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.
