[Federal Register: August 9, 2006 (Volume 71, Number 153)]
[Proposed Rules]
[Page 45511-45515]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09au06-51]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MB Docket No 06-121; MB Docket No 02-277; FCC 06-93]
2006 Quadrennial Regulatory Review; 2002 Biennial Regulatory
Review--Review of the Commission's Broadcast Ownership Rules
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document the Commission seeks comment on how to
address issues raised by the U.S. Court of Appeals for the Third
Circuit with respect to rules, as adopted or revised in the 2002
Biennial Review of the Commission's broadcast ownership rules.
Concurrently, the next quadrennial review of the broadcast ownership
rules is initiated as required by section 202(h) of the
Telecommunications Act of 1996.
DATES: The Commission must receive comments on or before September 22,
2006, and reply comments on or before November 21, 2006.
ADDRESSES: You may submit comments, identified by MB Docket No 06-121
and/or MB Docket No 06-277, by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
[[Page 45512]]
http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments. E-mail: ecfs@fcc.gov. Include the following words in the
body of the message, ``get form.'' A sample form and directions will be
sent in response.
Mail: Commercial overnight mail (other than U.S. Postal
Service Express Mail and Priority Mail) must be sent to 9300 East
Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service first-
class, Express, and Priority mail should be addressed to 445 12th
Street, SW., Washington DC 20554.
People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by e-mail: FCC504@fcc.gov or phone: 202-418-
0530 or TTY: 202-418-0432.
For detailed instructions for submitting comments and additional
information on the rulemaking process, see the SUPPLEMENTARY
INFORMATION section of this document.
FOR FURTHER INFORMATION CONTACT: Mania Baghdadi, Industry Analysis
Division, Media Bureau, Federal Communications Commission, (202) 418-
2330. Press inquiries should be directed to Rebecca Fisher, (202) 418-
2359, TTY: (202) 418-7365 or (888) 835-5322.
SUPPLEMENTARY INFORMATION: Pursuant to Sec. 1.415 and 1.419 of the
Commission's rules, 47 CFR 1.415, 1.419, interested parties may file
comments and reply comments on or before the dates indicated on the
first page of this document. All filings related to this Further Notice
of Proposed Rule Making should refer to MB Docket No. 06-121 and/or MB
Docket No. 02-277. Comments may be filed using: (1) The Commission's
Electronic Comment Filing System (ECFS), (2) the Federal Government's
eRulemaking Portal, or (3) by filing paper copies. See Electronic
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998). The
public may view a full copy of this document at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-06-93A1.doc
.
Electronic Filers: Comments may be filed electronically using the
Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal: http://www.regulations.gov. Filers should
follow the instructions provided on the website for submitting
comments.
For ECFS filers, if multiple docket or rulemaking numbers appear in
the caption of this proceeding, filers must transmit one electronic
copy of the comments for each docket or rulemaking number referenced in
the caption. In completing the transmittal screen, filers should
include their full name, U.S. Postal Service mailing address, and the
applicable docket or rulemaking number. Parties may also submit an
electronic comment by Internet e-mail. To get filing instructions,
filers should send an e-mail to ecfs@fcc.gov, and include the following
words in the body of the message, ``get form.'' A sample form and
directions will be sent in response.
Paper Filers: Parties who choose to file by paper must file an
original and four copies of each filing. If more than one docket or
rulemaking number appears in the caption of this proceeding, filers
must submit two additional copies for each additional docket or
rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial
overnight courier, or by first-class or overnight U.S. Postal Service
mail (although we continue to experience delays in receiving U.S.
Postal Service mail). All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.
The Commission's contractor will receive hand-delivered or
messenger-delivered paper filings for the Commission's Secretary at 236
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be
held together with rubber bands or fasteners. Any envelopes must be
disposed of before entering the building.
Commercial overnight mail (other than U.S. Postal Service Express
Mail and Priority Mail) must be sent to 9300 East Hampton Drive,
Capitol Heights, MD 20743.
U.S. Postal Service first-class, Express, and Priority mail should
be addressed to 445 12th Street, SW., Washington DC 20554.
People with Disabilities: To request materials in accessible
formats for people with disabilities (braille, large print, electronic
files, audio format), send an e-mail to fcc504@fcc.gov or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
Initial Paperwork Reduction Act Analysis. This document does not
contain proposed information collection(s) subject to the Paperwork
Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore,
it does not contain any proposed new or modified ``information
collection burden for small business concerns with fewer than 25
employees,'' pursuant to the Small Business Paperwork Relief Act of
2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4). However, depending
on the rules adopted as a result of this Further Notice of Proposed
Rule Making, the Report and Order (R&O) ultimately adopted in this
proceeding may contain information collections. The Commission will
provide a period for public comment on any PRA burdens contained in the
R&O and will submit such burdens to the Office of Management and Budget
for approval when the R&O is adopted and released.
I. Introduction
1. With this Further Notice of Proposed Rule Making (``FNPRM''), MB
Docket No. 06-121, MB Docket No. 02-277, FCC 06-93, released July 24,
2006, the Commission seeks comment on how to address issues raised by
the U.S. Court of Appeals for the Third Circuit with respect to the
rules as adopted or revised in the 2002 Biennial Review of the
Commission's broadcast ownership rules. Section 202(h) of the
Telecommunications Act of 1996 (``1996 Act'') requires the Commission
to periodically review its media ownership rules to determine ``whether
any of such rules are necessary in the public interest as the result of
competition'' and to ``repeal or modify any regulation it determines to
be no longer in the public interest.'' On June 2, 2003, the Commission
adopted a Report and Order in its third biennial review of its
broadcast ownership rules (``2002 Biennial Review Order'') 68 FR 46286
(August 5, 2003). The 2002 Biennial Review Order addressed all six of
the Commission's broadcast ownership rules: the national television
multiple ownership rule; the local television multiple ownership rule;
the radio-television cross-ownership rule; the dual network rule; the
local radio ownership rule; and the newspaper/broadcast cross-ownership
rule. In the 2002 Biennial Review Order, the Commission concluded that
neither the newspaper/broadcast cross-ownership rule nor the radio/
television cross-ownership rule remained necessary in the public
interest. Accordingly, it replaced those rules with new cross-ownership
regulations called the Cross Media Limits (``CML''). The Commission
also revised its market definition and the way it counts stations for
purposes of the local radio ownership rule, revised the local
television multiple ownership rule, modified the national television
ownership cap, and retained the dual network rule. Several parties
sought appellate review of various aspects of the 2002 Biennial Review
Order; others
[[Page 45513]]
filed petitions for reconsideration. The court challenges were
consolidated into a single proceeding, and on June 23, 2004, the U.S.
Court of Appeals for the Third Circuit issued its decision on review of
the 2002 Biennial Review Order, affirming some Commission decisions and
remanding others for further Commission justification or modification.
(the ``Prometheus decision'').
2. In this FNPRM, we discuss each rule that was remanded
individually and invite comment on how we should address the issues
remanded by the U.S. Court of Appeals for the Third Circuit. We
encourage commenters to buttress their arguments with current empirical
evidence and sound economic theory. Concurrently, this FNPRM initiates
the next review of the media ownership rules as required by section
202(h).
II. Discussion
3. In the 2002 Biennial Review Order, the Commission determined
that its longstanding goals of competition, diversity, and localism
would continue to guide its actions in regulating media ownership.
These policy objectives also will guide our actions on remand. In
addition to the other requests for comment discussed below, we ask that
commenters address whether our goals would be better addressed by
employing an alternative regulatory scheme or set of rules.
4. The Prometheus court noted that the Commission deferred
consideration of certain proposals for advancing ownership by
minorities. We therefore seek comment on the proposals to foster
minority ownership advanced by Minority Media and Telecommunications
Council in its filings in the 2002 biennial review proceeding,
including those that were listed in the 2002 Biennial Review Order and
referenced by the court. Are any of these proposals effective and
practical ways to increase minority ownership? If so, how could they
best be implemented? Do we have the statutory authority to adopt them?
Are there any constitutional impediments to adoption? Are there any
other alternatives that we should consider that would be more effective
and/or would avoid any statutory or constitutional impediments?
5. More generally, we urge commenters to explain the effects, if
any, that their ownership rule proposals will have on ownership of
broadcast outlets by minorities, women and small businesses. We also
urge commenters to discuss the potential effects, if any, of the
broadcast ownership rules currently in effect, and any changes proposed
in this proceeding on advertising markets, the ability of independent
stations to compete, the availability of family-friendly and children's
programming, the amount of indecent and/or violent content broadcast
over-the-air, and the availability of independent programming.
6. The Commission has a long-standing policy to foster broadcast
``localism,'' which it has defined as the airing of ``programming that
is responsive to the needs and interests of their communities of
license.'' In its 2002 Biennial Review, the Commission invited comment
on the extent to which its broadcast ownership rules were necessary to
foster localism. Subsequently, the Commission established its Localism
Task Force (``Task Force'') to study the issue of localism and advise
the Commission on whether any new rules or policies were required to
promote it. In addition, the Commission issued a Notice of Inquiry, 19
FCC Rcd 12425 (not published in the Federal Registrar) seeking comment
from the public on how broadcasters are serving the interests and needs
of their communities, whether the Commission needs to adopt new
policies, practices, or rules designed to promote localism in broadcast
television and radio; and what those policies, practices, or rules
should be. The record compiled in the localism docket, MB Docket No.
04-233, is extensive. The Media Bureau will compile a summary of the
comments in the localism proceeding and submit it into this docket. The
Commission will consider the evidence received in MB Docket No. 04-233
as it moves forward with this rulemaking.
7. Finally, we note that the media marketplace continues to evolve.
We seek comment on the impact of new technologies and providers such as
digital video recorders, video-on-demand, and the availability of
television programming and music on the Internet on media consumption
and ownership issues.
A. Local TV Ownership Rule
8. The Commission's local TV ownership rule, as currently in
effect, provides that an entity may own two television stations in the
same designated market area (``DMA'') if: (1) The Grade B contours of
the stations do not overlap; or (2) at least one of the stations in the
combination is not ranked among the top four stations in terms of
audience share, and at least eight independently owned and operating
commercial or non-commercial full-power broadcast television stations
would remain in the DMA after the combination.
9. In the 2002 Biennial Review, the Commission revised the local TV
ownership rule to permit an entity to own up to two television stations
in markets with 17 or fewer television stations, and up to three
television stations in markets with 18 or more television stations. The
Commission retained the prohibition on combinations involving more than
one station ranked among the top four in the market, thus prohibiting
combinations in markets with four or fewer television stations. The
Commission also eliminated consideration of overlapping Grade B
contours, and decided to look instead only at whether a station is
assigned by Nielsen to a DMA. All full-power commercial and non-
commercial television stations within the DMA would be counted for
purposes of applying the rule. The 2002 Biennial Review Order also
modified the Commission's criteria for waiver of the local TV ownership
rule.
10. On review, the Prometheus court, remanded the numerical limits
of the new rule for further justification. The court upheld the
Commission's decision to retain the top four-ranked station
restriction. The court also remanded for further consideration the
Commission's elimination of the requirement to demonstrate that no out-
of-market buyer is reasonably available when seeking a failed, failing,
or unbuilt television station waiver.
11. We invite comment on all of the issues remanded by the
Prometheus court regarding the local TV ownership rule. Should the
limits on the number of stations that can be commonly owned adopted in
the 2002 Biennial Review Order be revised, or is there additional
evidence or analysis upon which the Commission can rely to further
justify the limits it adopted? How should we address the court's
concern that the revised numerical limits allow concentration to exceed
the 1800 HHI benchmark relied upon by the Commission in setting the
limits? Is there additional evidence to support the Commission's
decision to treat capacity as an important factor in measuring the
competitive structure of television markets? Is there evidence to
support fluidity of television station market shares? Should the limits
vary depending on the size of the market? How would any changes impact
the need for the top four-ranked restriction?
12. We also invite comment on the court's remand of the elimination
of the requirement that waiver applicants demonstrate that there is no
reasonably available out-of-market buyer. Should we reinstate this
requirement? Is it unduly burdensome? Are there less
[[Page 45514]]
burdensome means of ensuring that unnecessary concentration of
ownership does not occur? Has the requirement had an effect on minority
and/or female ownership of broadcast stations?
B. Local Radio Ownership Rule
13. In the 2002 Biennial Review Order, the Commission retained the
local radio numerical limits and the AM/FM service caps that Congress
adopted in the 1996 Act. The Commission modified the definition of a
local radio market by replacing the contour-overlap approach with an
Arbitron Metro market definition, where Arbitron markets exist. The
Commission initiated a rulemaking proceeding, (MB Docket No. 03-130),
to seek comment on how to define local radio markets in geographic
areas that are not defined by Arbitron. In addition, the Commission
decided to include non-commercial stations when determining the number
of radio stations in a market for purposes of the ownership rules.
14. The Prometheus court concluded that the Commission's decision
``to replace contour-overlap methodology with Arbitron radio metro
markets was `in the public interest' within the meaning of 202(h)'' and
that the decision was ``a rational exercise of rulemaking authority.''
The court also upheld the Commission's attribution of JSAs. The court
further held that the Commission had justified its decisions to count
noncommercial stations in defining the size of a market and to restrict
the transfer of grandfathered combinations except to certain eligible
entities. The court remanded the Commission's decision to retain the
existing specific local radio ownership limits. The court held that the
limits were unsupported by the Commission's rationale that they ensure
five equal-sized competitors in most markets. The court further faulted
the Commission for not explaining why it could not take actual market
share into account when deriving the numerical limits. Finally, the
court held that the Commission did not support its decision to retain
the AM subcaps.
15. We invite comment on the issues remanded by the Prometheus
court with respect to the local radio ownership limits. In order to
address the court's concerns, should the numerical limits be revised,
or is there additional evidence that could be used to further justify
the limits? If the Commission should revise the limits, what revisions
are appropriate? Should we create additional tiers? How should the
Commission address the court's concern that the limits adopted do not
account for actual market share? Should the rule still seek to ensure a
specific number of competitors in a market, and, if so, what is the
appropriate benchmark for that number? Finally, should we retain the
AM/FM subcaps? Lastly, we seek comment on whether the local radio
ownership rule currently in effect is necessary in the public interest
as a result of competition.
C. Cross-Media Limits
16. In the 2002 Biennial Review Order, the Commission concluded
that neither the newspaper/broadcast cross-ownership rule nor the
radio/television cross-ownership rule was necessary in the public
interest as the result of competition. The Commission replaced these
rules with a single set of cross-media limits. To determine the
availability of media outlets in markets of various sizes, the
Commission developed a Diversity Index (the ``DI''), which it used to
analyze and measure the availability of outlets that contribute to
viewpoint diversity in local media markets.
17. The Prometheus court affirmed the Commission's decision to
eliminate the newspaper/broadcast cross-ownership rule. The court
concluded, however, that the specific limits selected by the Commission
were not supported by reasoned analysis, and remanded the CML to the
Commission for further justification or modification. The court also
remanded for further consideration the Commission's decision to assign
all outlets within the same media type equal market shares in
constructing the DI.
18. We invite comment on all of the issues remanded by the
Prometheus court regarding cross-ownership. Many of these issues relate
to the DI. In light of the court's extensive and detailed criticism of
the DI, we tentatively conclude that the DI is an inaccurate tool for
measuring diversity. Moreover, we recognize that some aspects of
diversity may be difficult to quantify. To the extent that we will not
use the DI to justify changes to the existing cross-ownership rules, we
seek comment on how we should approach cross-ownership limits. Should
limits vary depending upon the characteristics of local markets? If so,
what characteristics should be considered, and how should they be
factored into any limits? We seek comment on the newspaper/broadcast
cross-ownership rule and the radio/television cross-ownership rule. Are
there aspects of television and radio broadcast operations that make
cross-ownership with a newspaper different for each of these media? If
so, should limits on newspaper/radio combinations be different from
limits on newspaper/television combinations? Lastly, are the newspaper/
broadcast cross-ownership rule and the radio/television cross-ownership
rule necessary in the public interest as a result of competition?
D. Dual Network Rule
19. The Commission's dual network rule provides ``A television
broadcast station may affiliate with a person or entity that maintains
two or more networks of television broadcast stations unless such dual
or multiple networks are composed of two or more persons or entities
that, on February 8, 1996, were `networks' as defined in Section
73.3613(a)(1) of the Commission's regulations'' (that is, ABC, CBS,
Fox, and NBC). In the 2002 Biennial Review Order, the Commission
determined that the dual network rule was necessary in the public
interest to promote competition and localism and retained the rule. The
Petitioners in Prometheus did not appeal the Commission's retention of
the rule. We seek comment on whether the dual network rule remains
necessary in the public interest as a result of competition.
E. UHF Discount
20. In Prometheus, the Third Circuit held that challenges to the
Commission's national television ownership rule were moot following
Congressional action that set the national cap at 39 percent. In so
doing, the court also addressed the Commission's UHF discount rule,
which we have used in calculating a UHF station's audience reach under
the national TV cap. The court stated that the UHF discount rule ``is
insulated from this and future periodic review requirements'' and yet
also noted that the ``Commission is now considering its authority going
forward to modify or eliminate the discount and recently took public
comment on the issue.'' The court then concluded that that Commission
may decide the scope of our authority to modify or eliminate the UHF
discount outside of the mandate of section 202(h) of the 1996 Act.
21. We seek comment on whether the court's holding on the UHF
discount rule was ambiguous. We seek comment on whether the Commission
should retain, modify, or eliminate the UHF discount. Commenters who
urge us to modify or eliminate the UHF discount rule should discuss the
basis for our authority to take such action.
III. Petitions for Reconsideration
22. A number of parties filed petitions for reconsideration of the
2002 Biennial Review Order. These petitions, opposing pleadings, and
replies are
[[Page 45515]]
listed in Appendix A. The petitions have already been the subject of
public notice and comment during their own pleading cycle. Parties who
wish to refresh the record concerning the petitions may do so in their
comments filed in response to this FNPRM.
IV. Procedural Matters
A. Initial Regulatory Flexibility Analysis. As required by the
Regulatory Flexibility Act, 5 U.S.C. 603, the Commission prepared an
Initial Regulatory Flexibility Analysis (IRFA) in the initial Notice of
Proposed Rulemaking, 67 FR 65751 (October 28, 2002), in this
proceeding. For the FNPRM, a Supplemental IRFA has been prepared and
set forth in Appendix B. Written public comments are requested on the
Supplemental IRFA. These comments must be filed in accordance with the
same filing deadlines for comments on the FNPRM and should have a
separate and distinct heading designating them as responses to the
Supplemental IRFA.
B. Ex Parte Rules. This is a permit-but-disclose notice and comment
rulemaking proceeding. Ex parte presentations are permitted, except
during the Sunshine Agenda period, provided that they are disclosed as
provided in the Commission's Rules. See generally 47 CFR 1.1202,
1.1203, 1.1206(a).
V. Ordering Clauses
33. Accordingly, it is ordered, that pursuant to authority
contained in sections 1, 2(a), 4(i), 303, 307, 309, and 310 of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i),
303, 307, 309, and 310, and section 202(h) of the Telecommunications
Act of 1996, this Further Notice of Proposed Rulemaking is adopted.
34. It is further ordered that, pursuant to the authority contained
in sections 1, 2(a), 4(i), 303, 307, 309, and 310 of the Communications
Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i), 303, 307, 309,
and 310, and section 202(h) of the Telecommunications Act of 1996,
notice is hereby given of the proposals described in this Further
Notice of Proposed Rulemaking.
35. It is furthered order that MB Docket 03-130 SHALL BE severed
from this proceeding.
36. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Further Notice of Proposed Rulemaking, including the
Supplemental Initial Regulatory Flexibility Analysis, to the Chief
Counsel for Advocacy of the Small Business Administration.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. E6-12856 Filed 8-8-06; 8:45 am]
BILLING CODE 6712-01-P