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Broadcasters' Turn to Worry About FCC

Cable irked by Martin; now stations face new re-regulation fears 12/28/2007 07:00:00 PM Eastern

The cable industry felt the full force of FCC Chairman Kevin Martin's authority in 2007.

He has knocked cable rates and invoked cable's market power, and tried to push it to offer a la carte programming.

Now, it may be broadcasters' turn for some of the chairman's tough love. The recent new media-ownership rule revision did not go far enough for broadcasters' liking. Years of talk about deregulation ultimately led only to a “modest” modification of the cross-ownership ban, affecting only the top 20 markets, instead of a complete lifting of the ban. In addition, broadcasters now also face the broad potential for license renewal reregulation—a prospect which is more than they bargained for.

Raycom Media President Paul McTear, who heads a coalition of small-market TV stations that include ones owned by Belo, Fisher, Freedom and LIN TV, last week said the decision failed to take into account the “harm” the limited ruling had on smaller stations.

A broadcast executive who asked not to be identified added: “Not only did we get screwed on getting any meaningful reform, we've gone backward.” While he said broadcasters will go on being “healthy companies that will continue to generate shareholder returns,” he said the FCC, by not expanding the ability of small-market stations to form more duopolies, appeared to be less concerned with the vitality of the business than with its mere survival. Another broadcaster said Martin was relegating broadcasters to “second-class status” among other media.

The worst may be yet to come. With the FCC's proposal of a major overhaul to TV stations' license renewal requirements, broadcasters fear the government could decide what type of local programming TV stations have to run, or, for example, how much time radio should spend playing songs by local artists. Some broadcasters and communications attorneys are comparing the Martin FCC to the regulatory days of the 1970s.

And though it has little chance of passage, consolidation critic Rep. Anna Eshoo (D-Calif.) has introduced a bill that would toughen license renewal standards and cut the license term from eight years to three.

In introducing his proposal to loosen the newspaper-broadcast cross-ownership rules, Martin had said that after listening to a broad collection of consolidation critics at town meetings held nationwide, he determined that allowing companies to acquire more radio and TV stations in smaller markets was not in the public interest. Martin has a raft of proposals about broadcast localism that the National Association of Broadcasters says could potentially have “grave consequences.”

But if he is to take a regulatory tack toward the broadcast medium, Martin will almost certainly have to employ the “strange bedfellows” majority of teaming with the commission's two Democrats. That's also the tack he took two weeks ago when he imposed a cap on how big cable operators can become. The two Democrats on the commission voted with him; the two Republicans voted against him.

Communications attorneys who may have to deal with the FCC were not about to talk on the record. But one veteran communications attorney says of the localism proposals: “It looks like the commission is proposing that regulation go back to where things were in the '70s and '80s, complete with ascertainment and the old main studio rules. That was a time when someone described the FCC as the last of the New Deal Dinosaurs.”

In broadcasters' favor is that the FCC, in its Dec. 18 vote on the localism initiatives, didn't make any rules but instead indicated what it might do, shadows that won't necessarily remain unaltered by the future. “Any such proposals would need to go through the rulemaking process,” says the attorney, “a process that, if the past is prologue, will take years.”

That was one of the reasons why the localism initiatives were not a slam dunk for Democratic Commissioner Michael Copps, who has long called for more community input and a tougher license renewal policy. He says that while the cross-ownership change was an order, the localism item was simply a proposal, and that he is skeptical about how fervently the FCC would pursue those regulatory initiatives now that the majority had gotten what it wanted, “which was to loosen newspaper-broadcast cross-ownership.”

But that veteran attorney isn't convinced. “The current commissioners have virtually no experience with the old rules, particularly the ascertainment rules,” he says, “and probably don't realize how arcane and outmoded those rules have become.” They were scrapped in the 1980s under the theory that the marketplace was sufficiently vibrant and competitive that a broadcaster would provide programming of local interest because if it didn't, it wouldn't attract enough interested viewers to pay the bills.

Asked why it wasn't a reasonable thing to ask the community to weigh in on what local programming broadcasters should air, one broadcast executive who asked not to be identified had a ready answer: “If you could really ask the public what they want, they would say: 'Give me more sex, give me more violence.' Do we really get to find out what the public wants, or are we supposed to find out what Michael Copps and Jonathan Adelstein want? The elites love the notion of ascertainment.”

An FCC staffer says the localism proposals include mandates on the types and amount of local programming provided, with a license renewal potentially in the balance. The FCC wonders whether the network contracts with affiliates prevent stations from exercising local control, and whether it should create rules that strengthen a station's ability to pre-empt network content.

The NAB, in an e-mail obtained by B&C, urged members prior to the Dec. 18 meeting to call or meet with the commissioners about the proposals.

At least one commissioner is up to speed on the “arcane and outmoded” aspects of ascertainment, which require broadcasters to meet regularly with community groups to “ascertain” what local issues they think the station should be covering.

BACK TO THE FUTURE

“The localism proposals in the Notice of Proposed Rulemaking appear to be heavily re-regulatory,” says Commissioner Robert McDowell, a Republican. “I am concerned we may reinstate old regulations that the commission previously eliminated as unnecessary given marketplace dynamics.”

For example, he says, in the proposed rulemaking, “We tentatively conclude that the commission should require stations to convene permanent advisory boards made up of community officials and leaders to help the licensees ascertain the programming needs of the community. While seeking advice from community groups is a helpful idea, and one that many stations have voluntarily adopted, I have concerns about the government requiring them to do so while also micromanaging how they are run.”

McDowell is also worried about programming guidelines: “This is only a small step away from content regulation. We risk treading on the First Amendment rights of broadcasters to make editorial choices regarding what programming serves the needs of their communities.”

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