Sources: Pai Teeing Up Media-Ownership Order

Said to allow crossownership, could tweak duopoly test

FCC chair Ajit Pai is working on a media ownership order that, according to a broadcast industry source, would allow newspaper-broadcast and radio-TV crossownership.

The item also could remove the prohibition on owning two of the top four-rated stations in a market and “tweak” the eight-voices test for allowing duopolies (two stations in a market owned by a single entity).

Currently newspaper-TV and radio-TV combinations cannot be co-owned in the same market, with the exception of some grandfathered combos. The duopoly restrictions currently prohibit common ownership of two TV stations in a market if it would result in fewer than eight independent outlets, which means no station co-ownership in smaller markets. Reducing the number of independent voices (stations) in a market would expand the number of markets where dual ownership would be allowed.

Pai has long argued that crossownership rules are an artifact of a media marketplace before robust competition from cable and satellite and the Internet. Cable and satellite companies have no similar limits on ownership, nor do over-the-top video distributors. The FCC has consistently said over-the-top video distribution is beyond its purview, except for trying to ensure that the distributors it regulates don't anti-competitively hinder OTT growth.

The media ownership item is not expected to deal with the UHF discount or 39% national station ownership cap, the sources said, and that while it initially looked like it could be circulated to the other commissioners for a vote at the Sept. 28 meeting, that timeline would likely be pushed to at least October.

Pai has pledged to take some action on potential changes to media-ownership regulation before the end of the year.

An FCC spokesperson declined to comment, as did the National Association of Broadcasters, which had sought reconsideration of the Tom Wheeler FCC's Quadrennial Media Ownership review decision, which was to leave the crossownership rules in place and not make any changes to the duopoly rules.

NAB challenged the Wheeler decision in court, but dropped that in favor of asking the newly Republican and deregulatory FCC to reconsider the decision.

The FCC order would grant that petition for reconsideration, using that as the vehicle to whack and tweak the rules.

Such an order would almost certainly be challenged by anti-consolidation activists in the Third Circuit, where proposed media-ownership rule changes dating back to the chairmanship of Michael Powell have been the subject of numerous decisions, remands and responses.

A year ago this month, the then-Democratic Wheeler-led majority voted not to lift crossownership rules or loosen local market station limits. "Based on our careful review of the record, we find that the public interest is best served by retaining our existing rules, with some minor modifications," the order said.

In a 17-page opus of a dissent, then commissioner Pai said that while "the video marketplace has transformed dramatically," the FCC has done nothing but rubber stamp the radio and TV ownership rules.

"The more the media marketplace changes, the more the FCC’s media regulations stay the same," he said, calling the quadrennial an "ostrich of an order" that was not what Congress intended when it required the periodic reviews of whether regulations were still needed.

It has been more than a dozen years since the Third Circuit Court of Appeals blocked Powell's deregulatory remake.

After those numerous succeeding court challenges and FCC decisions and indecisions, the local ownership and cross-ownership rules remain on the books, much to broadcasters’ chagrin. Pai is looking to change that.

“Radical overhaul of the Commission’s media ownership restrictions is long overdue," said Free State Foundation President Randolph May, himself a former top FCC official. "The failure to do so for so many years stands out as a failure of government to engage in reality-based decisionmaking. At the very least, if the agency can’t tackle the whole ball of wax in one fell swoop, it should move promptly to change some of the regulations, such as the newspaper-broadcast ownership restriction. Keeping media ownership restrictions in place long after the media marketplace has been transformed into one of media abundance is inconsistent with First Amendment values."