Communications Law

1
Communications Law

• Prof. Karl Manheim
• Spring, 2006
• 6. Station Ownership Rules

2
Media Ownership

• Regulated media
• Broadcast TV (incl. DTV, LPTV)
• Broadcast Radio (inc. LPFM)
• Cable systems
• Satellite systems (DBS digital radio)
• Unregulated media
• Newspapers (and other print media)
• Cable/Satellite channels networks
• Internet

3
Media Ownership

• Regulated media
• Broadcast TV (incl. DTV, LPTV)
• Broadcast Radio (inc. LPFM)
• Cable systems
• Satellite systems (DBS digital radio)
• Unregulated media
• Newspapers (and other print media)
• Cable/Satellite channels networks
• Internet

by regulating these
the FCC can also indirectly regulate these
4
Evolution of Ownership Rules

• 1934/1941 Duopoly rules
• By Market
• No common ownership of TV stations
• No dual network affiliation
• No common ownership of radio in same service
• National caps 7 AM 7 FM 7 TV
• 1970 Cross-Ownership rules
• Radio/TV and Broadcast/Newspaper (by market)
• All rules survived judicial scrutiny

5
Evolution of Ownership Rules

• 1980s De-regulatory trend
• National caps
• of broadcast stations 12 per service (AM, FM,
  TV)
• 25 national audience potential (50 UHF
  discount)
• Local caps (by market)
• Common ownership allowed based on market size
• 1996 TCA
• Repealed or eased ownership rules
• No. of TV stations national audience cap
  (25-35)
• Local and national radio ownership
• Dual Network Rule

6
Evolution of Ownership Rules

• 1996 TCA
• Repealed or eased cross-ownership rules
• Telephone/Cable Cable/Broadcast Cable/Network
• Mandates deregulatory biennial review ( 202(h))
• 2000 Biennial Report (started in 1998)
• Retains NTSO and CBCO
• Invalidated Fox TV v. FCC Sinclair v. FCC
  (2002)
• 2003 Report Order
• Relaxed local and national ownership rules
• Rebuked by Congress
• Upheld in part in Prometheus Radio v. FCC (2004)

7
Multiple Ownership Rules

• Background Goals
• Competition
• Diversity of information sources
• Efficient use of spectrum
• New Facts Policies
• Convergence / media competition
• Deregulation
• 202 of 96 Telecom Act repeals/amends some caps
• Mandates that FCC reconsider others (biennially)
• 47 CFR 73.3555
• Inapplicable to NCE TV and FM stations

8
Radio Multiple Ownership

• No multiple ownership of AM or FM stations within
  same principal community contour
• AM predicted or measured 5 mV groundwave contour
• FM predicted 3.16 mV contour
• Exceptions based on market size TCA 202(b)

• National audience caps repealed 202(a)

9
Initial TV Mult. Ownership Rule

• No overlap of Grade B contours
• what is a grade B contour
• measurement of signal strength
• specified in 47 CFR 73.683 as
• 47-64 dB above 1 mV/m
• at least half the househeholds get tolerable
  reception using a conventional roof-top antenna
  half the time
• longley-rice model
• also applied to satellite non-duplication

10
Grade B Contour for WUSA
click for national grade b map
11
Grades AB KJEO Fresno
The contours are derived by mathematical
calculation using the Longley Rice method which
accounts for geography and other propagation
factors
12
Amended TV Duopoly Rule

• Maximum 2 stations in same DMA
• Neilsen Media Research Designated TV Market Area.
  more info still more
• Particular TV markets by county
• measured by preponderance of viewership
• LA 5,354,150 household (5.2 national) stations
  
• But only under these conditions
• no grade b overlap
• failed stations (no out-of-market buyers)
• 1 of the stations is ranked lower than 4th in DMA
  and 8 independent stations remain in DMA
• within grade b
• Other media (e.g. newspapers) dont count

See FCC Opinion Order (1/19/2001) - Duopoly
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TV/Radio Cross-Ownership sub (c)

• Previous cap
• No X-ownership in same geographic area
• Grade A contour overlaps w/ 1 mV/m (2 for AM)
• New cap
• 1 (or 2 where duopoly allowed) TV stations plus 1
  radio station in same market
• 1 TV station (or 2), plus y radio stations, where
• y 6 (or 7) if 20 media voices remain
• y 4 if 10 media voices remain
• voices include cable eng. lang. newspapers
  gt5 share
• certain stations grandfathered

14
Bcast/Newspaper X-Ownership (d)

• No TV license to owner of daily newspaper
• Grade A contour overlap (TV) w/ entire community
• Any 1st Amd concerns?
• No radio license if
• 2 mV contour overlap (AM) w/ entire community
• 1 mV contour overlap (FM) w/ entire community
• Replaced by Cross-Media limits (2003)

15
National TV Station Ownership sub (e)

• Previous NTSO rule
• 12 station cap nationally (earlier 3, 7)
• to maximize diversification of program and
  service viewpoints
• to prevent undue concentration of economic power
• New NTSO rule
• stations cannot reach gt 35 natl audience
• no couble counting for satellite stations in DMA
• satellite station must be permitted under duopoly
  rules
• expanded to 39 in 2004 (congl compromise)

16
Cable X-Ownership Rules 76.501

• Cable television system cannot own a TV broadcast
  station in same market
• predicted Grade B contour overlaps the cable
  service area
• Cannot offer Satellite Master Antenna TV
• SMATV is common satellite reception that doesnt
  use any public right of way
• e.g., hotel, apartment building
• Exception if effective competition in market

17
Promethus Radio v. FCC (3rd Cir. 2004)

• Jdx for Review of FCC Report Order
• 28 USC 2342(1) 47 USC 402(a)
• Since not a licensing decision, not limited to DC
  Cir.
• Standard of Review
• APA 7 USC 706(2)(a)
• arbitrary, capricious, an abuse of discretion,
  or other-wise not in accordance with law (eg,
  unconst, ultra vires)
• Procedural
• agency must adequately consider all facts
  positions
• Substantive
• rational basis review

18
Promethus Radio v. FCC (3rd Cir. 2004)

• Are the rules necessary in the public interest
• FCC interpretation useful, convenient,
  appropriate
• Based on 1996 TCA leg. history (no longer
  necessary)
• Compare necessary proper clause in Art. I,
  8
• indespensible, absolutely necessary
• Court upholds FCCs interpretation ( discretion)
• Same public interest standard in deregulation as
  elsewhere
• FCC must affirmatively justify retained own.
  rules
• No justification needed pre 96 TCA
• Any justification reviewed under deferential
  A/C/A standard

19
Promethus Radio v. FCC (3rd Cir. 2004)

• Cross-Ownership Rules
• Repealed replaced by Cross-Media Rules
• Rationales
• diversity of voices exists
• independent of ownership
• also due to new media (cable, Internet)
• XO rules undermined localism
• co-owned outlets produced higher quality local
  programming

20
Promethus Radio v. FCC (3rd Cir. 2004)

• Cross-Ownership Rules
• Repeal of XO rules upheld
• Enough evidence in record to avoid A/C/A standard
• Cross-Media Limits
• A/C/A standard
• Also record evidence to support some XO limits
• 5th Amendment Equal Protection
• Newspapers not singled out
• 1st Amendment
• Scarcity rationale (Red Lion v. FCC (1969))

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1st Amendment Scarcity

• XO rules content-based or content-neutral?
• If aimed at non-speech, apply mid-level scrutiny
• Promote an important govt interest, that is
• Unrelated to the suppression of speech, and
• Burdens speech no more than necessary
• (cf. Red Lion licensing of broadcast vs print)
• Content based (diversity and localism) rules
• only when the restriction is narrowly tailored
  to further a substantial government interest
• Do diversity localism, in face of scarcity,
  survive?
• Turner v. FCC (1994) (assuring the public has
  access to a multiplicity of informatn sources is
  a govt purpose of the highest order it promotes
  values central to the 1st Amd)

still valid rationale?
22
Promethus Radio v. FCC (3rd Cir. 2004)

• Specific Cross-Media Limits
• Court upholds limits in principle, but rejects
  FCC methodology in selecting them
• DoJ/FTC Diversity Index geared toward economic
  competition, not diversity of viewpoints
• FCC calculations of market share were flawed
• Why assign different values to different media,
  but then same value to all outlets of particular
  type (eg, all radio same share)
• Ex. Dutchess Com. College and ABC both assigned
  4.3 share
• Inclusion of Inet not justified (based on
  exclusion of cable)
• No citation/support of Internet as ind. local
  source of news
• Internet not as available as cable
• Why are these FCC rules A/C/A?

23
Promethus Radio v. FCC (3rd Cir. 2004)

• Local Ownership Rules
• TV
• Triopolies if gt17 TV stations Duopolies
  elsewhere
• No co-ownership of top 4 outlets in any market
• Court upholds this rule as welfare enhancing
  (ample record)
• Specific limits suffer from same inadequate
  record as XO rules