Gomez, Carr, and Starks Confirmations
After functioning for nearly two years without a full Commission, the FCC welcomed its fifth Commissioner in September 2023 when Anna Gomez was confirmed by the Senate. Gigi Sohn had been nominated to fill the seat in October 2021, but after opposition in the Senate, withdrew herself from consideration in March 2023. Gomez was then nominated by President Biden in May.
Commissioners Brendan Carr and Geoffrey Starks were unanimously confirmed by the Senate to serve additional terms, solidifying a complete five-member Commission consisting of three Democrats and two Republicans. In a statement on the confirmation of Commissioners Carr and Starks, Chairwoman Rosenworcel noted that “the FCC is now ready to take on our full slate of work.”
While net neutrality has made headlines as a priority of the Commission, the FCC must also turn to the pending 2018 and 2022 Quadrennial Reviews of its media ownership rules. It could also tackle issues such as the categorization of virtual multichannel video programing distributors, and television station blackouts on MVPDs.
2018 and 2022 Quadrennial Reviews
Every four years, pursuant to the Communications Act, the FCC undertakes a review of its media ownership rules. These “Quadrennial Reviews” are meant to ensure the rules are up to date and still in the public interest. The FCC initiated a Quadrennial Review in 2018. Legal challenges to the 2010/2014 Quadrennial Reviews slowed down the consideration of issues in the 2018 Review. In 2021, the FCC solicited comment to update the record in the 2018 Quadrennial Review. In December 2022, the Commission issued a Public Notice commencing the 2022 Quadrennial Review, even though the 2018 Quadrennial Review had not been completed.
The National Association of Broadcasters (NAB) filed a petition in federal court asking the court to compel the FCC to finish its 2018 review before starting the 2022 review. On September 28, 2023, the U.S. Court of Appeals for the D.C. Circuit ordered the FCC to complete the 2018 Quadrennial Review within 90 days or show cause why NAB’s petition should be denied.
The 2018 Quadrennial Review specifically sought comment on the Local Radio Ownership Rule, the Local Television Ownership Rule, and the Dual Network Rule. When the FCC commenced the 2022 Quadrennial Review, the focus was on those same three rules.
Local Radio Ownership Rule
The Local Radio Ownership Rule places caps and subcaps on common ownership of full power radio broadcast stations in local markets. The rule is based on a sliding scale. For example, in a radio market with 45 or more stations, an entity can own up to 8 stations but only 5 can be in the same service (AM or FM), while in a radio market with 14 or fewer stations, an entity can own up to 5 stations but only 3 can be in the same service and it cannot own more than 50 percent of all radio stations in that market.
Because it has the least political opposition, this rule may be the most likely to see action from the FCC. Those who favor eliminating the rule say doing away with it will increase competition for audio information and entertainment. They note that consumers are increasingly adopting online audio outlets and subscription audio platforms, and advertisers are migrating to digital solutions, leaving radio station owners with diminished audiences and advertising market share. They believe relaxing or eliminating the ownership caps could make radio more competitive by enabling market driven consolidation. Those opposing elimination of the rule say retaining the existing ownership caps will protect localism and diversity of viewpoints. If the FCC acts on the radio ownership rules, it may be likely to take an intermediate approach, for example by relaxing ownership subcap restrictions, or by retaining the FM caps on ownership but eliminating AM caps in order to promote the survival of AM radio, which many argue is essential for providing emergency and other local life-saving information.
Local Television Ownership Rule
The Local Television Ownership Rule prohibits ownership of two of the top four rated stations in a Designated Market Area (DMA) unless a waiver is granted. The top four stations are usually affiliates of the Big Four broadcast television networks (ABC, CBS, NBC and Fox).
TV broadcasters generally support relaxing or eliminating the rule, but multi-channel video programming distributors (MVPDs) do not, arguing that relaxation or elimination would threaten competition by providing TV station owners increased leverage in negotiation of retransmission consent agreements. Some MVPDs have also argued for the extension of the rule to low power television stations and secondary digital multicast streams so broadcasters cannot use these to circumvent the top-four prohibition. Most broadcasters say consolidation will increase competition by promoting cost-saving operational efficiencies, which will increase stations’ ability to serve the public.
Many broadcasters already have joint sales and programming agreements under which a certain amount of programming, marketing and operational expenses are shared. Some broadcasters, particularly in smaller markets, effectively operate two Big Four network stations in a market by placing the programming of one Big Four network on a digital multicast stream or on low power TV stations. Those who support elimination of the local television ownership rule say doing away with the rule would enable broadcasters to achieve the economies associated with joint operation in a more efficient way.
While the FCC is unlikely to change this rule, it may clarify the waiver requirements, for example by creating a presumption that a waiver would be in the public interest if the number three and four rated stations in a market merge under certain circumstances.
Dual Network Rule
The Dual Network Rule prohibits mergers among the Big Four networks. The Commission has stated that the Dual Network Rule maintains an equilibrium between the national television broadcast networks and their affiliated stations in local markets, and promotes competition in video entertainment programming and national advertising. Based on the FCC’s positive view of the Dual Network Rule, it seems unlikely the Commission will make any modifications to the rule. Many argue, however, that the rule is outdated, with the prevalence of MVPDs, the Internet, and online video distributors.
With the linear TV model experiencing challenges, the increased scale resulting from a merger of Big Four networks could better position traditional TV networks to compete in the current video environment. However, while there has been speculation over the past few years that some Big Four networks might be sold, the fact that owners of those networks rely on cash from retransmission consent fees to help support other operations such as streaming potentially makes a sale problematic. In any case, it is unlikely that the dual network rule will be changed or repealed in the foreseeable future.
Virtual MVPD Rulemaking
In 2014, the FCC issued a rulemaking seeking to define so-called virtual MVPDs (vMVPDs), or to incorporate them in the definition of MVPDs. vMVPDs are services that provide multiple video channels over the internet (that is, over-the-top or OTT service) rather than over their own infrastructure as do traditional MVPDs like cable TV and direct broadcast satellite services. Unlike subscription video on demand (sVOD) services such as Netflix and Prime Video, vMVPDs (such as SlingTV, FuboTV and Tubi) typically carry live TV channels. Some vMVPD services provide programming on a subscription basis while others are free but include commercial advertising. There also are hybrid models such as advertising-based video on demand (AVOD) which provide reduced fees for subscribers willing to watch some advertising.
After 2014, the rulemaking essentially went dormant. NAB has called on the FCC to restart it. This past August, the Republican chairs of the House Energy and Commerce Committee and the Communications Subcommittee called on the FCC to leave regulation of vMVPDs to Congress, while in October a group of 20 Senate Democrats called for the FCC to refresh the record in the long-pending rulemaking.
Network affiliate TV stations support reopening the proceeding because treating vMVPDs as MVPDs for purposes of retransmission consent would enable non-network owned stations to negotiate directly with vMVPDs and obtain fees for the carriage by vMPVDs. vMVPDs and the Big Four television networks have formed the Preserve Viewer Choice Coalition to oppose changes. Chairwoman Rosenworcel has expressed skepticism that the Commission has statutory authority to classify vMVPDs as MVPDs.
Next Generation TV
In 2017, the FCC authorized broadcasters to voluntarily transition to Next Generation Broadcast Television, or ATSC 3.0. In June 2023, the FCC issued a Third Report and Order and Fourth Notice of Proposed Rulemaking, clarifying that hosting multicast streams on a temporary host station’s facility would not result in attribution under the broadcast ownership rules. However, the FCC also noted there were concerns with the impact of ATSC 3.0 on the ownership rules, as more Big Four network programming is being placed on multicast streams. The FCC deferred action on this issue to the Quadrennial Review.
National Cap on TV Ownership
The National Cap on TV Ownership is not included in the FCC’s pending Quadrennial Reviews, but the FCC could still initiate a proceeding to review it. The rule does not limit the number of stations under common ownership, but it does prohibit common ownership of TV stations which collectively reach more than 39% of the national audience. Television stations operating on UHF channels (14 and higher) receive a “discount” for purposes of determining compliance with the rule, where only 50% of the number of TV households in the DMA are counted, versus 100% for VHF channels (13 and lower). This discount may seem inconsistent in today’s digital TV world, as UHF signals generally are technically superior to VHF channels. When the UHF discount was created, UHF channels were technically inferior to VHF channels.
In 2016, the FCC eliminated the UHF discount, but reinstated it in 2017. Chairwoman Rosenworcel has argued against the UHF discount, stating that the introduction of digital television rendered it obsolete. Elimination of the UHF discount without grandfathering would immediately place some TV broadcast groups in violation of the national audience cap. When the cap was eliminated in 2016, grandfathering was provided on a limited basis.
MVPD Blackouts and Fees
In October 2023, Chairwoman Rosenworcel circulated two NPRMs to address the problem of blackouts of broadcast TV stations on MVPD systems. Blackouts typically result when station owners and MVPDs reach an impasse in negotiations over retransmission consent terms and the station owners withhold the right for their stations’ programming to be carried on the MVPD’s systems. Such blackouts can be damaging to MVPDs, which can lose subscribers to competing MVPDs that continue to carry the stations’ programming. The NPRMs seek comment on proposals to require MVPDs to give subscribers advance notice of retransmission consent related blackouts, and to require MVPDs to issue rebates to subscribers who lose access to station programming due to such blackouts. These NPRMs have not yet been released.
In November, Charwoman Rosenworcel announced a proposed NPRM to target “junk fees” such as early termination fees charged to subscribers by MVPDs. This NPRM will be considered at the FCC’s meeting on December 13, 2023.
Proposal to Support Local Programming in Broadcasting
In November, Chairwoman Rosenworcel announced a proposed NPRM to prioritize the processing of applications for license assignments, transfers and renewals where the subject stations provide locally-originated programming. This NPRM has not yet been released and it is unclear how locally-originated programming would be defined, how much programming would be required to qualify for prioritization, or how such a processing rule otherwise would be applied.
