Broadcast Regulation Does Not Take a Vacation: FCC Resolves 2018 Quadrennial Review with No Significant Changes in Ownership Rules; Proposes a Reporting System for Retransmission Blackouts; and Advances New EEO Reporting Rules
January 5, 2024
By: David Oxenford, Wilkinson Barker Knauer
(Editor's note: this column was written on December 28, 2023)
While we normally publish a weekly summary of regulatory actions relevant to broadcasters, the weekend before last we said that we would take the holiday weeks off – and return with a summary on January 7 of all that occurred over the break – unless there was news in the interim. Well, there has been news, including the resolution of the FCC’s long-delayed 2018 Quadrennial Review of the broadcast ownership rules. In addition, the FCC issued a Notice of Proposed Rulemaking proposing to require the reporting by Multichannel Video Programming Distributors such as cable and direct broadcast satellite services concerning any blackouts of TV stations due to a failure of retransmission consent negotiations. In addition, while not yet adopted, the FCC announced that an item is circulating among the Commissioners for their consideration concerning a proposal to revive the FCC Form 395-B, which required broadcasters to report the race, gender, and ethnicity of all broadcast employees, before the FCC suspended the form more than 20 years ago.
The most significant of these actions is the resolution of the 2018 Quadrennial Review of the local broadcast ownership rules. As we have noted on this blog many times in recent weeks, the FCC had until December 27 to comply with a court order requiring the agency to conclude the 2018 Review. That Review should have been completed by the end of last year when, instead, the FCC asked initial questions for a new 2022 Quadrennial Review (see our article here). Following a request for “mandamus” by the NAB, the US Court of Appeals for the District of Columbia ordered the FCC to resolve the 2018 proceeding (see our article for more on the Court order). The FCC released its decision one day before the deadline, addressing the three major issues in the proceeding and making little significant change in the existing rules for radio and television, with one exception noted below.
First, the decision addressed the local radio ownership rules, and declined to make any substantial change in those rules. As we have noted before (see, for instance, our articles here and here), the NAB and many radio broadcasters had argued for a significant relaxation of these rules, or their revocation, given the massive changes in the audio marketplace and in the marketplace for local advertising sales (from which radio receives most of its revenue). In the 27 years since the current rules were adopted, digital media has substantially eroded radio’s share of audience and advertisers, and trends show that the erosion continues. Yet the FCC decided that radio was its own unique marketplace, and that it would not serve the public interest for that market to become further concentrated. The only change of note made by the FCC was that it made permanent the “interim contour method” of determining which stations competed in areas where there are no Arbitron markets. As that interim methodology has been in place for decades, the decision results in no real change in the radio ownership rules.
For TV, the FCC reached much the same conclusion, finding that broadcast TV is its own market, and again concluding that no significant changes should be adopted. The FCC’s principal focus was on situations where two of the top 4 TV stations in a market propose to combine. Such combinations are allowed under the current rules upon a showing that the combination will serve the public interest. But, as was evident in the case we noted here, those decisions as to whether a particular combination is in the public interest can take the FCC a long time to make, and they are filled with uncertainty. It was hoped that the FCC would announce rules outlining specific cases where combinations of two of the top 4 stations would be allowed – but the FCC left the decision to be made on an ad hoc basis. The Commission did, however, announce revisions to how it will determine which stations are in the top 4 in any market.
The other substantive change was to adopt a clarification of the rules to prohibit any agreement or series of agreements that allowed one top 4 station to acquire the programming of another top 4 station and move that programming to an LPTV station or a multicast stream. FCC policy already prohibits such transactions if the programming is moved to a full-power station owned by the acquiring party. Now, the Commission has made clear that the programming also cannot be moved to a commonly owned LPTV or multicast stream. Note that the FCC stated that this does not prohibit a network from itself deciding to move an affiliation to an LPTV or multicast stream – but it prohibits transactions to buy that programming from another in-market station.
The final rule under consideration was the dual network rule – prohibiting the common ownership of two of the Top 4 TV networks. In 2018, a potential change to that rule did not seem to be particularly significant as none of the networks appeared to be interested in combining. In fact, according to this week’s order, none of the networks filed comments in 2018 supporting a rule change. However, 3 of the 4 networks did support a change in supplemental comments filed in 2021. That change may not be surprising as there have been rumors in the past year of the potential interest in a sale of at least two of those networks – thus the rule now takes on greater significance. Yet the FCC left this rule in place without change, finding that the networks still had uniquely large audiences and unique programming that should not be allowed to be concentrated in fewer hands.
Both of the Republican Commissioners issued stinging dissents to these actions, arguing that the majority was blind to the clear changes in the marketplace brought about by digital media. In coming days, there will no doubt be industry reaction to these decisions as well. This is not the last article that you will see on this blog about these issues.
This was not the only action of note by the FCC. A pre-Christmas action was the adoption of a Notice of Proposed Rulemaking seeking public comment on a proposal to require MVPDs to report to the FCC whenever a broadcast television station is removed from their system for more than 24 hours due to a failure in retransmission consent negotiations. The MVPD would also have to report on the number of subscribers losing access to the television station. Another report would be filed when the blackout is resolved. The FCC does not propose any other changes in its rules regarding the negotiations themselves – the proposal is simply for reports to be filed when blackouts occur.
A last significant action worth noting is that the FCC’s report on the items “on circulation” (those orders or rulemaking proposals that have been drafted and are circulated among the Commissioners for review and a vote) as of the end of last week included an Order and Further Notice of Proposed Rulemaking in the docket proposing to bring back the FCC’s Form 395-B. That report detailed the gender, race, ethnicity, and job function of all station employees. Its use was suspended over 20 years ago when a court suggested that its use was discriminatory because the FCC was penalizing stations that did not meet specific racial or gender quotas in their workforce. The question of how to collect that information without using it for enforcement purposes has delayed any reinstatement of the filing obligation. Two weeks ago, Commissioner Starks and 27 members of Congress called (see here, here, and here) for the FCC to reinstate the requirement for broadcasters to provide broadcast workforce diversity data collection through the filing of the From 395-B. Starks asserted that the FCC was statutorily obligated to collect such information to ensure that broadcasters provide programming that is responsive to the needs and interests of their communities of license through the employment of a diverse workforce. Over two years ago, the FCC asked for comments on bringing back that form (see our article here) and apparently there is now an order looking to do so. We will be watching for more information as it becomes available.
Regulation never takes a holiday. Look for more on these actions in the coming weeks.
David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access). There are no additional costs for the call; the advice is free as part of your MAB membership.