[Federal Register Volume 64, Number 220 (Tuesday, November 16, 1999)]
[Rules and Regulations]
[Pages 62123-62127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30019]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 91-221, 87-8; FCC 99-343]
Review of the Commission's Regulations Governing Television
Broadcasting; Television Satellite Stations Review of Policy and Rules
AGENCY: Federal Communications Commission.
ACTION: Interpretation.
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SUMMARY: This document determines the procedures to be used to process
applications filed pursuant to the local broadcast ownership
proceeding. In that proceeding the Commission relaxed
[[Page 62124]]
these rules to reflect changes to the media marketplace. The purpose of
this action is to resolve issues necessary to commence processing
applications filed pursuant to our previously modified rules.
DATES: Effective November 16, 1999.
FOR FURTHER INFORMATION CONTACT: Mary Beth Murphy, (202) 418-2120,
Policy and Rules Division, Mass Media Bureau.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order
on Reconsideration (``Order''), FCC 99-343, adopted November 10, 1999,
and released November 10, 1999. The full text of the Commission's Order
is available for inspection and copying during normal business hours in
the FCC Dockets Branch (Room TW-A306), 445 12 St. S.W., Washington,
D.C. The complete text of this Order may also be purchased from the
Commission's copy contractor, International Transcription Services
(202) 857-3800, 1231 20th St., N.W., Washington, D.C. 20036.
Synopsis of Order on Reconsideration
I. Background
1. In this Order, we determine the procedures to be used to process
applications filed pursuant to the Report and Order (``Local Ownership
Order''), 64 FR 50651 (September 17, 1999), adopted in the above-
captioned local broadcast ownership proceeding on August 5, 1999. In
our Local Ownership Order, we relaxed our local broadcast ownership
rules, specifically the TV duopoly rule and radio-television cross-
ownership rule, to reflect changes in the media marketplace. We stated
that ``[a]pplications filed pursuant to this R&O will not be accepted
by the Commission until the effective date'' of the order, which will
be sixty days after publication in the Federal Register. We also said:
``We realize that the rules adopted in this R&O could result in two or
more applications being filed on the same day relating to stations in
the same market and that due to the voice count all applications might
not be able to be granted. We will address how to resolve such
conflicts in a subsequent action.''
2. On September 9, 1999, we released a Public Notice, FCC 99-240,
soliciting comment on procedures for processing applications filed
pursuant to the Local Ownership Order. We stated that one approach to
resolving potential conflicts would be to process applications on a
first-come, first-served basis. However, we noted that the difficulties
inherent in a system that would require the Commission to determine
whose application was filed first on a minute-by-minute--or indeed
second-by-second--basis weighs against that approach. Instead, we
stated our belief that the most prudent, easy to administer, and fair
method for determining the order in which applications filed on the
same day will be processed is by random selection. We sought comment on
the use of random selection to determine processing order, including
our authority to use that procedure in the context of applications for
transfer or assignment of existing licenses. We also sought comment on
alternative methods, such as auctions or first-come, first-served.
3. After carefully reviewing the comments filed in response to the
Public Notice, we have decided to use random selection to determine the
order in which the Commission will processes applications filed on the
same day pursuant to our revised local broadcast ownership rules. In
addition, we determine herein which applications will be subject to
random selection, and clarify how voices will be counted in a market
(including LMAs, other attributable interests, and conditional waivers)
for purposes of applying our rules. The purpose of this Order is to
resolve only those issues necessary to commence processing applications
filed pursuant to our modified rules. We have received a number of
petitions for reconsideration of our Local Ownership Order raising
other issues not addressed herein. We will address those issues in a
subsequent order.
II. Use of a Lottery
4. Comments. A number of commenters expressed concern that
processing applications by random selection alone would fail to protect
certain pre-existing investments or contractual relationships,
including existing Local Marketing Agreements (``LMAs) and other
attributable interests.
5. Several commenters also challenged the Commission's authority to
use random selection to determine application processing order.
Generally, these commenters argue that Section 309(i) of the
Communications Act authorizes the Commission to use lotteries only to
dispose of initial applications for license, not transfer applications.
Moreover, these parties argue that even if 309(i) could be read to
apply to transfer applications, Congress revoked any power the FCC had
to use a lottery to award commercial broadcast licenses in Section
309(i)(5)(A). Commenters also express the view that random selection is
an abdication of the Commission's duty to make a public interest
determination under Section 310(d) of the Communications Act.
6. Discussion. After careful consideration of the alternatives, we
conclude that random selection is the preferable method for determining
processing order of applications filed on the same day. This approach
gives equal treatment to similarly situated applicants in circumstances
where not all applications will be able to be granted as a result of
minimum voice counts. In addition, this method is relatively efficient
and easy to administer, thereby reducing delays in Commission action.
As we stated in the Public Notice, we believe random selection is
preferable to a ``first-come, first-served'' approach, given the
difficulties in determining which application was filed first.
Moreover, a ``first-come, first-served'' system could initiate a
``race'' to Mellon Bank to file applications, and result in filers
camping out to be first in line at the filing counter. Commenters who
addressed this approach agreed that it would be ill-advised. With
respect to the concerns raised by parties regarding the treatment of
existing LMAs and other interests under a random selection system, we
address those concerns below in our discussion of how to calculate the
number of voices in a market for purposes of applying the revised
ownership rules.
7. We also believe that random selection is preferable to the other
approaches suggested by commenters. A ``first to contract'' system
would require the Commission to define the types of contracts that
would receive priority (e.g., written or verbal, preliminary or final
agreements, etc.), raising issues of fairness and likely triggering
legal challenges and lengthy delays. Both the point system proposed by
UCC and the MMTC proposal to accord priority to applicants who spin off
stations to disadvantaged small businesses would be difficult and time
consuming to devise and apply, and would also result in potentially
lengthy delays in processing applications and increase the potential
for time-consuming legal challenges. Our goal in this order is to
devise application processing procedures that permit rapid, fair
implementation of the revised ownership rules. While the issues raised
by UCC and MMTC, including the impact of consolidation on diversity and
localism, are of critical importance, these issues have been considered
by the Commission in this proceeding and addressed in the Local
Ownership Order. Moreover, before approving any application under the
random selection procedures adopted herein, the Commission must
continue to make the
[[Page 62125]]
determination that grant of the application serves the public interest.
8. Finally, we continue to believe that we have authority under
Sections 310(d) and 4(i) of the Communications Act to use random
selection to determine the order in which the Commission processes
transfer and assignment applications. In acting on transfer and
assignment applications, the Commission must make a determination under
Section 310(d) whether the transfer would serve the public interest,
and cannot make that determination if the transfer would violate the
ownership rules. In carrying out our responsibilities under Section
310(d), we have the authority to devise reasonable means to establish
the processing order of transfer applications to allow us to make a
public interest determination where our rules permit the grant of some
but not all pending applications. Our random selection procedures to
determine processing order, adopted herein, are necessary to permit the
execution of our mandate under Section 310(d).
8. We disagree with those commenters who argue that random
selection is an abdication of our duty to make a public interest
determination under Section 310(d). The fact that Congress has
specifically permitted the use of lotteries in certain contexts clearly
indicates it did not consider this approach incompatible with the
Commission's public interest mandate. Moreover, our use of random
selection is to assign processing order only; the Commission still must
make a determination under Section 310(d) that grant of the application
will serve the public interest.
9. We also disagree with those commenters who argue that Section
309(i)(5) of the Act revokes our authority to use lotteries in this
context. Section 309(i)(5) provides that ``the Commission shall not
issue any license or permit using a system of random selection under
this paragraph after July 1, 1997,'' except with respect to
noncommercial stations. By its terms, this provision applies only to
use of random selection for the issuance of a license or permit, and is
inapplicable to the use of a lottery for determining processing order
of assignment and transfer applications. We also believe that the
better reading of the 1997 amendment to Section 309(i) is that the
amendment did not affect the paragraph's basic scope--situations where
there is ``more than one application for any initial license or
construction permit.'' In the current situation, the applications would
be for transfer or assignment of an existing license, not for an
initial license or permit. The fact that Congress acted in 1997 to
limit Section 309(i) lotteries to noncommercial licenses does not
restrict the Commission's authority to conduct a lottery pursuant to
Sections 310(d) and 4(i).
III. Filing Procedures
10. Comments. A number of commenters raised issues regarding which
applications would be subject to the tiebreaking procedure selected by
the Commission. Other commenters also would either give priority to
certain combinations or exclude certain applications from any
tiebreaking procedure ultimately adopted by the Commission.
Discussion
11. Applications Subject to Random Selection. We will include in a
lottery all transfer and assignment applications relating to stations
in the same market that are filed on the same day and that must comply
with a voice count under Secs. 73.3555, paragraphs (b) and (c), of our
rules for grant. Such voice count dependent applications will be
assigned, by random selection, a processing priority number. These
applications will be processed in order of the date filed and, among
applications filed on the same day, in order of their assigned
processing priority number. We will not include in a lottery, and will
not assign a processing number to, applications that are not voice
dependent, such as those filed pursuant to the failed, failing, or
unbuilt station waivers under the revised TV duopoly rule, those filed
pursuant to the failed station waiver under the revised radio/TV cross
ownership rule, applications for combinations of a single television
station and a single radio station in a market, as well as radio-only
combinations not implicating the radio/TV cross ownership rule. Such
applications will be processed in due course.
1. For each application filed with the Commission, it will be
necessary to determine the relevant market, whether the application is
voice dependent, and whether the application implicates the TV duopoly
or radio/TV cross ownership rule. Assignment of processing priority
numbers will proceed more rapidly if all of this information is stated
in the application or transmittal letter. The Commission staff will
issue a public notice with further details regarding the lottery,
including the method by which numbers will be selected, as well as
further information regarding application processing.
13. Application Processing. In processing voice count dependent
applications, the Commission will reduce the relevant voice count by:
(1) all voice and non-voice count dependent applications pending or
granted at the time the voice count dependent application is filed, and
(2) all non-voice count dependent applications filed on the same day as
the voice count dependent application. Thus, for example, in processing
an application for a radio/TV combination filed November 16, 1999, the
Commission will consider all radio-only applications filed prior to
November 16, 1999 and still pending as of that date, all radio-only
applications granted as of that date, as well as any radio-only
application, any combination involving a single TV and a single radio
station, or any failed, failing, or unbuilt station waiver filed on
November 16 that implicates the same market. For purposes of processing
the November 16 application, the staff will presume that all pending
voice and non-voice count dependent applications and all non-voice
count dependent applications filed the same day implicating the same
market will be granted. If this presumption precludes grant of the
November 16 voice count dependent application, that application will be
held until final action on the conflicting application(s) has been
taken. If the conflicting application(s) is ultimately denied, the
staff will proceed to process the November 16 voice count dependent
application. If more than one voice count dependent application was
filed on November 16 and was held pending processing of the non-voice
count dependent application(s), the Commission will use random
selection to determine processing order for such applications.
14. We believe that reducing the voice count by prior grants and
applications, and by non-voice count dependent applications (e.g.,
those filed pursuant to the failed, failing, and unbuilt station
waivers, applications for a single radio and single TV station
combination, and radio-only applications not implicating the radio/TV
cross ownership rule) filed on the same day as a voice count dependent
application, best advances our goal in the Local Ownership Order of
protecting competition and diversity by maintaining voice count floors
(e.g., a minimum of 8 TV voices post-grant to obtain a TV duopoly and a
minimum of 10 or 20, depending on the size of the combination, radio,
TV, newspaper, and cable voices post-grant to obtain a radio/TV
combination) in local markets.
[[Page 62126]]
While we envisioned in the Local Ownership Order that voice counts
could drop below the floor as a result, for example, of combinations
involving failed, failing, or unbuilt stations, by accounting for the
potential impact of these non-voice count dependent applications on the
number of voices in the market the voice count floors are more likely
to be maintained. We believe that these processing procedures strike an
appropriate balance between maintaining a minimum number of voices in
the market and establishing certainty with respect to the number of
stations available in the market at a given time. Combinations of a
single TV and a single radio, which can be obtained in any market and
are not voice count dependent, also would reduce the voice count for
same-day or subsequently filed voice count dependent applications. We
stated in our Local Ownership Order that the service benefits and
efficiencies achieved from the joint ownership and operation of a
single television/single radio combination in local markets further the
public interest and outweigh the cost to diversity in these instances;
thus, we allowed these combinations in all markets regardless of voice
count.
15. Calculation of Voices. The FCC's forms require applicants for
transfer or assignment of license to certify that, at the time of
filing, the application complies with all multiple ownership rules. In
order to certify compliance with the voice count components of our
revised ownership rules, applicants should determine ownership of
relevant media and the existence of any pending applications affecting
their market by consulting FCC records and widely recognized,
commercially available data sources such as Nielsen Media Research,
Arbitron, BIA Companies, Broadcasting & Cable Yearbook, TV Factbook,
and Bacon's media directories. Applicants should deviate from the data
supplied by these sources only where they have actual knowledge, or
could reasonably be charged with knowledge, that the data are in error
or are incomplete or outdated in a material respect. Applicants must
make a reasonable effort to verify the accuracy of this information and
to resolve any conflict in data obtained from different sources.
17. TV LMAs and Conditional Radio/TV Waivers. Any LMA attributable
under our rules in effect on November 16, 1999, and that was entered
into prior to August 5, 1999, the adoption date of the Local Ownership
Order, will be considered to be attributable to the owner of the
brokering station for purposes of the voice count determination. These
two stations will thus be considered as a single voice in the market.
The effect of this determination is that stations involved in a TV LMA
will have the first chance to convert to a duopoly in the market, ahead
of any other voice count dependent application. This result is
consistent with our determination in the Local Ownership Order not to
include in our count of independently owned broadcast stations those
that are brokered pursuant to an attributable same-market LMA. We
concluded that the brokering station has a significant degree of
influence over the brokered station's operations and programming such
that the latter should not be counted as an independent source of
viewpoint diversity.
18. Although applications to convert a TV LMA to ownership will be
considered ahead of any voice count dependent application in the same
market filed on the same day, the Commission will consider first,
before such applications, the impact on the number of voices of any
non-voice count dependent application filed for the same market on the
same day. In addition, as with other voice count dependent
applications, the Commission will also consider first the impact on the
number of voices in the market of any previously filed voice or non-
voice count dependent application, and any previous grant. As we stated
above, we believe that prior consideration of such applications and
grants is consistent with our goal in the Local Ownership Order to
preserve the voice count floors in local markets in order to preserve
competition and diversity.
19. In some cases, parties to an LMA may not be able to make the
requisite voice count showing to convert the LMA to ownership if the
number of voices in the market is below the voice count minimum under
our revised rules. This result is consistent with our determination in
the Local Ownership Order that stations involved in TV LMAs may apply
for a duopoly, but must comply with our revised rules. Where TV LMAs
cannot make the requisite voice count showing to convert to ownership,
the LMA may be able to convert pursuant to one of the waiver criteria
adopted in the Local Ownership Order. Where conversion to ownership is
not possible, TV LMAs may take advantage of the grandfathering and
transitional relief accorded in the order.
20. TV LMAs entered into on or after August 5, 1999, and on or
before November 16, 1999, will not be considered to reduce the number
of voices in a market. As a number of commenters pointed out, giving
priority in processing to TV LMAs entered into after adoption of our
new rules but before their effective date would unfairly prejudice
entities required to wait until the effective date of the rules to file
assignment and transfer applications. Entities with such interests may
file an application to convert to ownership on or after the effective
date of the rules. If such applications are filed on the same day as
other voice count dependent applications in the same market, the
Commission will use random selection to determine the processing order.
Interests not converted to ownership will be considered to have been
created as of the effective date of the new rules. Where such interests
do not comply with our revised rules, entities will be given a year
from the effective date of our new rules (November 16, 1999) to divest.
21. Stations commonly owned by a single entity under a conditional
waiver of the radio/TV cross ownership rule will also be considered as
a single voice in the market. Thus, as with TV LMAs, entities with a
conditional waiver will have the first chance to convert to ownership
in the market, ahead of any other voice count dependent application. In
our Local Ownership Order, we directed conditional waiver grantees to
file with the Commission within sixty days of publication of the order
in the Federal Register, that is by November 16, 1999, a showing
sufficient to demonstrate their compliance or non-compliance with our
revised radio/TV cross ownership rule. We will treat such showings
demonstrating compliance as applications to convert the waiver to
permanent ownership, and will treat any filings made before November
16, 1999 as filed on November 16, 1999. Conditional waiver grantees
will be treated in the same fashion as parties to a TV LMA entered into
prior to August 5, 1999. Thus, although applications to convert
conditional waivers to ownership will be considered ahead of any voice
count dependent application in the same market filed on the same day,
the Commission will consider first, before applications seeking to
convert conditional waivers to ownership, the impact on the number of
voices of any non-voice count dependent application filed for the same
market on the same day. In addition, as with other voice count
dependent applications, the Commission will also consider first the
impact on the number of voices in the market of any previously filed
voice or non-voice dependent application, and
[[Page 62127]]
any previous grant. Where conditional waivers can be converted to
ownership, the Mass Media Bureau will replace the conditional waiver
with permanent approval of the relevant assignment or transfer of
license. Where a showing based on voice counts does not qualify for
ownership, entities with a conditional waiver may also apply for a
failed station waiver and may also take advantage of the grandfathering
relief accorded in the Local Ownership Order.
22. Settlement. The Commission will issue a public notice for each
market listing all voice count dependent applications filed on the same
day that propose station combinations in the market. Applicants will be
given a limited period in which to identify for the staff any other
application eligible to be included on the list (e.g., any other
application filed on the same day as those listed in the notice that
proposes a combination implicating the same market). The public notice
will also specify a period during which applicants on the list may
reach a universal settlement; that is, a settlement that results in
grant or dismissal of all applications identified as eligible to
participate in the lottery. Any such settlement agreement must comply
with all Commission regulations. If no universal settlement is reached
during the settlement period, applications for that market will be
assigned a processing priority number by random selection. We believe
that permitting universal settlements will serve the public interest by
permitting processing of an application(s) without random selection,
thereby speeding Commission action on the application. We will not
accept settlements involving fewer than all eligible applicants for the
market. Partial settlements do not facilitate processing as random
selection is still required to determine the processing order.
IV. Administrative Matters
23. Paperwork Reduction Act of 1995 Analysis. This Order on
Reconsideration has been analyzed with respect to the Paperwork
Reduction Act of 1995 and found to impose no new reporting requirements
on the public.
24. Supplemental Final Regulatory Flexibility Act Analysis.
Pursuant to the Regulatory Flexibility Act of 1980, as amended, 5
U.S.C. 601 et seq., the Commission's Final Regulatory Flexibility Act
Analysis (FRFA) in the August 5, 1999 Local Ownership Order was
attached as Appendix A to that order. This Order on Reconsideration has
no significant economic impact on small entities beyond that described
in the discussion of voice tests in the August 5, 1999 FRFA.
25. Ordering Clauses. Accordingly, pursuant to the authority
contained in Sections 4 (i) & (j), 303(r), 308, 310 and 403 of the
Communications Act of 1934, 47 U.S.C. 154 (i) & (j), 303(r), 308, 310
and 403, as amended, this Order on Reconsideration is adopted.
26. As the issues resolved herein affect applications that will be
filed on November 16, 1999, the effective date of the Local Ownership
Order, pursuant to 5 U.S.C. 553(d)(3), upon good cause shown, this
Order on Reconsideration will become effective November 16, 1999.
List of Subjects in 47 CFR Part 73
Television broadcasting.
Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 99-30019 Filed 11-15-99; 8:45 am]
BILLING CODE 6712-01-p