In a blow to broadcasters and a victory for cable, the Federal Communications Commission has reaffirmed and toughened its network and TV station ownership limits, saying that despite a proliferation of alternative video options, including streaming video, limits on network and local station ownership remain necessary to promote the public interest goals of competition, localism and viewpoint diversity “given the unique obligations broadcast licensees have as trustees of the public’s airwaves to serve their local communities.”

In wrapping up its 2018 review of whether network and local TV station ownership limits and regulations are in the public interest, a Democratic majority of commissioners said they were. 

The 2018 quadrennial review was on hold after a legal challenge by broadcasters, which was generally resolved by a Supreme Court decision two years ago supporting the stations.

One of the legal holdups was a court finding that the FCC had not sufficiently explained how its approach to broadcast regulation impacted minority and female ownership. The FCC this week, in upholding the Local Television Ownership Rule and the Dual Network Rule as well as the Local Radio Ownership Rule, dismissed that with the explanation that “the record in the current proceeding does not establish concrete, affirmative steps the Commission can or should take with respect to our structural ownership rules to address concerns regarding minority and female ownership.”

Also Read: FCC Says FCC Should Wrap Up Overdue Quadrennial

The FCC did not restore the rules preventing newspaper/broadcast cross-ownership and radio/TV crossownership, which a Republican FCC had eliminated and an appeals court restored before the Supreme Court weighed in on the side of elimination.

“To be clear, at this point only three core rules remain,” FCC chair Jessica Rosenworcel said. “No entity can own all the television stations in a single market, with a case-specific request necessary to own more than one of the top four stations. No entity can own all the radio stations in a single market. There is also a restriction on the national combination of two of the four big television networks — ABC, CBS, Fox and NBC.” 

But the FCC is also expanding its definition of audience share that determines what qualifies as a top-four station to include the station's streamed multicast channels and low-power TV stations.

The FCC said it would retain its current numerical limit on station ownership because, despite streaming sites aplenty, traditional cable and satellite video programmers, “no other source of video programming provides a substitute for broadcast television.”

Broadcasters have long argued that the FCC should look at all those players as competitors to broadcasters, most recently the unregulated streaming sites that have taken a bite out of their audience that’s big — and getting. Although FCC said that it was retaining the limits because over-the-air TV stations were uniquely licensed to serve the public with valuable news and diverse viewpoints, broadcasters say that the limits make it harder for them to afford to deliver that must-see TV in competition to unregulated video providers.

The FCC retains the prohibition on owning more than one of the top four-rated stations in a market.

The FCC is also tightening that Top Four rule to prevent affiliation purchases that it says have been a loophole used to circumvent the ownership limits. “[A]n entity will not be permitted to acquire a network affiliation and place it on a station or broadcast signal that is otherwise not counted as a station for purposes of the Local Television Ownership Rule,” it said.

The Dual Network Rule prohibits the merger of any of the top four broadcast networks — ABC, CBS, Fox or NBC. The FCC justifies that by saying broadcasters have a “unique” ability to “regularly” amass a large audience.

“We find that loosening the rule to allow a combination between Big Four broadcast networks would lessen competition for advertising revenue and likely subsequently result in the remaining networks paying less attention to viewer demand for innovative, high-quality programming,” the FCC said. 

And as regards the issue of localism, it said the rule “increases the bargaining power of local broadcast affiliates and enables them to influence Big Four broadcast network programming decisions in ways that better serve the interests of their local communities.”

Cable operators were fine with the FCC keeping the Local ownership limits.

“We commend the Commission for affirming and extending the Top Four rule, which will protect consumers from higher retransmission consent fees and the increased risk of station blackouts,” NCTA-The Internet & Television Association said. “The Commission and the Department of Justice have repeatedly found that the common ownership of two top-four stations in a market gives the owner increased leverage in retransmission consent negotiations that harms competition and leads to increases in retransmission consent costs, higher consumer prices, and an increased risk that multiple top stations go dark simultaneously. That consumer and competitive harm is the same whether the commonly owned top-rated stations are full-power or low-power, or if an owner controls multiple top-four signals using multicast streams. Closing the LPTV/multicast loophole is therefore essential to reining in broadcasters' unreasonable carriage demands.”

Dissenting from the decision were Republican Commissioners Brendan Carr and Nathan Simington.

To make his point that the rules the FCC retained and even strengthened should have been loosened or eliminated, Carr ticked off a laundry list of streaming services: “Hulu, Netflix, Disney Plus, ESPN Plus, Amazon Prime Video, Sling TV, Apple TV, YouTube, YouTubeTV, Tubi, Vudu, Freevee, Crackle, Pluto TV, NBC News Now, CBS News Streaming Network, CBS Sports HQ, Peacock, The Roku Channel, Paramount Plus, Max (nee HBO Max), BritBox, DirecTV Stream, AT&T Now, FuboTV, Pandora, Spotify, SiriusXM, Apple Music, Amazon Music and other online audio and video streaming services too numerous to quantify or recount.”

Instead of recognizing that, he said the FCC majority has ”taken an ostrich-like approach" to what he said was Congress’ direction in the quadrennial to eliminate rules if they become unnecessary due to competition.”

Of the decision to include multicast streams and LPTVs, Simington said: “The fully novel application of this item's approach to extending the Local Television Ownership Rule to multicast streams and low power stations (which will impact principally smaller DMAs where it is not even arguable that broadcasters are ‘winning’ in the video marketplace) is without factual foundation and flies in the face of the essentially deregulatory precedent of the Quadrennial Review. This decision is anti-localism and hastens the death of local news in small markets, and it does so on the thinnest of gruels supplied in the factual record.”

The National Association of Broadcasters, which had pushed for eliminating the rules, declined comment.

Broadcasters are trying to get the Federal Communications Commission to complete its long-delayed 2018 quadrennial review of broadcast regulations.

The National Association of Broadcasters has filed a writ of mandamus with the U.S. Court of Appeals for the D.C. Circuit, which is a request for it to compel the FCC to wrap up the review.

“The Commission cannot continue to ignore its clear duty under the law,” NAB president and CEO Curtis LeGeyt said following the filing. “Broadcasters do not simply compete against each other, but with digital behemoths in a crowded media marketplace where big tech companies threaten the viability of local media, the most trusted source of news. Broadcasters and the hundreds of millions of Americans that depend on us can’t wait another day, much less another four years, for the FCC to allow us to compete on a level playing field.”

LeGeyt said the NAB went to court because the FCC gave it no choice. 

The FCC is under a congressional directive in the 1996 Telecommunications Act to periodically review its regulations — first biennially, then changed to quadrennially — and repeal or modify any rules it concludes are not in the public interest.

The FCC earlier this year sought input on the 2022 review of the rules, but the NAB asked in a filing February 2 that the FCC temporarily suspend that proceeding, including comment deadlines, until it has completed the 2018 review.

The NAB wanted that to happen by the end of March, but that didn't happen.

The 2018 quadrennial review was on hold after a legal challenge by broadcasters, which was generally resolved by a Supreme Court decision two years ago.

The FCC actually closed the formal comment period on its delayed 2018 Quadrennial Review more than two years ago. In opening up a new comment period last April, though, the Media Bureau said: “The 2018 Quadrennial Review proceeding has generated, and continues to generate, significant interest, including through the submission of additional information even after the initial comment period has ended. Accordingly, we ask commenters to take this opportunity to update the record in the 2018 Quadrennial Review proceeding, including with regard to the diversity-related proposals cited therein.”

The National Association of Broadcasters is suggesting the FCC is putting the 2018 quadrennial review cart before the 2022 quadrennial horse, asking the agency to finish its 2018 review before starting the next one.

The Federal Communications Commission is under a congressional directive in the 1996 Telecommunications Act to periodically review its regulations — first biennially, then changed to quadrennially — and repeal or modify any rules it concludes are not in the public interest.

The FCC recently sought input on the 2022 review of the rules but NAB asked in a filing Thursday (February 2) that the FCC temporarily suspend that proceeding, including comment deadlines, until it has actually completed the 2018 review, preferably by the end of March.

The 2018 quadrennial review was on hold after a legal challenge by broadcasters, which was generally resolved by a Supreme Court decision two years ago supporting the stations.

The FCC actually closed the formal comment period on its delayed 2018 Quadrennial Review two years ago, but the Media Bureau, in opening up a new comment period last April, said: “The 2018 Quadrennial Review proceeding has generated, and continues to generate, significant interest, including through the submission of additional information even after the initial comment period has ended. Accordingly, we ask commenters to take this opportunity to update the record in the 2018 Quadrennial Review proceeding, including with regard to the diversity-related proposals cited therein.”

Failing to complete the 2018 review while the broadcaster appeal was still working its way through the courts may have made sense, but no longer, said the association. “Continuing to refrain from resolving the 2018 review, while appearing to initiate the 2022 review and requesting comments, data and studies from interested parties, is contrary to [law] and places undue burdens on stakeholders’ effective participation in the quadrennial review process,” NAB said. “Given the existing analog-era ownership rules’ negative competitive impact on our radio and TV station members, NAB urges the FCC to act expeditiously on our requests.” ▪️

The National Association of Broadcasters said Federal Communications Commission policies are a big reason there isn't more diversity in broadcast ownership.

The broadcasting trade group shared that view in comments on the FCC's 2018 quadrennial review of broadcast and other ownership rules (the review has been delayed due to the legal back-and-forth over that issue).

The NAB told the commission that the FCC’s restrictions on multiple and small-market ownership are absurd and work against its goal of a more diverse media. It argues that the COVID-19 pandemic and economic recession have put an exclamation point on the need to reform the system.

The main reason for low levels of minority and female ownership is a lack of access to capital, the NAB said, which structural ownership rules don't address. But even if that capital were available, the FCC's rules are a disincentive to new investment, the trade group argued.

“In a world where investors and new entrants have countless other media and communications options,” NAB said, “the commission itself is a major impediment to increased diversity in the broadcast industry.”

Broadcasters have been trying to get out from under structural ownership rules for years, succeeding in getting some key deregulation under former FCC chairman Ajit Pai, only to have a federal court reverse that decision over what it said was the FCC's failure to sufficiently explore the impact of that deregulation on diversity. The U.S. Supreme Court then reversed that reversal, reinstating the deregulatory order but giving the new Democrat-led FCC a chance to restore the rules as part of the quadrennial review, for which the FCC has sought new comment to “refresh the record.”

The NAB also said the FCC’s ownership restrictions hurt localism because they prevent broadcasters in smaller markets from “leverag[ing] the strong economies of scale in local news production,” leveraging broadcasters' needs against the Big Tech companies that dominate content discovery and digital advertising, and “imperil[ing] the ability of news providers to reach online audiences with their local content and to derive ad revenue from that content.”

Finally, NAB said it is time for the FCC to stop maintaining the fiction that broadcasters compete only against other broadcasters. It pointed to a study submitted by the Justice Department that concluded that “digital platforms compete with local TV broadcasters for local ad dollars and that the relevant market for analyzing local TV station combinations should include advertising on digital platforms.”

The NAB pointed out that the prohibition on owning more than one AM, FM and TV station in a market dates from when Franklin D. Roosevelt was in the White House. “[T]he FCC cannot justify its ownership rules by acting as though broadcast stations are still the only relevant electronic outlets, as in the days of President Roosevelt’s famous fireside chats,” the NAB said.

The FCC actually closed the formal comment period on its delayed 2018 Quadrennial Review two years ago. But the Media Bureau, in opening up a new comment period, said: “The 2018 Quadrennial Review proceeding has generated, and continues to generate, significant interest, including through the submission of additional information even after the initial comment period has ended. Accordingly, we ask commenters to take this opportunity to update the record in the 2018 Quadrennial Review proceeding, including with regard to the diversity-related proposals cited therein.”

The FCC has released the text of its quadrennial media ownership rule review.

The FCC Democratic majority voted not to lift crossownership rules or loosen local market station limits. "Based on our careful review of the record, we find that the public interest is best served by retaining our existing rules, with some minor modifications," the order said.

One of those is providing a "failing newspaper" waiver for newspaper-broadcast cross-ownerships similar to its failing station waiver, but the presumption is still that such cross-ownerships are out of bounds short of such extenuating circumstances.

The FCC pegged retaining the rules to program diversity.

"These rules promote competition and a diversity of viewpoints in local markets, thereby enriching local communities through the promotion of distinct and antagonistic voices. Ideally, our media landscape should be diverse because our population is diverse, and retaining the existing media ownership rules is one way in which the Commission can help to promote such diversity," the order continued.

As to the FCC's incentive auction impact on broadcasting, the FCC said it was too early to take that into account. 

While the auction may have a dramatic impact on the television landscape in many local markets, based on our assessment of the record and the ongoing nature of the auction, we find that it is too soon to quantify this impact; accordingly, it would be premature to change our media ownership rules in anticipation of the incentive auction’s impact at this time," the order said.

The item resubmits the JSA-tightening rule -- remanded by a federal appeals court -- with the change that grandfathered JSAs can be sold without triggering ownership issues -- as Congress directed it to do. So, any JSA of over 15% of sales still counts as ownership interest, but those in existence before March 2014 don’t have to be unwound, as Congress has already signaled in legislation.

The Third Circuit Court of Appeals threw out the JSA tightening, primarily because the FCC changed the ownership reg before completing the reasoned analysis for the underlying rules that is supposed to happen in the quadrennial review.

The item also defines shared services agreements (SSAs) and will require they be filed with the FCC, but does not make them attributable as ownership interests...yet.

The item extends the ban on co-ownership of two top-four rated TV stations to network affiliation swaps to prevent using those to evade ownership restrictions.

The quadrennial review was actually approved (three votes) several weeks back, and officially voted (the two dissenting Republicans cast their votes) a couple of weeks ago, but the item was awaiting the commissioner's statements before being released.