[Federal Register Volume 61, Number 245 (Thursday, December 19, 1996)]
[Proposed Rules]
[Pages 66978-66987]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32140]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket Nos. 91-221 and 87-8; FCC 96-438]
Local Television Ownership Rules
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this Second Further NPRM, the Commission makes several
tentative conclusions and proposals concerning the modification of the
local television ownership rule and the radio-television cross-
ownership rule. Specifically, we invite comment on our tentative
conclusion to modify the local television ownership rule to a generally
less restrictive Designated Market Area (``DMA'') and Grade A signal
contour standard and on a number of specific waiver standards for the
local television ownership rule. We also seek comment as we reexamine
the radio-television cross-ownership rule in light of changes to the
radio-television cross-ownership waiver policy and local radio
ownership rules contemplated by the Telecommunications Act of 1996
(``1996 Act''). In addition, the Commission tentatively concludes that
it will establish the adoption date of this Second Further NPRM (i.e.,
November 5, 1996) as the grandfathering date for television local
marketing agreements (``LMAs'') in the event television LMAs are
considered attributable under our ownership rules. The purpose of this
Second Further Notice of Proposed Rulemaking is to invite additional
comments on our local television ownership rule, radio-television
cross-ownership rule, and the treatment of existing television LMAs in
light of the enactment of the 1996 Act.
DATES: Comments are due by February 7, 1997, and reply comments are due
by March 7, 1997.
ADDRESSES: Federal Communications Commission, 1919 M Street, N.W.,
Washington, D.C. 20554.
FOR FURTHER INFORMATION CONTACT: Alan Baughcum (202) 418-2170 or Kim
Matthews (202) 418-2130 of the Policy and Rules Division, Mass Media
Bureau.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second
Further Notice of Proposed Rule Making in MM Docket Nos. 91-222 and 87-
8, adopted November 5, 1996, and released November 7, 1996. The full
text of this Commission decision is available for inspection and
copying during normal business hours in the FCC Dockets Branch (Room
239), 1919 M Street, N.W. Washington, D.C. 20554. The complete text of
this decision may also be purchased from the Commission's copy
contractor, International Transcription Services, (202) 857-3800, 2100
M Street, N.W., Suite 140, Washington, DC 20037.
Synopsis of Second Further Notice of Proposed Rulemaking
I. Background
1. Last year, the Commission adopted a broad-ranging Further Notice
of Proposed Rule Making in this docket (hereinafter TV Ownership
Further NPRM). In that item, the Commission proposed changes or
revisions to the national television ownership rule, the local
television ownership rule, and the radio-television cross-ownership
rule. In addition, the Commission requested comment as to whether
certain broadcast television local marketing agreements (``LMAs'')
should be considered to be an attributable interest in a manner similar
to radio LMAs.
2. On February 8, 1996, the Telecommunications Act of 1996 (the
``1996 Act'') was signed into law. Section 202 of the 1996 Act directs
the Commission to undertake significant and far-reaching revisions to
its broadcast media ownership rules, some of which--like the relaxation
of the national television ownership limit--were proposed in the TV
Ownership Further NPRM. Section 202 also requires us to review other
aspects of our local ownership rules which were also the subject of the
TV Ownership Further NPRM. In particular, Section 202 requires the
Commission to do the following: (1) to conduct a rulemaking proceeding
concerning the retention, modification or elimination of the television
duopoly rule; and (2) to extend the Top 25 market/30 independent voices
one-to-a-market waiver policy to the Top 50 markets, ``consistent with
the public interest, convenience, and necessity.'' Additionally, both
the Act and its legislative history contain statements regarding the
appropriate treatment of existing television local marketing agreements
(``LMAs'') under our ownership rules. Because our previous request for
comments occurred before the enactment of the 1996 Act, we believe
inviting additional comments pertaining to the duopoly rule, the radio-
television cross-ownership rule, and the treatment of existing
television LMAs is appropriate.
3. We confine this Second Further NPRM to issues related to our
local television ownership rule (the duopoly rule), the one-to-a-market
rule, and LMA grandfathering issues. Issues relating to the national
television ownership limit, which was specifically modified by the 1996
Act, were addressed in a previously released Order implementing these
modifications (See Order, FCC 96-991, 61 FR 10691 (March 15, 1996) and
are also discussed in a separate NPRM adopted contemporaneously with
this Second Further NPRM. In addition, issues related to the broadcast
attribution rules are the subject of a Further NPRM in our attribution
proceeding that is also being adopted today.
4. In the sections that follow, we invite comment on several
discrete issues prompted by the 1996 Act. We also take this opportunity
to solicit further comment in light of our review of comments filed in
this proceeding to date. Specifically, we invite comment on our
tentative conclusion to modify the local television ownership rule to a
generally less restrictive Designated Market Area (``DMA'') and Grade A
signal contour standard and on a number of specific waiver standards
for the local television ownership rule. We also seek comment as we
reexamine the radio-television cross-ownership rule in light of the
1996 Act. Finally, we seek comment on how, if we decide to make
television local marketing agreements (``LMAs'') attributable for
ownership purposes, existing LMAs should be treated under the Act and
the new rules.
II. The Local Television Ownership Rule
A. Background
5. Our local television ownership rule presently prohibits common
ownership of two television stations whose Grade B signal contours
overlap. The TV Ownership Further NPRM set out a comprehensive
analytical framework for reviewing this rule in light of three
principal goals. First, we seek through our local television ownership
rule to promote diversity, particularly program and viewpoint
diversity. Second, we intend to foster the competitive operation of
broadcast television stations' program distribution and advertising
markets. Finally, we seek to promote greater certainty by adopting
[[Page 66979]]
generally applicable rules. We also recognize that the 1996 Act and
additional Commission proceedings may have a cumulative effect on the
ability of small stations or stations owned by minorities and women to
compete effectively in this new environment. We seek comment on what
aggregate effect these proposed rules may have on small stations, or
stations owned by minorities and women.
B. Geographic Scope of the Rule
6.The TV Ownership Further NPRM proposed to narrow the geographic
scope of the duopoly rule by prohibiting station overlaps on the basis
of Grade A contours (with a radius of approximately 30-45 miles) rather
than Grade B contours (with a radius of approximately 50-70 miles). We
also sought comment on whether Nielsen's DMA was a better measure of a
local television market than Grade B signal contours. While some
commenters opposed any change of the local ownership rule at all, most
advocated a relaxation of the rule, with many supporting some form of
the proposed Grade A test.
7. We continue to question whether the Grade B contour best
reflects the market in which a television station operates for purposes
of our local ownership rule. The TV Ownership Further NPRM indicated
that the area within the Grade B contour does not necessarily reflect
the station's ``core market,'' (i.e., the viewers the station is trying
to reach). It further pointed to a number of benefits, including
economies of scale, that could be gained by relaxing the rule. Various
parties have commented that the Grade B contour test should be relaxed
because stations with overlapping Grade B contours are generally
unlikely to have enough viewers in common to raise competition or
diversity concerns if the stations were jointly owned. Commenters also
pointed to the greater number of alternatives now afforded many viewers
with cable and other multichannel video program services.
8. While we believe the Grade B test may be overly restrictive, we
are concerned that the Grade A contour alone may not be the appropriate
measure to adopt in its place. We recognize that in the TV Ownership
Further NPRM, we indicated that the record at the time supported moving
to a Grade A approach. Upon further consideration of these issues and
of the comments submitted in response to the TV Ownership Further NPRM,
however, we believe a combination of the DMA and Grade A signal
contours may be a more appropriate measure of the geographic scope of
the local television ownership rule.
9. Our tentative conclusion is that the local television ownership
rule should permit common ownership of television stations in different
DMAs so long as their Grade A signal contours do not overlap. In this
section, we set forth the reasons as to why this approach may more
accurately reflect a television station's geographic market and may
further our diversity and competition goals. We invite parties to
comment on this tentative conclusion and how it might be superior or
inferior to a standard that is based solely on signal contours or one
that is based solely on DMAs.
10. The Relevance of DMAs. The record indicates that the DMA
provides, as a general matter, a reasonable proxy of a television
station's geographic market. The Commission has previously noted that
the benefit of the DMA definition is that it attempts to capture the
actual television viewership patterns and each county is assigned to a
unique television market, unlike the Grade A and B contour standards
which ignore the carriage of broadcast signals over cable systems.
Thus, DMAs are designed to reflect actual household viewing patterns
and advertising markets--critical ingredients for determining a
station's geographic market, both for competition and diversity
purposes. In addition, the Commission traditionally has employed a
similar geographic measure to the DMA in other rules. That geographic
measure is the Area of Dominant Influence (``ADI''), used by the
Arbitron Company to define a television station's geographic market
according to audience viewing patterns.
11. We thus invite parties to comment further upon whether the DMA
provides a reasonable, general approximation of a television station's
geographic market, and whether the DMA is an appropriate basis for
application of our local ownership rules. Furthermore, we seek comment
on the consistency of DMA classifications from year to year. We
recognize that some degree of change in these classifications is
inevitable as viewing patterns shift, but ask parties to address
whether these changes are so frequent or of such significance that they
would undermine our goal of crafting an ownership rule that provides
certainty and consistency in its application. We also seek comment on
the basis upon which changes in DMA boundaries are made, and on whether
boundaries are changed at the request of local broadcast television
stations.
12. Supplementing the DMA Test with a Grade A Contour Standard.
While it is our present view that DMAs may be better than either Grade
B or Grade A signal contours as measures of the market, we also
tentatively conclude that we should supplement our proposed DMA-based
rule with a Grade A contour criterion. There are at least two reasons
why we would include both the DMA and Grade A signal contours in the
local television ownership rule. First, because the DMA is based on the
preponderance, not necessarily the majority, of audience viewing,
broadcast television stations in neighboring DMAs may in fact be such
significant competitors that joint ownership should not be allowed.
Broadcast television stations with overlapping Grade A signal contours,
whether in the same DMA or not, may compete for viewers and advertising
dollars. Second, the common ownership of two broadcast stations in
different DMAs with overlapping Grade A signal contours may reduce
voice and program diversity available to the viewers in the overlap
area. Thus, we believe that a supplemental Grade A overlap criterion
will serve to forestall potentially anti-competitive and diversity-
reducing mergers in the broadcast television industry.
13. Total viewing for a particular broadcast television station may
include viewing in counties both within and outside the station's DMA.
Nielsen in fact examines all such viewing attributed to stations in
counties in and outside the station's DMA and reports this viewing data
under the heading ``Station Totals.'' The fact that there is viewing
outside the DMA suggests that, at least in some instances, stations in
neighboring DMAs may compete for some of the same audience. This may
especially be the case in the eastern U.S. where counties and DMAs tend
to be smaller than west of the Mississippi River. In these areas it may
be that significant portions of an individual station's audience reside
in adjacent DMAs, particularly for stations located near DMA
boundaries. We seek comment on whether our composite DMA/Grade A rule
will adequately address these concerns.
14. The Commission recognizes that actual viewing patterns may not
be limited to instances where stations in different DMAs find their
Grade A signal contours overlapping. We believe, however, that the
areas in which such Grade A signal contours overlap are likely to be
among those where the competitive and diversity concerns raised by
common ownership of the two stations would be greatest. This is because
the Grade A contour represents
[[Page 66980]]
the core over-the-air market. We seek comment on this belief.
15. A further reason we tentatively conclude that a composite DMA/
Grade A rule is advisable is because the DMA designation relies on
ratings in both cable and non-cable households in describing the
geographic reach and extent of television markets. We note, however,
that slightly more than one-third of television viewers do not
subscribe to cable. Thus, reliance on a DMA market definition may
conceal the extent to which viewers that rely on free-over-the-air
television might be harmed from a diversity perspective if the duopoly
rule takes no independent account of the extent to which two stations
serve the same viewers solely on an ``over-the-air'' basis.
16. We ask for comment on whether there are any other such issues
raised by reliance on DMA market designations which the Commission
should consider. To the extent that such problems exist and are
significant, will adding a Grade A component to the rule remedy them
and thereby ease our competition and diversity concerns?
17. Large DMAs and Counties. We believe that a DMA/Grade A approach
will generally be less restrictive than the current Grade B signal
contour test. There may be some situations, however, where this is not
the case, particularly in some geographically large DMAs west of the
Mississippi River. In these situations, the DMA may be large enough so
that two stations could be situated in the DMA yet not have overlapping
Grade B contours; common ownership of the two stations would be
permitted under the existing rule but not under the DMA/Grade A
approach. We note, however, that a preliminary review of station
locations and Nielsen DMAs suggests that there are currently few
stations within the same DMA that could be commonly owned under the
existing Grade B signal contour standard that are not already jointly
owned. We invite comment on whether parties agree with this assessment,
and whether, as a practical matter, the issue is essentially mooted by
our proposal to grandfather these existing arrangements. In the event
this is not the case, we invite comment as to how we should address
this issue in defining the local geographic market and implementing the
television duopoly rule. One alternative would be to adopt a two-tiered
rule under which we would permit common ownership both in cases where
there is no DMA/Grade A overlap and in situations where there is no
Grade B overlap. Such a rule would be no more restrictive than our
current regulation and would not disrupt current ownership patterns. We
seek comment on this approach.
18. A related issue concerns the possibility that certain western
counties are sufficiently large, measured by area, that populations in
cities or towns at opposite ends of the same county watch stations in
different DMAs. Nielsen's methodology for assigning counties would
nonetheless award the county based on the preponderance of overall
viewing in the county. This could, potentially, lead to a situation in
which Nielsen assigns a significant portion of the viewing population
of that county, say residents of town A, to a DMA with stations that
are not viewed by those television households. Such assignment might
occur because Nielsen relies on the preponderance of cable and non-
cable viewers in both town A and the larger town B at the opposite end
of the county. As a result, under a DMA-based duopoly rule, stations
licensed to towns A and B could not be commonly owned even if their
Grade B contours do not overlap and they actually serve entirely
different markets. Our preliminary analysis, however, indicates that
the number of instances in which this might occur may be small. Indeed,
we note that Nielsen has, in certain instances, split counties among
different DMAs based on the disparate viewing habits of residents in
various locations in the county. We seek comment on whether this
assessment is accurate. What would be the appropriate response in the
event the record shows that this issue in fact presents a significant
problem?
19. Grandfathering. As noted, recognizing that our proposal could
disrupt existing ownership arrangements involving stations in the same
DMA with no Grade B overlaps, we seek comment on whether we should, if
we adopt a DMA/Grade A rule, grandfather existing joint ownership
combinations that conform to our current Grade B test. We also seek
comment on whether the grandfathered status we propose for existing
joint ownership combinations in the same DMA should cease at the time
an applicant seeks to assign or transfer a grandfathered station, or
whether we should allow the grandfathered status to be transferred to a
new owner. In the event we were to grandfather these combinations, the
apparently more restrictive aspects of a DMA/Grade A duopoly approach
would appear to have little effect on existing broadcasters, while the
relaxation of the duopoly standard inherent in the change from a Grade
B to a DMA/Grade A criterion would afford broadcasters significant
opportunities to obtain the efficiencies which common ownership may
offer. We tentatively conclude that, overall, our DMA/Grade A rule will
make the local television rule less restrictive without harming our
competition and diversity goals.
C. Exceptions and Waivers to the DMA/Grade A Approach
20. The TV Ownership Further NPRM invited comment on whether, in at
least some situations, we should allow a company to acquire stations
within the same geographic market. We asked parties to address a number
of possible exceptions to a ``one station'' local ownership rule, such
as (1) permitting combinations of two UHF stations located in the same
market or permitting combinations of one UHF station and one VHF
station located in the same market, and (2) permitting such
combinations only if a certain number of independently-owned broadcast
television stations remain after the transaction. We also sought
comment on the criteria to be used in a case-by-case waiver approach.
In response, a number of parties opposed any relaxation of our current
rules, while other commenters urged us to modify our rules to permit
same-market combinations in certain circumstances.
21. We invite parties to update the record on the general issue of
whether we should permit television duopolies in certain circumstances
by rule or waiver. We also seek additional comment on a specific
exception and on specific waiver criteria for the local station
ownership rule.
22. In addition, we seek further evidence regarding the
relationship between ownership and diversity. Greater ownership
concentration traditionally has been thought to reduce diversity. We
seek comment, analysis and evidence on whether it reduces viewpoint and
program diversity. For example, would a single owner of two stations be
less likely to present diverse opinions, and less likely to serve
diverse audiences, than would two unaffiliated owners? Conversely,
would an owner of two stations in a market be more likely to
counterprogram and thereby serve the interests and views of more
viewers? With respect to these questions, what can we learn from the
waivers of local television ownership rules that we have already
granted? Have they led to a decrease or an increase in programming or
viewpoint diversity? Similarly, taking account of the important
differences between television and radio, what can we learn from
``radio duopolies,'' which have been permissible since 1992?
[[Page 66981]]
1. Exceptions
a. Distinguishing Between UHF and VHF Stations
23. In response to the TV Ownership Further NPRM, several parties
raised a threshold issue in arguing that local television station
combinations involving UHF stations should receive more favorable
treatment than those involving VHF stations. We invite parties to
comment on the extent to which we should explicitly distinguish between
UHF and VHF stations in determining whether to allow common ownership
of stations in the same market. In particular, should we treat the
common ownership of UHF stations in the same DMA or even in the same
city more favorably than that of non-UHF stations? As several parties
noted, some UHF stations are major network affiliates with large market
shares, but many are not. These parties therefore raise a question as
to the continuing validity of the need for differential treatment of
UHFs.
b. Satellite Stations
24. Television satellite stations are authorized under Part 73 of
the Commission's Rules to retransmit all or part of the programming of
a parent station. The two stations are ordinarily commonly owned.
Satellite stations are generally exempt from our broadcast ownership
restrictions. An application for television satellite status will be
presumed to be in the public interest if the applicant meets three
criteria: (1) there is no City Grade overlap between the parent and the
satellite; (2) the proposed satellite would provide service to an
underserved area; and (3) no alternative operator is ready and able to
construct or to purchase and operate the satellite as a full-service
station.
25. We presently see no reason to alter our current policy
exempting satellite stations from our local ownership rules. Our
satellite station policy, resting in significant part on the satellite
station's questionable financial viability as a stand-alone operation,
has furthered our ownership policies by adding additional voices to
local television markets where otherwise no additional voices might
have emerged. The criteria we utilize to evaluate requests for
satellite status--including service to underserved areas and a
demonstrated unwillingness by potential buyers to operate the station
on a stand-alone basis--ensure that satellite operations are consistent
with our underlying goals of promoting diversity and competition. Under
these circumstances, we believe that continued exception of satellite
stations from the local ownership rules is appropriate. We invite
comment on this conclusion.
2. Waivers
The Commission seeks comment on a number of specific waiver
criteria for allowing common ownership of stations within the same
local market.
a. UHF/VHF
27. We have discussed, as a possible exception to the local
television ownership rule, exempting certain UHF combinations from the
application of the local television ownership rule. Another approach
toward the same end would be to create waiver criteria by which the
Commission might waive the application of the rule for certain UHF
combinations. Many of the comments from parties on possible criteria to
be used in permitting common ownership of stations within the same
local market focussed on permitting combinations involving UHF
stations.
28. Given these comments, we request additional comment on whether
we should treat UHF station combinations differently from VHF
combinations with respect to local ownership and, if so, how.
Commenters citing disadvantages that they believe UHF stations continue
to suffer should also list very specific criteria for waiving the
duopoly rule that would correspond to those disadvantages, e.g., small
audience share or limited area of signal coverage. We ask parties to
comment on the use of such criteria in granting waivers in light of our
competition and diversity goals. In addition, while the 1996 Act itself
is silent on the question, the Conference Report to the Act states that
``[i]t is the intention of the conferees that, if the Commission
revises the multiple ownership rules, it shall permit VHF-VHF
combinations only in compelling circumstances.'' Thus, we seek comment
on whether there are particular locations (such as Alaska or Hawaii)
where there are such compelling circumstances that the Commission might
allow some VHF/VHF combinations for reasons analogous to those cited in
support of UHF combinations. Commenters supporting this view should
describe the nature of the showing that should be required and the
effect of any such waivers on diversity and competition in these
markets.
b. Failed Station
29. We invite comment on whether, if an applicant can show that it
is the only viable suitor for a failed station, the Commission should
grant the application regardless of contour overlap or DMA
designations. A ``failed'' broadcast station for purposes of our one-
to-a-market rule waiver standard is a station that has not been
operated for a substantial period of time, e.g., four months, or that
is involved in bankruptcy proceedings. We ask whether this failed
station standard would be appropriate in evaluating a potential duopoly
application. We invite comment on whether it is preferable to have two
operating stations with a single owner than to have one operating and
one dark station. The Commission also invites comment on whether any
such standard should be relatively strict or generous. For example,
should only failed stations qualify, or should we consider failing
stations as well? If so, what is the appropriate definition of a
failing station? Should applicants be required to demonstrate that they
are the only qualified and viable purchaser for the failed stations? We
seek comment on whether this standard is appropriate, on how a
demonstration that a station has ``failed'' or is failing might be
accomplished.
c. Vacant and New Channel Allotments
30. In our recent Sixth Further Notice of Proposed Rule Making
(``Sixth FNPRM''), 61 FR 43209 (August 21, 1996) in the DTV proceeding,
we proposed to delete all vacant TV allotments in order to provide
existing television stations with DTV allotments with comparable
coverage. In the Sixth FNPRM, however, we indicated that ``in some
communities--mainly rural areas--unused channels may remain even after
all existing broadcasters receive allotments.''
31. We invite comment on whether we should entertain a waiver
request to the local television ownership rule to enable a local
broadcast television licensee to apply for a channel allotment that has
long remained vacant or unused, e.g., five years. We believe that it
may not be in the public interest to have allotted broadcast channels
lie fallow--particularly in markets where it might be possible to allow
additional NTSC stations to come on the air without adversely impacting
the proposed DTV allotment table and the transition to digital
television. Evidence that an allotment has remained vacant for five
years, or evidence of a pattern of failure in applications for that
allotment, may suggest that the operation of another television station
on a stand-alone basis in the community in question is not economically
viable. In those circumstances, the public interest in diversity may be
advanced by permitting an existing station in the market to acquire the
station, rather
[[Page 66982]]
than allowing the channel to remain unused. Similarly, if it is
possible to create new channel allotments in a market without
interfering with nearby channels and without adversely impacting the
proposed new DTV allotment table, we seek comment on whether the
Commission should entertain applications by an incumbent television
licensee to establish a new channel in a market. We note that there
currently is a freeze placed on new applications as the result of our
DTV proceeding. We anticipate that, in the event we adopt a vacant
channel waiver criterion, it would not apply until a DTV table of
allotments is finalized in that proceeding. Advanced Television Systems
and their Impact Upon the Existing Television Broadcast Service, Sixth
FNPRM, 61 FR 43209 (August 21, 1996). We seek comment on this issue,
including whether there may be circumstances where it would be
appropriate to consider such waiver requests before DTV allotments are
finalized.
32. A vacant channel waiver criterion is analogous to waivers for
failed stations. We believe that granting waivers for failed stations
and vacant allotments would be consistent with our objective to advance
diversity and competition. We therefore seek comment on whether these
failed and vacant channel waiver proposals increase the amount and
diversity of programming and viewpoints available in the market.
Similarly, we seek comment on a possible competitive or economic
efficiency rationale for prohibiting existing broadcasters from
expanding their capacity into unused broadcast spectrum that no other
person wants to use. Specifically, we ask commenters to discuss the
rationale that unassigned channels might need to be preserved for new
broadcasters to accommodate future growth in demand for local
television broadcasting. We solicit comment on these observations and
especially upon the feasibility of this proposal given the proposed new
DTV allotment table.
d. Small Market Share/Minimum Number of Voices
33. In addition, the Commission seeks comment on whether it should
entertain waivers to allow joint ownership of stations that (1) have
very small audience or advertising market shares and (2) are located in
a very large market where (3) a specified minimum number of
independently owned voices remain post-merger. The purpose of such a
waiver standard would be to enhance competition in the local market by
allowing small stations to share costs and thereby compete more
effectively. It could also increase the availability of programming
and, perhaps, program diversity were such stations to use their
economic savings to produce new and better-quality programming or
related enhancements. Such advantages may be particularly helpful to
small and independent UHF stations.
34. Market Share. We seek comment as to the size of market shares
that would be sufficiently low to meet this standard. We also seek
comment on whether a small market share waiver standard would tend to
limit the application of this waiver standard, either absolutely or
generally, to UHF stations and to independent stations not affiliated
with any major network. In addition, if after a duopoly waiver is
granted, such joint ownership results in the previously struggling
stations developing large shares of the viewing audience, should the
Commission terminate the waiver for joint ownership in the event the
owner seeks to assign or transfer the stations' licenses?
35. Minimum Number of Voices. The TV Ownership Further NPRM
discussed whether waivers would be appropriate where a sufficient
number of independently owned broadcast television voices remained in
the market post-merger. Several parties argued for variations on
similar waiver standards.
36. We have previously sought comment on whether a minimum of six
independently owned broadcast television stations in an ADI is an
appropriate standard in light of our competition and diversity goals.
The Commission's 1995 TV Ownership Further NPRM raised numerous
questions about the extent to which other video and non-video products
and services were competitive or diversity substitutes for broadcast
television. We noted the lack of unanimity among the parties as to
which products and services are substitutes and which are not. Given
the many changes that are taking place in the television industry and
the lack of consensus in the record, we ask here for comment on whether
we should, until we observe further marketplace developments, focus
only on broadcast television outlets in counting voices for this
proposed waiver. Or, for example, should we give consideration to cable
television systems when cable has a very high penetration level in the
market? If so, how should a cable system be counted for these purposes?
In view of recent developments regarding DBS, Open Video Systems (OVS),
and on-line services, we also seek comment on whether and how these
services should be counted as voices. For a given minimum number of
independently owned broadcast television voices, an approach that
counted only broadcast television voices would establish a more
difficult standard for station owners in most markets to meet as
compared to an approach that included a broader array of media as
independent voices. Indeed, such an approach might limit waivers under
this criteria to only the very largest markets. However, based on
experience gained from granting waivers in these circumstances, we
could then consider relaxing the rule further as part of a future
biennial review of our ownership rules.
37. Market Size. We also invite comment on whether, if we adopt a
small market share and minimum number of voices waiver policy, we
should add a market size test. In other words, we might limit waivers
based on a minimum number of television voices in the very largest
markets. We invite comment on whether the largest markets already have
sufficiently numerous competing broadcast television outlets to
safeguard our competition and diversity concerns. Or, are there so few
such large markets that development of a waiver criterion is not an
efficient means to promote diversity? Parties are also asked to comment
on the appropriate minimum number of voices under such an approach. For
example, should this standard require a minimum number of
independently-owned broadcast television stations (including both
commercial and non-commercial stations) licensed to communities in the
DMA after the proposed transaction? The Commission seeks comment on
alternative standards, and whether waivers based on these criteria
should be limited, at least for the time being, to only the largest
markets.
e. Public Interest and Unmet Needs
38. Finally, we seek comment on the circumstances in which the
Commission should grant a waiver if the applicant demonstrates that the
public interest benefits that will flow from a waiver would include
public interest programming that would not be provided were the
stations owned separately. The Commission has on numerous occasions
taken into account an applicant's programming enhancements in granting
permanent and temporary waivers of the television duopoly rule although
these waivers typically involved only limited amounts of contour
overlap between the stations. We also seek comment on how, if this
waiver criterion were adopted, programming benefits would fit into our
analysis of the public interest. Should we rely only on types of
programming
[[Page 66983]]
that the Commission has traditionally considered ``public interest''
programming, such as children's educational programming, news, public
affairs and access of political candidates to the airwaves? Should we
permit broadcasters to identify additional types of programming that
would support a waiver, such as programming that serves the needs of an
underserved segment of the local market or underprovided public
interest programming? Should we follow up on the representations made
by licensees in their waiver requests? Finally, we seek comment on
whether it would be preferable to consider this waiver criterion, if at
all, only in conjunction with one or more of the other criteria
discussed above.
3. Waivers Pending the Outcome of This Proceeding
39. There has been an increase in broadcast transactions since the
passage of the 1996 Act, with a number of these involving requests for
waiver of our ownership rules. Our current television duopoly rule
will, of course, remain in place pending the outcome of this
proceeding, but we take this opportunity to provide parties guidance
regarding our policy in waiving the rule during this interim period. We
hope that doing so will facilitate planning for these transactions as
well as staff processing of license transfer and assignment
applications.
40. During this interim period, we will generally grant waivers of
the television duopoly rule, conditioned on coming into compliance with
the requirements ultimately adopted in this proceeding within six
months of its conclusion, where the television stations seeking common
ownership are in different DMAs with no overlapping Grade A signal
contours. Commission staff will have delegated authority to act on
applications seeking such waivers as long as the applications do not
raise new or novel issues. We have tentatively concluded that the
record in this proceeding supports relaxation of the geographic scope
of the duopoly rule from its current Grade B overlap standard to a
standard based on DMAs supplemented with a Grade A overlap criterion.
While we are providing an opportunity for comment on this tentative
conclusion, we do not believe granting waivers satisfying the proposed
standard, and conditioning them on the outcome of this proceeding, will
adversely affect our competition and diversity goals in the interim. It
will also have the benefit of providing parties some flexibility in
moving forward on merger transactions that do not comply with the
current duopoly rule.
41. We will be disinclined to grant waiver requests not falling in
this category (i.e., those involving stations in the same DMA or with
overlapping Grade A signal contours), absent extraordinary
circumstances. These types of waiver requests will be acted upon by the
full Commission.
III. Radio-Television Cross-Ownership Rule
42. The radio-television cross-ownership rule, or the one-to-a-
market rule, generally forbids joint ownership of a radio and a
television station in the same local market. The rule seeks to promote
competition as well as viewpoint and programming diversity in
broadcasting. In 1989, we amended the rule to permit, on a waiver
basis, radio-television mergers in the Top 25 television markets if,
post-merger, at least 30 independently owned broadcast voices remained,
or if the merger involved a failed station or if the merger satisfied a
group of five other criteria. Waivers premised on the first two
criteria--large market size or financial failure--were presumed to be
in the public interest, while waivers based on the ``five factors''
were evaluated based on the strength of the applicant's individual
showings.
43. In the TV Ownership Further NPRM, we proposed to eliminate the
cross-ownership restriction in its entirety or replace it with an
approach under which cross-ownership would be permitted where a minimum
number of post-acquisition, independently owned broadcast voices
remained in the relevant market. We tentatively concluded that there
were two alternative approaches towards modifying the one-to-a-market
rule. If radio stations and television stations do not compete in the
same local advertising, program delivery or diversity markets, we
proposed to eliminate this rule entirely and rely on our local
ownership rules to ensure competition and diversity at the local level.
Under the local radio ownership rules in effect at that time, this
would have permitted entities to own one AM, one FM, and one television
station in small markets. In large markets, one entity would have been
able to own up to 2 AMs, 2 FMs, and 1 television station. If, on the
other hand, radio and television did compete in some or all of the same
local markets, then we proposed to modify the one-to-a-market rule to
allow radio-television combinations (AM-TV, FM-TV, or AM-FM-TV) in
those markets that have a sufficient number of remaining alternative
suppliers/outlets as to ensure sufficient diversity and competition.
44. Commenting parties responded with a variety of positions
ranging from recommending repeal of the rule, to relaxation of the
rule, to retention of the rule. Since those comments were received,
Congress passed the 1996 Act. The 1996 Act affects our radio-television
cross-ownership rule in at least two ways. First, Section 202(d) of
that Act directs the Commission to extend our radio-television cross-
ownership waiver policy to the Top 50 rather than the top 25 television
markets ``* * * consistent with the public interest, convenience and
necessity.'' Second, the 1996 Act significantly liberalized the local
radio ownership rules. Prior to the 1996 Act, the largest number of
radio stations one firm could own in any market was four--two AM and
two FM stations. As modified by the 1996 Act, however, our rules now
allow one party to own up to 8 commercial radio stations in radio
markets with 45 or more commercial radio stations. One party can own up
to 7 commercial radio stations in radio markets with 30-44 commercial
radio stations and as many as 6 commercial radio stations in radio
markets with 15-29 commercial radio stations. For radio markets with 14
or fewer commercial radio stations, one party can own up to 5
commercial radio stations (provided that no party may own, operate or
control more than 50% of the stations in the market).
45. We consider the recent statutory changes to the local radio
ownership rules to be significant enough to warrant further comment on
our radio-television cross-ownership rule proposals outlined in the TV
Ownership Further NPRM. First, can the rule be eliminated based on a
finding that radio and television stations are not substitutes? Second,
even if we eventually consider television and radio stations
substitutes, can the rule be eliminated because the respective radio
and television ownership rules alone can be relied upon to ensure
sufficient diversity and competition in the local market?
46. We also seek to update the record on options for modifying, but
not eliminating, the radio-television cross ownership rule.
Accordingly, we invite comment on whether any easing of the cross-
ownership rule should take the form of modifying the rule itself or
modifying our presumptive waiver policy.
47. Consistent with Section 202(d) of the 1996 Act, we propose, at
a minimum, to extend the Top 25 market/30 voice waiver policy to the
Top 50 markets. The 30 independently owned
[[Page 66984]]
voices test has proven effective in safeguarding our diversity and
competition objectives in the Top 25 markets. Our experience in
processing waiver requests beyond these markets further indicates that
application of the 30 independently owned voices test to the Top 50
markets should also be sufficient to safeguard diversity and
competition in markets 26-50. We consequently tentatively conclude that
extending this test to the Top 50 markets would be consistent with the
public interest, convenience and necessity. Thus, an applicant would be
presumptively entitled to a waiver to obtain one AM, one FM, and one
television station in a Top 50 market as long as 30 independently owned
voices remained after the merger. The TV Ownership Further NPRM made a
similar proposal and most parties were in apparent agreement with at
least taking this step. We regard this as a minor change in our rules
because the independently owned 30 voice requirement would remain the
primary restraint on radio-television mergers.
48. We also invite comment, however, on the following four
options--most of which were discussed in the previous NPRM--to change
the rule beyond that contemplated by the 1996 Act. First, should we
extend the presumptive waiver policy to any television market that
satisfies the minimum independent voice test? Second, should we extend
the presumptive waiver policy to entities that seek to own more than
one FM and/or AM radio station? Third, should we reduce the number of
required independently owned voices that must remain after a
transaction? And fourth, should our ``five factors'' test be changed or
refined to be more effective in protecting competition and diversity?
To assist our consideration of these alternatives, we seek comment on
the effects of waivers we have granted in the past on competition in
local markets and on viewpoint and program diversity. We request that
commenters provide as specific data as possible in describing their
conclusions.
49. To the extent the Commission finds that it is necessary to
consider market share information in reviewing matters of common
ownership, we also ask for comment on how to establish the appropriate
definition of the relevant advertising market for our consideration.
For example, we seek comment on whether we should view the relevant
market as focusing on advertising in radio and television.
Alternatively, is the relevant market in this context more
appropriately defined as local advertising media for radio, television,
newspaper, cable, and others, or should certain media segments be
excluded? In this regard, we also seek comment on the level of data on
market shares that firms should be required to provide in order to
demonstrate that common ownership would meet market share criteria. In
particular, should they provide market share of radio and television
local revenue independently, as well as the combined share of all
advertising?
50. We seek comment on the above options as well as other possible
means of revising the radio-television cross ownership rule,
particularly in light of the changes resulting from the 1996 Act. We
seek to safeguard our competition and diversity goals while at the same
time allowing parties to take advantage of the efficiencies that may
result from permitting cross ownership of radio and television stations
in the same market. As to the latter, we urge parties to provide more
detailed evidence of these efficiencies. Can the same level of
efficiencies be achieved in the cross-ownership situation as when the
common ownership involves stations within the same service? Do these
efficiencies diminish as the number of commonly owned stations
increases?
51. We note that our current radio-television cross-ownership rule
will remain in place pending the resolution of this proceeding. Waiver
requests submitted in the interim will be processed pursuant to our
current criteria for evaluating such requests. The Chief of the Mass
Media Bureau will continue to have delegated authority to rule on
uncontested one-to-a-market waiver requests that involve stations in
the Top 100 television markets that are clearly consistent with prior
Commission precedent, i.e., which present no new or novel issues. One-
to-a-market waiver requests not falling in this category will be
referred to the Commission. We expect that waivers falling in this
latter category that are granted by the Commission will be conditioned
on the outcome of this proceeding.
IV. Television Local Marketing Agreements
52. A television local marketing agreement (``LMA'') is a type of
contract in which the licensee leases blocks of its broadcast time to a
broker who then supplies the programming to fill that time and sells
the commercial spot announcements to support the programming.
Currently, the Commission does not attribute television LMAs for local
and national ownership purposes and so these relationships are not
subject to our ownership rules. However, in the radio context, radio
station ownership is attributed to any radio licensee who enters into
an LMA with another radio station in the same market if the agreement
involves the brokering of more than 15% of the station's weekly
broadcast hours.
53. In the previous NPRM, the Commission suggested that guidelines
similar to those governing radio LMAs may be necessary with regard to
television LMAs. We also determined that such agreements, subject to
some general Commission guidelines, can provide competitive and
diversity benefits to both the brokering parties and to the public. We
tentatively proposed to treat LMAs involving television stations in the
same basic manner as we did for radio stations. That is, time brokerage
of another television station in the same market for more than 15% of
the brokered station's weekly broadcast hours would result in counting
the brokered station toward the brokering licensee's national and local
ownership limits. Further, television LMAs would be required to be
filed with the Commission in addition to the existing requirement that
they be kept at the stations involved in an LMA. Finally, we indicated
that our television LMA guidelines would allow for ``grandfathering''
television LMAs entered into before the adoption date of the TV
Ownership Further NPRM, subject to renewability and transferability
guidelines similar to those governing radio LMAs as described more
fully below in paragraphs 90 and 91.
54. These proposed guidelines primarily concern the circumstances
under which a television LMA should be attributed to the brokering
entity for purposes of the broadcast ownership rules. We will
consequently incorporate the issue of whether to adopt these
guidelines, or some variation of them, into our companion proceeding
regarding our broadcast attribution rules. In our companion Attribution
Further NPRM, we tentatively conclude that we should treat time
brokerage of another television station in the same market for more
than 15 percent of the brokered station's weekly broadcast hours as
being attributable, and therefore as counting toward the brokered
licensee's multiple ownership limits.
55. We will, however, decide in this proceeding how to treat
existing television LMAs under any guidelines that are adopted that
would attribute television LMAs to the brokering station. These
television LMA grandfathering and transition issues will be especially
significant issues if we do
[[Page 66985]]
not modify our television duopoly rule, because such an attribution
provision would preclude television LMAs in any market where the time
broker owns or has an attributable interest in another television
station.
56. In this regard, Section 202(g) of the 1996 Act states that
``[n]othing in this section shall be construed to prohibit the
origination, continuation, or renewal of any television local marketing
agreement that is in compliance with the regulations of the
Commission.'' We interpret this provision as clearly stating no more
than that Section 202 of the 1996 Act shall not be construed to
prohibit any television LMA that is in compliance with the Commission's
rules. We do not regard Section 202(g) as limiting our ability to
promulgate attribution rules under Title I and Title III affecting the
status of television LMAs. As a result, we do not see Section 202(g) of
the 1996 Act as posing a legal restraint on our questions in the TV
Ownership Further NPRM as to (1) whether television LMAs in which a
broker obtains the ability to program 15% or more of a broadcast
television station's weekly broadcast output should be deemed an
attributable interest (which will be decided in the attribution
proceeding); and (2) whether grandfathering existing television LMAs
from any applicable ownership rules that would follow from that
attribution decision is appropriate.
57. We recognize, however, that the language in the Conference
Report to the 1996 Act appears to interpret Section 202(g) of the 1996
Act in a different manner with regard to television LMAs that predate
February 8, 1996, the date of enactment of this legislation. The
Conference Report states--``[Section 202(g)] grandfathers LMAs
currently in existence upon enactment of this legislation and allows
LMAs in the future, consistent with the Commission's rules. The
conferees note the positive contributions of television LMAs and this
subsection assures that this legislation does not deprive the public of
the benefits of existing LMAs that were otherwise in compliance with
Commission regulations on the date of enactment.'' The Conference
Report suggests that the conferees intended to ``grandfather'' existing
television LMAs. Although we do not interpret the statute as requiring
that outcome, we believe that existing television LMAs entered into on
reliance of the Commission's current policy should not be disrupted
during the remainder of the current contract term. Indeed, we had a
similar concern at the time of the TV Ownership Further NPRM and so
asked a series of questions as to whether television LMAs entered into
before the adoption date of the TV Ownership Further NPRM should be
grandfathered with respect to ownership regulations.
58. We wish to provide an additional opportunity for comment on
these grandfathering and transition issues. In particular, in order to
devise a fair and efficient method to bring licensees into compliance
with our ownership rules, in the event television LMAs are
attributable, we request specific comments concerning the number of
television LMAs that are in effect on the date of the adoption of this
NPRM, the market that each LMA covers, the length of the contractual
relationship, and any other data concerning television LMA
relationships that would have a bearing on bringing parties to an LMA
into compliance with our ownership rules. This data will allow us to
assess the need for grandfathering existing LMAs in the event they are
deemed attributable, and the form this grandfathering should take. We
wish to minimize undue and inequitable disruption to existing
contractual relationships, and consequently seek comment on allowing
television stations to come into compliance with our ownership rules
within a reasonable period of time.
59. We note that such a transition would not involve grandfathering
permanent ownership arrangements that would violate our rules given
that LMAs typically involve, by their nature, more temporary
relationships that have set contractual terms. We thus are inclined to
institute a grandfathering policy to provide that in the event
television LMAs become attributable pursuant to the broadcast
attribution proceeding, television LMAs entered into prior to a
specific date, and that are otherwise in compliance with applicable
rules and policies, would be permitted to continue in force without
disruption until the original term in the LMA expires. However, if a
grandfathered television LMA results in violation of any Commission
ownership rule, a party would be required to seek a waiver from the
Commission prior to transferring the station or renewing the
grandfathered television LMA. By specifying this date at this time, we
provide notice that television LMAs entered into after the
grandfathering date will not be grandfathered if television LMAs are
ultimately found to be attributable. Additionally, we hope to provide
certainty to television licensees who wish to make business decisions
concerning television LMAs until the attribution issue is resolved. We
consequently believe this grandfathering approach would be appropriate.
We reserve the right, however, to invalidate an otherwise grandfathered
LMA in circumstances that raise particular competition and diversity
concerns, such as those that might be presented in very small markets.
60. With respect to specifying a particular grandfathering date in
the event we determine television LMAs should be attributable under our
local ownership rules, we are inclined to grandfather all television
LMAs entered into before the adoption date of this NPRM for purposes of
compliance with our ownership rules. Thus, such television LMAs will
not be disturbed during the pendency of the original term of the LMA in
the event the cognizability of the LMA would result in violation of an
ownership rule. However, television LMAs entered into on or after the
adoption date of this NPRM would be entered into at the risk of the
contracting parties. Consequently, if these latter television LMAs
result in violation of any Commission ownership rule, they would not be
grandfathered and would be accorded only a brief period in which to
terminate.
61. We generally propose to limit the transferability and
renewability of grandfathered television LMAs as we did with respect to
radio LMAs. In transfer situations wherein the television LMA was
entered into before the grandfather date, we generally propose to
permit the new station owner to retain the LMA for the duration of the
initial term of the television LMA even if it would otherwise violate
our local ownership rules, under our new attribution criteria for
television LMAs. We invite comment, however, as to whether there should
be some absolute limit, such as three years, on such grandfathering. In
transfer situations wherein the television LMA was entered into on or
after the grandfather date, we propose to allow the new station owner a
minimum amount of time to terminate the contractual relationship. In
the television LMA renewal context, we propose to permit renewal or
extension of television LMAs only if the extension or renewal took
place before the relevant grandfathering date. We seek comments on
these proposals.
V. Administrative Matters
62. Pursuant to applicable procedures set forth in Sections 1.415
and 1.419 of the Commission's Rules, 47 CFR Secs. 1.415 and 1.419,
interested parties may file comments on or before February 7, 1997 and
reply comments on or before March 7, 1997. To file formally in this
proceeding, you must file an original plus four copies of all comments,
reply comments, and
[[Page 66986]]
supporting comments. If you want each Commissioner to receive a copy of
your comments, you must file an original plus nine copies. If you want
to file identical documents in more than one docketed rulemaking
proceeding, you must file two additional copies of any such document
for each additional docket. You should send comments and reply comments
to Office of the Secretary, Federal Communications Commission,
Washington, D.C. 20554. Comments and reply comments will be available
for public inspection during regular business hours in the FCC
Reference Center (Room 239), 1919 M Street, N.W., Washington, D.C.
20554.
63. This is a non-restricted notice and comment rulemaking
proceeding. Ex parte presentations are permitted, except during the
Sunshine Agenda period, provided they are disclosed as provided in the
Commission Rules. See generally 47 CFR Secs. 1.1202, 1.1203, and
1.1206(a).
64. Additional Information: For additional information on this
proceeding, please contact Alan Baughcum (202) 418-2170 or Kim Matthews
(202) 418-2130 of the Policy and Rules Division, Mass Media Bureau.
VI. Initial Paperwork Reduction Act of 1995 Analysis
65. The rules proposed in this Second Further Notice of Proposed
Rulemaking have been analyzed with respect to the Paperwork Reduction
Act of 1995 and contain no changes from our earlier proposals in this
rule-making proceeding related to new or modified form, information
collection and/or record keeping, labeling, disclosure or record
retention requirements. These proposed rules would not increase or
decrease burden hours imposed on the public.
VII. Initial Regulatory Flexibility Analysis
66. With respect to this Second Further NPRM, an Initial Regulatory
Flexibility Analysis (IRFA) is contained below. As required by Section
603 of the Regulatory Flexibility Act, the Commission has prepared an
IRFA of the expected impact on small entities of the proposals
suggested in this document. Written public comments are requested on
the IRFA. In order to fulfill the mandate of the Contract with America
Advancement Act of 1996 regarding the Final Regulatory Flexibility
Analysis, we ask a number of questions in our IRFA regarding the
prevalence of small businesses in the radio and television broadcasting
industries. Comments on the IRFA must be filed in accordance with the
same filing deadlines as comments on the Second Further NPRM, but they
must have a separate and distinct heading designating them as responses
to the IRFA. The Secretary shall send a copy of this Second Further
NPRM, including the IRFA, to the Chief Counsel for Advocacy of the
Small Business Administration in accordance with paragraph 603(a) of
the Regulatory Flexibility Act.
Initial Regulatory Flexibility Analysis Regulatory Flexibility Act
As required by Section 603 of the Regulatory Flexibility Act, 5 U.S.C.
Sec. 603, the Commission is incorporating an Initial Regulatory
Flexibility Analysis (IRFA) of the expected impact on small entities of
the policies and proposals in this Second Further NPRM. Written public
comments concerning the effect of the proposals in the Second Further
NPRM, including the IRFA, on small businesses are requested. Comments
must be identified as responses to the IRFA and must be filed by the
deadlines for comments on the Second Further NPRM provided in Paragraph
94. The Secretary shall send a copy of this Second Further NPRM,
including the IRFA, to the Chief Counsel for Advocacy of the Small
Business Administration in accordance with paragraph 603(a) of the
Regulatory Flexibility Act. Reason and Objectives for Second Further
NPRM: After the issuance of the Television Ownership Further NPRM in
this docket, the Telecommunications Act of 1996 (``1996 Act'') was
signed into law. The Second Further NPRM seeks to update the record in
this proceeding on the effect of the 1996 Act and to review other
aspects of our local ownership rules which were also the subject of the
Television Ownership Further NPRM.
First, this Second Further NPRM proposes to modify the geographic
scope of the duopoly rule to eliminate the Grade B contour overlap
standard and replace it with a DMA/Grade A contour standard. Second,
this NPRM proposes to modify the radio-television cross ownership rule
to conform to Section 202 of the 1996 Act. Accordingly, we propose to
extend our 30 voices waiver policy to the Top 50 markets. We also seek
comment on a number of other options for revising the radio-television
cross-ownership rule and the waiver policy for this rule. Finally, this
NPRM proposes to institute a grandfathering policy in the event
television LMAs become attributable pursuant to the accompanying
broadcast attribution proceeding.
Legal Basis: Authority for the actions proposed in this Second
Further NPRM may be found in Sections 4(i), 303(r), and 307(a) of the
Communications Act of 1934, as amended, 47 U.S.C. Secs. 154, 303(r),
and 307(a) and Sections 202(c)(2), 202(d), 202(g), and 257 of the
Telecommunications Act of 1996.
Description and Estimate of the Number of Small Entities to Which
the Proposed Rule Will Apply: The proposed rules and policies will
concern full power television broadcasting licensees, radio
broadcasting licensees and potential licensees of either service. The
Small Business Administration (SBA) defines a television broadcasting
station that has no more than $10.5 million in annual receipts as a
small business. Television broadcasting stations consist of
establishments primarily engaged in broadcasting visual programs by
television to the public, except cable and other pay television
services. Included in this industry are commercial, religious,
educational, and other television stations. Also included are
establishments primarily engaged in television broadcasting and which
produce taped television program materials. Separate establishments
primarily engaged in producing taped television program materials are
classified in Services, Industry 7812. There were 1,509 television
stations operating in the nation in 1992. That number has remained
fairly constant as indicated by the approximately 1,550 operating
television broadcasting stations in the nation at the end of August
1996. For 1992 the number of television stations that produced less
than $10.0 million in revenue was 1,155 establishments.
Additionally, the SBA defines a radio broadcasting station that has
no more than $5 million in annual receipts as a small business. A radio
broadcasting station is an establishment primarily engaged in
broadcasting aural programs by radio to the public. Included in this
industry are commercial, religious, educational, and other radio
stations. Radio broadcasting stations which primarily are engaged in
radio broadcasting and which produce radio program materials are
similarly included. However, radio stations which are separate
establishments and are primarily engaged in producing radio program
material are classified in Services, Industry 7922. The 1992 Census
indicates that 96% (5,861 of 6,127) radio station establishments
produced less than $5 million in revenue in 1992. Official Commission
records indicate that 11,334 individual radio stations were operating
in 1992. For 1996, official Commission records indicate that 12,088
radio stations were operating. Thus, the proposed rules will affect
approximately 1,550 television
[[Page 66987]]
stations, approximately 1,194 of those stations are considered small
businesses. Additionally, the proposed rules will affect 12,088 radio
stations, approximately 11,605 are small businesses. These estimates
may overstate the number of small entities since the revenue figures on
which they are based do not include or aggregate revenues from non-
television or non-radio affiliated companies. We recognize that the
proposed rules may also impact minority and women owned stations, some
of which may be small entities. In 1995, minorities owned and
controlled 37 (3.0%) of 1,221 commercial television stations and 293
(2.9%) of the commercial radio stations in the United States. According
to the U.S. Bureau of the Census, in 1987 women owned and controlled 27
(1.9%) of 1,342 commercial and non-commercial television stations and
394 (3.8%) of 10,244 commercial and non-commercial radio stations in
the United States. We recognize that the numbers of minority and women
broadcast owners may have changed due to an increase in license
transfers and assignments since the passage of the 1996 Act. We seek
comment on the current numbers of minority and women owned broadcast
properties and the numbers of these that qualify as small entities. To
assist us with our responsibilities under the amended Regulatory
Flexibility Act, we specifically request comments concerning our
assessment of the number of small businesses that will be impacted by
this rulemaking proceeding, the type or form of impact, and the
advantages and disadvantages of the impact. In addition to owners of
operating radio and television stations, any entity who seeks or
desires to obtain a television or radio broadcast license may be
affected by the proposals contained in this item. The number of
entities that may seek to obtain a television or radio broadcast
license is unknown. We invite comment as to such number.
Description of Projected Recording, Recordkeeping, and Other
Compliance Requirements: No new recording, recordkeeping or other
compliance requirements are noted in this Second Further Notice of
Proposed Rulemaking.
Federal Rules That Overlap, Duplicate, or Conflict With the
Proposed Rules: The Commission's broadcast-newspaper, television
broadcast-cable, local radio ownership, and national television
ownership rules also promote the same goals as the rules discussed in
this item, however, they do not overlap, duplicate or conflict with the
proposed rules.
Significant Alternatives to the Proposed Rule Which Minimizes the
Significant Economic Impact on Small Entities and Accomplish the Stated
Objectives: The Commission seeks to minimize the impact of any changes
in the television local ownership rules upon small entities while
preserving competition and diversity in our local markets. Any
significant alternatives consistent with the stated objectives
presented in the comments will be considered. We urge parties to
support their proposals with specific evidence and analysis.
Local Ownership Rule: In this NPRM we tentatively conclude that a
combination of the DMA and Grade A signal contours may be a better
measure of the geographic scope of the duopoly rule. We also seek
comment on whether to grandfather existing common ownership
combinations that conform to our current Grade B test and whether we
should permit television duopolies in certain circumstances by rule or
wavier.
Radio-Television Cross-Ownership Rule: In the Television Ownership
Further Notice of Proposed Rulemaking, we received a large array of
comments recommending a variety of positions ranging from repeal, to
relaxation, to retention of the rule. We request comment and specific
data to support the commenters positions concerning: (1) extending the
presumptive waiver policy to any television market that satisfies the
minimum independent voice test; (2) extending the presumptive waiver
policy to entities that seek to own more than one FM and/or AM radio
station; (3) reducing the number of required independently owned voices
that must remain after a transaction; and (4) whether the ``five
factor'' waiver policy should be changed or refined to be more
effective in protecting competition and diversity.
Television Local Marketing Agreements: To minimize undue and
inequitable disruption to existing contractual relationships, we
propose a grandfathering policy which allows television stations to
come into compliance with our ownership rules within a reasonable
period of time.
We seek comment concerning the significant economic impact of each
of the above mentioned proposals on a substantial number of small
stations.
Issues Raised by the Public Comments in Response to the Initial
Regulatory Flexibility Analysis: There were no comments submitted
specifically in response to the IRFA that was included in the
Television Ownership Further Notice of Proposed Rulemaking. We have,
however, taken into account all issues raised by the public in response
to the proposals raised in this proceeding. We received conflicting
comments concerning the impact of joint ownership on broadcast
stations. Several commenters advocated the modification or elimination
of the local ownership rules in order to permit station owners to take
advantage of the economies of scale that will result from joint
ownership. On the other side, several commenters argued that the
ability of station owners to take advantage of the economies of scale
resulting from joint ownership will drive up the price of stations
which will make it more difficult for new entrants, including
minorities and women, to finance the purchase of stations.
List of Subjects in 47 CFR Part 73
Television broadcasting.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-32140 Filed 12-18-96; 8:45 am]
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