Blank-Slate Draft Doesn't Give Experts Much to Go on for Predicting Eventual QR Rules

The 2018 draft quadrennial review NPRM’s absence of conclusions makes it hard to know what the proceeding will lead to, broadcasters and their lawyers told us. Though the item asks many questions about possible changes to radio subcaps, top-four ownership rules and the broadcast market, lack of concrete proposals leaves open the possibility the agency may not act on any of those matters (see 1811200048), they said. “They didn’t reveal their hand,” said Garvey Schubert's Melodie Virtue.

The FCC is in a legal battle over a host of ownership decisions connected with the prior QR, so it’s not surprising that the draft keeps its options open, attorneys said. Others said the degree to which the item avoids signaling a policy direction on long-anticipated items like AM/FM subcaps was unexpected. The open-ended QR could feel “like a walk-back” on indications of action on the subcaps or top-four network rule, one said. That could be reading too much into it, another said. The agency may have prioritized keeping the NPRM free of preconceptions to create a strong record for eventual deregulation, a third said. An FCC official said the draft is intended to be a neutral starting point. The commission didn't comment.

The court case and the Democratic-controlled House could mean “tough geography” when it comes time to make rules from the QR proceeding, one broadcaster said. It’s likely to be election season again before such a rulemaking, possibly making it difficult for the FCC to take controversial actions on ownership, the broadcaster said.

The draft QR is notable for the number and degree of questions it asks, especially about media competition, attorneys said. “There are a lot of questions about what the marketplace is,” said Wilkinson Barker's David Oxenford. “It’s pretty obvious the markets have changed.”

“Do advertisers view satellite radio and audio streaming services as substitutes for advertising on broadcast radio? How should the impact of Internet services like Google and Facebook on local advertising markets factor into our consideration of the Local Radio Ownership Rule?” asks the draft QR. “Do consumers consider broadcast television to be interchangeable with other sources of programming?” Comments responding to the NPRM are likely to be voluminous, attorneys said.

The draft explores numerous options on AM/FM subcaps and the process for approving top-four ownership combinations. It asks if expanded FM translator coverage should affect the subcap question, and whether there's parity between AM and FM stations. On the top-four rule, it seeks comment on whether the FCC should have a bright-line test and allow different combinations within the top four, and whether the rules should differentiate between smaller and larger markets.

The draft seeks comment on several questions about the dual-network rule. An FCC official noted the NPRM spends less real estate on the topic. Lawyers said changes to the rule governing ownership of networks are unlikely.

The draft QR seeks comment on three diversity proposals the FCC told the 3rd U.S. Court of Appeals it would include in the 2018 review. Broadcast attorneys said only a proposal to apply cable procurement rules to stations seems likely to become a mandate. That proposal is the closest to existing rules, and Chairman Ajit Pai praised the diversity advisory committee for working on procurement diversity, a lawyer noted. The other proposals would create a mathematical formula for measuring diversity, and create a system of tradeable diversity credits.

The QR suggests all three proposals could raise constitutional concerns because of how they define diversity and minorities. That’s “puzzling,” said Multicultural Media Telecom and Internet Council Senior Adviser David Honig, who has backed all three proposals. The procurement proposal’s language mirrors that of existing FCC equal employment opportunity rules, he said.