FCC Launches Media-Ownership Rules Review

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The Federal Communications Commission 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," McDowell 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 vice president 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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