FCC SHOULD KILL CROSS-OWNERSHIP AND DUOPOLY RULES, NAB SAYS

NAB proposed that FCC adopt new approach to boost prospects of struggling local broadcasters by allowing duopolies under certain circumstances. Under NAB’s proposal, Commission would adopt presumptive “10/10” rule for allowing TV duopolies in designated market areas (DMAs). Under that standard, 2 stations each with year-long average 7 a.m.-1 a.m. share of less than 10 could be commonly owned, and station with share of 10 or more could be co-owned with another with share of less than 10. “This reformed rule would provide needed financial relief for struggling lower rated stations, especially those in medium and small markets, while still promoting diversity and competition by preventing the combination of 2 high-rated stations in the same market,” NAB said in filing at FCC.

Comments on FCC’s broadcast ownership rulemaking were due Thurs., and some 1,500 interest groups and citizens had done so by late afternoon, with more expected after our deadline. Proceeding involves 6 rules: (1) Newspaper/broadcast cross-ownership ban. (2) Local radio ownership. (3) Cap on national TV ownership of stations at no more than 35% of national audience. (4) Local TV multiple ownership. (5) Radio/TV cross-ownership restriction. (6) Dual TV network.

NAB said FCC should allow duopolies between stations not meeting 10/10 standard on case-by-case basis, considering several factors, including need to preserve failed or failing stations, promotion of digital transition in small and medium markets and maintaining or promoting new local news operations. NAB said Commission should repeal newspaper/broadcast cross-ownership rule, calling it “anachronistic ban” that inhibited development of new media services, especially online services that included features of electronic and print media.

Commission also should repeal radio/TV cross-ownership rule, NAB said, saying it “is no longer needed to ensure diversity in local markets, but in its current form primarily serves to limit radio station ownership arbitrarily.” It argued that Commission “has no statutory authority” to override Congress’s judgment about ownership in local radio markets. Recent studies show consolidation in local broadcast markets, particularly among radio stations, has “only enhanced” program diversity, NAB said.

Center for Creative Community (CCC), coalition of writers, directors, producers, performers and others, asked FCC to limit amount of in-house programming networks could run in prime time. Rapid consolidation of network and cable TV ownership in hands of few corporate conglomerates has significantly harmed free expression, quality and creativity in TV, CCC said in its comments. “When 5 companies (AOL/Time Warner, Viacom/CBS/UPN, GE/NBC, Disney/ABC and Fox/News Corp.) both produce and distribute the programming seen by the vast majority of Americans on broadcast and cable, Americans ultimately hear only the ‘voices’ of those 5 corporate leviathans, no matter how many channels they receive,” CCC said.

CCC proposed what it called new, flexible rule requiring certain percentage of independently produced programming on networks’ prime-time schedules. Four largest networks -- CBS, NBC, ABC and Fox -- would be limited to producing or owning financial interest in no more than 65% of programming on their schedules. Smaller networks, such as UPN and WB, would be limited to 75%. New networks would have no limit. Similar percentages would apply to basic cable networks. Subscription cable networks would be excluded. CCC also urged FCC to monitor success of small businesses, women and minorities in placing shows on network schedules. It said Commission should retain its rule prohibiting mergers between 2 of Big 4 networks and its rule limiting number of local stations broadcast network could own.

Coalition for Program Diversity also said it had “a deep concern about the diversity-chilling stranglehold” that networks had over prime time. Commission should adopt 25% independent producer rule that would prevent networks from “extracting” ownership rights, said coalition, which includes American Federation of TV & Radio Artists (AFTRA), Directors Guild of America, Screen Actors Guild and Sony Pictures TV. In-house programming isn’t necessarily best in quality, coalition said, but instead is designed for maximum profit through repurposing. Coalition said networks aired only 17 hours of independently produced and owned programming per week, compared with 47.5 hours 10 years ago. Meanwhile, networks have decreased programming expenditures as percentage of revenue to 26.3% from 30.3% over last 8 years, coalition said.

Three of world’s largest media companies, Fox, NBC and Viacom filed joint comments urging repeal of ownership rules. They said FCC should “abandon the media ownership regulatory scheme in its entirety.” They contended that dramatic increases in media competition could be seen in both traditional and nontraditional sectors, including hundreds of TV channels, increases in audio programming available locally and nationally, daily and weekly neighborhood/suburban newspapers “and perhaps the most transforming of all media developments: The Internet… In a world where a lone Internet journalist can break a story that leads to impeachment of the President, it makes little sense to weight outlets based on audience or revenue share.”

Antitrust laws “are more than adequate” to protect viewpoint diversity, competition and localism, Fox, NBC and Viacom said. Companies said existing FCC rules not only didn’t foster diversity, competition and localism, “but are often counterproductive.” They submitted analysis by economist Bruce Owen, who they said confirmed FCC study’s finding that CBS, Fox and NBC’s owned stations “consistently produce substantially more local news than their competitors.” Companies contended that “at most” FCC should consider only regulation that would serve as “a safety net” for diversity.

Sinclair Bcst. said there was “no justification” for any local TV ownership rule. It called current rules “completely irrational… The absurdity of the current rules is illustrated by the fact that a broadcast television station owner may be prohibited from owning more than one station in a market, while at the same time a large multifaceted media company may own extensive media properties in that same market,” such as TV station, cable or cable networks, broadcast network or Internet service providers. Sinclair submitted study by telecom economist Robert Crandall, who looked at markets where Sinclair had duopoly. He concluded that duopolies “have not allowed Sinclair to exert market power in local advertising markets.”

Newspaper Assn. of America (NAA) said FCC should repeal newspaper-broadcast cross-ownership ban. “Full repeal would do absolutely no harm and, perhaps more importantly, promises positive benefits to the public through enhanced broadcast services to local communities by newspaper-owned stations,” NAA Pres. John Sturm said.

Minority Media & Telecom Council (MMTC), which dedicated its 150-plus pages of comments to former FCC Chmn. William Kennard, said “abysmal level” of minority broadcast ownership was “a national disgrace” and loss of nearly half of nation’s minority-owned TV stations in last 3 years was “an emergency.” Neither FCC’s passively monitoring efforts nor voluntary efforts by industry will address magnitude of problem, MMTC said, so Commission should “be prepared to invoke race-conscious efforts as a last resort,” though it first could try “race-neutral” methods. MMTC suggested FCC take 6 steps: (1) Staged or phased-in efforts, such as large markets, then small markets or increasing diversity by percentage points. (2) Encouraging voluntary industry efforts. (3) Building incentives into rules. (4) Requiring “Equal Transactional Opportunity” that would be analogous to Equal Employment Opportunity. (5) Adopting “zero tolerance” policy for ownership structure abuse. (6) Modernizing FM allotments process to create opportunities for new entrants.