FCC Launches Media-Ownership Rules Review

Notice of inquiry officially begins Congressionally-mandated review of five rules limiting local ownership, cross-ownership
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Related: No Hard, or Fast, Rules on Media Ownership

The FCC officially launched its congressionally-mandated
review of its media ownership rules. That came in a May 25
notice of inquiry
teeing up questions, the answers to which will help the
commission set new policy or adjust old ones.

Specifically, the FCC is looking at five rules: the local TV
ownership rule, the local radio ownership rule, the newspaper/broadcast cross-ownership
rule, the radio/TV cross-ownership rule, and the dual-network rule.

The notice makes it clear the FCC will take into account the
role of the Internet. "The Internet clearly has not wholly supplanted
traditional media, such as broadcast stations, newspapers, and cable systems,
but it has increased the quantity of news and programming available to
consumers."

If also asks what impact the National Broadband Plan should
have, including how "access to audio and video content available over
broadband" factors into its analysis of competition.

FCC Commissioner Robert McDowell, for one, says the Internet
has to be factored into the competition equation. "The Commission has
known since at least the time of its 2002 ownership review that the Internet
would have a profound effect on the media landscape, yet for various reasons
the agency has been unable to fully adapt its regulations to the new
realities," he said in a statement. "This time, I hope, we will get
it right.  Burdensome rules that have
remained essentially intact for more than a decade should not be allowed to
continue impeding, or potentially impeding, the ability of broadcasters and
newspapers to survive and thrive in the digital era."

Congress charged the commission with reviewing its rules
periodically to determine if any were "necessary in the public interest"
-- five words that have been interpreted by some to mean the FCC charter was
only to get rid of rules that were no longer necessary, and by others to mean
it is supposed to tighten or add regulations if it determines they are in the
public interest (the language also talks about modifying rules).

The commission said it will take a "close look" at
the impact of consolidation on the marketplace, but also promised it was going
in with "no preconceived notions" about what the close look
would reveal.

A separate, parallel inquiry into the state of journalism
and public access to local news and information will proceed and is expected to
help inform this review.

The NOI at least suggests that the competitive market for
broadcast video content includes cable, online, satellite, podcasts and
streaming audio content, though it also wants comment on how to define the
competitive market.

"Consumers of broadcast video content also have choices
for video programming among hundreds of cable channels carried by multichannel
video programming distributors (MVPDs), and on many Internet sites such as
hulu.com, fancast.com, abc.com, fox.com, and available for download at
Netflix.com and at iTunes," said the FCC document. "Some of the
Internet sites provide free content viewable with online commercial interruptions;
some provide fee-only content; and others offer content only to their
subscribers or members. Consumers of broadcast radio can choose also among over
100 audio channels carried by satellite radio, downloadable podcasts, audio
streaming, and other audio entertainment available in cars, on mobile devices,
and on computers. What is the impact of such changes on the economic viability
of broadcasters, including specifically the viability of their local news and
public affairs programming, in terms of the cost of production and resulting
station revenue from such programming?"

Broadcasters have argued that those competing voices must be
taken into account, and that the FCC needs to modify its rules to allow broadcaster
to team up with each other and with newspapers in smaller markets to compete
and survive.

The FCC is providing 45 days for comment, after which it
will propose rules changes--or not--and provide likely another 45 days for
comment. The goal is to get the review done by the end of the year.

The FCC effort is going on at the same time the Third
Circuit Court of Appeals is hearing challenges to the FCC's last quadrennial review-driven
media ownership rule change. That is when the FCC under then-Chairman Kevin
Martin chose only to loosen the newspaper-broadcast cross-ownership rule and
leave the others in place.

That move panned both by broadcasters who said it did not go
far enough, and consolidation critics, who said it went too far. In the latter
camp was Media Access Project, which weighed in on the FCC's announcement with
reservations about its priorities.

"Even though the Commission must begin the next review this
year," said MAP Senior VP Andrew Schwartzman. "I think it is placing
too high a priority on taking action at this time."

Schwartzman would prefer resolving the court case first.
"Right now, it should be devoting much more attention on fixing the mess
left by the Bush-era FCC which issued a poorly-supported opinion on
cross-ownership in the prior quadrennial review. That decision is under attack
in Court, and the Commission should fix that decision before starting work on a
new one."

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