viewers, should the Commission continue to
permit common ownership? Should the Commission limit the ability of
station owners to form dual affiliations involving certain networks?
The Commission seeks comment on specific instances of dual affiliation
and on how such situations have impacted the markets where they occur.
The Commission notes that broadcasters are not required to use their
additional spectrum to multicast, and that some stations will instead
elect to use their additional spectrum to offer other services (e.g.,
mobile video). How, if at all, should that affect the Commission's
decision regarding whether multicasting justifies a tightening of the
duopoly rule? The Commission also seeks comment on how multicasting is
affecting stations in small markets, including specifically whether
stations in small markets have been successful in negotiating for MVPD
carriage of their subchannels and what revenue and viewer benefits
these channels generate. The Commission seeks comment on whether and
how to consider multicasting with regard to any waiver standard in
small markets.
58. The Commission notes that Media Ownership Study 10, which
studies the impact of the ownership rules on multicasting, found some
evidence to suggest that variations in ownership structure have little
effect on the extent of multicasting. Media Ownership Study 10 finds
that other market characteristics, such as market size and the number
of television stations operating in a market, may have a greater impact
on the extent of multicasting than ownership structure. The Commission
seeks comment on the findings of Media Ownership Study 10.
59. Minority and Female Ownership. According to DCS, there are
still significant barriers to entry by minority owners in both the
traditional and new media industries; DCS supports measures to
facilitate minority media ownership. DCS states that minority-owned
stations are more likely to provide programming geared toward minority
audiences and that minority communities are underserved as a result of
the lack of minority media ownership. The Commission seeks comment on
how the proposed local television rule would affect minority and female
ownership opportunities. The Commission seeks comment on how promotion
of diverse television ownership promotes viewpoint diversity. The
Commission requests commenters to provide additional data supporting
their positions.
2. Local Radio Ownership Rule
a. Introduction
60. The Commission has intended the local radio ownership rule to
promote competition, diversity, and to some degree localism. The
current local radio ownership rule, retained without modification in
the previous media ownership proceeding, allows an entity to own: (1)
Up to eight commercial radio stations in radio markets with 45 or more
radio stations, no more than five of which can be in the same service
(AM or FM), (2) up to seven commercial radio stations in radio markets
with 30-44 radio stations, no more than four of which can be in the
same service (AM or FM), (3) up to six commercial radio stations in
radio markets with 15-29 radio stations, no more than four of which can
be in the same service (AM or FM), and (4) up to five commercial radio
stations in radio markets with 14 or fewer radio stations, no more than
three of which can be in the same service (AM or FM), provided that an
entity may not own more than 50 percent of the stations in such a
market, except that an entity may always own a single AM and single FM
station combination. In Prometheus II, the Court upheld the
Commission's decision in the last media ownership proceeding to retain
the local radio ownership rule, specifically concluding that the
Commission was justified in retaining the existing numerical limits and
the AM/FM subcaps.
61. Based on the record in this proceeding, the Commission
tentatively concludes that the current local radio ownership rule
remains necessary in the public interest as a result of competition.
The Commission tentatively agrees with the previous determination that
competition-based radio ownership limits promote viewpoint diversity
``by ensuring a sufficient number of independent radio voices and by
preserving a market structure that facilitates and encourages new entry
into the local media market.'' The Commission also tentatively agrees
with the previous determination that a competitive local radio market
helps to promote localism, as a competitive marketplace will lead to
the selection of programming that is responsive to the needs and
interests of the local community. The Commission seeks comment on these
tentative conclusions.
62. As discussed in greater detail below, the Commission
tentatively concludes that it should retain the existing numerical
ownership limits and market tiers, but still seeks comment on whether
to change the existing numerical limits and/or market tiers. The
Commission also proposes to retain the AM/FM subcaps, but seeks comment
on the impact of the ongoing digital radio transition on the
differences between AM and FM stations. In addition, the Commission
seeks comment on whether to adopt a specific waiver standard and, if
so, what criteria to apply. Finally, the Commission seeks comment on
the impact of the local radio ownership rule on minority and female
ownership.
b. Background
63. In the NOI, the Commission sought comment on whether the
current local radio numerical ownership limits are appropriate to
achieve the Commission's policy goals and whether to account for other
sources of audio programming in the rule.
64. Broadcasters generally support loosening the ownership limits,
contending that common ownership of radio stations in the same market
does not harm competition, as consolidation has been shown to have no
effect on advertising rates. In addition, broadcasters assert that
radio stations can, and do, change formats with ease, which they claim
should make the possibility of coordinated behavior among owners an
insignificant concern to the Commission. Moreover, broadcasters argue
that radio ownership limits are not necessary to foster program
diversity or localism. According to Clear Channel, econometric analysis
from the 2006 quadrennial review shows that group

[[Page 2878]]

ownership of radio stations has enhanced diversity of programs and
music formats and substantially increased radio broadcasters' ability
to serve the local needs and interests of their communities. Clear
Channel's econometric analysis relates to the impact of common
ownership on format diversity. The Commission has previously ``declined
to rely on format diversity to justify the local radio ownership
rule.'' In this proceeding, the Commission tentatively concludes that
it should focus the Commission's analysis on viewpoint diversity. The
Commission seeks comment on this tentative conclusion. Clear Channel
states that the company's experience demonstrates that group owners
have natural incentives to counter-program their stations and that
there are efficiencies and economies associated with higher levels of
common ownership.
65. Public interest groups urge the Commission to retain the local
radio ownership rule and argue that radio station ownership caps are
key to preventing the concentration of economic, social, and political
power. Communications Workers of America (CWA) states that ``in 1996,
there were 10,257 commercial radio stations and 5,133 radio owners.''
In 2010, ``there [were] 11,202 commercial radio stations and 3,143
owners, representing a 39 percent decrease in the number of owners
since 1996.'' Future of Media Coalition (FMC) argues that consolidation
in the radio industry ``has no demonstrable public benefit'' and that
``[r]adio programming from the largest station groups remains focused
on just a few formats--many of which overlap with each other, creating
further homogenization.''
66. In the Commission's studies it sought data to help it determine
how best to structure a local radio ownership rule to satisfy the
Commission's policy goals. Particularly relevant to the local radio
rule, Media Ownership Study 5 analyzes the quantity of radio stations
that are classified as news-formatted stations in the top 300 Arbitron
metro areas. Media Ownership Study 7 addresses radio station ownership
structure and minority-targeted programming using data on radio station
formats.
c. Discussion
67. Market. Broadcasters generally assert that they are facing
increased competition from new audio platforms and that this increased
competition has led, at least in part, to a reduction in advertising
revenues, which could threaten the continued viability of the broadcast
radio industry. Broadcasters contend that Internet-based audio
platforms such as Pandora and Apple's iTunes have ``transitioned--in
just a few years--from new market entrants to full-fledged competitors
of terrestrial radio broadcasters.'' Broadcasters assert that none of
the new competitors to free, over-the-air radio broadcasting are
constrained by government-imposed limits on the number of outlets that
can be owned, and therefore, limiting ownership of broadcast stations
places broadcasters at a disadvantage. For this reason, according to
broadcasters, the Commission should modify the local radio ownership
rule to permit increased common ownership in local markets.
68. The Commission tentatively concludes that broadcast radio
stations compete in the radio listening market and that it is not
appropriate, at this time, to expand the relevant market to include
nonbroadcast sources of audio programming. This tentative conclusion is
consistent with previous Commission decisions to not expand the
relevant market to include satellite radio and Internet audio
streaming. The Commission has also found previously that radio
broadcasters compete in the radio advertising and radio program
production markets. The Commission tentatively concludes that these
markets do not have a direct impact on consumers and should not be the
focus of the Commission's inquiry. The Commission seeks comment on
these tentative conclusions. The Commission notes that the current
record suggests that the audio marketplace has changed since the last
media ownership review in terms of the number of choices consumers have
to access audio programming, the number of audio programming providers,
and audio programming choices. For instance, satellite radio
subscribership has grown significantly, and millions of listeners now
access audio content via the Internet. However, satellite radio still
only serves a small portion of all radio listeners and millions of
listeners do not have broadband Internet access. Moreover, these audio
programming alternatives are national platforms that are not likely to
respond to conditions in local markets. Therefore, the Commission
proposes that the local radio ownership rule continue to focus on
promoting competition among broadcast radio stations in local radio
listening markets. The Commission seeks comment on these tentative
conclusions.
69. These tentative conclusions not withstanding, the Commission
seeks additional comment on the impact of new audio technologies on the
continued viability of broadcast radio stations. Broadcast radio
audiences appear stable, the recent decline in advertising has been
replaced by gains in 2010, and overall advertising revenue share is
predicted to decline only slightly through 2019. Does the apparent
resiliency of the broadcast radio industry despite the growth of new
technologies suggest that broadcast radio is unique? If so, what
characteristics of broadcast radio make it unique, and is it
appropriate to consider other technologies in the local radio ownership
rule? How, if at all, do nonbroadcast sources of audio programming
contribute to the Commission's policy goals? For example, do these
alternatives to broadcast radio make programming and/or business
decisions based on competitive considerations in local markets? Should
the Commission determine that, contrary to its tentative conclusion,
the local radio ownership rule should focus on promoting competition
among broadcast radio stations and alternatives to broadcast radio
stations in local radio markets, the Commission seeks comment below on
whether and how to include these sources in the rule, either in
determining market size or in setting the numerical limits.
70. Market Size Tiers. The Commission proposes to retain the
current approach of numerical ownership limits based on market size
tiers. Based on the Commission's years of experience in applying the
rule, the Commission believes that the existing framework best ensures
that the local radio ownership rule serves the Commission's policy
goals and that limiting common ownership helps to prevent the formation
of market power in local markets by ensuring that a few owners cannot
``lock up'' the available--limited--radio spectrum in a local market.
Moreover, this bright-line approach provides transaction participants
with a clear understanding of which transactions comply with the
ownership limitations and allows for timely processing of assignment/
transfer applications. The Commission seeks comment on these tentative
conclusions.
71. The Commission tentatively concludes that it will continue to
determine market size based on the number of commercial and
noncommercial radio stations in the relevant local market. This
tentative conclusion is consistent with the Commission's goal of
promoting competition among local broadcast radio stations and the
Commission's

[[Page 2879]]

decisions in the previous two media ownership proceedings not to
consider nonbroadcast programming in the rule itself. However, to the
extent the Commission determines it is appropriate to consider these
alternative sources in the rule, the Commission seeks comment on
whether to count these alternative sources in defining market size to
determine how many stations an entity may own, and, if so, how. To what
extent does the presence of these alternatives vary by market (e.g.,
Internet-based audio services) or remain constant across markets (e.g.,
satellite radio)? Should the Commission consider broadband deployment
and/or adoption in a particular local market when determining whether
to count Internet-based audio services? Should the Commission consider
fixed or wireless broadband, or both? How much online radio listening
is devoted to streams of broadcast radio stations, and how should this
amount impact the weight of the impact of internet audio streaming in
local markets? Should the Commission consider availability and/or
adoption of satellite radio in local markets?
72. Numerical Limits. The Commission tentatively concludes that it
should retain the existing numerical ownership limits for each existing
market size tier. The Commission retained these numerical limits in the
last media ownership proceeding, finding that public interest would not
be served either by relaxing the numerical limits or by making the
numerical limits more restrictive. In light of the degree of
consolidation in the broadcast radio market following the relaxation of
the local radio ownership limits in the 1996 Act, the Commission
continues to believe that further relaxation of the numerical limits is
not appropriate. Furthermore, the Commission continues to believe that
making the limits more restrictive would be inconsistent with
Congress's decision to relax the ownership limits and too disruptive to
the radio marketplace. In light of these considerations, the Commission
tentatively concludes that it is appropriate to continue to retain the
numerical ownership limits adopted by Congress in the 1996 Act.
73. The Commission seeks comment, however, on whether to adopt any
changes to the numerical ownership limits. Is there evidence that the
existing limits no longer serve the Commission's policy goals or have
caused specific harm to the radio broadcast industry? Do changes in the
marketplace require modification of these limits, or do the
characteristics of certain markets justify increasing the ownership
limits in those markets? For example, should the Commission allow
additional common ownership in markets with substantially more than 45
stations, now the top tier? Some larger radio markets may contain more
than 100 stations, yet the ownership limit is the same--eight
stations--in each. Should the Commission, as Clear Channel suggests,
allow for increased common ownership in larger markets by creating
additional tiers? Clear Channel suggests an increase from eight to ten
in the number of stations a single entity may own in markets with
between 55 and 64 stations and from eight to twelve the number of
stations that a single entity may own in markets with 65 or more
stations.
74. As an alternative to considering nonbroadcast audio programming
in determining the size of a radio market, to the extent the Commission
determines it is appropriate to consider these sources in the rule, the
Commission seeks comment on whether to include these sources when
setting the numerical limits and, if so, how it would do so. For
example, the Commission could allow for ownership of an additional
station in markets where alternative sources of audio programming are
available, even though the market tier was established solely by the
number of broadcast radio stations in the market. If the Commission
does so, how should it determine whether such sources are available?
For example, are Internet-based audio services consistently available
across markets of similar sizes? Should the Commission take adoption
rates into account? For example, satellite radio is generally
consistently available across a local market, but the number of
subscribers remains low compared to the total number of radio
listeners. How should this factor into the Commission's consideration
of the impact of satellite radio in local markets?
75. AM/FM Subcaps. In the NOI, the Commission sought comment on
whether to retain the AM/FM subcaps. The Commission previously
concluded that retaining the subcaps serves the public interest by
promoting new entry into broadcast radio ownership, particularly by
small businesses, including minority- and women-owned businesses. The
Commission also concluded that technical and marketplace differences
between AM and FM stations supported retention of the subcaps,
consistent with the Commission's goal to protect competition in local
radio markets.
76. Those advocating elimination of the subcaps argue that recent
advances in technology, including online streaming, HD radio
technology, and the use of FM translators to augment AM station
broadcast signals, have improved the ability of AM radio to compete in
the marketplace. In addition, they assert that many of the top stations
in large and small markets are AM stations, which undercuts any
argument that AM radio will flounder if the subcaps are removed. Some
broadcasters also assert that lifting the subcaps will create new
ownership opportunities of divested station for entities, which include
minorities, women, and small businesses, because broadcasters will buy
and sell certain in-market stations to strengthen existing station
clusters. In addition, they state that the owners of these station
clusters would then be in better financial positions to devote
additional resources to local programming. Mt. Wilson, however, asserts
that subcaps remain necessary to promote competition in local radio
markets.
77. The Commission proposes to retain the current AM/FM subcaps for
the reasons set forth in the 2006 Quadrennial Review Order. The
Commission continues to believe that this rationale supports retention
of the subcaps and seeks comment on this proposal.
78. In addition, the Commission seeks comment on the impact, if
any, of the ongoing introduction of digital radio on the AM/FM subcaps.
AM stations face unique technical limitations with respect to FM
stations, such as lesser bandwidth and inferior audio signal fidelity.
In addition, unlike FM signals, AM signal propagation varies with the
time of day (i.e., AM signals travel much farther at night than during
the day), and many AM stations are required to cease operation at
sunset. As a result, FM stations tend to have greater listenership and
revenues than AM stations, though this is not necessarily true of all
stations in all markets. The Commission has previously stated that
digital radio may help AM stations to even the playing field with FM
stations.
79. What is the impact of digital radio on the technological and
economic differences between AM and FM stations? The Commission notes
that, unlike the digital television transition, radio stations have no
obligation to operate in digital mode. At present, far more FM stations
have provided the Commission with a notice of commencement of digital
operations than AM stations, though the vast majority of stations in
both services have not provided such notice. How, if at all, should
these facts inform the Commission's analysis of the impact of digital
operations on the AM/FM

[[Page 2880]]

subcaps? At this stage, has digital radio helped address the technical
disadvantages of AM stations, such as fidelity and signal propagation,
and led to a more balanced competition between AM and FM stations
generally? Is it premature to consider the impact of digital radio,
given the lack of widespread digital radio options (both AM and FM)?
How, if at all, should the lack of a deadline to operate in digital
affect this decision? Should the Commission also consider the level of
consumer adoption when determining the impact of digital operations on
the subcaps? What are the current levels of commercial availability and
consumer adoption of radios capable of receiving digital signals?
80. Some broadcasters support elimination of the subcaps so they
can acquire additional AM stations in order to aggregate AM stations to
provide full signal coverage in large geographic areas or in areas with
mountainous terrain. The Commission notes that it recently changed the
FM translator rules ``to allow AM stations to use currently authorized
FM translator stations to retransmit their AM service within their AM
stations' current coverage areas.'' Approximately 500 a.m. stations are
currently retransmitting their signals via FM translators, which has
allowed some AM stations to operate at night for the first time and--
according to anecdotal reports--has allowed certain AM stations to more
effectively serve their communities. In light of this success, the
Commission recently sought comment on whether to extend this
rebroadcast authority to new FM translators with applications for
authorization on file as of May 1, 2009. What has been the impact of
the revised FM translator rule on the ability of AM stations to provide
expanded coverage in their service areas without the need to acquire
additional AM stations? If these stations are now able to provide
expanded coverage in their service areas without acquiring additional
AM stations, is elimination of the AM/FM subcaps also necessary to
address signal coverage concerns? Why or why not? How, if at all, has
this rule change impacted other AM technical/competition concerns,
aside from the signal coverage issue raised by some broadcasters?
81. Market Size Waivers. The Commission has previously declined to
adopt a specific waiver standard for the local radio ownership rule;
instead, parties ``may seek a waiver under the `good cause' waiver
standard in [the Commission's] rules.'' Given the significant amount of
common ownership currently permitted, is a specific waiver standard
warranted, or should applicants continue to be required to justify a
waiver of the rule under the Commission's general waiver standard? If
the Commission determines that a specific waiver standard is warranted,
what are appropriate waiver criteria? Should such a waiver standard
apply equally to all markets, regardless of size, or should the
Commission adopt different standards based on market size? Should the
Commission limit the waiver standard to smaller markets? If so, what
characteristics of those markets establish the need for a specific
waiver standard (to the exclusion of larger markets)?
82. Minority and Female Ownership. As noted above, DCS suggests
that significant barriers to entry for minority ownership remain in
both the traditional and new media industries. The Commission seeks
comment on DCS' assertion that minority communities are underserved as
a result of the lack of minority media ownership, specifically as it
relates to the radio market. Moreover, the Commission seeks comment on
how the local radio rule affects minority and female ownership
opportunities. The Commission asks that commenters be as specific as
possible when identifying particular aspects of the rule that may
impact the opportunity for minority and female entry into the radio
business and ownership of broadcast stations. How is any such impact
relevant to the Commission's goals, in particular promoting viewpoint
diversity?
83. Media Ownership Study 7 analyzes the relationship between
ownership structure and the provision of radio programming targeted to
African-American and Hispanic audiences. Acknowledging that Black and
Hispanic listeners have different viewing preferences from the majority
White population, the data suggest that there is a positive
relationship between minority ownership of radio stations and the total
amount of minority radio programming available in the market. The data
do not indicate a clear relationship between ownership concentration
and programming variety, although the cross-sectional analysis does
suggest that concentration promotes variety. A minority-owned radio
station may not be more popular with minority audiences than a non-
minority-owned radio station providing the same minority-targeted
format. If minority-owned stations have smaller coverage areas they
will necessarily have lower ratings and therefore appear less popular
even though they may be more popular among those consumers that can
receive the signal. The Commission seeks comment on the methodology and
conclusions of Media Ownership Study 7 and how its conclusions should
influence the Commission's decisions on the proposed local radio rule.
The Commission requests commenters to provide additional data
supporting their positions.
3. Newspaper/Broadcast Cross-Ownership Rule
a. Introduction
84. Newspaper/broadcast cross-ownership was first prohibited in
1975 to preserve viewpoint diversity in local markets. In the 2006
Quadrennial proceeding, the Commission concluded that some limitations
on newspaper/broadcast cross-ownership continued to be necessary to
promote viewpoint diversity. The Commission recognized, however, that
certain newspaper/broadcast combinations may promote its localism goal.
It found that the opportunity for sharing newsgathering resources and
for realizing other efficiencies derived from economies of scale and
scope may improve the ability of commonly owned media outlets to
provide local news and information. In the 2002 Biennial Review Order,
the Commission determined that a ban on newspaper/broadcast cross-
ownership was not necessary to promote its competition goal. The
Commission concluded that most advertisers do not consider newspapers,
television stations, and radio stations to be close substitutes for
each other, and that therefore newspapers and broadcast stations do not
compete in the same product market.
85. The newspaper/broadcast cross-ownership rule prohibits common
ownership of a full-service broadcast station and a daily newspaper if:
(1) A television station's Grade A service contour completely
encompasses the newspaper's city of publication; (2) the predicted or
measured 2 mV/m contour of an AM station completely encompasses the
newspaper's city of publication; or (3) the predicted 1 mV/m contour
for an FM station completely encompasses the newspaper's city of
publication. In the 2006 Quadrennial proceeding, the Commission
concluded that an absolute prohibition on newspaper/broadcast
combinations is overly broad. It added waiver provisions to the rule
whereby a waiver would be presumed to be not inconsistent with the
public interest if a daily newspaper in a top 20 DMA sought to combine
with: (1) A radio station or (2) a television station, and (a) the
television station was not ranked among the top

[[Page 2881]]

four stations in the DMA and (b) at least eight independently owned and
operated ``major media voices'' would remain in the DMA after the
combination. For purposes of the newspaper/television combinations,
major media voices would include full-power commercial and
noncommercial television stations and major newspapers. For markets
below the top 20 DMAs, the Commission would presume a waiver of the
newspaper/broadcast cross-ownership rule to be inconsistent with the
public interest.
86. Under the 2006 rule, a waiver applicant could overcome this
negative presumption by demonstrating, with clear and convincing
evidence, that the merged entity would increase the diversity of
independent news outlets and the level of competition among independent
news sources in the relevant market. The Commission would reverse the
negative presumption in two limited circumstances: (1) When the
proposed combination involved a failed/failing station or newspaper, or
(2) when the proposed combination was with a broadcast station that was
not offering local newscasts prior to the combination, and the station
would initiate at least seven hours per week of local news after the
combination.
87. Under both presumptions, the following four factors would
inform the Commission's review of a proposed combination: (1) The
extent to which cross-ownership would serve to increase the amount of
local news disseminated through the affected media outlets in the
combination; (2) the ability of each affected media outlet in the
combination to employ its own staff exercise its own independent news
judgment; (3) the level of concentration in the DMA; and (4) the
financial condition of the newspaper or broadcast station, and if the
newspaper or broadcast station was in financial distress, the owner's
commitment to invest significantly in newsroom operations.
88. In Prometheus II, the Third Circuit vacated and remanded the
newspaper/broadcast cross-ownership rule as modified by the Commission
in the 2006 Quadrennial proceeding. The court based its decision on its
conclusion that the Commission failed to comply with the notice and
comment provisions of the Administrative Procedures Act. The court did
not address the Commission's substantive modifications to the rule.
Because the court reinstated the former rule, the absolute ban on
newspaper/broadcast cross-ownership remains in effect, with no specific
provision for waivers.
89. Consistent with previous Commission findings, the Commission
tentatively concludes that some newspaper/broadcast cross-ownership
restrictions continue to be necessary to protect and promote viewpoint
diversity. Research shows that newspapers and local television
stations, and their affiliated Web sites, are the primary sources that
consumers rely on for local news. The Commission continues to believe,
however, that a blanket prohibition on newspaper/broadcast combinations
is overly broad and does not allow for certain cross-ownership that may
carry public interest benefits. The Commission tentatively affirms its
earlier findings that the opportunity to share newsgathering resources
and realize other efficiencies derived from economies of scale and
scope may improve the ability of commonly owned media outlets to
provide local news and information, and the Commission seeks comment on
how cross-ownership may promote the Commission's localism goal. The
Commission notes here the observations of the Information Needs of
Communities Report with regard to newspaper/broadcast cross-ownership.
The report was written by an ongoing, informal working group that
consisted of Commission staff, industry scholars, and consultants. As
noted in the report, the views expressed in the report ``do not
necessarily represent the views of the Federal Communications
Commission, its Commissioners or any individual Bureaus or Offices.''
The report observes that newspaper/television cross-ownership ``could
lead to efficiencies and improved business models that might result in
more reporting resources,'' thereby promoting the Commission's localism
goal. The report cautioned, however, that cross-ownership may instead
``simply improve the bottom line of a combined company without actually
increasing the resources devoted to local newsgathering.'' In addition,
the Commission tentatively concludes, as the Commission found in
previous ownership reviews, that newspapers and broadcast stations do
not compete in the same product market and, therefore, that the rule is
not necessary to promote the Commission's competition goal.
90. The Commission continues to believe that the nation's largest
markets can accommodate some cross-ownership without unduly harming
viewpoint diversity. For reasons set forth below, the Commission
proposes to adopt a rule that includes elements of the 2006 rule,
including the top 20 DMA demarcation point, the top-four television
station restriction, and the eight remaining voices test. The
Commission tentatively concludes that viewpoint diversity is best
achieved by analyzing these elements for proposed newspaper/broadcast
combinations on a case-by-case basis. The Commission seeks comment on
whether alternative approaches or different demarcations and
restrictions would promote the Commission's diversity goal more
effectively. For newspaper/television combinations, the Commission
proposes to use Nielsen DMA definitions to determine when the rule is
triggered, given the lack of a digital equivalent to the analog Grade A
service contour.
91. The 2006 rule contained some elements that may not be necessary
to promote the public interest. Specifically, as explained below, the
Commission seeks comment on whether the detailed elements describing
what showings are required to overcome the rule's stated presumptions
and the showings required of all applicants unnecessarily increased the
rule's subjectivity and complexity. The Commission also seeks comment
on whether to retain some or all of the factors the Commission adopted
under the 2006 rule to consider in cross-ownership transactions. The
Commission also solicits input on whether to formulate a specific
waiver provision that relies on clear, objective, and enforceable
standards and a burden of proof standard for waiver requests. Finally,
the Commission seeks comment on the impact of the newspaper/broadcast
cross-ownership proposals on minority and female ownership
opportunities.
b. Background
92. In the NOI, the Commission asked whether newspaper/television
combinations should be treated differently from newspaper/radio
combinations, as they are in the 2006 rule. The Commission sought
comment on the impact of marketplace changes in the newspaper industry,
which has seen increased competition for audiences and declining
revenues. The Commission elicited input on the extent to which relaxing
the rule could benefit newspapers and result in a net gain of local
news and information. In the NOI, the Commission noted that consumers
are increasingly getting their news from online and mobile platforms
and asked about the significance of this trend for the newspaper
industry. The Commission sought comment on whether relief from the 2006
rule, if any, should be provided through a revised rule or a waiver
standard, and the factors that should apply under either approach. For
example, the Commission

[[Page 2882]]

asked whether distinctions should be drawn based on market size and the
number of voices remaining post-transaction. The Commission sought
comment also on how to evaluate the efficacy of the rule in terms of
the Commission's goals and the effects on the market participants.
93. Among the commenters responding to the NOI, newspaper and
broadcast owners recommend repeal or relaxation of the rule, and public
advocacy groups support the rule's retention. Supporters of repeal or
relaxation of the rule argue that cross-ownership enhances localism and
supports diverse points of view. They describe an evolution of the
marketplace, including introduction of the Internet and other non-
traditional media, such as iPhone applications, that they assert
provide local and diverse content. They describe serious economic
challenges faced by newspapers and suggest that the only way for them
to survive is by entering combinations and creating economies of scale.
Commenters state that: Newspaper circulation is in a downward spiral
since 2008, reaching its lowest point in nearly 70 years in October
2009; advertising revenues, which traditionally make up 80 percent of
overall newspaper revenues, have dropped 43 percent from 2007 through
2009; and several newspaper publishers have sought bankruptcy
protection, while others have ended their print editions. They state
that the newspapers that remain in business have closed domestic and
foreign bureaus, laying off thousands of journalists. Newspaper
Association of America (NAA) cites to Project for Excellence in
Journalism's (PEJ) recent estimate that newspapers will devote $1.6
billion less annually to news reporting in 2010 than they were able to
do just three years ago.
94. Supporters of the 2006 rule--or a strengthened rule--assert
that restrictions remain necessary to protect against further
concentration in an industry already characterized by concentrated
vertical ownership and consolidated local ownership. They argue that
the 2006 rule provides flexibility where cross-ownership efficiencies
might benefit the public interest and permit combinations in failing
business situations, while requiring maintenance of separate newsrooms
for the purpose of diversity. They argue that the only benefits of
cross-ownership are financial benefits for the owners, which they
assert arise at the cost of diversity and localism for citizens. In the
Commission's studies, the Commission sought data to help it analyze
questions related to the relevance of the newspaper/broadcast cross-
ownership rule to the Commission's policy goals. Particularly, the
Commission measured whether the presence of cross-owned stations
affects the amount of local news provided at the local market level and
at the individual station level. The Commission also measured localism
by analyzing consumer satisfaction with the amount of local news
available in markets. In addition, the Commission studied the impact of
cross-ownership on viewpoint diversity in media markets. The Commission
seeks comment on the extent to which its proposed approaches for
newspaper/television combinations are supported by data from the
Commission's studies or other available data.
c. Discussion
95. The Commission tentatively concludes that some restrictions on
newspaper/broadcast combinations continue to be necessary to promote
viewpoint diversity within local markets. The Commission seeks comment
on this tentative conclusion. There is evidence that Americans continue
to rely on local television stations and newspapers for the majority of
their local news, despite the rising popularity of the Internet as a
platform for access to news. Studies have found that approximately
three-quarters of Americans obtain news from a local television
station. In addition, although newspaper readership has declined in
recent years, in 2010, 37 percent of Americans reported reading a
newspaper the preceding day.
96. Although consumers are turning increasingly to the Internet for
news and information generally and seeking new platforms on which to
access local news, the Web sites most frequently viewed for news and
information are affiliated with legacy media. In the fall of 2009,
among the top roughly 200 news Web sites based on traffic, 67 percent
were associated with legacy media, and 48 percent were associated with
newspapers in particular. More recently, the Information Needs of
Communities Report concluded that ``from a traffic perspective,
newspapers have come to dominate the Internet on the local level.''
Along with newspaper Web sites, local television news Web sites rank
among the most popular news Web sites. Indeed, Media Ownership Study 6
looks at online local news content and finds very little that is not
affiliated with a newspaper or television or radio station. Other Web
sites offering local news presently receive little traffic. Even where
there are Internet-only local news outlets, the study suggests that the
aggregate weekly quantity of such content is about equal to a single
page of a full-size daily newspaper. The PEW Research Center's
Baltimore Study similarly finds that the majority of local news content
on Web sites unaffiliated with newspapers or broadcast stations
contains only commentary on the stories and features that originated
from traditional media outlets. Given the continuing prevalence of
broadcast stations and newspapers as news sources consumers rely on the
most, the Commission tentatively finds that some newspaper/broadcast
restrictions remain necessary to protect viewpoint diversity. The
Commission will continue to monitor and assess the Internet's role in
the marketplace for local news and information in this regard. The
Commission seeks comment on these tentative conclusions.
97. The Commission has found evidence previously that some
newspaper/broadcast cross-ownership may produce increased local news.
What benefits and efficiencies accrue from cross ownership? Media
Ownership Study 4 examines the impact of newspaper/television cross-
ownership on the amount of local television news at both the station
and the market level. The study finds that, other things being equal, a
station that is cross-owned with a daily newspaper produces more local
news than a stand alone station. However, when the analysis is done at
the market level, other things being equal, a market with a cross-owned
station offers somewhat less local news than a market without a cross-
owned station. Because there was little variation in the extent of
newspaper-television cross-ownership during the period studied, the
author recognizes that the conclusions of the statistical analysis must
be treated with caution. The Commission seeks comment on how to weigh
the Media Ownership Study 4 findings and how those findings should
affect the Commission's analysis. Has this rule resulted in the
reduction of local news, the loss of journalism positions, and the
failure of newspapers? What challenges have newspapers faced because of
the current economy and the changing marketplace?
98. Nielsen DMAs. As an initial matter, for television stations,
the Commission proposes to apply any ownership combination restrictions
to daily newspapers and stations within the same DMA. The Commission
seeks comment on its tentative conclusion that the Commission will use
Nielsen DMA definitions to determine when the cross-ownership rule is
triggered, as there is no digital equivalent contour for

[[Page 2883]]

the analog Grade A contour specified by the current rule. The
Commission seeks comment on the impact of changing from a contour-based
rule to a DMA-based rule. For any proposed rule, would many more
newspaper/television station combinations be implicated by the cross-
ownership rule under a DMA-based approach as compared to a contour-
based approach? Are there negative consequences to switching to a DMA-
based rule? What are the benefits? The Commission's preliminary view is
that DMA market definitions would reflect circulation and viewing areas
more accurately than the current approach. However, given the large
size of some DMAs, the Commission seeks comment on whether the rule
instead should be triggered only if the newspaper's circulation extends
to the community of license of the television station.
99. To the extent the rule relies on DMAs, the Commission proposes
to grandfather ownership of existing combinations of television
stations and newspapers that would conflict with the newspaper/
broadcast cross-ownership rule by virtue of the change to a DMA-based
approach. Compulsory divestiture is disruptive to the industry and a
hardship for individual owners, and any benefits to the Commission's
policy goals would likely be outweighed by these countervailing
considerations. The Commission seeks comment on these tentative
conclusions. Are the Commission's policy goals served by allowing
grandfathered combinations to be freely transferable in perpetuity,
irrespective of whether the combination complies with the newspaper/
broadcast cross-ownership rule? What is the effect on the entities if
they are sold separately? Is it possible that such a rule could have
the unintended consequence of causing a station or newspaper to close?
100. Proposed Rule. In taking a fresh look at the rule, the
Commission tentatively finds that a blanket rule prohibiting all
newspaper/broadcast cross-ownership within the same service area is
unnecessarily broad. The Commission tentatively concludes that the top
20 DMA demarcation point, the top-four television station restriction,
and the eight remaining major media voices test for television/
newspaper combinations contained in the 2006 rule are the fundamental
elements of a rule that will protect and promote viewpoint diversity
while also properly supporting localism most effectively. The
Commission notes that these criteria are objective standards that can
be applied and enforced consistently and fairly, with low cost to the
applicants and Commission. The Commission seeks comment generally on
the benefits of adopting these criteria and specifically on their
individual aspects, as detailed below.
101. The Commission proposes a rule that prohibits common ownership
of a daily newspaper and (1) a full-power commercial television station
within the same DMA, (2) an AM station with a predicted or measured 2
mV/m contour service area that encompasses the newspaper's city of
publication; or (3) an FM station with a predicted 1 mV/m contour
service area that encompasses the newspaper's city of publication. The
proposed rule would presume a waiver to be consistent with the public
interest if: (1) A daily newspaper in a top 20 DMA sought to combine
with a radio station, or (2) a daily newspaper sought to combine with a
full-power commercial television station in the same top 20 DMA, and:
(a) The television station is not ranked among the top four television
stations in the DMA and (b) at least eight independently owned and
operated ``major media voices'' would remain in the DMA after the
combination. For purposes of the waiver, major media voices would
include full-power commercial and noncommercial television stations and
major newspapers. The rule would presume a waiver to be inconsistent
with the public interest in all other circumstances. Below the
Commission seeks comment on alternative demarcation points for these
three key elements of the proposed rule (top-four television station
restriction, eight remaining major media voices criterion, top 20 DMA
cutoff) and on how in practice these three constraints interact with
one another.
102. The Commission tentatively concludes that the case-by-case
approach adopted as part of the 2006 rule to consider requests for
waivers of the newspaper/broadcast cross-ownership rule would best
serve the Commission's goal of promoting viewpoint diversity. This
approach should provide an appropriate amount of flexibility to allow
the Commission to consider specific, individual circumstances.
Presumptions either in favor of or against a waiver can be overcome
when specific facts so warrant. Under this approach, opponents to a
waiver request, even in the largest markets, maintain the ability to
argue that specific circumstances overcome a favorable presumption. In
addition, parties requesting a waiver in smaller markets are not
precluded from demonstrating the benefits of that particular
combination in the individual market. The Commission seeks comment on
these tentative conclusions.
103. Alternatively, the Commission seeks comment on whether a
bright-line rule addressing newspaper/broadcast cross-ownership would
be preferable. Such a rule would allow common ownership of (1) one
daily newspaper in a top 20 DMA and one commercial radio station, or
(2) one daily newspaper and one full-power commercial television
station in a top 20 DMA under the circumstances in which the case-by-
case approach proposed above would establish a favorable presumption.
For purposes of the rule, major media voices would include full-power
commercial and noncommercial television stations and major newspapers.
Other combinations would be prohibited. The purpose of a bright-line
rule is to create a clear-cut, readily enforceable standard that
provides consistency and certainty to the marketplace. The Commission
seeks comment on whether this approach would result in a simplified
rule that would preserve essentially the same levels of local viewpoint
diversity as a case-by-case approach but reduce applicants' costs and
make the Commission's review of transfer and assignment applications
more objective, predictable, and expeditious. Is a bright-line formula
too blunt a tool to account for variable conditions that may exist when
considering newspaper/broadcast cross-ownership waivers, even in
similarly sized markets? The Commission notes that even utilizing a
bright-line rule, petitions to deny an application would not be
precluded even for a newspaper/broadcast combination within a top 20
DMA or a waiver request in other markets. Would including the
determinative criteria in a governing rule alleviate the need to
undergo a potentially lengthy and expensive waiver process for
applications presumed to be in the public interest? If the results are
likely to be the same in most cases, is the flexibility of a tailored
review process worth the additional time and expense? The Commission
seeks comment on the extent to which the structure of the bright-line
approach would diminish the likelihood of successfully opposing such a
merger. Under a bright line approach, should the Commission adopt
specific standards for waivers or rely on the Commission's generally
applicable waiver standards?
104. Market Tiers. The Commission proposes to differentiate between
markets in the top 20 DMAs and markets below the top 20 DMAs. In the
last review of this rule, the Commission found a ``notable difference
between the

[[Page 2884]]

top 20 markets and all other DMAs,'' citing the range of media outlets
available in the top 20 DMAs and concluding that ``[t]he diversity in
the number and types of traditional media outlets in the largest
markets ensures that the public is well served by antagonistic
viewpoints. Markets outside of the top 20 DMAs do not feature diversity
to such an extent.'' The Commission continues to believe that the top
20 DMAs are notably different from other markets, both in terms of
voices and in terms of television and radio households. Based on the
range of media outlets available in the top 20 DMAs, the Commission
tentatively concludes that diversity in those largest markets is
healthy and vibrant in comparison to other DMAs. For example, while
there are at least 10 independently owned, commercial television
stations in 15 of the top 20 DMAs, none of the DMAs ranked 21 through
25 has even eight independently owned, commercial television stations.
Additionally, while 15 of the top 20 DMAs have at least two newspapers
with a circulation of at least five percent of the households in that
DMA, four of the five DMAs ranked 21 through 25 have only one such
newspaper. Moreover, the top 20 markets, on average, have 16
independently owned television stations and major newspapers and
approximately 2.5 million television households. By comparison, DMAs 21
through 30 have on average nine major voices and fewer than 1.2 million
television households, representing drops of 44 percent and 52 percent
from the top 20 markets, respectively. DMAs 31 through 50 have average
numbers of voices for each category similar to markets 21 through 30,
but even fewer television households on average, 856,700 and 694,500,
respectively. DMAs 51 through 210 show even more dramatic drops, with,
on average, seven major voices and approximately 236,000 television
households, representing drops of 56 percent and 91 percent from the
top 20 DMAs, respectively. The diversity in the number and types of
traditional media outlets in the largest markets ensures that the
public is well served by a variety of viewpoints. Markets outside of
the top 20 DMAs do not feature diversity to such an extent.
105. The Commission seeks comment on this analysis of the
distinction between the top 20 DMAs and others and on the Commission's
tentative conclusion that the viewpoint diversity level in the 20
largest DMAs is sufficient to consider adopting a regulatory framework
that would accommodate a limited amount of newspaper/broadcast cross-
ownership in those markets. The Commission also seeks comment on its
continued belief that markets below the top 20 DMAs cannot accommodate
any such cross-ownership, absent particular circumstances warranting a
waiver. The Commission asks commenters to address separately market
structure characteristics, such as the number of independent media
voices, and market size characteristics, e.g., the number of television
households in the market. Market structure characteristics are directly
and separately addressed by the proposed top four television station
restriction and the proposed eight remaining major media voices
criterion. Due to the high fixed costs of television program production
(including local programming in general and local news programming in
particular), the number of television households in the market affects
the revenue base available to support local programming and hence
affects the quantity, quality, and diversity of local programming
produced in the market, independent of the number of media voices.
106. In addition, the Commission seeks comment on whether a
different demarcation point would more effectively protect and promote
the Commission's viewpoint diversity and localism goals. For example,
would differential treatment be warranted for newspaper/broadcast
combinations in the top 30 DMAs, top 40 DMAs, top 50 DMAs, or at a
different market size? Please provide specific market data to support
the proposed demarcation point. If the Commission were to maintain the
prohibition on combinations involving the top four television stations
and the requirement to retain eight major media voices in the market,
what is the impact on permitted combinations of varying the demarcation
point?
107. Newspaper/Television Station Combinations: Top-Four
Restriction. The Commission proposes to prevent a daily newspaper from
combining with a television station that is ranked among the top four
television stations in the DMA. The Commission proposes that the
current criteria would continue to apply when determining what
qualifies as a daily newspaper and what qualifies as a television
station ranked among the top four stations. The Commission believes
that allowing a top-four station to merge with a daily newspaper would
create the greatest risk of losing an independent voice in that market.
The Commission's analysis shows that there is a decrease in the amount
of local news broadcast between the fourth and fifth ranked stations.
In larger markets, the fifth ranked station generally provides no more
than half the amount of local news of the fourth ranked station. The
Commission seeks comment on this analysis and on its application to the
proposed approaches.
108. Furthermore, the Commission notes the dominance of the four
major television networks in most local television markets. How
commonly are the top four stations in a market affiliated with the four
major broadcast networks? The Commission seeks comment on the findings
in Media Ownership Study 4 that television stations affiliated with one
of the four major broadcast networks tend to air more local news than
other stations and that there are about 35 additional minutes of local
news programming in the market for each additional station in the
market that is affiliated with one of the four major broadcast
networks. The Commission seeks comment on the presumption that,
therefore, the top four television stations generally contribute the
most local news and information among the television stations within a
market.
109. Alternatively, the Commission seeks comment on whether a
different limit is appropriate. For example, is there evidence to
support a cross-ownership restriction between newspapers and the top-
five or the top-six television stations in some markets? If so, why? Is
there support to prevent combinations between newspapers and stations
affiliated with one of the four major broadcast networks? If so, why?
Could such combinations potentially harm diversity more than other
combinations? Is there evidence that these stations provide more
diversity in local markets?
110. Newspaper/Television Station Combinations: Eight Major Media
Voices Restriction. The Commission tentatively proposes to prohibit
transactions where less than eight independently owned and operated
``major media voices'' would remain in the DMA after a transaction. The
Commission seeks comment, however, on the potential impact of
eliminating this voices test. The Commission's examination of the top
20 DMAs indicates there would be no impact in these markets. Under the
existing ownership patterns in the top 20 markets, even if all daily
newspapers combined with television stations, at least eight major
media voices would remain in the market. The existence of the eight
voices test in the local television ownership rule also helps retain
independent major media voices by limiting commercial consolidation
once only eight independent television

[[Page 2885]]

stations remain in the market. As long as these eight independent
television voices remain in the market, consolidation between
newspapers and television stations will not reduce the number of major
media voices below eight. Is the Commission's assessment accurate, and
if so, is there any reason to incorporate the eight voices test into a
new rule or waiver provision? Is there a reason to require a different
number of voices to remain in the DMA, and if so, how would that number
better protect the Commission's diversity goal? Should the Commission's
analysis change if the Commission does not distinguish the top 20 DMAs
but adopt a different demarcation point? For example, would there be an
impact on the market if the Commission eliminates the eight voices test
and creates a separate tier for the top 30 DMAs?
111. Newspaper/Radio Station Combinations. As an alternative to the
Commission's proposal above to retain the restriction on newspaper/
radio combinations, the Commission also seeks comment on whether it
should eliminate the newspaper/radio restriction in all markets or
otherwise relax the restriction. The Commission tentatively concludes
that radio stations are not the primary outlets that contribute to
local viewpoint diversity. Media Ownership Study 5 finds that at least
one commercial radio station with a news and talk format serves most
markets and that a public news radio station serves about 40 percent of
markets. Research shows, nevertheless, that consumers' main sources for
local news and information are television stations, newspapers, and
their affiliated Web sites. Moreover, the Commission tentatively
concludes that a substantial amount of news and talk show programming
on radio stations is nationally syndicated. The Commission seeks
comment on its tentative conclusion that radio stations generally are
not the dominant source consumers turn to for local news and
information, as compared to newspapers and television stations. The
Commission seeks comment on whether, to the extent radio stations serve
as sources of local news and information, viewpoint diversity would be
adequately protected by the proposed local radio limits. Because
consumers in markets of all sizes rely most heavily on other types of
news outlets for local news and information, is there any reason to
distinguish between markets in the top 20 DMAs and those below the top
20 DMAs for purposes of newspaper/radio combinations? Would the removal
of prohibitions against newspaper/radio combinations have any impact on
the ownership, or contribution to local viewpoint diversity, of
noncommercial educational FM broadcast stations, given the restriction
that they may be licensed only to nonprofit educational organizations?
Would common ownership between a radio station and a newspaper increase
the quality and quantity of local news programming available on radio
stations due to shared newsgathering expertise and resources? Could
such combinations provide an opportunity for both radio stations and
newspapers that are struggling financially to become more vital
participants in the news and information marketplace and what is the
likelihood of this outcome? Should the Commission consider a rule that
prohibits newspaper-radio combinations in certain markets only when the
radio station is among the largest four in the market by audience
share?
112. The proposed newspaper/broadcast cross-ownership rule retains
the use of radio contours to determine when the rule is triggered. As
discussed below, Arbitron market definitions are used to delineate a
market's geographic boundaries for purposes of the local radio limits
and the Commission proposes to use DMAs for purposes of triggering the
local TV ownership rule and the newspaper/television aspect of the
cross-ownership rule. Should the Commission continue to use contours to
determine whether the newspaper/broadcast cross-ownership rule is
triggered for newspaper/radio combinations? What are the benefits of
continuing to rely on contours only for this portion of the rule? Can
retaining a contour approach to newspaper/radio combinations be
reconciled with the Commission's proposed use of geographic market
definitions for newspaper/television combinations? Alternatively,
should the Commission replace radio contours with Arbitron market
definitions for purposes of determining whether the newspaper/broadcast
cross-ownership rule is triggered for newspaper/radio combinations? Are
there any specific concerns about moving to an Arbitron market
definition for this rule? Would more or fewer newspaper/radio station
combinations be implicated by the cross-ownership rule under an
Arbitron-based approach as compared to a contour-based approach? How
would the Commission handle non-Arbitron radio markets? The Commission
seeks comment.
113. To the extent the rule relies on a different market area, the
Commission proposes to grandfather ownership of existing combinations
of radio stations and newspapers that would conflict with the
newspaper/broadcast cross-ownership rule by virtue of the change.
Compulsory divestiture is disruptive to the industry and a hardship for
individual owners, and any benefits to the Commission's policy goals
would likely be outweighed by these countervailing considerations. The
Commission seeks comment on these tentative conclusions. Are the
Commission's policy goals served by allowing grandfathered combinations
to be freely transferable in perpetuity, irrespective of whether the
combination complies with the newspaper/radio cross-ownership rule?
What is the effect on the stations if they are sold separately? Is it
possible that such a rule could have the unintended consequence of
causing a station or newspaper to close?
114. Factor Tests. The 2006 rule included a list of four factors
for the Commission to analyze when deciding whether a specific
newspaper/broadcast ownership combination was in the public interest.
The Commission seeks comment on whether it should retain those factors.
In 2006, the Commission stated that the factors were intended to
address ``the need to support the availability and sustainability of
local news while not significantly increasing local concentration or
harming diversity.'' Specifically, the 2006 rule required applicants to
make showings regarding: (1) The amount of local news that would be
produced post-transaction; (2) the extent to which the affected media
outlets would exercise independent news judgment; (3) the level of
concentration in the DMA; and (4) the financial condition of the
applicant, and if financially distressed, the applicant's commitment to
invest in newsroom operations. Do the factors provide useful
predictability or clarity for applicants applying for a waiver of the
newspaper/broadcast cross-ownership rule? Do factors provide specific
benefits to the Commission staff reviewing applications and waiver
requests? Alternatively, are any of the factors, such as the first two
factors, too subjective, or focused on future behavior that may be too
difficult to predict or enforce? Do specific factors create unnecessary
delay in the application and review process? Should the Commission
exclude all of these elements from the new rule and consider
applications on a more case by case basis? If so, should the
presumptions included in the rule be interpreted as establishing a
prima facie case in favor of or against a transaction and, once
established, shifting the

[[Page 2886]]

burden of proof regarding the Commission's treatment of an application
to those that may seek to overcome the presumption? If so, what should
that burden of proof be? Would a well defined exception or waiver
standard, as discussed below, sufficiently support the Commission's
consideration of specific factual scenarios related to a proposed
transaction, including for instance, the financial condition of the
entities involved and/or the availability of local news, such that the
specification of these additional factors is not necessary? The
Commission seeks comment.
115. Exception or Waiver. The Commission also seeks comment on
whether to retain or abolish the factors adopted in 2006 to overcome or
reverse a negative presumption. Is it better to remove all factors from
the rule and rely on the Commission's general waiver standard? Under
the 2006 rule, a waiver applicant could overcome a negative presumption
by demonstrating, with clear and convincing evidence, that the merged
entity would increase the diversity of independent news outlets and the
level of competition among independent news sources in the relevant
market. Is such a standard sufficiently objective and quantifiable? The
2006 rule further stated that the Commission would reverse the negative
presumption in two limited circumstances: (1) When the proposed
combination involved a failed/failing station or newspaper, or (2) when
the proposed combination was with a broadcast station that was not
offering local newscasts prior to the combination, and the station
would initiate at least seven hours per week of local news after the
combination. Is such a standard sufficiently objective and
quantifiable? Should the give special consideration to a transaction
that involves a station or newspaper that is failed or failing? If so,
what showing should an applicant be required to make to qualify as
failed or failing? Is a requirement that a waiver applicant show that a
proposed combination would increase the number of hours of local news
programming overly focused on future behavior that may be too difficult
to predict or enforce? Are there other factors that the Commission
should adopt that would be more objective or easier to enforce than
those adopted in 2006? If so, what would be the benefits of adopting
any other proposed factors and what would be the harms? The Commission
also seeks comment on whether it may be appropriate to adopt specific
factors to consider in instance in which an applicant is seeking a
waiver of the restriction on combinations involving a top-four
television station or the eight voice test. Finally, the Commission
seeks comment on whether and why such provisions are needed given that
filing a waiver petition is always an option under Sec. 1.3 of the
Commission's rules?
116. Minority and Female Ownership. According to DCS, there are
still significant barriers to entry by minority owners in both the
traditional and new media industries; DCS supports measures to
facilitate minority media ownership. DCS states that minority-owned
stations are more likely to provide programming geared towards minority
audiences and that minority communities are underserved as a result of
the lack of minority media ownership. The Commission seeks comment on
how the proposed newspaper/broadcast cross-ownership rule could affect
minority and female ownership opportunities. The Commission seeks
comment on how promotion of diverse ownership promotes viewpoint
diversity. The Commission requests that commenters provide additional
data supporting their positions.
4. Radio/Television Cross-Ownership Rule
a. Introduction
117. The current radio/television cross-ownership rule limits the
number of commercial radio and television stations an entity may own in
the same market, with the degree of common ownership permitted varying
depending on the size of the relevant market. The rule allows common
ownership of at least two television stations and one radio station in
the smallest markets, while in larger markets, a single entity may own
additional stations depending on the number of media owners in the
market. The Commission retained the radio/television cross-ownership
rule in the 2006 Quadrennial Review Order to ensure diversity in local
markets. In Prometheus II, the Third Circuit upheld the Commission's
decision to retain the rule, based in part on the Commission's
assertion in the 2006 Quadrennial Review Order that the rule benefited
viewpoint diversity. It noted that the Commission supported retention
of the rule in the 2006 Quadrennial proceeding with some evidence that
commonly owned stations can share the same viewpoint.
118. Pursuant to a statutory mandate, the Commission considers
whether the radio/television cross-ownership rule continues to be
necessary to promote the public interest. The Commission tentatively
concludes that it does not. The Commission believes that repeal of the
radio/television cross-ownership rule is not likely to increase
significantly consolidation of broadcast facilities. To the extent that
repeal does allow additional consolidation, the Commission seeks
comment on whether such consolidation would result in greater
efficiencies, to be passed through to consumers in the form of enhanced
programming choices or other consumer welfare benefits. Moreover, as
discussed further below, data suggest that radio/television cross-
ownership does not negatively impact the amount of local news available
to consumers or the diversity of such programming. Finally, the
Commission is persuaded by the evidence from its studies and the
changes in the marketplace that the rule is not necessary to ensure
sufficient diversity in local markets. Accordingly, the Commission
tentatively concludes that in the current media market, the
Commission's goals of localism and diversity will be adequately
protected by the local radio and television ownership rules without
this additional limitation. The Commission seeks comment on these
tentative conclusions. The Commission also seeks comment on whether
there are any reasons to retain the rule.
b. Background
119. The Commission first restricted combined ownership of radio
and television stations in local markets in 1970 to foster competition
and promote diversification of programming sources and viewpoints. As
discussed in the NOI, in 1999 the Commission relaxed the rule to
balance diversity and competition concerns against the desire to permit
broadcasters and the public to realize the benefits of common
ownership. In the 2006 Quadrennial Review Order, the Commission
retained the radio/television cross-ownership rule, based in part on
the concern that the local television and radio rules were not
sufficient to protect diversity in the media marketplace. After
reviewing the record, the Commission determined that radio and
television both contributed to the ``marketplace of ideas'' and thus
competed in providing diversity. At the same time, the Commission
acknowledged that newspapers and television were ``far and away the
most important sources'' of news and information, with radio ``a
distant third.'' On review, the Third Circuit upheld the Commission's
decision to retain the rule finding that the rule

[[Page 2887]]

continues ``to ensure that viewpoint diversity is adequately
protected.''
120. In the NOI, the Commission sought comment on whether the
current rule continues to be necessary in the public interest. NAB
supports repeal of the radio/television cross-ownership rule because it
believes that additional cross-ownership will allow broadcasters to
better compete for advertising and viewers with the new media sources
entering the market and will allow them to invest more in local news
and information. Fox also suggests that allowing more common ownership
of different types of media in a single market could enhance localism.
NAB, Fox, and CBS argue that, in light of the explosion of media
outlets and Internet-related media in all markets, and the resulting
fragmentation of the local audience, ``repeal of the [radio/television
cross-ownership] rule will not adversely affect the availability of
diverse audio and video programming and viewpoints.'' Fox contends that
in the Internet age ``all outlets have an equal capacity to reach the
vast majority of citizens (especially now that three-quarters of all
American adults use the Internet).'' In contrast, AFTRA argues that the
Commission should maintain the radio/television cross-ownership rule to
prevent further consolidation and promote localism and diversity. AFTRA
points out that, between 1996 and 2010, ``the number of commercial
radio stations increased by about 10 percent * * * [while] the number
of station owners fell by about 40 percent.'' AFTRA further asserts
that, during the same period, ``the number of commercial television
stations increased by about 15 percent * * * [while] the number of
station owners fell by 33 percent.''
121. In the Commission's economic studies, which are discussed in
more detail below, the Commission sought data to help analyze questions
related to the relevance of the radio/television cross-ownership rule
to the Commission's policy goals. Particularly, the Commission measured
whether the presence of radio/television cross-ownership affects the
amount of local news provided at the local market level and at the
individual station level. The Commission also measured localism by
analyzing consumer satisfaction with the amount of locally oriented
programming available in markets. In addition, the Commission studied
the impact of radio/television cross-ownership on the amount of diverse
viewpoints available in media markets.
c. Discussion
122. Competition. As the Commission has held in the past, the
Commission does not believe this rule is necessary to promote
competition. Previously, the Commission has concluded that most
advertisers do not consider radio and television stations to be good
substitutes for their advertising needs, and, therefore, combinations
of radio and television stations would not harm competition in local
media markets. This conclusion was based in part on Department of
Justice assertions that radio advertising constitutes a separate
antitrust market. The Commission continues to believe that radio and
television are not good substitutes in the advertising market. The
Commission seeks comment on this tentative conclusion.
123. Similarly, the Commission tentatively concludes that most
consumers do not consider radio and television stations to be
substitutes for one another. That is, the Commission believes that
consumers are not likely to switch between television viewing and radio
listening based on the program content of radio and television
stations. Nor does the Commission believe it likely that radio or
television stations adjust their content in response to changes in the
other medium's programming. Accordingly, the Commission believes that
repealing the radio/television cross-ownership rule will not negatively
impact the Commission's competition goals and seek comment on this
tentative conclusion.
124. As stated above, broadcasters argue that lifting the radio/
television cross-ownership restriction will enable them to compete
better in today's marketplace. The Commission seeks comment on whether
repealing the restriction would allow greater efficiencies through
joint operations that can be passed on to consumers through investment
in programming. In addition, the Commission seeks comment on whether
allowing additional radio-television combinations would lead to
consumer benefits in the form of additional investment in radio or
television news rooms, increased editorial staffs, or additional local
news coverage on radio stations.
125. The Commission does not anticipate, however, that eliminating
the radio/television cross-ownership rule would significantly
contribute to broadcast consolidation. Pursuant to the existing radio/
television cross-ownership rule, in the largest markets, entities
currently may own, in combination, either two television stations and
six radio stations or one television station and seven radio stations.
The local radio ownership rule permits an entity to own a maximum of
eight radio stations in a single market. Therefore, in the largest
markets, absent the current radio/television cross-ownership rule, an
entity approaching the limits of the existing cap could acquire only
one additional radio station and remain in compliance with the local
radio rule. Likewise, an entity with one television station already
could acquire only one additional station in the largest markets under
the current local television rule. Thus, the Commission believes that
the effect of eliminating the radio/television cross-ownership rule
will be small, and that the local radio and local television rules will
continue to prevent a significant increase in the consolidation of
broadcast facilities. The Commission seeks comment on these issues.
What impact is the proposed action likely to have in small and mid-
sized markets? Are there specific examples of markets where repeal of
the rule may substantially contribute to broadcast consolidation?
126. Localism. As the Commission has held in the past, the
Commission does not believe this rule is necessary to promote localism.
The Commission tentatively concludes that repealing the radio/
television cross-ownership rule will not negatively impact the
Commission's localism goal. Again, the Commission believes that the
local television and local radio rules, as well as the newspaper/
broadcast cross-ownership rule, will sufficiently promote and protect
the Commission's localism goals. Radio and television broadcasters
would continue to have the same obligation to serve their local
communities in the absence of a radio/television cross-ownership
restriction. The Commission also recognizes that consumers primarily
rely on television and newspapers, and their affiliated Web sites, for
their local news. Moreover, audiences of traditional news sources have
moved toward new media, with both Internet and cable news sources
growing. The Commission recognizes that radio stations that air
nationally syndicated news or talk show programming contribute to the
overall amount of news and information within their local market. The
Commission notes that lifting the radio/television cross-ownership rule
will not impact the availability of non-commercial news radio stations.
The Commission seeks comment on these tentative conclusions.

[[Page 2888]]

127. In the media ownership studies, the Commission sought to
develop data to inform its analysis of whether the radio/television
cross-ownership rule promotes localism. In particular, both Media
Ownership Study 1 and Media Ownership Study 4 look at whether the level
of radio/television cross-ownership in a market is associated with the
amount of local television programming provided. Evidence from the
studies is mixed with respect to this question.
128. Media Ownership Study 1 examines how cross-ownership is
associated with localism, as measured by the amount of local news
provided in the market. The study finds that cross-ownership decreases
local television news hours but raises ratings, which leads to
ambiguous results. The Commission seeks comment on these findings and
their relevance to the Commission's analysis of whether the radio/
television cross-ownership rule is necessary to promote the
Commission's localism goal.
129. Media Ownership Study 4 finds that, at the station level,
radio/television cross-owned stations appear to air more local news on
average, though the impact is marginal. According to the study, for
every additional in-market radio station a parent owns, the television
station will air 3.7 more minutes of local news. The Commission seeks
comment on these study findings and how they should affect the
Commission's analysis. At the local market level, however, Media
Ownership Study 4 finds that increases in radio/television cross-
ownership correlate to decreases in the total amount of news minutes
provided in the market. As the study notes, however, due to economies
of scale, this negative correlation is partially mitigated as the
average number of broadcast outlets per cross-owned station group in
the market increases.
130. Diversity. The Commission tentatively concludes that the
radio/television cross-ownership rule is no longer necessary to promote
the Commission's goal of encouraging viewpoint diversity. The
Commission seeks comment on this tentative conclusion, as well as the
tentative conclusion that the proposed local television and radio rules
and the newspaper/broadcast cross-ownership rule will suffice to
protect and promote the Commission's diversity goal. The Commission
also seeks comment on alternatives to this tentative conclusion,
including whether or not it is necessary to retain the radio/television
cross-ownership rule for diversity purposes. The Commission seeks data
to support retention of the rule, including any data that the cross-
ownership rule is necessary to ensure diverse viewpoints in local
markets.
131. Overall, the media ownership studies provide little evidence
that cross-ownership, to the degree currently allowed under the radio/
television cross-ownership rule, has an effect on viewpoint diversity.
Media Ownership Study 8A analyzes the impact of radio/television cross-
ownership on viewpoint diversity available in local markets by
examining how consumers react to the content delivered to them. The
study utilizes variations in viewing patterns of local television news
programs as compared to local viewing patterns for national television
news programs to develop a measure of diversity of content on local
news programs, and relates changes in viewing patterns to changes in
local media cross-ownership. The study finds that, in general, radio/
television cross-ownership has a negligible effect on viewpoint
diversity. Media Ownership Study 8B examines the impact of media
ownership, including radio/television cross-ownership, on the amount of
programming provided in television news programs in three categories:
Politics, local programming, and issue diversity (diversity in coverage
of news topics). Overall, the study finds little evidence that market
structure influences diversity. Nonetheless, with respect to one of the
three types of diversity--issue diversity--the study finds that, for
the majority of topics for which cross-ownership is statistically
significant, increases in cross-ownership are associated with greater
diversity. The Commission seeks comment on the findings presented in
Media Ownership Study 8A and Media Ownership Study 8B. Specifically,
the Commission seeks comment on how these findings should inform its
analysis of whether the radio/television cross-ownership rule remains
necessary to promote viewpoint diversity.
132. While consumers continue to rely on television and newspapers,
and their affiliated Web sites, for their local news, they increasingly
turn to new media, both the Internet and cable, as news sources. The
recent Information Needs of Communities Report finds that the Internet
has created more diversity and choice in news and information, and that
most communities have seen a rise in the number and diversity of
outlets, as well as more diversity in commentary and analysis. The
Commission seeks comment on whether these sources contribute
significantly to the diversity of news sources available to consumers.
As the Third Circuit noted, the traditional media continue to be an
important news source. Nonetheless, Internet adoption rates continue to
grow, leading to changes in how consumers get their news. Because the
primary marketplace for news is shifting, the Commission seeks comment
on whether the shift in consumption of news supports elimination of the
rule. For instance, does the increase in the diversity of news outlets
provided by the Internet contribute enough to the marketplace of ideas
to ensure that viewpoint diversity would be adequately protected absent
this rule? The Commission also notes that the Commission previously has
rejected the argument that the use of common facilities by cross-owned
stations to gather news, traffic, and weather would be harmful to
diversity, because such cost-cutting measures allow the vital
information to be available to the public through a greater number of
outlets. The Commission seeks comment on how other changes in the media
marketplace affect diversity.
133. The Commission also seeks comment on how elimination of the
radio/television cross-ownership rule would affect minority and female
ownership opportunities. As noted, DCS asserts that significant entry
barriers continue to exist for minorities and women in both the
traditional and new media industries. Would elimination of the radio/
television cross-ownership rule have any effect on such barriers? DCS
also states that minority-owned stations are more likely to provide
programming geared towards minority audiences and that minority
communities are underserved as a result of the lack of minority media
ownership. Would elimination of the radio/television cross-ownership
rule have any effect on programming geared toward minority audiences?
134. Digital Transition. The Commission observes that, following
the digital transition for full-power television broadcasters in 2009,
the current radio/television cross-ownership rule became at least
partially obsolete. The rule relies on analog broadcast television
contours as one of its criteria. As broadcast television stations have
completed the transition to digital television service and ceased
broadcasting in analog, the analog contours are no longer relevant, and
comparable digital contours do not exist for all of the analog contours
previously employed in the media ownership rules. As discussed in the
NOI, while the Commission has found the digital noise limited service
contour to approximate the larger Grade B contour, the Commission has
not found an

[[Page 2889]]

equivalent for the smaller Grade A contour, which is used to trigger
the radio/television cross-ownership rule. If the Commission were to
apply the larger Grade B contour, the Commission could allow entities
to own more broadcast stations than was the case with the analog
contours. The Commission received no suggestions in filed comments
about how to address this problem. Although the Commission does not
base its decision to repeal the rule on the rule's use of analog
contours and the lack of digital equivalents, the difficulty of
creating a consistent rule in the digital age is a factor the
Commission has considered. The Commission seeks comment on how it could
overcome this difficulty to the extent commenters propose to maintain
restrictions on radio/television cross-ownership. In particular, if
commenters favor retaining a contour-based rule, the Commission seeks
comment on what contour to utilize and how the rule should be applied.
5. Dual Network Rule
a. Introduction
135. Historically, the Commission has concluded that the dual
network rule is necessary in the public interest to promote competition
and localism. In order to promote these goals, the current dual network
rule permits common ownership of multiple broadcast networks, but
prohibits a merger between or among the ``top four'' networks (ABC,
CBS, Fox, and NBC). The Commission concluded in the 2002 Biennial
Review Order that, given the level of vertical integration of each of
the top four networks, as well as their continued operation as a
``strategic group'' in the national advertising market, a top-four-
network merger would give rise to competitive concerns that the merged
firm would be able to reduce its program purchases and/or the price it
pays for programming. The Commission reasoned that these competitive
harms would reduce program output, choices, quality, and innovation to
the detriment of viewers. The Commission also concluded that allowing a
merger of any of the top four networks would harm localism by reducing
the ability of affiliates to bargain with their networks for favorable
terms of affiliation, diminishing affiliates' influence on network
programming, and thus harming the ability of the affiliates to serve
their communities. In the 2006 Quadrennial Review Order, the Commission
concluded that the dual network rule continued to be necessary in the
public interest to promote competition and localism. The U.S. Court of
Appeals for the Third Circuit upheld the Commission's decision to
retain the rule, finding that the Commission reasonably relied on
several unique features of the top four broadcast networks, such as
their vertical integration and their ability to reach a larger audience
than other networks. The Court also found that the Commission's
description of the media marketplace as ``dynamic'' and ``competitive''
was not inconsistent with its decision to retain the rule, in part, to
avoid the damage to competition that a merger of the top four networks
would cause.
136. The Commission notes that since its last review significant
changes have taken place in the television marketplace. In particular,
the number and popularity of non-broadcast sources for video
programming continue to grow. Nonetheless, the Commission tentatively
finds that the top four broadcast networks continue to possess
characteristics that distinguish them from other broadcast and cable
networks and therefore still serve a unique role in the electronic
media that justifies retaining a rule specific to them. As discussed in
more detail below, the top four broadcast networks, as compared to
other broadcast and cable networks, achieve substantially larger
primetime audiences, which can then be sold at a premium to advertisers
that want to reach large, nationwide audiences. Accordingly, the
Commission tentatively finds that a top-four network merger would
restrict the availability, price, and quality of primetime
entertainment programming to the detriment of consumers. The Commission
also tentatively finds that a top-four network merger would
substantially lessen competition for advertising dollars in the
national advertising market, which would reduce the incentives for the
networks to compete against each other for viewers by providing
innovative, high quality programming. For these reasons, the Commission
tentatively concludes that the dual network rule remains necessary in
the public interest to promote competition and should be retained
without modification. The Commission seeks comment on this tentative
conclusion. The Commission also seeks comment on whether allowing a
merger of any of the top four networks would harm localism by reducing
the bargaining power of affiliates, which would consequently lessen
their ability to influence network programming in ways that serve their
local communities. The Commission also seeks comment on whether
allowing a merger of any of the top four networks would promote
localism.
b. Background
137. In the NOI, the Commission sought comment on issues related to
the dual network rule, including whether the rule remains necessary to
protect competition in the program acquisition and national advertising
markets. In the current proceeding, very few parties have addressed
these issues. Several parties suggest that the dual network rule
remains important to promoting the Commission's policy goals. By
contrast, both CBS and Fox assert that, in light of changes in the
marketplace, the dual network rule is no longer justified and should be
eliminated. Specifically, CBS contends that the Commission has failed
to identify the distinguishing characteristics of the top four networks
that justify a rule specific to those networks, and that greater
audience share in comparison to other broadcast and cable networks does
not adequately explain why the top four networks should be specifically
singled out.
c. Discussion
138. Competition. Broadcast networks serve in multiple roles as an
intermediary between content creators, advertisers, and local broadcast
stations. As a result, the Commission tentatively finds that the top
four broadcasters participate, and can affect competition, in more than
one market. Specifically, the Commission considers the implications of
a top-four network merger for competition in the provision of primetime
entertainment programming and competition in the sale of national
advertising time.
139. Primetime network programming is generally designed to attract
a mass audience, and financing such programming, in turn, requires the
substantial revenue that only a mass audience can provide. The top four
broadcast networks supply their affiliated local stations with
primetime entertainment programming intended to attract mass audiences
and the advertisers that want to reach such large, nationwide
audiences. By contrast, other broadcast networks target more
specialized, niche audiences similar to many cable television networks.
The Commission recognizes that, in general, consumers substitute
between broadcast and cable networks, and that cable networks earn
substantial advertising revenues. Nevertheless, the Commission
tentatively finds that the primetime entertainment programming supplied
by the top four broadcast networks is a distinct product, the

[[Page 2890]]

provision of which could be restricted if two of the four major
networks were to merge.
140. First, the audience size for primetime entertainment
programming provided by each of the top four broadcast networks remains
unmatched by that of any other broadcast or cable network. The
primetime audience for all cable networks taken together is greater
than that of the broadcast networks and that the gap in size between
broadcast and cable network audiences has been narrowing over time.
Nonetheless, the average audience size for each of the top four
broadcast networks remains significantly larger than the audience size
for even the most popular cable networks. For example, over an 11-month
period in 2009-2010, the average primetime audience across the four
broadcast networks was 8.61 million. During the same period, the
highest rated cable networks were USA Network, Nickelodeon, Disney
Channel, and ESPN. Their average primetime audience was approximately
2.79 million. Thus, the average broadcast network audience was more
than three times larger than the average audience for the highest rated
cable networks. Additionally, during the same period, the fifth highest
rated broadcast network was Univision, which provides Spanish-language
programming, and which had an average primetime audience of 3.62
million. The next highest rated English-language broadcast network was
the CW, which ranked sixth overall, with an average primetime audience
of 1.78 million. Thus, the average primetime audience for the top four
broadcast networks was more than twice as large as that of the fifth
highest rated broadcast network, and nearly five times larger than that
of the next highest rated English-language broadcast network.
141. Similarly, among individual primetime entertainment programs,
the audiences for the top four broadcast networks remain substantially
larger than those for other broadcast and cable networks. With the
exception of certain individual sports events, cable network programs
do not regularly rank among the highest rated television programs. For
instance, during the first three months of 2011, the highest rated
single episode of a non-sports primetime program on a cable network was
an episode of Jersey Shore, which achieved an audience of 8.87 million
when it appeared on MTV during the week of January 17-23, 2011. Despite
this sizable audience, for the week, a total of 21 non-sports programs
that aired on top-four broadcast networks achieved larger audiences.
Primetime programs on broadcast networks outside the top four likewise
generally achieve smaller audiences than primetime programs carried on
the top four networks. For instance, for the 2009-2010 television
season, no program from any non-top-four broadcast network ranked among
the 100 highest rated broadcast programs.
142. Another indicator of the distinctiveness of the top four
broadcast networks is the wide disparity in advertising prices between
the top four broadcast networks and cable networks. Some advertisers
are willing to pay a premium per viewer for programs that attract
larger audiences. As the Information Needs of Communities Report notes,
despite a fragmented audience, broadcast television networks still
retain some clout, relative to most cable networks, as an effective way
for advertisers to reach large audiences. As evidence of this, the top
four broadcast networks generally earn higher advertising rates than
cable networks. In 2009, among the top four broadcast networks, CBS had
the lowest average advertising rate, as measured in cost per thousand
views (referred to as cost per mille or CPM), but its CPM was still 38
percent higher than the highest CPM among non-sports cable networks
(MTV) and 178 percent higher than the CPM for the highest rated cable
network (USA). The appeal of the top four broadcast networks to
advertisers seeking large, national audiences is also reflected in data
on net advertising revenues. The top-four broadcast network with the
lowest net advertising revenue in 2009 was Fox, but it still received
more than three times that of any non-top four broadcast network. It
also received double that of the highest rated non-sports cable network
(USA).
143. The Commission disagrees with the assertion by CBS that
greater audience share in comparison to other broadcast and cable
networks does not justify a rule specific to the top four networks. The
Commission finds that the top four broadcast networks have a
distinctive ability to attract larger primetime audiences regularly
relative to other broadcast and cable networks, which enables them to
earn higher rates from advertisers that are willing to pay a premium
for such audiences. Thus, a combination between top-four broadcast
networks would reduce the choices available to advertisers seeking
large, national audiences, which could substantially lessen competition
and lead the networks to pay less attention to viewer demand for
innovative, high quality programming. The Commission therefore
tentatively concludes that primetime network entertainment programming
and national television advertising are each distinctive products, the
availability, price, and quality of which could be restricted, to the
detriment of consumers, if two of the top four networks were to merge.
Accordingly, the Commission tentatively concludes that the dual network
rule remains necessary to foster competition in the provision of
primetime entertainment programming and the sale of national
advertising time. The Commission seeks comment on these tentative
conclusions. In particular, the Commission seeks comment on whether the
top four networks face competition from any other sources that are also
capable of delivering a large, national audience to advertisers, such
that they provide a reasonable substitute for the top four networks in
the national advertising market. The Commission also seeks comment as
to whether the dual network rule is necessary to promote and protect
competition in the primetime network entertainment programming and
national television advertising markets, or if antitrust laws and the
Commission's public interest standard are sufficient for reviewing any
possible merger between the four networks.
144. The Commission also seeks comment on whether a merger between
top-four broadcast networks would give rise to any other potential
competitive concerns. For instance, the Commission seeks comment on
whether, as the Commission has previously determined, the level of
vertical integration of each of the top four networks is such that a
top-four-network merger would give rise to competitive concerns that
the merged firm would be able to reduce its program purchases and/or
the price it pays for programming. In addition, the Commission seeks
comment on the role that the top four broadcast networks play in the
provision of national news content. As the Information Needs of
Communities Report notes, despite their declining audiences, the three
broadcast network evening newscasts (ABC, CBS, and NBC) still draw 22
million viewers--five times the number tuning in to the three major
cable news networks (CNN, FOX, and MSNBC) during primetime. The
Commission seeks comment on whether a merger among the top four
broadcast networks would significantly restrict the availability of
diverse sources of national television news. The Commission also seeks
comment on whether other sources of news--including cable television,
newspapers, and the Internet--are sufficient to ensure a diverse and
competitive market

[[Page 2891]]

for national news, or whether the dual network rule remains necessary
to protect against excessive concentration in this market. The
Commission also seeks comment as to whether the dual network rule is
necessary to promote and protect competition in a national news market
and purchasing or pricing of such programming, or if antitrust laws and
the Commission's public interest standard are sufficient for reviewing
any possible merger between the four networks.
145. Localism. The Commission seeks comment on the continued
validity of the Commission's previous finding that the dual network
rule is necessary to foster localism. In particular, the Commission
seeks comment on potential ways in which a merger among the top four
broadcast networks would impair the ability of their affiliates to
serve the interests of their local communities. Specifically, does the
rule remain necessary to preserve the balance of bargaining power
between the top-four networks and their affiliates? Would a top-four
network merger reduce the ability of a TV station, in bargaining with
its affiliated network, to use the availability of other top
independently owned networks as a bargaining tool? Furthermore, would
the availability of fewer alternatives give an affiliate less influence
on network programming decisions? For instance, would it reduce the
ability of an affiliate to engage in a dialogue with a network over the
suitability for local audiences of either the content or scheduling of
network programming? The Commission also seeks comment as to whether
the dual network rule is necessary to ensure options and preserve the
bargaining power and independence of affiliates, or if antitrust laws,
the Commission's public interest standard, and other Commission rules
are sufficient for reviewing any possible merger between the four
networks. In addition, the Commission seeks comment on whether the
growth of alternate sources for local content should have any impact on
the Commission's decision whether the dual network rule remains
necessary to promote localism.

D. Diversity Order Remand/Eligible Entity Definition

146. The Commission seeks comment in this Notice of Proposed
Rulemaking on issues that previously were being addressed in a separate
rulemaking proceeding focused on enhancing the diversity of ownership
in the broadcast industry, including by increasing ownership
opportunities for minorities and women (the Diversity proceeding). As
explained below, the Third Circuit in Prometheus II remanded the
measures adopted in the Commission's 2008 Diversity Order that relied
on a revenue-based ``eligible entity'' standard and emphasized that the
actions required on remand from the Diversity Order should be completed
``within the course of the Commission's 2010 Quadrennial Review of its
media ownership rules.'' Accordingly, the Commission seeks comment in
this proceeding on how the Commission should respond to the court's
remand and on other actions the Commission should consider to increase
the level of broadcast station ownership by minorities and women.
147. Current Diversity Initiatives. The Commission believes that
promoting diversity of ownership among broadcast licensees and
expanding opportunities for minorities and women to participate in the
broadcast industry are important parts of the Commission's mission
under the Communications Act. The Commission currently has a number of
rules and initiatives in place that are designed to advance these
objectives. For example, although the Third Circuit remanded the
provisions adopted in the Diversity Order that relied on the eligible
entity definition, it expressly upheld a number of other actions the
Commission has taken to promote diversity of ownership. These actions
include, among others, a ban on discrimination in broadcast
transactions, a ``zero tolerance'' policy for ownership fraud, and a
requirement that non-discrimination provisions be included in
advertising sales contracts. Similarly, the Prometheus II opinion did
not question the Commission's decision to reinstate the failed station
solicitation rule (FSSR), which is intended to provide out-of-market
buyers, including minorities and women, with notice of a sale and an
opportunity to bid on stations. Accordingly, these measures remain in
place.
148. Over the past several years, the Commission also has
implemented recommendations from the Advisory Committee on Diversity
for Communications in the Digital Age (Advisory Committee) designed to
enhance opportunities for minorities, women, and other underrepresented
groups to participate in the broadcast industry. For example, based on
a recommendation from the Advisory Committee, the Commission's Office
of Communications Business Opportunities (OCBO) hosts annual
capitalization strategies workshops in order to facilitate lending to
and investment in minority- and women-owned entities. Most recently,
OCBO convened a Capitalization Strategies Workshop that focused on
capital acquisition for small, women- and minority-owned businesses in
broadcasting, telecommunications, and related fields. In addition, as
explained further below, the Commission currently is considering a
recommendation from the Advisory Committee to afford bidding credits in
license auctions to persons or entities that have overcome substantial
disadvantage. The Commission seeks input in this Notice of Proposed
Rulemaking on how the Commission most effectively can expand upon its
diversity initiatives at the same time that the Commission addresses
the Third Circuit's concerns and other legal considerations, including
potential impediments to affording licensing preferences to minorities
and women under current standards of constitutional law.
149. Eligible Entity Standard and Prometheus II Remand. Aside from
implementing the initiatives noted above, the Commission also has
sought to promote diversity through the measures adopted in the
Diversity Order that incorporated the eligible entity definition. As
discussed below, the Third Circuit in Prometheus II vacated and
remanded each of these measures. Accordingly, the Commission seeks
comment on how the Commission should respond to the court's criticisms
of the Commission's previous eligibility standard, how the Commission
should proceed with respect to the measures that previously relied on
that standard, and any other actions the Commission should consider to
advance its diversity objectives.
150. As defined in the Diversity Order, an ``eligible entity'' is
any entity that qualifies as a small business under revenue-based
standards that have been established by the Small Business
Administration (SBA). In adopting measures based on this definition,
the Commission concluded that it would ``be effective in creating new
opportunities for broadcast ownership by a variety of small businesses
and new entrants, including minorities and women.'' The Commission also
noted that adopting this ``race- and gender-neutral definition'' would
avoid the ``constitutional difficulties'' associated with a race-
conscious definition ``that might create impediments to the timely
implementation'' of the measures adopted in the Diversity Order. In
response to commenters' requests that the Commission take direct action
to increase minority and female ownership of broadcast stations,
however, the Commission asked for comment in the Third Further Notice
of Proposed

[[Page 2892]]

Rulemaking to the Diversity Order (73 FR 28400, May 16, 2008, FCC 07-
217, rel. Mar. 5, 2008) (the Diversity Third FNPRM) on whether it
should adopt an alternative, race-conscious eligibility definition as
well as other potential definitions. The alternative definitions
proposed in the Diversity Third FNPRM are discussed below.
151. In Prometheus II, the Third Circuit held that the Commission's
revenue-based eligible entity definition was arbitrary and capricious.
While noting that other actions in the Diversity Order ``take a strong
stance against discrimination and are no doubt positive,'' the court
found that the Commission failed to show that measures based on the
eligible entity definition ``will enhance significantly minority and
female ownership, which was a stated goal of'' the rulemaking
proceeding in question. The court further observed that, in discussing
its decision to adopt this definition, the Commission had referred
``only to `small businesses,' and occasionally `new entrants,' as
expected beneficiaries.'' In addition, the court expressed doubt that
the Commission would be able to provide an adequate explanation on
remand of how ``measures using this definition would achieve the stated
goal'' of increasing broadcast ownership by minorities and women. In
particular, the court pointed to data cited by the Commission showing
that ``minorities comprise 8.5 percent of commercial radio station
owners that qualify as small businesses, but 7.78 percent of commercial
radio stations as a whole -- a difference of less than 1 percent.'' The
court also noted that, in adopting the eligible entity standard,
``[t]he Commission referenced no data on television ownership by
minorities or women and no data regarding commercial radio ownership by
women.''
152. Finding that the Commission had not provided a ``sufficiently
reasoned basis for deferring consideration'' of the alternative
definitions proposed in the Diversity Third FNPRM, the court
specifically directed it to consider those proposals within the course
of the 2010 Quadrennial Review. The Third Circuit also admonished that
the Commission could not further delay its consideration of its prior
proposals simply because of the constitutional difficulties they may
present. To the extent that the Commission ``requires more and better
data'' in order to complete its analysis, the court directed the
Commission to ``get [such] data and conduct up-to-date studies.''
153. Data Collection Concerning Minority and Female Ownership.
Since the adoption of the Diversity Order, the Commission actively has
sought to improve the broadcast ownership information available to it
and has gathered additional data regarding the current levels of
minority ownership of broadcast stations. In 2009, the Commission
implemented a number of changes to its Form 323 ownership reports to
further its goal that the data reported in the form, including data
regarding minority and female broadcast ownership, are reliable,
accurate, searchable, and aggregable. In addition, the Commission set a
new uniform biennial filing deadline for the Form 323 and expanded the
class of entities required to file the form. The Commission requires
all full power commercial broadcast stations and all low power
television stations, including Class A stations, to file the new form
biennially. It also eliminated the exemption from the biennial
reporting requirement that formerly applied to sole proprietorships and
partnerships of natural persons that are commercial broadcast
licensees. In addition, all attributable interest holders must now
obtain unique FCC registration numbers for purposes of filing the form
in order to facilitate cross-referencing of reported ownership
interests.
154. The Commission's first data collection that incorporates these
changes reflects ownership interests as of November 1, 2009. The
deadline for filing the data with the Commission was July 8, 2010, and
on February 28, 2011 the Commission released to the public a data set
compiling all of the ownership reports that were filed. That release
included descriptions of the data and instructions on accessing them to
permit interested parties to analyze and manipulate the data. This data
set represents the first ``snapshot'' of broadcast ownership data in a
series of planned biennial reviews that collectively should provide a
reliable basis for analyzing ownership trends in the industry,
including ownership by minorities and women.
155. Commission staff has reviewed the 2009 biennial ownership
filings of full power commercial broadcast television stations in order
to determine the number of stations controlled by reported racial and
ethnic categories. For purposes of this analysis, the Commission
examined the race or ethnicity of owners with attributable voting
interests in the entity that ultimately owns the station license and
defined a controlling interest as an interest that exceeds 50 percent
alone or in the aggregate. There were 1,394 full-power commercial
television stations in the United States as of November 1, 2009, the
information collection date. According to the Commission's review of
the 2009 data, 29 of these stations, or 2.1 percent, are minority
owned. Of those 29 stations, 9 have Black or African-American owners,
accounting for 0.6 percent of all stations. American Indian or Alaska
Native owners control 10 stations, or 0.7 percent, while Asian owners
control nine stations, or 0.6 percent. Native Hawaiian or Pacific
Islanders own one station, or 0.1 percent. Hispanic or Latino owners
control 36 stations, or 2.6 percent. By comparison, the Commission's
review showed that non-Hispanic White owners control 1,021 stations, or
73.2 percent of the total stations. In addition, the Commission was not
able to categorize the race or ethnicity of the ownership for 244
stations, representing 17.5 percent of the total stations, because at
least 50 percent of the ownership of these stations was not reportable
via the Form 323. Information was unavailable for 64 stations, or 4.6
percent.
156. Several of the Media Ownership Studies provide additional
analysis of these subjects. These and other studies are discussed more
fully in Section V herein. Media Ownership Study 7 considers the
relationship between ownership structure and the provision of radio
programming targeted to African-American and Hispanic audiences. The
study finds that Black and Hispanic listeners have very different
listening preferences from the White population. The study also finds
that although most minority-targeted stations are not minority-owned,
most minority-owned stations target minority listeners, and the
presence of minority-owned stations in a market appears to raise the
amount of minority-targeted programming. Media Ownership Study 2
concludes that consumers value diversity of opinion and community news
to varying degrees that generally increase with age, education, and
income. The study also examined the value listeners place on
multiculturalism, however, which was found to decrease with age. The
study further concludes that White male consumers generally do not
value multiculturalism.
157. The Commission recognizes that the data currently in the
record of this proceeding are not complete and are likely insufficient
either to address the concerns raised in Prometheus II or to support
race- or gender-based actions by the Commission. Although the
Commission would prefer to be able to propose specific actions in
response to the Third Circuit's remand of the measures relying on the
eligible entity

[[Page 2893]]

definition in this Notice of Proposed Rulemaking, the Commission
believes that making legally sound proposals would not be possible
based on the record before us at this time. Accordingly, the Commission
plans to undertake the following actions in preparation for the 2014
broadcast ownership review to establish with the requisite foundation
and clarity what additional policies can be implemented promoting
greater broadcast ownership diversity, including female and minority
ownership: (1) Continue to improve the Commission's data collection so
that the Commission and the public may more easily identify the diverse
range of broadcast owners, including women and minorities, in all
services the Commission licenses; (2) Commission appropriately-tailored
research and analysis on diversity of ownership; and (3) Conduct
workshops on the opportunities and challenges facing diverse
populations in broadcast ownership. In addition, the Commission asks
interested parties to supplement the record and provide any and all
data available that can complete a picture of the current state of
ownership diversity, including minority and female ownership in the
broadcast industry and to justify any prospective actions the
Commission may take on remand.
158. Options for Reconsideration of the Eligible Entity Standard.
The Commission seeks comment herein on a number of actions it could
take with respect to the remanded eligible entity definition. With
respect to these proposals and any others that may be suggested, the
Commission emphasizes that interested parties should squarely address
the potential legal impediments to any specific approach. The
Commission asks commenters to explain the constitutional law analysis
that would apply to, as well as the potential constitutional problems
with, any proposals for a new eligibility definition. Commenters should
explain in detail, based on relevant case law, whether and how the
Commission could overcome the application of strict or intermediate
constitutional scrutiny to any race- or gender-based standard.
Commenters also should explain whether and how proposals can be
supported by data and whether they can be applied in a consistent and
rational manner.
159. As an initial matter, the Commission invites comment regarding
the possibility of reinstating the preexisting eligible entity
definition. Recognizing the Third Circuit's apparent skepticism that
the Commission would be able to demonstrate on remand that the revenue-
based eligibility definition serves the Commission's goal of increasing
broadcast ownership by minorities and women, the Commission asks
commenters to address whether or not there is additional evidence
available that would show a stronger connection between according
licenses preferences to small businesses and promoting this goal. Is
there evidence demonstrating that there are now more small businesses,
particularly those that are owned by minorities or women, that own
broadcast outlets than there were when the eligible entity standard was
put in place? The Commission strongly encourages parties to supply any
such information to the Commission. The Commission also notes the Third
Circuit's statement that ``it is hard to understand how measures using
[the eligible entity] definition would achieve the stated goal'' of
increasing broadcast ownership by minorities and women in light of
Commission data showing that ``minorities comprise 8.5% of commercial
radio station owners that qualify as small businesses, but 7.78% of the
commercial radio industry as a whole. * * *'' The Commission seeks
comment on whether this comparison of minority representation in
different segments of the radio industry accurately reflects the
potential impact of the eligible entity standard on minority and female
ownership. In addition, the Commission invites input on whether it is
possible that the preexisting definition would have a more substantial
impact on minority and female station ownership if the Commission
modifies the licensing preferences to which the definition applies. As
discussed in more detail below, the Commission invites commenters to
propose changes to these preferences and to explain how such changes
would promote the Commission's minority and female ownership
objectives.
160. Alternatively, should the Commission consider reinstating the
eligible entity definition to support other policy objectives aside
from the promotion of minority and female station ownership? For
example, should increasing station ownership by small businesses be
considered an independent policy goal in this proceeding and, if so,
would readopting the preexisting eligibility definition be a reasonable
and effective means of promoting this objective? Several provisions of
the Communications Act require the Commission to promote the interests
of small businesses. See, e.g., 47 U.S.C. 309(j)(3)(B) (obligating the
Commission to ``disseminat[e] licenses among a wide variety of
applicants, including small businesses'' in authorizing the Commission
to award licenses via competitive bidding); see also 47 U.S.C. 257(a)
(directing the Commission to identify and eliminate ``market entry
barriers for entrepreneurs and other small businesses in the provision
and ownership of telecommunications services and information services *
* *''); 47 U.S.C. 614(a)(i) (establishing a ``Telecommunications
Development Fund'' to, among other purposes, ``promote access to
capital for small businesses in order to enhance competition in the
telecommunications industry''). The Commission also asks commenters to
consider whether creating opportunities for small businesses to
participate in the broadcast industry via the eligible entity standard
would serve the Commission's traditional goals of fostering viewpoint
diversity, localism, and competition. In the Diversity Order, the
Commission suggested that the use of the eligible entity standard would
``result in a wider array of programming services, including some that
are responsive to local needs and interests and audiences that are
underserved.'' In this regard, the Commission ``anticipate[d] that
small businesses will be more likely than large corporations to have
ties to the communities that they serve, and thus be more attuned to
local needs and interests.'' The Commission seeks comment on this
prediction and on other ways in which the continued use of the eligible
entity definition could serve the Commission's traditional policy
objectives.
161. The Commission also seeks comment on whether there are other
race- and gender-neutral standards for defining eligible entities that
the Commission should consider for the measures adopted in the
Diversity Order and any others the Commission may implement in the
future. Given the Third Circuit's conclusion that the Commission failed
to demonstrate a connection between the previous revenue-based
definition and the Commission's stated diversity goals, commenters
should supply specific evidence demonstrating why a proposed definition
is likely to serve the Commission's policy objectives, especially the
Commission's goal of increasing station ownership by minorities and
women. In addition, the Commission asks commenters to discuss any
potential legal problems as well as any administrative issues
associated with their proposals.
162. In the Diversity Third FNPRM, the Commission sought comment on

[[Page 2894]]

replacing the eligible entity standard with a standard based on the
SBA's definition of socially and economically disadvantaged businesses
(SDBs) used for purposes of its Business Development Program. African
Americans, Hispanic Americans, Asian Pacific Americans, Subcontinent
Pacific Americans, and Native Americans are presumed to qualify for the
Business Development Program, and other individuals may qualify for the
program if they can show by a preponderance of the evidence that they
are disadvantaged. The Commission again seeks comment on this proposal
in this proceeding. In addition, the Commission seeks comment on
whether there is an alternative race-conscious and/or gender-specific
standard that the Commission should adopt.
163. To be lawful, race-based and gender-based governmental action
must satisfy the Equal Protection Clause of the Fourteenth Amendment to
the United States Constitution. The Supreme Court has established that
race-based classifications are subject to strict scrutiny and may be
upheld ``only if they are narrowly tailored measures that further
compelling governmental interests.'' Gender classifications are subject
to intermediate scrutiny, under which the government's actions must be
substantially related to the achievement of an important objective.
Commenters advocating a race-conscious classification, therefore,
should explain, based on relevant judicial precedent and empirical
data, how such a classification would satisfy the strictest level of
constitutional scrutiny. To justify the adoption of a race-conscious
standard, would it be possible for the Commission to demonstrate a
compelling interest in fostering viewpoint diversity, redressing past
discrimination, or some other interest? If the Commission could
establish such an interest, how could the Commission demonstrate that a
race-based standard would be a narrowly tailored means of achieving
this interest? Similarly, could the Commission meet the relevant
constitutional standards for a gender-specific standard? Commenters
also should explain what data the Commission would need in order to
adequately support a race- and/or gender-based definition. Commenters
should provide relevant data and are encouraged to submit peer-reviewed
studies.
164. The Commission also sought comment in the Diversity Third
FNPRM on an ``individualized full-file review'' approach to awarding
the preferences adopted in the Diversity Order. Under this proposal,
applicants would be accorded licensing preferences if they could
demonstrate that they have overcome ``significant social and economic
disadvantages.'' After the release of the Diversity Third FNPRM, the
Media and Wireless Bureaus sought comment on a proposal made by the
Advisory Committee to award bidding credits in licensing auctions to
applicants that demonstrate that they have overcome a ``substantial
disadvantage.'' The Commission seeks comment on the use of this type of
standard for purposes of the licensing preferences adopted in the
Diversity Order. Would these standards, both of which are based on
individualized reviews to determine whether applicants have overcome
considerable disadvantages, be subject to strict judicial scrutiny and
would they be able to survive this level of constitutional analysis?
Alternatively, would it be feasible for the Commission to conduct such
reviews in a race- and gender-neutral manner that would be subject to a
lower level of constitutional scrutiny? If so, would the Commission be
able to satisfy the Third Circuit's concern that the use of a race- and
gender-neutral approach may not materially advance the Commission's
minority and female ownership goals? In addition, the Commission asks
commenters to consider how the Commission could ensure that the highly
individualized reviews of broadcast applications that would be required
under a substantial disadvantage standard could be administered in a
sufficiently objective and consistent manner as well as in accordance
with First Amendment values. The Commission also would like interested
parties to comment on the Commission resources that would be required
to conduct, as a matter of course, highly fact-specific reviews of this
nature. What data would the Commission need to support the adoption of
this type of standard? The Commission seeks comment as to the
practicability of implementing such a standard and what information
would be required by the Commission to determine potential eligibility.
What privacy concerns, if any, are raised by collecting such
information? Would the Commission have statutory authority to adopt it?
To the extent that additional data are needed, commenters are
encouraged to provide such information.
165. In addition, the Commission seeks comment on any other
approaches it should consider. Commenters advocating alternative
proposals should explain how the proposal would satisfy the applicable
level of constitutional scrutiny, how it would advance the Commission's
policy goals, how the Commission could address any administrative
burdens or practical considerations inherent in the proposed approach,
and what data the Commission would need in order to justify it. Again,
commenters are strongly encouraged to supply any relevant data to the
Commission.
166. Finally, the Commission asks commenters to consider whether
the Commission should decline to adopt any new eligibility standard
specifically aimed at increasing minority and female station ownership
in light of the record in front of the Commission in this proceeding.
In particular, the Commission asks parties to consider, on the one
hand, the Third Circuit's dissatisfaction with the Commission's prior
race- and gender-neutral approach. On the other hand, the Commission
asks parties to consider the high constitutional hurdles the Commission
would face if it were to adopt an expressly race- or gender-based
standard on remand and the data that would be necessary to justify such
a standard prior to the completion of the 2010 Quadrennial Review.
While the Commission continues to believe that promoting minority and
female ownership is an important goal, the Commission also recognizes
that implementing a program expressly aimed at this goal in the context
of this proceeding would require the support of a substantial
evidentiary record that the Commission has not yet been able to amass.
Accordingly, the Commission seeks comment on how the Commission most
effectively could continue to pursue its longstanding goals of
promoting diversity among broadcast licensees, and especially of
fostering broadcast ownership by minorities and women, in the event
that the Commission determines that it is unable to support a new
eligibility standard in this proceeding.
167. Measures Relying on Eligible Entity Standard. In addition to
seeking comment on the eligible entity definition, the Commission also
seeks comment on how the Commission should proceed with respect to the
licensing preferences that previously relied on this definition, each
of which was remanded in Prometheus II. As numbered in the Diversity
Order, these measures include: (1) Revision of Rules Regarding
Construction Permit Deadlines; (2) Modification of Attribution Rule;
(3) Distress Sale Policy; (4) Duopoly Priority for Companies that
Finance or Incubate an Eligible Entity; (5) Extension of Divestiture
Deadline in Certain Mergers;

[[Page 2895]]

and (6) Transfer of Grandfathered Radio Station Combinations to Non-
Eligible Entities. The Commission seeks comment on whether or not the
Commission, either in this proceeding or a separate rulemaking, should
attempt to reinstate any of these measures. In particular, if the
Commission decides to readopt the preexisting eligible entity
definition on remand, should it also reinstate each of the measures
that rely on this definition? Alternatively, if the Commission adopts a
new standard to replace or supplement the eligible entity definition,
should the Commission apply that revised standard to each of the above-
listed measures, but otherwise reinstate them in their current form?
Are there reasons why the Commission should either decline to readopt
any of these measures on remand or make any changes to them if the
Commission implements a new eligibility standard? The Commission also
seeks comment on whether reinstating these measures, either in their
current form or with proposed changes, would be an effective means of
advancing the Commission's policy goals and whether such action would
be consistent with applicable constitutional law standards. The
Commission further invites comment on whether the Commission would need
additional data in order to justify the readoption of any of these
measures and, if so, the Commission requests that such data be
submitted. By contrast, if the Commission decides that it is not
feasible to replace the eligible entity definition and therefore
declines to adopt any new definition on remand, then, absent further
action by the Commission, each of the measures vacated by the court
would remain void. Accordingly, these measures would be rescinded by
the Commission.
168. The Commission also sought comment on a number of additional
measures intended to promote diversity among broadcast licensees in the
Diversity Third FNPRM. Several of these proposals rely on the now
vacated eligible entity definition or another proposed eligibility
standard. As set forth in the Diversity Third FNPRM, these proposals
include: (1) Share-Time Proposals; (2) Retention of AM Expanded Band
Owners' Station if One Station Is Sold to an Eligible Entity; (3)
Structural Waivers for Creating Incubator Programs; and (4) Proposals
of the National Association of Black Owned Broadcasters and the
Rainbow/PUSH Coalition. A number of parties filed comments on these
proposals in response to the Diversity Third FNPRM. With regard to the
third proposal, MMTC recently has urged the Commission to take action
on a similar Minority Ownership Incubation Proposal. Specifically, MMTC
has proposed an incubation program pursuant to which the local radio
ownership rule would be waived for radio broadcasters that engage in
one of six ``Qualifying Activities,'' including (1) selling or donating
a commercial radio station to a qualified entity; (2) entering into a
local marketing agreement with an independent programmer for a five
year period for the use of an FM HD-2 or HD-3 channel; (3) financing
one year of operations and providing in-kind technical and engineering
assistance or equipment that enables an eligible entity to reactivate
and restore to full service a dark commercial or noncommercial
broadcast station; (4) donating a commercial or noncommercial station
to an Historically Black College or University, an Hispanic Serving
Institution, an Asian American Serving Institution, or a Native
American Serving Institution; (5) ``providing loans, loan guarantees,
lines of credit, equity investments or other direct financial
assistance to a qualified entity to cover more than 50 [percent] of the
purchase price of a radio station''; or (6) engaging in another action
that is ``likely to enhance radio station ownership opportunities for
qualified entities.'' Under MMTC's proposal, the Qualifying Activity
must occur in either the same market as or a larger market than the
market for which the waiver is requested. Radio broadcasters that
engage in Qualifying Activities would be eligible to receive an
unlimited number of waivers of the AM and FM subcaps and a specified
number of waivers of the local radio ownership caps based on market
size. In light of the Third Circuit's remand, the Commission again
seeks comment on the proposals in the Diversity Third FNPRM, as well as
those that have been suggested more recently, in this proceeding. In
particular, the Commission asks for input on how the court's remand of
the provisions relying on the eligible entity definition should impact
the Commission's consideration of each of these proposals. The
Commission also seeks comment on whether the adoption of these measures
would advance the Commission's policy objectives and on the legal
implications of implementing these proposals. Further, the Commission
invites parties to comment on whether the Commission would need
additional data in order to justify any of these measures and encourage
parties to provide any data that may be helpful to the Commission's
analysis.
169. Additional Measures To Further the Commission's Diversity of
Ownership Goals. The Commission also seeks comment on any other
measures it should consider that would advance the Commission's
longstanding goal of having a wide diversity of broadcast licensees
and, more specifically, of increasing the number of minority- and
women-owned broadcast stations. In addition to the measures noted
above, the Diversity Third FNPRM sought comment on several other
proposals designed to increase participation in the broadcast industry
by new entrants and small businesses, including minority- and women-
owned businesses. These proposals include: (1) Opening FM Spectrum for
New Entrants; (2) Must-Carry for New Class A Television Stations; and
(3) Reallocation of TV Channels 5 and 6 for FM service. The Commission
seeks to refresh the record on these proposals in this proceeding. The
Commission also asks commenters to suggest any additional actions the
Commission should consider to advance its important diversity
objectives. For example, MMTC has suggested that the Commission seek to
reinstate and expand its previous Tax Certificate Policy by
coordinating with the White House on draft legislation. The Commission
asks commenters specifically to explain how their proposals would serve
the Commission's goals and whether they would satisfy relevant
constitutional law standards.

E. Media Ownership Studies

170. To provide data on the impact of market structure on the
Commission's policy goals of competition, localism and diversity, the
Commission has commissioned eleven Media Ownership Studies, which are
listed in Appendix A and have now been completed. The economic studies
were completed and subject to formal peer review during the period
January to July 2011. The studies, peer reviews, and author comments on
the peer reviews are available on the Commission's media ownership Web
site at http://www.fcc.gov/encyclopedia/2010-media-ownership-studies.
The Commission invites interested parties to submit any comments on the
studies on the same comment dates indicated on the first page of this
document.
171. As discussed below, each of these studies defines a relevant
performance metric with respect to one or more of the three policy
goals and examines how results vary across markets with differing
ownership

[[Page 2896]]

structures. Generally, the research was designed to relate relevant
performance metrics directly to changes in ownership of broadcast
facilities in local markets, the attribute of the market that the
Commission's rules directly affect. In some cases the studies found
useful and important correlations. In other cases variations were found
across markets but with little correlation to local market ownership
structure. The Commission seeks comment on how to interpret and apply
these results. Are there other statistical studies available that the
Commission should consider that relate relevant performance metrics to
market structure using statistical analysis of a reasonably large
sample of markets? Are there individual market case studies available
that are relevant and, if so, what role should they have in the
Commission's deliberations?
1. Studies Relating to Competition
172. With standard private goods, a study of competitive
performance would normally begin with an examination of the
relationship between price and marginal cost. Broadcast television and
radio programming do not have end user prices, so this approach cannot
be implemented here. This leaves two other options. First, the
Commission can examine television viewing and radio listening on the
assumption that, other things being equal, higher viewing and listening
levels in a market are associated with higher consumer satisfaction
(the Commission values competition because it provides high levels of
consumer satisfaction). Second, the Commission can survey consumers
about their valuation of the media environment. Competition can benefit
consumers not only by delivering a valued mix of programming at a point
in time, but also by promoting innovation. The Commission's slate of
studies included both approaches to the direct assessment of consumer
satisfaction and also examines one manifestation of innovation. The
Commission tentatively concludes that these metrics are appropriate to
analyze competition and seek comment on that conclusion, as well as the
structure and conclusions of the studies described below.
173. Media Ownership Study 1 examines television audience ratings
during parts of the day when programming is locally selected (in
particular, dayparts other than prime time, because most prime time
programming is network selected). The study found no significant
relationship between variations in viewing and variations in market
structure across markets. The Commission seeks comment on the use of
these metrics to measure competition, as well as the results of Media
Ownership Study 1.
174. Media Ownership Studies 5 and 7 each provide some analysis of
variations across markets in radio listening. Media Ownership Study 5
examines listening to news radio stations. It finds no significant
correlation between market structure and listening, although it does
find that the addition of a public news station has a significant
impact on news listening. In many if not most markets, there is not
more than one public news station, so the results are plausibly
understood as suggesting that adding the first public news station in a
market has a significant effect. It is not clear that adding additional
public news stations would have the same effect. The Commission seeks
comment on the structure and conclusions of Media Ownership Study 5,
including how the Commission should consider the impact of public news
stations on competition given the results of the study.
175. Media Ownership Study 7 focuses on the provision of radio
programming to minority audiences. It first documents the significant
differences in listening patterns across the Black and White and across
the Hispanic and non-Hispanic demographic groups. The study also
examines the impact of market structure on listening with inconclusive
results. The Commission seeks comment on the design of Media Ownership
Study 7, as well as its results with respect to radio listening, and
what, if anything, those results can contribute to the Commission's
analysis.
176. Media Ownership Study 2 utilizes survey data as a basis for
estimating consumers' willingness to pay for (i.e., valuation of)
various characteristics of their media environment (diversity of
opinion, community news, multiculturalism, and advertising). The
portion of the Media Ownership Study 2 analysis most directly related
to competition is the study of advertising and consumers' revealed
willingness to pay for reductions in it. Some past research has
interpreted the amount of advertising as a kind of ``price'' that
consumers must pay to receive television programming. The market
structure analysis in Media Ownership Study 2 focuses on the number of
television voices in the market, and the results appear to show that an
increase raises the amount of advertising. The Commission seeks comment
on whether the characteristics used in Media Ownership Study 2 to
measure consumer satisfaction adequately measure total consumer
satisfaction. In particular, the Commission seeks comment on the extent
to which correlations between market structure and the amount of
advertising in a market provide a useful proxy for competition in the
marketplace. Commenters who argue that important elements of the media
environment are missing from the study are requested to indicate how
consumer satisfaction is affected by the missing elements as well as
how the missing elements are likely to be correlated with the elements
of the media market structure the Commission's ownership rules can
influence.
177. Media Ownership Study 10 examines how the structure of the
television market has influenced the increase in television stations'
use of multicasting. Innovation as evidenced by the spread of
technological advances is another area where competition in the media
markets can be observed. One could view increases in multicasting as
the result of competition among television stations in a market. The
study offers two measures of multicasting: The total number of
multicast channels in the market and the average number of multicast
channels per television station in the market. The study finds little
evidence that variations in ownership structure affect the extent of
multicasting. Rather it appears that other market characteristics, such
as the market size and the number of television stations operating in
the market, are more relevant factors. The Commission seeks comment on
the use of multicasting as a metric to study innovation and competition
in the market, including whether one measure used in Media Ownership
Study 10 is a more appropriate one than the other.
2. Studies Relating to Localism
178. The Commission sought to measure localism, in part, by looking
at the effect of local market structure on the quantity of local news
and public affairs programming provided at both the market level and
the station level. Media Ownership Study 1 examines a number of factors
relating to the quantity and quality of local information and
correlates that information with the structure of the local media
market. In this study, quality is measured by using ratings as the
variables to determine how much people prefer certain types of
programming, including local news programming. The study does not
identify a relationship between ownership structure and local news
ratings or hours of programming. The Commission seeks comment on how

[[Page 2897]]

well Media Ownership Study 1 measures the degree to which the localism
needs of the local population are being served. The study defines
television ratings, restricted to the evening time period, as a
reasonable measure for the quality of the local television content in
the market. Does a measure of the rating of local news provide a better
measure of localism than a measure of all content viewing during this
period? Should the Commission's localism metric necessarily rely on
consumer preference? Media Ownership Study 1 also examines three
measures of the amount of news available in the market: The number of
news formatted radio stations, the number of hours of local news, and
daily newspaper circulation. Is the number of news formatted radio
stations an appropriate measure of localism in the absence of
information on the type of news carried by the stations? Would one
expect the amount of local news on a news formatted station to vary
across markets in a predictable manner? Is the circulation of daily
newspapers in a market a reasonable measure of the availability of
local content? How should it be interpreted? What, if anything, does a
high newspaper circulation level indicate about local content on
television and radio stations in the same market?
179. Media Ownership Study 4 also provides an analysis of the
quantity of local television news and public affairs programming. Media
Ownership Study 4 finds that local news and public affairs minutes
provided in a market increases with the number of television stations
and the number of Big Four (ABC, NBC, CBS, Fox) affiliates in the
market. The presence of a newspaper-television combination in a market
appears to reduce total local news minutes in the market, even though
the cross-owned station itself produces more local news than otherwise
comparable stations. At the station level, Media Ownership Study 4
finds that radio-television cross-ownership appears to increase local
news. Superficially Media Ownership Study 1 and Media Ownership Study 4
appear similar because each measures the quantity of local news. The
Commission notes, however, that the sources each study uses to catalog
the amount of news are different. In addition, the empirical models
differ. How should the Commission weigh each of these studies? Is one
data source superior to another? Media Ownership Study 4 examines
individual station and market behavior. How should the Commission weigh
conflicting results between market outcomes and station behavior?
180. Media Ownership Study 5 examines the prevalence of news
formatted radio stations and the listenership of those stations. The
data for this study do not separate local and national news programming
or account for news programming on stations that are not designated as
news formatted. Is the news content of news-formatted stations
sufficiently local that the Commission can use the number of such
stations as a reliable metric for the amount of localism in a radio
market? The study also analyzes usage of news, via the overall ratings
of the news-formatted radio stations. Are ratings a sufficient measure
of the quality of the local content provided by the station? The
Commission notes that the study examines only radio markets defined by
Arbitron, which tend to be in the more populous areas of the country.
Should the Commission expect the more rural areas to differ? The study
concludes there are few significant relationships between news
formatted stations and ownership structure. The study does provide weak
evidence, however, that an increase in the size of the largest local
owner group is associated with an increase in the number of news
stations and the number of different news formats offered in the
market. The Commission seeks comment on these conclusions.
181. Media Ownership Study 6 examines the state of local news on
the Internet to determine whether the Internet provides a net increase
to media diversity in local markets. Media Ownership Study 6 first
determines which news sites are not affiliated with a traditional media
outlet such that they can be considered a new or independent news
source. The study provides data on online local news sites within the
top 100 U.S. television markets that reach more than a minimum
threshold of traffic. Media Ownership Study 6 concludes that there is a
very limited amount of local news on the Internet that is provided by
organizations that are not broadcasters or print media organizations.
The Commission tentatively concludes from Media Ownership Study 6 that,
while the potential of the Internet for local, or even hyper-local,
news is great, very few such sites today reach a significant audience,
at least in the top 100 markets. The Commission seeks comment on that
tentative conclusion. The Commission also notes that the analysis is
based upon the most widely visited sites. Is it possible that a
sufficient number of lightly visited sites carrying content produced by
non-traditional media exist such that they act as a reservoir of local
content available to consumers? If not, are the barriers to entry into
Web publishing sufficiently low such that a failure by broadcasters to
provide consumers with their desired level of local news and
information will attract competitors? Does the current relative absence
of competitors provide any indication of how well the traditional media
are serving the needs of consumers?
182. Media Ownership Study 3 examines public knowledge and civic
participation to determine whether consolidation results in a more or
less informed public. Media Ownership Study 3 considers several metrics
of civic engagement, including knowledge of political candidates and
issues, as potential indicators of how well the media environment
supplies information about local issues. It finds little relationship
between media market structure and consumers' knowledge about
presidential and congressional candidates, interest in politics, or
turnout at the polls. The peer reviewer raised several questions about
the usefulness of these particular measures of civic knowledge and
engagement. Are the metrics reliable indicators of such
characteristics? The study does find a relationship between political
participation and political advertising on television. Could there be a
connection that Media Ownership Study 3 did not measure between market
structure and a political candidate's decision to advertise in that
market, which influenced civic knowledge and participation? The
Commission seeks comment on these issues.
183. Finally, Media Ownership Study 2, discussed above in the
Competition section, provides the Commission with information on the
relative value consumers place on the Commission's diversity and
localism goals. When examining the influence of market structure on
consumer valuation, the study finds that the number of television
voices does not have an impact on the consumer's perception of the
amount of community news provided. The Commission notes that the
average consumer places a higher value on opinion diversity and local
news content than on content diversity. How should the Commission
evaluate this trade-off? Is the valuation by the average consumer the
most appropriate measure or should the Commission look at the
valuations broken down by demographic groups?

[[Page 2898]]

3. Studies Relating to Diversity
184. In commissioning ownership studies on diversity, the
Commission elected to measure the availability of news and civic
engagement in local markets as it relates to local market structure in
a variety of ways, as described below. The Commission tentatively
concludes that these metrics are appropriate to analyze diversity and
seek comment on that conclusion, as well as the individual studies
described below. Media Ownership Study 5 examines whether ownership
structure impacts the availability and listenership of radio stations
with a news format in local radio markets, as discussed above. Markets
with more news formatted radio stations would be considered to have a
greater level of program diversity. The study concludes there is no
evidence that newspaper-radio cross-ownership increases news variety or
listening. As discussed above, the study provides weak evidence that an
increase in the size of the largest local owner group is associated
with an increase in the number of news stations and the number of
commercial news varieties present in the market. Are these format
categories for news and information useful measures of program
diversity?
185. The Commission also assessed diversity in Media Ownership
Study 2. The study analyzes the existing and preferred quantity of
information of interest specifically to women and minorities, which it
refers to as multiculturalism. Analysis of the survey results allowed
the researchers to estimate the value consumers place on increased
amounts of this media market characteristic. The Commission tentatively
concludes that what the study labeled as multiculturalism is a useful,
though not singular, indicator of the level of program diversity in the
market. The survey asked consumers about their media environments
overall rather than the characteristics of a particular medium such as
radio or television. When examining the influence of market structure
on consumer valuation, the study finds that the number of television
voices has a significantly positive impact on consumers' valuation of
opinion diversity and multiculturalism, even after accounting for the
number of stations in the market. Examining the effect of a combination
of two television stations in a market, the study finds such a
combination leads to a loss in average consumer welfare which is
greater in smaller markets. The study finds that the combination does
benefit consumers due to a reduction in the perceived amount of
advertising. While the changes in consumer welfare from such a
transaction vary significantly by market size for opinion diversity and
advertising, the effect on multiculturalism varies substantially less
by market size. How should the Commission assess consumers'
satisfaction against the overall media environment when balancing the
benefits of program diversity with any possible countervailing effects?
186. Media Ownership Study 8B directly measures the diversity of
content by measuring the diversity of viewpoints discussed on local
television news programs. The study catalogs words used in broadcasts
and then measures variation among stations in a market. Viewpoint
diversity in this study is considered in terms of diversity in
discussions of political figures, issues, and local regions. How should
each of these measures of content diversity be weighted? The analysis
is based on the content available in 37 large markets. Would the
results of this study likely hold in smaller markets? Can the findings
for television news be generalized to other sources of news, such as
radio and newspapers?
187. Media Ownership Study 9 is a theoretical and experimental
study of the impact of market structure on the incentives of media
outlets to withhold information from citizens when withholding could
benefit the policy position the media owner favors. In the past, many
analyses of market structure and diversity have focused on the idea
that, to ensure a wide range of viewpoints are provided, it is
important to have multiple independent media outlets. The underlying
presumption is that with many independent outlets it is likely that the
decision makers for content transmission will have varying points of
view and so varying points of view will be disseminated.
188. Media Ownership Study 9 emphasizes the importance for
information transmission of having multiple outlets with the same
viewpoint, with rivalry among outlets with similar viewpoints serving
to prevent information withholding. The theoretical model is an
abstraction, beginning with two outlets and a single policy issue on
which they can have differing viewpoints and adding additional outlets.
One conclusion is that ``competition within viewpoints dramatically
enhances information revelation.'' In the real world, there are of
course multiple issues and likely more than two alternative viewpoints
per issue. Nevertheless, the analysis is valuable because it provides
strong support for having at least four independent media voices, since
every issue has at least two viewpoints and two outlets per viewpoint
are needed in the model to ensure information regarding a viewpoint is
not withheld. The experimental results are also suggestive, first
because, broadly speaking, they confirm the theoretical predictions,
but also because they indicate the market performance improves with
additional media outlets, but that the marginal value (for information
transmission) of additional outlets declines as the number of outlets
increases. The Commission seeks comment on the validity of the
theoretical model and the extent to which inferences based on it are
relevant to the Commission's diversity analysis.
189. While Media Ownership Studies 5 and 8B focus on diversity
measures relating to the content of the medium, Media Ownership Study
8A measures diversity of content by observing how consumers react to
the content delivered to them. Can consumer behavior provide a reliable
indicator of the level of diversity? The study utilizes variations in
viewing patterns of local television news programs as compared to local
viewing patterns for national television news programs to develop a
measure of diversity of content on local news programs. The study
compares the dispersion of the market shares of national news programs
to the dispersion of the market shares of local news to benchmark the
diversity offered by local news in a market. It finds little
correlation between viewpoint diversity and local market ownership
structure. The Commission seeks comment on these results.
190. Media Ownership Studies 1 and 5 measure the market share of
local television news programs and news-formatted radio stations,
respectively. Media Ownership Study 1 examines variations in viewing of
local television news programming but finds little relationship to
market structure. Can these metrics also provide information about the
diversity of content provided by the media in addition to satisfaction
with the media? Will diverse content necessarily attract a larger
audience than less diverse content, or is the effect contingent on the
diversity of the population within the market? The Commission seeks
comment on whether these two studies can provide additional information
on the level of diversity in a local market.
191. Measures of civic engagement also can be used to assess the
level of viewpoint diversity in a market. For instance, if media
outlets in a market supply programming with a diverse range of
viewpoints, consumers may be

[[Page 2899]]

better informed, which can lead to increased local civic participation.
As noted above, Media Ownership Study 3 provides data relevant to this
analysis. It measures civic participation and knowledge. Does this
metric also provide useful information about the level of viewpoint
diversity in the market? Several measures examined by the study may
have relevance to diversity depending on how consumers react to hearing
diverse viewpoints. The study measures consumers' recognition of
politicians. Is it reasonable to conclude that markets where consumers
are more likely to recognize the positions held by various politicians
are markets in which more diverse information is available? The
Commission seeks comment on the relevance of civic participation for
measuring the level of viewpoint diversity in the market.
4. Study Relating to Minority and Women Ownership Issues
192. Media Ownership Study 7 considers the relationship between
ownership structure and the provision of radio programming targeted to
African-American and Hispanic audiences. It provides mixed evidence on
whether minority-owned radio stations better serve minority
populations. This study looks at the provision of radio programming to
minority (African-American and Hispanic) audiences, as reflected in the
choices of radio stations to select formats that are popular with
minority audiences. It reflects that minority audiences--specifically
Black and Hispanic listeners--have very different listening preferences
from the majority non-Hispanic, White population. For example, the
study shows that a single programming format, Urban--attracts half of
black listening, while it attracts less than five percent of nonblack
listening. The data also suggest that there is a positive relationship
between minority ownership of radio stations and the total amount of
minority-targeted radio programming available in a market--in other
words, that minority-owned stations are more likely to provide
programming targeted to minorities than are non-minority owned
stations. The data do not indicate a clear relationship between
ownership concentration and the number of different radio formats in
each market, although the cross-sectional analysis does suggest that
ownership concentration promotes a greater number of formats in the
market. The Commission seeks comment on this study and on the
appropriate application of its analysis to the Commission's policy
goals. Are there other statistical studies available that the
Commission should consider, relating market structure and the promotion
of content that is specifically of interest to minorities and women? Do
such studies use statistical analysis of a reasonably large sample of
markets? Are there individual market case studies available that are
relevant and, if so, what role is there for such case studies in the
Commission's deliberations?

F. Attribution Matters

193. The Commission's broadcast attribution rules define which
financial or other interests in a licensee must be counted in applying
the broadcast ownership rules. They seek to identify those interests in
licensees that confer on their holders a degree of ``influence or
control such that the holders have a realistic potential to affect the
programming decisions of licensees or other core operating functions.''
Although the Commission did not seek comment on attribution issues in
the NOI, the Commission does so now in order to address issues raised
in the record regarding the impact, both positive and negative, of
certain agreements on the Commission's ownership rules and fundamental
policy goals.
194. The Commission seeks comment in particular regarding local
news service (LNS) agreements and shared service agreements (SSAs). An
LNS agreement is defined by commenters as an agreement in which
multiple local broadcast television stations contribute certain news
staff and equipment to a joint news gathering effort coordinated by a
single managing editor. According to commenters, an SSA is an
agreement, or series of agreements, in which one in-market station
provides operational support and programming for another in-market
station. Public interest commenters contend that LNS agreements and
SSAs result in fewer independent voices and less local news content and
could be used to circumvent the Commission's rules. On the other hand,
broadcasters assert that these agreements facilitate greater
collaboration between media outlets and permit stations to sustain
labor intensive journalism, thereby offering more communities access to
local news content than could otherwise be achieved.
195. Background. The Commission's attribution rules currently make
attributable certain local marketing agreements (LMAs), also referred
to as time brokerage agreements (TBAs), in which a broker purchases
discrete blocks of time from a licensee and supplies programming and
sells advertising for the purchased time. Certain joint sales
agreements (JSAs), which ``involve primarily the sale of advertising
time and not decisions concerning programming,'' are also subject to
attribution. These agreements are not precluded by any Commission rule
or policy as long as the Commission's ownership rules are not violated
and the participating licensees maintain ultimate control over their
facilities.
196. The Commission first adopted attribution rules for same-market
radio LMAs in 1992. The Commission was concerned that absent such rules
significant time brokerage under such agreements, combined with
increased common ownership permitted by revised local radio ownership
rules, could undermine the Commission's competition and diversity
goals. In 1999, the Commission adopted attribution rules for television
LMAs, finding that the rationale for attributing same-market radio LMAs
applied equally to same-market television LMAs, but declined to adopt
attribution rules for radio or television JSAs. However, the
Commission, in its 2002 Biennial Report and Order, adopted attribution
rules for same-market radio JSAs, finding that JSAs may convey
sufficient influence and control over advertising to merit attribution.
Subsequently, in 2004, the Commission initiated a rulemaking to
determine whether or not to adopt attribution rules for television
JSAs; the Commission tentatively concluded that it should. No decision
has been issued in that proceeding.
197. Potential Concerns. CWA and Free Press object to LNS
agreements because they believe that collaboration under LNS agreements
harms competition and reduces the amount of independently produced
local news programming available to consumers. These commenters are
concerned that stations will be unable to devote sufficient resources
to independent journalism as a result of the staff reductions and
resource sharing resulting from the creation of an LNS. CWA also is
concerned that consolidating newsgathering and editorial control
reduces diversity and in-depth coverage of local news. Because stations
are reporting the same story, CWA argues, viewers are exposed only to a
single perspective on every story covered by the LNS. Moreover, CWA
suggests that increased communication between stations could lead to
antitrust law violations.
198. CWA and Free Press also object to SSAs, particularly those
that allow a

[[Page 2900]]

single station to produce the news content for multiple stations in a
local market. According to these commenters, such agreements result in
``re-run'' content being broadcast over multiple newscasts, thereby
reducing the number of independent voices available in the local
community. Furthermore, these commenters assert that the staff
reductions that typically accompany SSAs reduce the quality, quantity,
and diversity of local news coverage.
199. CWA and Free Press object to SSAs also because they believe
broadcasters may be using them to circumvent the Commission's multiple
ownership rules. CWA suggests that SSAs contain very similar provisions
to LMAs and JSAs, which are attributable under certain conditions under
the Commission's multiple ownership rules. For instance, like many LMAs
and JSAs, SSAs may involve the sharing of facilities, advertising sales
personnel, news production, and certain station operations, and options
to purchase the brokered station. CWA opposes broadcasters using SSAs
to outsource (or broker) newscasts, in asserted circumvention of the
Commission's attribution rules. According to CWA, news programming
accounts for an average of 45 percent of a station's revenue;
therefore, a brokering station can unfairly acquire a significant
portion of the economic benefit generated by the brokered station
without triggering the attribution rules. In addition, the American
Cable Association (ACA) argues that both SSAs and LMAs harm local
competition particularly when they permit stations to jointly negotiate
retransmission consent. ACA argues that such arrangements permit local
broadcast stations to exercise additional leverage with respect to
MVPDs leading to higher fees for signal carriage, which are passed on
to consumers in the form of higher rates. ACA suggests that
broadcasters should be precluded from including collective negotiation
of retransmission consent in SSAs or LMAs, particularly with respect to
the four top-rated local stations.
200. Potential Benefits. On the other hand, broadcasters assert
that sharing arrangements (including LNS agreements, LMAs, SSAs, and
JSAs) are beneficial to local media markets, generating local news and
other services that would not be possible otherwise. Gray asserts that,
because of the considerable cost savings associated with its sharing
agreements, it can invest in the development of multicast programming
streams, mobile video applications, and other uses of the broadcast
spectrum. The Local TV Coalition and Nexstar note that the Commission
has long held that sharing agreements (e.g., JSAs) generate
efficiencies and serve the public interest.
201. According to the Local TV Coalition and TTBG, sharing
agreements can be particularly important in small and mid-sized
markets. The Coalition asserts that the advertising revenue available
in most small and mid-sized markets is insufficient to support four
stand-alone broadcast television news operations. In such markets, the
Coalition states, broadcasters budget an average of approximately $1.8
million per year for the capital and operating expenses associated with
local news production. The Local TV Coalition notes that unprofitable
news operations, like any unprofitable business venture, likely will be
eliminated over time. The Local TV Coalition submits an analysis of 20
small and mid-sized markets, which it asserts shows that one or more
news operations would have been lost without the existence of shared
services agreements or common ownership of local stations.
202. In addition, the Local TV Coalition provides numerous examples
of claimed public interest benefits from sharing agreements. For
example, in the Burlington, Vermont-Plattsburgh, New York market, the
local Fox affiliate and the local ABC affiliate entered into a JSA and
a SSA in 2005. Prior to entering into these agreements, the Fox station
had never aired a local newscast and the ABC station had discontinued
its news operation and fired 25 staffers. Since concluding the sharing
agreements, the Fox station now produces newscasts for both stations,
resulting in 28 new jobs. NAB also submits examples of broadcast
television stations that increased local news programming as a result
of sharing agreements. Nexstar states that sharing agreements have
enabled it to increase news coverage in the Lubbock, Texas and the
Peoria-Bloomington, Illinois markets, and as a result it has launched a
nightly newscast in various markets across five states that previously
had no local news coverage. Nexstar asserts that any layoffs associated
with these agreements typically involve back-office staff and not news
personnel. It also asserts that any layoffs of redundant news personnel
permit local broadcasters to invest more money in news production and
other local programming. Broadcasters state that issues concerning the
joint negotiation of retransmission consent fees should be addressed in
the Commission's retransmission consent proceeding, and not in the
media ownership proceeding. Ultimately, broadcasters oppose any
additional regulation of sharing agreements.
203. Request for Comment. Are LNS agreements and SSAs substantively
equivalent to agreements that are already subject to the attribution
rules, and are they therefore attributable today or should they be
attributable? What characteristics make them different from already
attributable agreements? How, if at all, do LNS agreements and SSAs
create interests in licensees that confer a degree of ``influence or
control such that the holders have a realistic potential to affect the
programming decisions of licensees or other core operating functions''?
What is the impact of agreements such as LNS agreements and SSAs on the
Commission's competition, localism, and diversity goals? Does either of
these types of agreements have a greater impact on the Commission's
policy goals than the other? If so, what characteristics account for
the disparity in impact? Should the Commission, and if so how, consider
the impact of these agreements on the Commission's policy goals when
formulating the ownership rules?
204. If the Commission determines that LNS agreements and/or SSAs
should be attributable, how should the Commission define LNS agreements
and SSAs and what attribution standard should the Commission adopt? If
the Commission adopts new attribution rules, should existing agreements
be grandfathered? If so, how should the grandfathering be structured?
If not, how long should broadcasters have to comply with the new
attribution rules? If the Commission determines that these arrangements
should not be attributable, should the Commission adopt disclosure
requirements? If so, what disclosure should be required? Such
disclosures could help viewers determine the origin of news content and
help the Commission monitor the proliferation of such agreements and
determine whether to revisit the issue of attribution.
205. What benefits accrue from stations entering into LNS
agreements or SSAs? What would be the impact of a rule that would lead
to the attribution of LNS agreements or SSAs? If these agreements
result in attribution, what would be the effect, if any, on the cost to
produce local news, the ability to employ journalists, and the overall
quality of news programming? Is it possible that, without such
agreements, local news coverage could be reduced or that some stations
will cease news production?
206. Instead of focusing on attributing certain named agreements
(e.g., JSAs,

[[Page 2901]]

LMAs, SSAs, LNS agreements) as the Commission has in the past, should
the Commission adopt a broader regulatory scheme that encompasses all
agreements, however styled, that relate to the programming and/or
operation of broadcast stations? If so, how should the Commission
define the covered agreements and structure this regulatory scheme?
What characteristics of such agreements are most likely to confer a
degree of ``influence or control such that the holders have a realistic
potential to affect the programming decisions of licensees or other
core operating functions''? Should the Commission consider the impact
of these agreements on other matters of Commission interest, such as
retransmission consent negotiations? Or are these issues more
appropriately considered in another context, such as the retransmission
proceeding?
207. The Commission strongly encourages parties to existing
agreements of all of these types to respond to this request for comment
and to provide any other information they think is relevant. It is
critical that the Commission obtain accurate information on how these
agreements operate in order to make a reasoned decision on what, if
any, changes should be made to the Commission's attribution rules.

II. Procedural Matters

A. Filing Requirements

208. Ex Parte Rules. The proceeding this Notice of Propose
Rulemaking initiates shall be treated as a ``permit-but-disclose''
proceeding in accordance with the Commission's ex parte rules. Persons
making ex parte presentations must file a copy of any written
presentation or a memorandum summarizing any oral presentation within
two business days after the presentation (unless a different deadline
applicable to the Sunshine period applies). Persons making oral ex
parte presentations are reminded that memoranda summarizing the
presentation must (1) list all persons attending or otherwise
participating in the meeting at which the ex parte presentation was
made, and (2) summarize all data presented and arguments made during
the presentation. If the presentation consisted in whole or in part of
the presentation of data or arguments already reflected in the
presenter's written comments, memoranda or other filings in the
proceeding, the presenter may provide citations to such data or
arguments in his or her prior comments, memoranda, or other filings
(specifying the relevant page and/or paragraph numbers where such data
or arguments can be found) in lieu of summarizing them in the
memorandum. Documents shown or given to Commission staff during ex
parte meetings are deemed to be written ex parte presentations and must
be filed consistent with rule 1.1206(b). In proceedings governed by
rule 1.49(f) or for which the Commission has made available a method of
electronic filing, written ex parte presentations and memoranda
summarizing oral ex parte presentations, and all attachments thereto,
must be filed through the electronic comment filing system available
for that proceeding, and must be filed in their native format (e.g.,
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding
should familiarize themselves with the Commission's ex parte rules.
209. Comment Information. Pursuant to Sec. Sec. 1.415 and 1.419 of
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may
file comments and reply comments on or before the dates indicated on
the first page of this document. Comments may be filed using: (1) The
Commission's Electronic Comment Filing System (ECFS), (2) the Federal
Government's eRulemaking Portal, or (3) by filing paper copies. See
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121
(1998).
Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/ or the Federal eRulemaking Portal: http://www.regulations.gov.
For ECFS filers, if multiple docket or rulemaking numbers
appear in the caption of this proceeding, filers must transmit one
electronic copy of the comments for each docket or rulemaking number
referenced in the caption. In completing the transmittal screen, filers
should include their full name, U.S. Postal Service mailing address,
and the applicable docket or rulemaking number. Parties may also submit
an electronic comment by Internet email. To get filing instructions,
filers should send an email to ecfs@fcc.gov, and include the following
words in the body of the message ``get form.'' A Sample form and
directions will be sent in response.
Paper Filers: Parties who choose to file by paper must
file an original and four copies of each filing. If more than one
docket or rulemaking number appears in the caption of this proceeding,
filers must submit two additional copies for each additional docket or
rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial
overnight courier, or by first-class or overnight U.S. Postal Service
mail. All filings must be addressed to the Commission's Secretary,
Office of the Secretary, Federal Communications Commission.
All hand-delivered or messenger-delivered paper filings
for the Commission's Secretary must be delivered to FCC Headquarters at
445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours
are 8 a.m. to 7 p.m. All hand deliveries must be held together with
rubber bands or fasteners. Any envelopes must be disposed of before
entering the building.
Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9300 East Hampton
Drive, Capitol Heights, MD 20743.
U.S. Postal Service first-class, Express, and Priority
mail must be addressed to 445 12th Street SW., Washington DC 20554.
People with Disabilities: Contact the FCC to request
materials in accessible formats for people with disabilities (braille,
large print, electronic files, audio format), send an emailto
fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at
202-418-0530 (voice), (202) 418-0432 (TTY).

B. Initial Regulatory Flexibility Analysis

210. As required by the Regulatory Flexibility Act (RFA), the
Commission has prepared this Initial Regulatory Flexibility Analysis
(IRFA) of the possible significant economic impact on small entities by
the policies and rules proposed in this Notice of Proposed Rulemaking.
Written public comments are requested on this IRFA. Comments must be
identified as responses to the IRFA and must be filed by the deadlines
for comments provided in this Notice of Proposed Rulemaking. The
Commission will send a copy of this Notice of Proposed Rulemaking,
including this IRFA, to the Chief Counsel for Advocacy of the Small
Business Administration (SBA). In addition, the Notice of Proposed
Rulemaking and IRFA (or summaries thereof) will be published in the
Federal Register.
1. Need for, and Objectives of, the Proposed Rules
211. Pursuant to a statutory mandate under the Telecommunications
Act of 1996, the Notice of Proposed Rulemaking seeks comment on the
Commission's media ownership rules and proposed changes thereto. As
discussed in the Notice of Proposed

[[Page 2902]]

Rulemaking, the Commission is required by statute to review its media
ownership rules every four years to determine whether they ``are
necessary in the public interest as the result of competition.'' The
Notice of Proposed Rulemaking discusses the local television ownership
rule, the local radio ownership rule, the newspaper/broadcast cross-
ownership rule, the radio/television cross-ownership rule, and the dual
network rule. A challenge in this proceeding is to take account of new
technologies and changing marketplace conditions while ensuring that
the media ownership rules continue to serve the Commission's public
interest goals of competition, localism, and diversity. The Notice of
Proposed Rulemaking also seeks comment on economic studies analyzing
the relationship between local media market structure and the policy
goals that underlie the Commission's media ownership rules. In
addition, the Notice of Proposed Rulemaking seeks comment in this
proceeding on the aspects of the Commission's 2008 Diversity Order that
the Third Circuit remanded in Prometheus II.
212. The Commission finds that the public interest is best served
by modest, incremental changes to the rules. Recognizing current market
realities, the Notice of Proposed Rulemaking seeks comment on the
following proposals:
Local Television Ownership Rule. In the Notice of Proposed
Rulemaking, the Commission tentatively concludes that it should retain
the current local television ownership rule with minor modifications.
Specifically, the Notice of Proposed Rulemaking proposes to eliminate
the Grade B contour overlap provision of the current rule. The
Commission tentatively concludes that it should retain the prohibition
against mergers among the top-four-rated stations, the eight-voices
test, and the existing numerical limits. In addition, the Notice of
Proposed Rulemaking seeks comment on whether to adopt a waiver standard
applicable to small markets, as well as appropriate criteria for any
such standard. Also, the Notice of Proposed Rulemaking seeks comment on
whether multicasting should be a factor in determining the television
ownership limits.
Local Radio Ownership Rule. The Notice of Proposed
Rulemaking proposes to retain the current local radio ownership rule.
The Notice of Proposed Rulemaking also seeks comment on alternative
modifications to the rule and whether and how the rule should account
for other audio platforms. The Notice of Proposed Rulemaking also
proposes to retain the AM/FM subcaps, and seeks comment on the impact
of digital radio. The Notice of Proposed Rulemaking seeks comment on
whether to adopt a waiver standard and on specific criteria to adopt.
Newspaper/Broadcast Cross-Ownership Rule. In the Notice of
Proposed Rulemaking, the Commission tentatively concludes that some
newspaper/broadcast cross-ownership restrictions continue to be
necessary to protect and promote viewpoint diversity. The Notice of
Proposed Rulemaking proposes to use Nielsen DMA definitions to
determine the relevant market area for television stations, given the
lack of a digital equivalent to the analog Grade A service contour. The
Notice of Proposed Rulemaking proposes to adopt a rule that includes
elements of the 2006 rule, including the top 20 DMA demarcation point,
the top-four television station restriction, and the eight remaining
voices test.
Radio/Television Cross-Ownership Rule. The Notice of
Proposed Rulemaking proposes to eliminate the radio/television cross-
ownership rule in favor of reliance on the local radio rule and local
television rule. The Commission believes that the local radio and
television ownership rules adequately protect the Commission's localism
and diversity goals and tentatively conclude that eliminating this rule
is not likely to lead to significant additional consolidation of
broadcast facilities. The Notice of Proposed Rulemaking seeks comment
on this.
Dual Network Rule. In the Notice of Proposed Rulemaking,
the Commission tentatively concludes that the dual network rule remains
necessary in the public interest to promote competition and localism
and should be retained without modification.
Diversity Order Remand/Eligible Entity Definition. The
Commission seeks comment in this Notice of Proposed Rulemaking on
issues that previously were being addressed in a separate rulemaking
proceeding focused on enhancing the diversity of ownership in the
broadcast industry, including by increasing ownership opportunities for
minorities and women. As explained in the Notice of Proposed
Rulemaking, the Third Circuit in Prometheus II remanded the measures
adopted in the Commission's 2008 Diversity Order that relied on a
revenue-based ``eligible entity'' standard and emphasized that the
actions required on remand from the Diversity Order should be completed
``within the course of the Commission's 2010 Quadrennial Review of its
media ownership rules.'' Accordingly, the Commission seeks comment in
this proceeding on how the Commission should respond to the court's
remand and on other actions the Commission should consider to increase
the level of broadcast station ownership by minorities and women.
2. Legal Basis
213. The proposed action is authorized under sections 1, 2(a),
4(i), 303, 307, 309, and 310 of the Communications Act of 1934, as
amended, 47 U.S.C. 151, 152(a), 154(i), 303, 307, 309, and 310, and
section 202(h) of the Telecommunications Act of 1996.
3. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply
214. The RFA directs agencies to provide a description of and,
where feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted. The RFA generally defines
the term ``small entity'' as having the same meaning as the terms
``small business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. A small business concern is one which: (1) Is independently owned
and operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the SBA.
215. Television Broadcasting. The SBA defines a television
broadcasting station as a small business if such station has no more
than $14.0 million in annual receipts. Business concerns included in
this industry are those ``primarily engaged in broadcasting images
together with sound.'' The Commission has estimated the number of
licensed commercial television stations to be 1,382. According to
Commission staff review of the BIA Kelsey Inc. Media Access Pro
Television Database (BIA) as of October 3, 2011, 950 (or about 73
percent) of an estimated 1,301 commercial television stations in the
United States have revenues of $14 million or less and, thus, qualify
as small entities under the SBA definition. The Commission has
estimated the number of licensed noncommercial educational (NCE)
television stations to be 392. The Commission notes, however, that, in
assessing whether a business concern qualifies as small under the above
definition, business (control) affiliations must be included. The
Commission's estimate, therefore, likely overstates the number of small
entities that might be

[[Page 2903]]

affected by the Commission's action, because the revenue figure on
which it is based does not include or aggregate revenues from
affiliated companies. The Commission does not compile and otherwise
does not have access to information on the revenue of NCE stations that
would permit it to determine how many such stations would qualify as
small entities.
216. In addition, an element of the definition of ``small
business'' is that the entity not be dominant in its field of
operation. The Commission is unable at this time to define or quantify
the criteria that would establish whether a specific television station
is dominant in its field of operation. Accordingly, the estimate of
small businesses to which rules may apply does not exclude any
television station from the definition of a small business on this
basis and are therefore over-inclusive to that extent. Also, as noted,
an additional element of the definition of ``small business'' is that
the entity must be independently owned and operated. The Commission
notes that it is difficult at times to assess these criteria in the
context of media entities and the Commission's estimates of small
businesses to which they apply may be over-inclusive to this extent.
217. Radio Broadcasting. The proposed policies could apply to radio
broadcast licensees, and potential licensees of radio service. The SBA
defines a radio broadcast station as a small business if such station
has no more than $7 million in annual receipts. Business concerns
included in this industry are those primarily engaged in broadcasting
aural programs by radio to the public. According to Commission staff
review of the BIA Publications, Inc. Master Access Radio Analyzer
Database on as of October 3, 2011, about 10,783 (97 percent) of 11,125
commercial radio stations have revenues of $7 million or less and thus
qualify as small entities under the SBA definition. The Commission
notes, however, that, in assessing whether a business concern qualifies
as small under the above definition, business (control) affiliations
must be included. The Commission's estimate, therefore, likely
overstates the number of small entities that might be affected by the
Commission's action, because the revenue figure on which it is based
does not include or aggregate revenues from affiliated companies.
218. In addition, an element of the definition of ``small
business'' is that the entity not be dominant in its field of
operation. The Commission is unable at this time to define or quantify
the criteria that would establish whether a specific radio station is
dominant in its field of operation. Accordingly, the estimate of small
businesses to which rules may apply does not exclude any radio station
from the definition of a small business on this basis and therefore may
be over-inclusive to that extent. Also, as noted, an additional element
of the definition of ``small business'' is that the entity must be
independently owned and operated. The Commission notes that it is
difficult at times to assess these criteria in the context of media
entities and the Commission's estimates of small businesses to which
they apply may be over-inclusive to this extent.
219. Daily Newspapers. The SBA has developed a small business size
standard for the census category of Newspaper Publishers; that size
standard is 500 or fewer employees. Census Bureau data for 2007 show
that there were 4,852 firms in this category that operated for the
entire year. Of this total, 4,771 firms had employment of 499 or fewer
employees, and an additional 33 firms had employment of 500 to 999
employees. Therefore, the Commission estimates that the majority of
Newspaper Publishers are small entities that might be affected by the
Commission's action.
4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
220. The Notice of Proposed Rulemaking proposes a number of rule
changes that will affect reporting, recordkeeping and other compliance
requirements. Each of these changes is described below.
221. The Notice of Proposed Rulemaking proposes modifications to
several of the media ownership rules as set forth above. The proposals,
if ultimately adopted, would modify several FCC forms and their
instructions: (1) FCC Form 301, Application for Construction Permit For
Commercial Broadcast Station; (2) FCC Form 314, Application for Consent
to Assignment of Broadcast Station Construction Permit or License; and
(3) FCC Form 315, Application for Consent to Transfer Control of
Corporation Holding Broadcast Station Construction Permit or License.
The Commission may have to modify other forms that include in their
instructions the media ownership rules or citations to media ownership
proceedings, including Form 303-s and Form 323. The impact of these
changes will be the same on all entities, and the Commission does not
anticipate that compliance will require the expenditure of any
additional resources.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
222. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include the following four alternatives (among others): (1)
The establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or any part thereof, for small
entities.
223. The specific proposals on which the Notice of Proposed
Rulemaking seeks comment, set forth above, are intended to achieve the
Commission's public interest goals of competition, localism, and
diversity. The Notice of Proposed Rulemaking seeks comment on a number
of measures designed to minimize the economic impact of the
Commission's proposed rules on firms generally, as well as those
intended to promote broadcast ownership opportunities among a diverse
group of owners, including small entities. For example, as part of the
local radio ownership rule, the Notice of Proposed Rulemaking proposes
to retain the AM/FM subcaps, which limit the number of radio stations
in the same service that an entity can own. As noted in the Notice of
Proposed Rulemaking, the Commission has previously concluded that AM/FM
subcaps serve the public interest by promoting new entry into radio
ownership, particularly by small businesses, including minority- and
women-owned businesses.
224. The Notice of Proposed Rulemaking also seeks comment in this
proceeding on the aspects of the Commission's 2008 Diversity Order that
the Third Circuit remanded in Prometheus II. Among other measures, the
Notice of Proposed Rulemaking seeks comment on those intended to
promote broadcast ownership opportunities for small businesses. For
instance, the Notice of Proposed Rulemaking seeks comment regarding
whether to reinstate the preexisting revenue-based eligible entity
definition, which the Commission has concluded would ``be effective in
creating new opportunities for broadcast ownership by a variety of
small businesses and new entrants, including minorities and women.''
The Notice of Proposed Rulemaking also seeks comment on

[[Page 2904]]

whether increasing station ownership by small businesses should be an
independent policy goal in this proceeding and, if so, whether
readopting the preexisting eligible entity definition would be a
reasonable and effective means of promoting this objective.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rule
225. None.

C. Ordering Clauses

226. Accordingly, It Is Ordered, that pursuant to the authority
contained in sections 1, 2(a), 4(i), 303, 307, 309, and 310 of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i),
303, 307, 309, and 310, and section 202(h) of the Telecommunications
Act of 1996, this Notice of Proposed Rulemaking Is Adopted.
227. It Is Further Ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of the Notice of Proposed Rulemaking, including the Initial
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of
the Small Business Administration.

List of Subjects in 47 CFR Part 73

Radio, Reporting and recordkeeping requirements, Television.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Proposed Rules

For the reasons discussed in the preamble, the Federal
Communications Commission proposes to amend 47 CFR part 73 as follows:

PART 73--RADIO BROADCAST SERVICES

1. The authority citation for part 73 continues to read as follows:

Authority: 47 U.S.C. 154, 303, 334, 336 and 339.

2. Amend Sec. 73.3555 by removing and reserving paragraph (c) and
revising paragraphs (b) and (d) to read as follows:

Sec. 73.3555 Multiple ownership.

* * * * *
(b) Local television multiple ownership rule. An entity may
directly or indirectly own, operate, or control two television stations
licensed in the same Designated Market Area (DMA) (as determined by
Nielsen Media Research or any successor entity) if:
(1) At the time the application to acquire or construct the
station(s) is filed, at least one of the stations is not ranked among
the top four stations in the DMA, based on the most recent all-day (9
a.m.-midnight) audience share, as measured by Nielsen Media Research or
by any comparable professional, accepted audience ratings service; and
(2) At least 8 independently owned and operating, full-power
commercial and noncommercial TV stations would remain post-merger in
the DMA in which the communities of license of the TV stations in
question are located. Count only those TV stations with a community of
license in the same DMA as the stations in the proposed combination. In
areas where there is no Nielsen DMA, count the TV stations present in
an area that would be the functional equivalent of a TV market. Count
only those TV stations with a community of license in the same area
that would be the functional equivalent of a TV market as the stations
in the proposed combination.
(c) [Reserved]
(d) Daily newspaper-broadcast cross-ownership rule. (1) No license
for a full power AM, FM or TV broadcast station shall be granted to any
party (including all parties under common control) if such party
directly or indirectly owns, operates or controls a daily newspaper and
the grant of such license will result in:
(i) The TV station's community of license and the entire community
in which the newspaper is published being located within the same
Nielsen DMA;
(ii) The predicted or measured 2 mV/m contour of an AM station,
computed in accordance with Sec. Sec. 73.183 or 73.186, encompassing
the entire community in which such newspaper is published; or
(iii) The predicted 1 mV/m contour for an FM station, computed in
accordance with Sec. 73.313, encompassing the entire community in
which such newspaper is published.
(2) There is a presumption that it is consistent with the public
interest, convenience, and necessity for an entity to own, operate or
control in a top 20 Nielsen DMA a daily newspaper and
(i) A full power radio station, or
(ii) A full-power TV broadcast station provided that,
(A) The TV station is not ranked among the top four TV stations in
the DMA, based on the most recent all-day (9 a.m.-midnight) audience
share, as measured by Nielsen Media Research or by any comparable
professional, accepted audience ratings service; and
(B) At least 8 independently owned and operating major media voices
would remain in the DMA in which the community of license of the TV
station in question is located (for purposes of this provision major
media voices include full-power TV broadcast stations and major
newspapers).
(4) There is a presumption that it is inconsistent with the public
interest, convenience, and necessity for an entity to own, operate or
control in a DMA other than the top 20 Nielsen DMAs a daily newspaper
and a full-power TV broadcast station in the same DMA as the
newspaper's community of publication, or a commercial AM or FM
broadcast station as defined in paragraph (d)(1) of this section.
* * * * *
[FR Doc. 2012-148 Filed 1-18-12; 8:45 am]
BILLING CODE 6712-01-P