The long fight over the Federal Communications Commission's media ownership rules could finally come to an end within the next 12 months, most likely after the presidential election.
An April 3 deadline for public comment on changes the FCC proposed late last year is quickly approaching, and while there's no guarantee the commission can finally put this fight behind it, if the modest proposal on the table now is upheld, broadcasters would have stable rules for the first time since the passage of the Telecommunications Act of 1996 obligated the FCC to revisit its media ownership rules. Since 1996 the rules have been caught in a loop of commission revisions and court challenges.
The FCC's rules play a key role in media deals by determining how many stations a company can own or control in a market, whether newspapers and broadcasters can own each other and in some cases which stations a buyer can and can't acquire. (In one example, the rules bar a company from owning two major network affiliates in the same market.)
The FCC's latest proposal would leave in place existing caps that limit broadcasters to owning eight radio stations and two TV stations in big markets. But the FCC also proposed some relaxation by letting newspapers and broadcasters buy each other in big markets and potentially do so in smaller markets on a case-by-case basis. That change is nearly identical to one the FCC proposed several years ago, but this time the agency sought public comment on standards it should use in determining whether to allow smaller-market combinations.
The FCC also questioned whether the limit on the number of stations a company can own in a market should apply to local marketing agreements between stations. Some stations set up marketing and programming agreements with local rivals to get around the prohibition.
Broadcasters have urged the FCC to relax the rules even further, but public-interest groups argue that the FCC plans already have given up too much.
The prevailing opinion is that FCC Chairman Julius Genachowski will wait to implement the rules until after the election to dampen political repercussions. FCC officials decline comment.
Last year an appellate court in Philadelphia overturned the latest incarnation of the FCC's rules, after having done the same to a previous incarnation, finding that the FCC hadn't done enough to determine how the changes would affect the already shrinking ownership of stations by women and minorities.
Some proponents of stricter limits on big media companies say the FCC hasn't adequately addressed that mandate in the new proposal and could still be on shaky grounds. "My reading is [the judges] directed the FCC to address the minority and female questions," says Corie Wright, policy counsel of consumer group Free Press. "It begs the question of what else you are going to do on this."
Broadcasters and publishers counter that in light of vastly heightened competition for viewership and ad dollars from cable and the Web, the FCC ownership rules are anachronistic. They also suggest that consolidation is needed to ensure stations can continue to pay for news and local programming despite the flight of viewers to other media.
Broadcasters aren't relying solely on the FCC for more relaxed rules. They've asked the Supreme Court to review the appellate court's action. "With newspapers having lost half their revenue since the last review ... the newspaper-broadcast restriction is an artificial impediment to nurturing local news and has outlived any usefulness it was supposed to serve," says Shaun Sheehan, Tribune Co.'s Washington vice president.
Consumer groups warn that media consolidation could leave communities with fewer independent sources of local news and programming.
If history is any guide, the commission will move conservatively. "I think this is a commission which is not likely to make radical changes. It's going to be largely incremental," says David Honig, president and executive director of the Minority Media and Telecommunications Council. Nevertheless. "It will do some good."
"My guess is that the FCC won't act until 2013 and likely will make only minor changes," says Richard Wiley, chairman of Wiley Rein LLP and a former FCC chairman whose clients now include many broadcasters.
Ira Teinowitz covers financial regulation for The Deal magazine.