FCC rolls back ownership regulations for big media companies
The Federal Communications Commission voted Thursday to relax ownership rules that will allow media companies to operate multiple TV stations in a market and reach more viewers nationwide. The new rules are a big help to Sinclair Broadcast Group which is trying to purchase Tribune Media.
The Federal Communications Commission voted 3-2 Thursday to relax broadcast ownership rules that will allow Sinclair Broadcast Group to purchase Tribune Media and expand Sinclair's reach to nearly three-fourths of all American households. The vote was not a surprise, but it was not without some drama.
Common Cause, a critic of media consolidation said, "Even for this craven FCC majority, today’s vote to bless more media consolidation represents an awful new low. The FCC just wiped away time-tested and common sense safeguards that promote vibrant local media by ensuring voters have access to competing sources of news. By blessing consolidation this majority has ensured newsroom redundancy, meaning fewer working journalists to hold the powerful to account."
FCC Chairman Ajit Pai, a Republican, said, "After too many years of cold shoulders and hot air, this agency finally drags its broadcast ownership rules into the digital age."
But Mignon Clyburn, a Democrat said, "Mark my words, today will go down in history as the day when the FCC abdicated its responsibility to uphold the core values of localism, competition and diversity in broadcasting."
National Association of Broadcasters president and CEO Gordon Smith said, "We are grateful the commission has adopted a common-sense approach to media regulations that will foster innovation, re-investment in investigative reporting and better service to our tens of millions of listeners and viewers.”
Eliminating the cross-ownership ban
The changes the FCC made today affect TV and newspapers, even though newspapers are not government regulated the way the FCC regulates the airwaves. In 1975, the FCC imposed a cross-ownership ban that kept TV stations from owning newspapers in the same market. Existing ownership was "grandfathered" but as stations and newspapers sold, new cross-ownership was not allowed. The FCC removed that barrier today. Chairman Pai said, "With the newspaper industry in crisis, it makes no sense to place regulatory roadblocks in the way of those who want to purchase newspapers. The media landscape has changed dramatically in the last 42 years, and the idea that a company could dominate a media market by owning a radio station and a newspaper is utter nonsense."
Eliminating the eight-voices test
In some markets, the same company runs more than one station. This practice, called "duopoly," required that no company is allowed to own two television stations in a market unless there are at least eight independently owned television stations in that market. The FCC chairman said the rule makes no sense since there is no such requirement for eight competitors in any other business.
The FCC also loosened its prohibition against one company owning two Top 4 stations in a market. Until now, duopolies could not include say, the number one and number three stations in the market, so it kept a company from owning big network affiliates since the top stations in most markets are affiliated with NBC, CBS, ABC or FOX. But after today, the FCC says it would consider allowing combinations on a "case-by-case basis."
Sinclair claims that even when it runs more than one station in a market, its history has been to expand the number of hours of news it offers and it says even when it runs news operations out of the same newsroom it can keep the stations independent of each other. Opponents say duopolies lead to layoffs and less vigorous news competition, and that, they say, is bad for the viewers.
Eliminating restrictions on Joint Sales Agreements (JSAs)
This is not something that viewers will notice, but it is an important "inside baseball" issue for stations. JSAs are used when one company owns a station but allows another company to manage the sales side of the business. Other agreements may allow more functions to be run by the non-owner. In small markets, this kind of agreement can cut down on the number of people needed to keep a station running.
Next-Gen TV moves forward
While most of its votes Thursday dealt with TV and radio, it also voted to keep the newest and, for broadcasters, most promising new technology moving forward. Next Gen TV, also known as ATSC 3.0 will allow broadcasters to insert customized advertising in their signals the same way social media targets you with special ads that are based on your demographics or interests. Broadcasters hope the new technology will also improve video delivery to mobile devices and will improve video and audio quality. The FCC vote sets a technical standard for one-way transmissions from broadcasters to viewers, but later it may have to regulate how the broadcasters collect data from viewers.
Reinstating the UHF discount
Earlier this year, the FCC took action that plays into the votes today.
TV owners may only own stations that, added together, do not reach more than 39 percent of U.S. homes. That law was put in place in 2004. But how is it then that the Sinclair-Tribune merger would be allowed to reach three fourths of American households? It is in the odd way the FCC will allow owners to count. If a TV station over-the-air channel is 14 or higher, it is a UHF station. If the station was in a 1-million person market, the owner would only have to count a half million people as being reached. Before cable, UHF stations had a smaller reach than VHF stations (channel 13 and lower.) The FCC, in April, re-instated the so-called UHF discount, which will allow Sinclair to keep most of its 173 stations, add Tribune's 42 stations and still be within the ownership limit because many of the stations are UHF stations. Opponents say it makes no sense because so few people use over-the-air signals these days. They watch TV via cable or satellite.
One thing that also complicates the argument for restricting market penetration is that big cable channels touch the majority of the country. CNN, FOX and MSNBC all reach about three-fourths of American households by cable.
The road ahead
Opponents are promising a lawsuit over the TV ownership rules. Democrats are hoping to launch an investigation into whether the GOP controlled FCC was giving preferential treatment to Sinclair, which critics say has Republican-friendly tendencies.
And the FCC is facing even stiffer headwinds next month. In December, the commission may vote on whether to overturn its own net neutrality rules. The plan to roll back net neutrality may be rolled out next week with a vote Dec. 14. Like the TV rule changes, big broadband providers love the idea of rolling back regulations but consumer groups loudly oppose it.