The FCC has completed its long-pending 2018 review of the broadcast multiple ownership rules. In making its determination of whether the ownership rules remain necessary in the public interest as a result of competition, the FCC continued to focus on the goals of competition, localism, and viewpoint diversity. It rejected the argument made by the National Association of Broadcasters (NAB) and certain broadcasters that the FCC should focus primarily on the impact of the rules on competition.
The FCC declined to loosen the local radio ownership rule, the local TV ownership rule, or the dual network ownership rule. Commissioners Carr and Simington dissented from the decision and issued separate statements.
Local Radio Ownership Rule
The local radio ownership rule limits the number of stations an entity can own in a local market based on the total number of full power radio stations in the market and imposes subcaps on the total number of AM or FM stations an entity can own in one market. The number of stations in a market is determined by Nielson Audio for rated markets and by using a contour overlap method in areas outside rated markets. Although it concluded that the environment in which radio stations operate has changed dramatically since 1996 when the current rule was adopted, the FCC declined to make any changes to the local radio ownership rule. The FCC stated that there was no consensus among commenters on whether changes in the rule would allow radio station owners to respond to the marketplace changes more effectively, and it agreed with broadcasters who argued that loosening the rule would harm competition.
The FCC made permanent the contour-overlap methodology to determine compliance with the local radio ownership rule in areas that are not within the boundaries of Nielsen Audio radio markets, and in Puerto Rico. This methodology has been used on an “interim” basis for almost 20 years. The FCC declined to modify the procedure used to determine compliance with the rule for station owners in embedded markets — that is, smaller markets contained within the boundaries of a larger market.
Local Television Ownership Rule
The local television ownership rule permits an entity to own up to two television stations in the same Nielsen Designated Market Area (DMA) as long as the noise limited service contours of the stations don’t overlap or both stations are not among the top-four ranked stations in a DMA at the time of an acquisition. The FCC’s Order retains the current rule and tightens the method used to determine compliance with the top-four prohibition. The FCC updated the audience share metric used to determine a station’s ranking and clarified that ratings data should be averaged over the 12-month period preceding the date an FCC assignment or transfer application is filed. Also, the FCC decided that a station’s multicast streams that have measurable ratings as reported by Nielsen or another ratings service and are not a simulcast of another in-market station will be included in determining the ranking of a station.
The FCC’s decision to keep the current rule is based on its conclusion that top-four combinations can result in a single entity obtaining a significantly larger market share than other entities in the market and can also result in reduced incentive for local stations to improve their programming. The FCC will continue to allow waivers of the top-four prohibition on a case-by-case basis but will not adopt presumptions in favor of top-four combinations when, for example, an entity commits to improve local news.
The FCC is expanding the prohibition on certain types of acquisitions of a network affiliation by one station in a market from another, to ensure that these transactions are not used to circumvent the top-four prohibition. Broadcasters will not be permitted to acquire a network affiliation from another station that is ranked among the top-four stations in the market and place the network programming on a low power television station that the acquiror currently owns or on a multicast stream of the acquiring station. This new prohibition will apply only on a prospective basis. Licensees that have acquired a network affiliation from another station in the market and are currently broadcasting the network’s programming on a low power station or a multicast stream will be grandfathered. This change relates only to the acquisition of network affiliations. Low power stations will continue to be exempt from the local ownership rule for purposes of the top-four prohibition.
Dual Network Rule
The dual network rule prohibits a merger between any of the big-four networks — ABC, CBS, Fox, and NBC. The FCC concluded that the rule, which has existed since the 1940s, remains necessary despite significant changes in the video marketplace.
