FCC rejects TV and radio owners’ call for deregulation

The Federal Communications Commission dashed the hopes of TV and radio ownership groups that wanted the commission to loosen ownership restrictions.

The broadcasters had argued that lifting ownership restrictions would allow local stations to more aggressively compete with social media and streaming sources that are eating away at audiences and revenue. Social media and streaming services — which did not exist when the original limitations on broadcasters were put in place — now claim more than half of some markets’ ad revenue.

But on Wednesday, in a long-awaited decision, the FCC rejected the broadcasters’ call for deregulation and said they should embrace “public service” over profitability.

In the decision, the FCC reaffirmed restrictions on the number of TV stations that ownership groups may control in a market “given the unique obligations broadcast licensees have as trustees of the public’s airwaves to serve their local communities.”

Federal rules dictate that a single broadcaster may own only one of the four highest-rated TV stations in a single market. Usually, those include stations affiliated with NBC, CBS, ABC, Fox and, in some markets, Spanish-language Univision- or Telemundo-affiliated stations.

In affirming the restriction, the ruling said, in effect, competition with streaming and social media sites will push the broadcasters to focus on serving the public. The ruling stressed words such as “competition,” “localism” and “viewpoint diversity.”

The ruling said: “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.”

“To be clear, at this point only three core rules remain,” FCC Chairwoman Jessica Rosenworcel wrote. “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.”

Broadcasters have argued for years that federal restrictions put them at a disadvantage in competing with online news and entertainment sources. Streaming services and podcasting have exploded. The National Association of Broadcasters told the FCC, “Broadcasters’ service to communities across the country is imperiled by the Commission’s failure to modernize its decades-old media ownership rules.”

Republican Commissioners Brendan Carr and Nathan Simington called the ruling “an ostrich-like approach.” Carr warned that local broadcasters will face the same financial troubles as local newspapers unless the FCC lifts ownership restrictions:

It is past time for the FCC to confront the harms that its own media ownership policies have caused. For decades, the FCC prohibited someone from owning a newspaper and a broadcast station in the same market. This restriction was born in an era when newspapers and broadcasters were the only games in town for local news and information. Back then, Americans got their news in the morning when a newspaper clunked onto the front doorstep and in the evening when they tuned into one of three nightly newscasts. But over time, the FCC failed to acknowledge the titanic changes taking place in the news business, particularly with the rise of the Internet.

Our prohibition on newspaper-broadcast cross-ownership only made it harder for them to gain the scale needed to compete with the Internet giants. When we finally eliminated the prohibition in 2017, it was too late for much of the industry—1,800 newspapers had gone out of business since 2004 alone. They were facing competition from market segments that the FCC refused even to recognize. The result? Communities across the country lost access to local news and information at least in part because the FCC failed to react quickly enough to changes in the marketplace.

The Internet and Television Association, a trade association that represents the broadband and cable TV industries, pushed the FCC to tighten ownership rules. When TV stations own multiple stations in a market, the group argued, it drives up cable rates because the owners have more leverage to force cable companies to pay more to carry the TV signals. The association recently wrote to the commissioners:

The Commission has repeatedly found that the long-standing ban on one company owning more than two top-four rated stations in a market remains vital to promoting competition and protecting consumers. More specifically, both 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.

The FCC ruling did acknowledge that it might be necessary, at some point, to change ownership rules because they no longer “serve the public interest.” But that time is not now, the ruling said. Congress compels the FCC to reconsider the ownership rules every four years.

Radio ownership rules remain, too
While radio ownership is less regulated than TV ownership, the FCC does restrict how many radio stations a company may own in a market. The rules vary depending on the number of stations in a market. Bigger markets allow owners to control more station licenses.

On Wednesday, the FCC affirmed those rules, saying:

The Local Radio Ownership Rule enacted in 1996 allows an entity to own:

• up to eight commercial radio stations in radio markets with at least 45 radio stations, no more than five of which may be in the same service (AM or FM);
• up to seven commercial radio stations in radio markets with 30-44 radio stations, no more than four of which may be in the same service (AM or FM);
• up to six commercial radio stations in radio markets with 15-29 radio stations, no more than four of which may be in the same service (AM or FM); and
• up to five commercial radio stations in radio markets with 14 or fewer radio stations, no more than three of which may be in the same service (AM or FM), provided that the entity does not own more than 50% of the radio stations in the market unless the combination comprises not more than one AM and one FM station.

The FCC acknowledged that radio stations face even more competitive headwinds than TV stations given the explosion of podcasts, satellite services and online streaming services. The commissioners noted:

In particular, we note that broadcast radio is alone within the audio landscape in having an affirmative obligation to serve the needs and interest of the local community. Moreover, there is evidence that being local is the defining value proposition that many radio stations see themselves as providing to consumers. As commenters point out, radio programming includes offerings with a community focus, such as program hosts that are known within the locality, music by local bands, reporting on local sports teams, and sponsorship of neighborhood festivals, which other audio services do not provide.

But Carr, the Republican commissioner, passed on this experience from a field trip to Wyoming:

During a visit to Powell, Wyoming, a town of about 6,000 people that sits in the northwest corner of the Cowboy State, I stopped by a local radio station, only to find its doors locked. After we were finally able to rouse someone to let us inside, I got a good look at the operations—effectively a Dell laptop playing music pumped in from some big city somewhere else.

A couple of miles away in Cody, there was a local broadcast company that was investing in their community and the types of local news and entertainment programming that are attuned to the needs of their listeners. This company wanted to invest in the Powell station and originate live and local programming for this underserved community. But they couldn’t. Not because they lacked the capital or a willing seller, but because the FCC wouldn’t let them. Our ownership rules—which are supposed to promote competition, a diversity of viewpoints, and localism—were keeping that laptop powered up while preventing actual investment in local newsgathering and the local jobs that come with it. These are the very same rules that the FCC votes to retain. Poynter