The FCC's Office of Economics and Analytics has issued a working paper giving the next FCC something to think about when it decides whether to allow mergers that reduce the number of station owners in a market.
It is expected to be the last such working paper issued under chairman Ajit Pai, who is exiting the FCC Jan. 20.
The paper, which was issued only days before the FCC heads to the Supreme Court -to defend its efforts to deregulate TV station ownership, looks at the relationship between the number of independently owned local television news operations and market size and the size thresholds above which a market will be able to sustain, economically, two, three or four or more such operations.
"In some markets, there may be a tradeoff between localism and diversity. A merger that eliminates a source of local news may be optimal, even though it reduces viewpoint diversity, if the merged entity improves the quality or increases the quantity of local news programming, strengthening localism," the paper said.
The paper said its analysis "could help policymakers assess whether a market is likely able to sustain the current number of local news operations or whether a proposed merger is likely to result in a favorable tradeoff of diversity for localism."
The FCC currently prohibits mergers among the top four stations in a market, one of the rules the FCC was trying to loosen before an appeals court struck it down, but the paper said that prohibition may not serve the public interest if it prevents such favorable trade-offs.
The FCC's merger analysis also includes the impact on competition, so the paper said that third policy goal would also need to be considered in any merger review.
The paper is meant to provoke discussion and represents the views of the staff and not the FCC or any commissioner.
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