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FCC Could Be SingingCable’s Duopoly Tune

Washington — With the holidays just past, cable
operators may have received an early Christmas present
from the Federal Communications Commission.

The agency has voted to launch an inquiry into
whether shared-services agreements between
broadcast-TV stations are a loophole in the FCC’s
media-ownership rules and to look into other duopolyrelated
practices. That was part of its vote on broadcastmedia
ownership rules, but there was still plenty of
takeaway for the wired medium.

“May” is the operative word, since the FCC’s action
was part of a notice of inquiry, which is essentially
throwing out several questions for public comment
and input. Those questions were the right ones as far
as the American Cable Association and Time Warner
Cable are concerned, and in the case of network affiliation swaps that put the top two TV stations in a
given market into the hands of one owner, the FCC’s
Media Bureau appears to be on the same page with
cable operators.

Cable operators, and the American Cable Association
in particular, have been asking the commission
to crack down on shared-services agreements — in
which one broadcast TV station takes over some or all
management functions for another in the same market
— because they believe such arrangements are
tantamount to virtual duopolies that give broadcasters
unfair leverage in retransmission-consent negotiations.
ACA wants the practice banned.

Another positive sign for cable operators in the inquiry,
which came as part of the FCC’s vote to loosen newspaper-
broadcast cross-ownership rules and scrap
TV-radio cross-ownership rules, but leave duopoly
rules in place, was the FCC’s decision to examine the
effects of broadcast-TV multicasting.

Time Warner Cable had argued in comments to
the commission that multicasting was another form
of virtual duopoly. TV stations affiliated with one of
the Big Four broadcast networks (ABC, CBS, Fox and
NBC) have used a digital subchannel to affiliate with
a second Big Four network in at least 68 instances, according
to TWC.

With the transition to digital broadcasting — which
provided each station with multiple digital subchannels
— now over, the FCC said it wanted answers to
whether “the transition has eliminated the need for
the local television ownership rule to permit common
ownership in local television markets.”

Broadcasters have countered that digital subchannels
are not comparable to a station’s main signal,
since the subchannels have no must-carry rights and
can be used for purposes other than transmitting traditional
TV signals, such as mobile video, data or additional
high-definition programming.

The FCC said it wants comment on another scenario
some cable operators have tabbed an ownership
loophole: the fact that under the FCC’s current reading
of the rules, one company can own two of the top
four network affiliates in a market, which the rules
otherwise prohibit, so long as both channels didn’t
hold those affiliations when the combination was created.
That inquiry dates to an October Media Bureau
decision in a complaint against Raycom in Honolulu,
which traded up affiliations in the market.

The bureau signaled in that decision that it was following
the letter of the law, while agreeing with the
complainant that it was a loophole. The FCC has now
signaled it could modify or eliminate that practice.