[Federal Register Volume 66, Number 194 (Friday, October 5, 2001)]
[Proposed Rules]
[Pages 50991-51000]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24950]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MM Docket No. 01-235; FCC 01-262]
RIN 4207


Cross-Ownership of Broadcast Stations and Newspapers

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: This document initiates a proceeding to consider whether to 
eliminate, modify, or retain the Commission's newspaper/broadcast 
cross-ownership rule and/or related waiver policies. The takes this 
action in part because it committed to do so in its first biennial 
review of its broadcast ownership rules. The intended effect is the 
harmonization of the Commission's competition and diversity goals with 
the current realities of the local media marketplace.

DATES: Comments are due December 3, 2001; reply comments are due 
January 7, 2002.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Eric J. Bash, (202) 418-2130 or 
[email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Notice of Proposed 
Rule Making (``NPRM'') in MM Docket No. 01-235, FCC 01-262, adopted 
September, 13, 2001, and released September 20, 2000. The complete text 
of this NPRM is available for inspection and copying during normal 
business hours in the FCC Reference Center, Room CY-A257, 445 12th 
Street, SW., Washington, DC and may also be purchased from the 
Commission's copy contractor, Qualex International, Portals II, 445 
12th Street SW, Room CY-B-402, Washington, DC 20554, telephone (202) 
863-2893, facsimile (202) 863-2898, or via email [email protected]. The 
NPRM is also available on the Internet at the Commission's website: 
http://www.fcc.gov.

Introduction

    1. In this proceeding, the Commission seeks comment on whether and 
to what extent it should revise the newspaper/broadcast cross-ownership 
rule, which prohibits common ownership of a broadcast station and a 
newspaper in the same geographic area. The rule rests on the ``twin 
goals'' of diversity of viewpoints and economic competition. The 
Commission adopted the rule in 1975. The local multimedia marketplace 
in which broadcast stations and newspapers operate has changed 
significantly since that time. This proceeding seeks comment on the 
relevance of these changes to the newspaper/broadcast cross-ownership 
rule.

Background

    2. The newspaper/broadcast cross-ownership rule prohibit common 
ownership of a full-service broadcast station and a daily newspaper 
when the broadcast station's service contour (2mV/m contour for AM, 1 
mV/m contour for FM, Grade A for TV) fully encompasses the newspaper's 
city of publication. When adopting the rule in 1975, the Commission not 
only prohibited future newspaper/broadcast combinations, but also 
required existing combinations in highly concentrated markets to divest 
holdings to come into compliance within five years. The Commission 
grandfathered combinations in other markets, so long as the parties to 
the combination remained the same. The Commission, however, 
contemplated waiving the rule, for existing or future combinations, if: 
(1) A combination could not sell a station; (2) a combination could not 
sell a station except at an artificially depressed price; (3) separate 
ownership and operation of a newspaper and a station could not be 
supported in a locality; or (4) for whatever reason, the purposes of 
the rule would be disserved. The Supreme Court has reviewed the rule 
and the Commission's related waiver policies, and upheld them in their 
entirety. The Commission has granted only four permanent waivers in the 
twenty-six years since it adopted the rule.
    3. In February 1996, the Telecommunications Act of 1996 also became 
law. Section 202(h) of the 1996 Act instructs the Commission to review 
each of its ownership rules biennially, to determine whether the rule 
is ``necessary in the public interest as a result of competition'' and 
repeal or modify any rule it finds is no longer in the public interest. 
As required by section 202(h) of the 1996 Act, the Commission examined 
the newspaper/broadcast cross-ownership policies in its first biennial 
review on broadcast ownership rules. The Commission concluded that the 
newspaper/broadcast cross-ownership rule continues to serve the public 
interest because it furthers diversity, and therefore should be 
retained. However, the Commission also noted that the rule might not be 
necessary to achieve its intended public interest benefits under 
certain circumstances. Thus, the Commission committed to undertaking a 
rulemaking proceeding to tailor the rule accordingly.

Discussion

    4. Since the Commission adopted the newspaper/broadcast cross-
ownership rule over twenty-five years ago, the local media marketplace 
has changed dramatically. In this proceeding, we seek to examine our 
newspaper/broadcast cross-ownership policies in the context of these 
changes in the local media marketplace, taking into account section 
202(h) of the Telecommunications Act of 1996, and our diversity and 
competition goals.
    5. Current Status of the Media Marketplace. The number of local 
media outlets has grown substantially since 1975. A significant portion 
of this growth has occurred within the broadcast industry itself. A 
total of 7,785 radio stations were on the air as of January 1, 1975; as 
of June 30, 2001, the Commission had licensed 12,932 radio stations. A 
total of 952 TV stations were on the air on January 1, 1975; as of June 
30, 2001, the Commission had

[[Page 50992]]

licensed 1,678 full power television stations, 2,396 low power TV 
stations, and 232 Class A TV stations. In 1975, there were three 
national commercial broadcast networks, and today there are seven such 
networks. We seek comment on the relevance of these developments to our 
newspaper/broadcast cross-ownership policies.
    6. Changes in the newspaper industry since 1975 have been more 
mixed. Although the number of daily newspapers has decreased since 
1975, the number of weekly newspapers has increased. The number of 
daily newspapers has declined from 1,756 in 1975, to 1,422 in 2000. The 
total circulation of morning and evening daily newspapers has declined 
by about 8% from 60.6 million in 1975 to 55.8 million in 2000. However, 
the combined circulation of smaller, more targeted newspapers, often 
published weekly, has more than doubled: 7,612 weekly newspapers had a 
circulation of approximately 35.9 million in 1975, whereas 7,915 such 
newspapers had a circulation of approximately 81.6 million in 1996. 
These weekly newspapers are often the source of local information. We 
seek comment on these figures and their significance to our newspaper/
broadcast cross-ownership rule, as well as any other data we should 
consider.
    7. Besides the changes in the broadcast and newspaper industries, 
there has been a proliferation of other outlets in the local media 
marketplace. In 1975, cable television systems served only 13% of TV 
households. By June 2000, they served 67.4% of TV households, or 67.7 
million people. There are over 200 video programming services available 
on cable systems. Other multichannel programming distributors (MVPDs), 
most notably direct broadcast satellite (DBS) providers, now compete in 
the marketplace but were nonexistent in 1975. DBS has grown rapidly, 
and now serves nearly 13 million subscribers, or over 15% of MVPD 
households. Other MVPDs serve another nearly 4 million subscribers. All 
of these MVPDs distribute the programming of many networks. Today, 
almost 84% of all TV households subscribe to an MVPD. We seek comment 
on the impact of these alternative media outlets on our newspaper/
broadcast cross-ownership policies.
    8. As of November 2000, 56% of Americans had access to the Internet 
from home, which was not commercially available in 1975. The Internet 
has the potential to be a significant source of local and national news 
and information, and, to a limited though increasing extent, audio and 
video programming. The Internet may provide advertisers with 
alternative means of reaching their potential customers. We seek 
specific data on the impact of the Internet in the local media 
marketplace.
    9. Although the number of media outlets has grown, so has the 
concentration in their ownership. Historically, the Commission has had 
both local and national ownership limits for broadcast stations. In 
1975, on the local level, the Commission prohibited common ownership of 
two radio stations within the same type of service, or two TV stations 
when their signal contours overlapped. On the national level, the 
Commission prohibited common ownership of more than seven AM, seven FM, 
and seven TV stations. Pursuant to the 1996 Act, the Commission 
eliminated any national ownership limit on radio stations, and relaxed 
the national TV ownership limit to permit common ownership of TV 
stations that reach as many as 35% of TV households. It also relaxed 
its local radio ownership rules, and in 1999, its local TV multiple 
ownership rule. The result is that, while in 1975 a single entity could 
not own more than fourteen radio stations nationwide, today one entity 
owns more than 1,000 radio stations nationwide. In addition, at 
approximately the same time that the 1996 Act became law, there were 
approximately 5,100 owners of commercial radio stations, while now 
there are only approximately 3,800 owners, a decrease of 25%. Moreover, 
in 1995 there were 543 entities that owned commercial TV stations, 
while today there are only 360. We seek comment on the relevance of 
consolidation in the broadcast industry to our newspaper/broadcast 
cross-ownership policies, and additional data on how this consolidation 
has impacted the local media marketplace.
    10. Diversity. As noted, the Commission adopted the newspaper/
broadcast cross-ownership rule largely to promote and protect a 
diversity of viewpoints. The Commission has sought to ensure that the 
public has access to a diversity of viewpoints to promote First 
Amendment values. In the words of the Supreme Court, ``[t]hat Amendment 
rests of the assumption that the widest possible dissemination of 
information from diverse and antagonistic sources is essential to the 
welfare of the public. * * *'' The Commission historically has sought 
to promote its goal of viewpoint diversity indirectly through 
structural regulation, such as ownership rules. We note that the 
Commission goal of diversity of viewpoint has been particularly 
important in the context of newspaper/broadcast cross-ownership, given 
the reliance the public has placed on these media as sources of local 
news and information.
    11. As we evaluate our newspaper/broadcast cross-ownership rule, we 
begin by asking whether the newspaper/broadcast cross-ownership rule 
continues to be necessary to protect a diversity of viewpoints. As 
noted, consumers today have many media outlets from which to obtain 
news and information. While the number of daily newspapers has 
declined, the number of weekly newspapers has doubled since 1975. In 
addition, approximately 77% of commercial TV stations provide local 
news. Virtually all affiliates of ABC, CBS, and NBC provide local news, 
and approximately one third of other broadcast TV stations do. This 
latter group includes stations affiliated with the Fox network, which 
did not even exist in 1975. As of 1999, approximately thirty regional 
cable news networks provided news and information targeted to more 
local areas than their national counterparts, such as CNN. These 
networks did not exist in 1975. Recent studies also show that the 
Internet is becoming an increasingly significant source of news and 
information. Indeed, these studies suggest that some Americans are 
turning to the Internet for news instead of TV, in particular broadcast 
TV. We seek comment on what information consumers actually access and 
how successful independent Internet-based providers of information have 
been. Are the data different for different types of local markets, or 
for different demographic and income groups? If so, what is the 
relevance of those differences for purposes of evaluating the 
newspaper/broadcast cross-ownership rule? Are there still other media 
that are sources of local news and information? Does the proliferation 
of these new media mean that the newspaper/broadcast cross-ownership 
rule is no longer necessary to ensure that consumers of news and 
information have access to diverse ideas and viewpoints?
    12. Although the number of media outlets has increased, the 
Commission traditionally has focused on the number of different owners, 
as opposed to the number of media outlets, because as noted, the 
Commission has thought that diversity in ownership promotes diversity 
in viewpoint. According to this theory, common ownership of media 
outlets means that they are one and the same for purposes of viewpoint 
diversity. Under this view, the growth in the number of broadcast 
outlets is

[[Page 50993]]

counterbalanced by the consolidation in ownership of them. Accordingly, 
the development of regional cable news networks might not be considered 
especially important in terms of diversity analysis, because more than 
half of them are owned by co-located broadcast stations or newspapers. 
In addition, the growth of news-oriented websites likewise might not be 
considered particularly significant, because many do not focus on local 
news and information, and those that do are often operated by existing 
local media, such as broadcast stations and newspapers. We seek comment 
on the level of independence of other media, including the Internet.
    13. The relationship between ownership diversity and viewpoint 
diversity is the subject of considerable debate. The Commission has 
noted the argument that ``the greater the concentration of ownership, 
the greater the opportunity for diversity of content.'' Under this 
view, competing parties in a market have a commercial incentive to air 
``greatest common denominator'' programming, while a single party that 
owns all stations in a market has a commercial incentive to air more 
diverse programming to appeal to all substantial interests. On the 
other hand, there also is the argument that the existence of multiple 
owners competing in a market is likely to provide viewpoint diversity 
``rather than content diversity `` providing the ``divergent viewpoints 
on controversial issues'' which the Commission has stated is 
``essential to democracy.'' We seek comment on these competing theories 
of the relationship between ownership diversity and viewpoint 
diversity. Are commercial incentives adequate to protect the public's 
access to a variety of viewpoints from commonly owned media? Is there a 
difference between the relevance of the competing theories in terms of 
diversity of entertainment programming and news or public affairs 
programming? Or as applied across different media? We note that the 
Commission has suggested that the theory that consolidation promotes 
diversity in content might apply to entertainment programs and formats, 
but not to news and public affairs programming. Should the Commission 
give greater weight to viewpoint diversity in the latter area because 
it serves core First Amendment values of helping to ensure robust 
discussion of issues of public concern? Are there ways that the 
Commission can attempt to promote viewpoint diversity beyond structural 
regulation? What role if any do other legal requirements, for example 
those that require broadcasters to provide political candidates access 
to their facilities under certain conditions, or that require cable 
systems to set aside channel capacity for certain uses (e.g., PEG, 
leased access), play in promoting diversity? Historically, broadcast 
stations and newspapers have been viewed as the gatekeepers in the 
local marketplace of ideas. Given the significant changes in the local 
media marketplace, is this viewpoint still accurate?
    14. In addition to comments on the competing theories of viewpoint 
diversity described above, we seek comment on and data about actual and 
potential effects on diversity of the newspaper/broadcast cross-
ownership rule and our proposed options for modifying the rule. Is it 
possible that the effect on diversity will be different depending on 
the size of the markets involved, or the predominance of newspapers and 
broadcast stations in a particular local market? Would the increase or 
decrease in access to diverse viewpoints affect different demographic 
or income groups differently? Is there some other variable that would 
affect the relationship between ownership diversity and viewpoint 
diversity? Commenters arguing for or against these theories are 
encouraged to provide specific analyses and data to support their 
arguments.
    15. Competition. Our multiple ownership rules traditionally have 
been designed to serve the ``twin'' goals of competition and diversity. 
In addition, section 202(h) of the 1996 Act instructs the Commission to 
review each of it ownership rules, including the newspaper/broadcast 
cross-ownership rule, biennially to determine whether the rule is 
``necessary in the public interest as a result of competition,'' and 
then to tailor the rule accordingly. As we review our newspaper/
broadcast cross-ownership policies, we therefore seek information about 
the economic impact of maintaining or modifying the rule. As we do so, 
we focus on the primary economic market in which broadcast stations and 
newspapers may compete: Advertising. As the Commission stated in its 
recent proceeding relaxing the dual network rule, the Commission has 
historically considered and promoted competition in advertising markets 
in order to enhance the welfare of listeners and viewers of broadcast 
services. This is because advertisers provide all of the financial 
support for programming on broadcast stations, and have a commercial 
incentive to prefer programming with widespread appeal, all other 
things remaining the same. As more and more Americans, however, 
subscribe to MVPDs, and thus do not receive their television service 
free and over-the-air, it may be appropriate for the Commission to 
reexamine its approach to and emphasis on the advertising market. Who 
benefits from lower advertising rates? Is it the role of the Commission 
to ensure these benefits? What are the other economic markets in which 
broadcast stations and newspapers compete? Is there a better measure of 
the state of economic competition than the advertising market?
    16. Competition analysis requires us to define the relevant product 
and geographic markets in which broadcasters and newspapers compete, as 
well as the market share of the participants within the relevant 
market, and then weigh the competitive benefits of consolidation (e.g., 
economies of scale and scope that may lead to lower costs and prices or 
superior products) against the harms (e.g., the exercise of market 
power). We seek information that would help us conduct our analysis.
    17. Our first task is to define the relevant product market. 
Measured on an aggregate, national basis, advertisers spend about 45% 
of all local advertising dollars on newspapers, about 16% on radio 
stations, and about 15% on broadcast TV stations. There is considerable 
debate, however, on the extent to which advertising in one of these 
media is a substitute for advertising on another, and thus the extent 
to which they are in fact in the same product market. We seek comment 
on this issue. To what extent is advertising on a broadcast station a 
substitute for advertising in a newspaper, i.e., to what extent do 
advertisers shift their expenditures between broadcast stations and 
newspapers as one medium raises the prices it charges for advertising? 
Does the answer depend on whether the broadcast medium is radio or 
television? Does the answer depend on whether the newspaper is 
published daily or weekly? Do advertisers seek to use broadcast media 
and newspapers to reach different demographic groups? We also note that 
classified advertising appears to be a type of advertising for which 
broadcast stations do not compete with newspapers. What other types of 
advertising should be viewed as a separate market? Has the decrease in 
the number of daily newspapers, and the increase in the number of 
broadcast stations, affected the way in which these media compete? We 
note that when the Commission adopted the newspaper/broadcast cross-
ownership rule, it

[[Page 50994]]

observed that the Department of Justice defined the relevant product 
market to include newspapers and broadcast stations. Currently, 
however, the Department of Justice views radio as a separate product 
market. Courts have likewise concluded that the local newspaper 
advertising market is a distinct antitrust market from the local media 
advertising markets. We seek comment on these views.
    18. Are other media reasonable substitutes for advertising on 
broadcast stations, newspapers or both, such that these other media 
should be considered in the same product market? Measured on an 
aggregate national basis, advertising on cable now accounts for nearly 
4% of the total of all local advertising dollars. Cable systems' share 
of the local advertising market thus appears small currently, but it is 
continuing to grow. For example, cable systems' share of the local 
advertising market was only 1% in 1990, meaning that it has quadrupled 
in the last decade. Does the availability of advertising on cable 
systems constrain broadcast stations' and newspapers' ability to raise 
their advertising prices? Do other MVPDs such as DBS compete with 
broadcast stations and newspapers in the local advertising market? Do 
they have plans to do so? How do banner ads on websites affect the 
relevant product market? How substitutable is Internet advertising for 
other forms of media advertising? Are there other media that should be 
included in the relevant market?
    19. When analyzing the potential competitive effects of a proposed 
newspaper/broadcast combination, what is the relevant geographic 
market? The relevant geographic market is some local area, but what are 
the precise parameters of that area? We note that antitrust analysis 
defines the relevant geographic market as the region where a 
hypothetical monopolist that is the only producer of the relevant 
product in the region could profitably raise the price of the relevant 
product. Under the Commission's current rule, newspaper/broadcast 
combinations are prohibited when the broadcast station's service 
contour encompasses the entire community in which the newspaper is 
published. If local advertisers would respond to an advertising price 
increase in the community in which the newspaper is published by 
shifting to alternative suppliers located outside this geographic area, 
the relevant geographic market should be larger than the community in 
which the newspaper is published. We seek comment on how to define the 
relevant geographic market for purposes of our newspaper/broadcast 
cross-ownership analysis.
    20. Once we define the relevant product and geographic markets, how 
should we measure the market share of those that compete in the market? 
Market share is often measured by revenue. Local advertising revenue, 
however, is often not publicly available for some media. Should we 
therefore instead rely on circulation and ratings information, which 
presumably correlate to advertising rates, and therefore overall 
revenue and share? Commenters arguing against reliance on circulation 
or ratings information should propose alternative bases of measurement. 
Industry-accepted ratings services report on how many listeners and 
viewers ``consume'' particular content of broadcast stations. The 
Arbitron Company reports on the radio marketplace, and Nielsen Media 
Research reports on the TV marketplace. Other entities, such as SRDS, 
provide data on the circulation of newspapers. Based on these reports, 
it is possible to determine how many listeners or viewers tune in to a 
broadcast station for a particular program, and how many people 
purchase a newspaper within a particular area. How should we compare 
newspaper circulation with radio and television ratings?
    21. What are the benefits of newspaper/broadcast combinations, not 
only to the combinations, but also to advertisers, and the public? The 
joint operation of a broadcast station and a newspaper may create 
efficiencies and synergies. For example, the efficiencies of a merger 
may enable a broadcast station and a newspaper to combine sales 
operations and staff, and thereby save expenses or reduce advertising 
prices. At least some of these savings could be passed on to 
advertisers in the form of lower advertising rates. Some of the 
additional savings in advertising expenses could also be passed on to 
listeners, viewers, and subscribers in the form of enhanced content. Is 
there a difference in efficiencies between combining a newspaper and a 
radio station, as compared to combining a newspaper and a TV station? 
Commenters in our 1998 biennial review proceeding stated that common 
ownership produces cost savings in business administration. We seek 
information on the nature and scope of efficiencies combinations might 
realize, and the nature and magnitude of benefits that flow through to 
advertisers and ultimately to consumers. We seek evidence that 
newspaper/broadcast combinations produce efficiencies that flow through 
to advertisers and consumers. Studies showing that advertising rates 
for newspaper/broadcast combinations are significantly lower than 
advertising rates for separately owned newspapers and broadcast 
stations would be particularly useful.
    22. What economic harms might newspaper/broadcast combinations 
bring? The potential harms of such combinations include creating and 
exercising market power. A particular combination may garner such a 
share of the local advertising market that advertisers believe they 
must advertise on the combination's media in order to reach consumers, 
such that the combination can charge anticompetitive prices. We seek 
additional information on the nature and scope of the economic harms 
that newspaper/broadcast combinations might bring. Studies and other 
evidence showing that advertising rates for newspaper/broadcast 
combinations are significantly higher than advertising rates for 
separately owned newspapers and broadcast stations would be 
particularly useful. It would also be useful to identify the associated 
harm to consumers.
    23. We have sought comment on the degree to which broadcast 
stations and newspapers compete for advertising dollars. Are there 
other markets in which broadcast stations and newspapers compete? For 
example, broadcast stations and newspapers compete to provide news. 
They do so to attract readers, listeners, and viewers, in order to 
attract advertisers. Do they compete to provide news for other reasons 
that should be relevant to our analysis? How should the non-advertising 
economic markets in which broadcast stations and newspapers compete 
affect our newspaper/broadcast cross-ownership policies?
    24. Existing Newspaper/Broadcast Combinations. As we consider the 
environment in which broadcast stations and newspapers operate, we seek 
comment in particular on the experience of existing newspaper/broadcast 
combinations. As noted, the Commission grandfathered most combinations 
that existed at the time it adopted its rule, and approximately fifty 
of these remain today. In addition, the Commission has granted four 
permanent waivers of the rule. We seek further comment on the 
experience of co-located newspaper/broadcast combinations, because they 
provide concrete examples of how the marketplace may be affected by 
changes to our rule. What sorts of public interest benefits or harms 
have these combinations produced?
    25. How have combinations affected advertising rates? Have the

[[Page 50995]]

combinations sold advertising at lower rates than their competitors? Or 
are advertising rates higher in these markets? Has there been a 
difference between combinations involving newspapers and radio 
stations, as opposed to newspapers and TV stations? At least one study 
concluded that common ownership of a newspaper and a TV station in the 
same market significantly decreases newspaper advertising rates, but 
common ownership of a newspaper and a radio station does not.
    26. How have combinations affected news? Have the combinations 
brought additional news outlets to the marketplace, or otherwise 
enhanced news coverage? We note that commenters in our 1998 biennial 
review proceeding stated that common ownership has enabled them to 
provide more news, to distribute it through new media (such as cable 
systems and websites), and to treat subjects in more depth. What sorts 
of harms have the combinations produced? Even if the amount or quality 
of news has increased, has viewpoint diversity decreased?
    27. Legal Issues. As we consider our competition and diversity 
goals in the context of newspaper/broadcast combinations, we note the 
recent decision of the U.S. Court of Appeals for the D.C. Circuit, Time 
Warner Entertainment v. FCC (Time Warner). This decision struck down 
two ownership rules that the Commission had adopted to implement the 
Cable Act of 1992. One of these rules restricted the number of 
subscribers that a given multiple system operator can serve to 30% of 
subscribers to MVPDs, and the other prohibited cable systems from 
filling more than 40% of their channel capacity with affiliated 
programming networks. In analyzing petitioners' arguments that these 
rules interfered with their speech in violation of the First Amendment, 
the court applied the ``intermediate scrutiny'' test on review. Under 
that test, a regulation will be upheld if ``it furthers an important or 
substantial governmental interest; if the governmental interest is 
unrelated to the suppression of free expression; and if the incidental 
restriction on alleged First Amendment freedoms is no greater than is 
essential to the furtherance of that interest.'' Consistent with 
earlier holdings of the Supreme Court, the D.C. Circuit found the 
Commission's interest in ``the preservation of competition'' and ``the 
promotion of diversity in speech and ideas'' important government 
interests.
    28. The D.C. Circuit also found, however, that the Commission had 
not provided the ``substantial evidence'' necessary to show how its 
rules furthered its interest in ``the preservation of competition,'' 
and remanded the matter to the Commission. The court explained that 
``[s]ubstantial evidence does not require a complete factual record--we 
must give appropriate deference to predictive judgments that 
necessarily involved the expertise and experience of the agency.'' 
Holding that the Commission had not satisfied the applicable test, it 
remanded the matter to the Commission for further proceedings. We seek 
comment on the relevance of the Time Warner decision to the competition 
goals that inform our newspaper/broadcast cross-ownership policies. Are 
the First Amendment interests at stake here the same as in Time Warner? 
As commenters advocate particular public policy options, we encourage 
them to consider the level of proof required to support them under Time 
Warner, and whether these standards are applicable in the newspaper/
broadcast context.
    29. We note that the court in Time Warner held that the Commission 
could not rely on its diversity goal alone to support the horizontal 
and vertical restraints at issue in that case. We also note, however, 
that the court's holding was based on its interpretation of the 
specific provision of the Cable Act of 1992 authorizing adoption of the 
cable limits, which focused on competition; the statutory source of the 
newspaper/broadcast cross-ownership policies, on the other hand, is the 
broad public interest standard of Title III. As discussed above, the 
Supreme Court upheld the Commission's predominant reliance on the 
diversity rationale to support its newspaper/broadcast cross-ownership 
policies. We seek comment on the impact of the Time Warner case on our 
diversity analysis, and how the marketplace changes that have occurred 
since the Supreme Court upheld the newspaper/broadcast cross-ownership 
rule may affect the First Amendment analysis.

Options

    30. As the Commission stated in its first biennial review of the 
broadcast ownership rules, there may be circumstances in which the 
newspaper/broadcast cross-ownership rule may not be necessary to 
achieve its intended public interest benefits. We outline below a 
variety of different approaches that might serve the public interest. 
We seek comment on each of the options.

Modification of Rule or Waiver Policies

    31. We could modify our newspaper/broadcast cross-ownership rule in 
a number of ways to ensure that it best serves our competition and 
diversity goals. Should the Commission adopt any changes by amending 
the rule or by modifying its waiver policies? Amending the rule, 
including adopting clearly defined waiver standards, would provide 
greater guidance and predictability to the public. Modifying our waiver 
policies, however, would allow the Commission to fashion the most 
appropriate solution to any given situation. We seek comment on how we 
can best modify our cross-ownership rule or waiver policies to serve 
the public interest.
    32. We outline below possible modifications we could make to the 
newspaper/broadcast cross-ownership rule. These proposals are based 
largely on revisions the Commission has made to other multiple 
ownership rules. Commenters supporting adoption of one or more of these 
proposals should explain how the proposed modification would advance 
our public interest goals of promoting competition and diversity. 
Similarly, commenters proposing modifications not discussed in this 
NPRM should explain why the public interest supports their proposal.
    33. Redefining the Geographic Area. As explained above, the current 
rule prohibits common ownership of a broadcast station and a newspaper 
when the broadcast station's service contour encompasses the 
newspaper's city of publication. We seek comment on whether to redefine 
the geographic area in which the rule operates to that local area in 
which broadcast stations and newspapers compete, without regard to 
contour overlap. Under this approach, combinations would be permitted 
so long as the broadcast station and the newspaper are in different 
markets. This change could be made on its own, or in conjunction with 
other modifications, such as the ones set forth below. We seek comment 
on defining the relevant geographic area. In particular, we seek 
comment on how to define the market in which a particular newspaper 
competes. We have recognized that the commonly accepted geographic 
market for TV is the Designated Market Area, or DMA, defined by Nielsen 
Media Research. Does a newspaper compete throughout a DMA? A commonly 
accepted geographic market within the radio industry is the radio 
metro, defined by The Arbitron Company. Does a newspaper compete 
throughout a radio metro? How should we treat radio markets that are 
not located in a radio metro? What will be the effect of any proposed 
changes in the geographic market definition on competition and 
diversity?

[[Page 50996]]

    34. ``Market Concentration'' Standard. When the Commission revised 
the TV duopoly rule, it decided not only to redefine the geographic 
scope of the rule to enable stations in separate markets to combine, 
but also to permit smaller stations in the same market to combine with 
each other or with a larger station. One option for modifying our 
newspaper/broadcast cross-ownership policies therefore might be to 
adopt a ``market concentration'' standard of some kind. For example, 
the Commission might permit combinations between broadcast stations and 
newspapers, so long as their combined or individual market shares do 
not exceed a certain level.
    35. We seek comment on a ``market concentration'' standard. What is 
the appropriate measure of ``market concentration'' for broadcast 
stations and newspapers, advertising or audience share? How should we 
define the broadcast stations and newspapers with the largest market 
share? With respect to newspapers, should we identify the largest 
participants in a local area by their circulation? What circulation 
should count as large, and what newspaper publications should count as 
being in the market? As we asked, what should be the geographic 
boundaries of the local area over which we measure newspaper 
circulation?
    36. We seek comment on how we should define the top ranked TV 
stations in a market. We note that, in revising the TV duopoly rule, 
the Commission decided to prohibit combinations between stations when 
both are ranked within the top four in the DMA. The Commission 
explained that ``[t]hese stations generally have a large share of the 
audience and advertising in their area, and requiring them to operate 
independently will promote competition. In addition, our analysis has 
indicated that the top four-ranked stations in each market generally 
have a local newscast, whereas lower-ranked stations often do not have 
significant local news programming, given the costs involved. 
Permitting mergers among these two categories of stations, but not 
among the top four-ranked stations, consequently might pose less 
concern over diversity of viewpoints in local news presentation, which 
is at the heart of our diversity goal.'' We seek comment on the 
relevance of this reasoning to our newspaper/broadcast cross-ownership 
policies.
    37. We also seek comment on how to define the top ranked radio 
stations in a market. We note that, according to our Mass Media 
Bureau's most recent report on the radio industry, ``[t]he two largest 
radio firms in each radio market have, on average, 70 percent of the 
market's radio advertising revenue.'' Would it therefore be appropriate 
to prohibit combinations between the two largest radio station owners, 
or radio station owners with stations that have an advertising or 
audience share that exceeds a certain limit, and the largest newspapers 
in the same market? We also note, however, that in revising its radio/
TV cross-ownership rule, the Commission treated all radio stations 
similarly, and thus permitted TV stations to combine with radio 
stations up to a voice-dependent numerical limit, without regard to the 
radio station's market share. Would it therefore be appropriate not to 
restrict the type of radio stations that can combine with newspapers? 
Regardless of whether we limit the kind of radio station that a 
newspaper may acquire, should we limit the number of radio stations it 
may acquire? How many radio stations should we permit to be commonly 
owned with a newspaper? Should any limit depend on the market share of 
the radio station(s) involved? Should the appropriate number depend on 
the other media properties attributed to the radio station owner, such 
as broadcast TV or cable systems? We seek comment on the mechanism that 
will best serve the public interest.
    38. ``Voice Count'' Standard. Another option for modifying the 
newspaper/broadcast cross-ownership policies would be to permit 
combinations so long as a certain number of independently owned media 
``voices'' would remain in the market post-merger. This approach would 
be consistent with the recently revised radio/TV cross-ownership rule, 
which permits common ownership of a TV station and up to four radio 
stations if at least ten media voices would remain in the market, and 
up to six radio stations if at least twenty media voices would remain 
in the market. Several commenters in the 1998 biennial review 
proceeding favored such an approach. Under our current radio/TV cross-
ownership rule, media ``voices'' include TV stations within the DMA, 
radio stations within the radio market within the DMA, newspapers 
published four or more days a week with a circulation of 5% or more 
within the DMA, and cable (as one voice) if generally available in the 
DMA. This approach would ensure a ``floor'' of independently owned 
outlets, regardless of market size. However, since the requirement that 
a minimum number of voices remain in a market necessarily disfavors 
combinations in markets with fewer voices, are there alternative 
approaches that might provide relief in these markets but still 
preserve our competition and diversity goals? If we were to adopt a 
voice count approach, how should we resolve mutually exclusive 
applications, i.e., applications filed at the same time both of which 
could not be granted without reducing the ``floor'' that our policy 
would be designed to protect against?
    39. One particular formulation of the newspaper/broadcast cross-
ownership policy might treat a daily newspaper as the equivalent of a 
TV station, and thus permit common ownership of newspapers and several 
radio stations, or one TV station, if a certain number of voices would 
remain in the market. Or are newspapers a sufficiently distinct medium 
of expression, such that they should not be treated similar to a TV 
station? We seek comment on whether it would be appropriate to adopt a 
voice count test in the newspaper/broadcast context, and if so, on how 
many voices we should require, and what voices should qualify. In 
revising the radio/TV cross-ownership rule, the Commission decided to 
count toward the number of voices necessary for a particular 
transaction only those newspapers published at least four days a week 
with a circulation of 5% or more in the DMA. The Commission explained 
that ``[o]ur intent in this regard is to include only those newspapers 
that are widely available throughout the DMA and that provide coverage 
of issues of interest to a sizeable portion of the population. Although 
we recognize that other publications also provide a source of diversity 
and competition, many of these are targeted to particular communities 
and are not accessible to, or relied upon by, the population throughout 
the local market.'' Is this rationale equally appropriate for 
determining the newspapers with such a significant market presence that 
we should not permit them to combine with co-located broadcast stations 
that also have a significant presence?
    40. In the radio/TV cross-ownership context, the Commission decided 
to count cable systems because they provide some local information, but 
to count them as only one voice because, despite the many channels 
available on the systems, the cable operator either originates or 
selects almost all of the programming. Should we give greater weight to 
the fact that many cable systems provide leased access and PEG 
channels, which can provide local information, given that the cable 
system does not control the content of these channels? For the revised 
radio/TV cross-ownership rule, the Commission

[[Page 50997]]

also decided not to count other media, such as other MVPDs and 
websites, because it concluded that they generally do not provide local 
news or were not widely available. The Commission also decided not to 
count media such as billboards, direct mail, and yellow pages, because 
they are not meaningful sources of information on issues of local 
concern. We seek comment on whether recent changes in the media 
marketplace, including DBS'' potential for providing local news and 
information and the growing availability of local content on Internet 
websites, should impact these decisions.
    41. We also note that, in revising the TV duopoly and radio/TV 
cross-ownership rules, the Commission decided to count only those TV 
stations that have service contours that overlap with the service 
contour of at least one of the stations in a proposed combination. The 
Commission did so because some TV stations in a DMA may serve very 
local communities, such that allowing them to combine based on 
circumstances elsewhere in the DMA disserved competition and diversity 
objectives. If we decide to adopt a voice count standard for our 
newspaper/broadcast cross-ownership policies, should we similarly limit 
the circumstances in which a particular voice counts to ensure that the 
test adequately promotes our goals? If so, how could we accomplish this 
in the newspaper/broadcast context? For example, how could we ensure 
that the only local newspaper and the only local TV station that serve 
a community do not combine and threaten competition and diversity in 
the community?
    42. ``Market Concentration''/``Voice Count'' Standard. Another 
option for modifying the newspaper/broadcast cross-ownership policies 
would be to combine the ``market concentration'' and ``voice count'' 
standards. Under this approach, a combination would be permitted so 
long as both parties do not have a certain market share (combined or 
individual), and so long as a minimum number of voices would remain in 
the market post-merger. This approach would be consistent with the 
recently revised TV duopoly rule, which permits common ownership of two 
TV stations within the same DMA if both are not ranked among the top 
four in the market, and at least eight independently owned TV stations 
would remain in the DMA post-merger. As the Commission explained when 
it revised the TV duopoly rule, ``the station rank and voice criteria 
are designed to protect both our competition and diversity concerns.'' 
As the Commission further explained, the combined standard permits 
weaker market participants to combine with each other, or with a larger 
participant, and thereby preserves and strengthens their ability to 
compete.
    43. A particular formulation might blend the TV duopoly rule (which 
combines both a market concentration and voice count standard) with the 
radio/TV cross-ownership rule (which is a cross-media policy). For 
example, a combination of a smaller newspaper and a certain number of 
radio stations might be permitted so long as a minimum number of media 
voices would remain. We seek comment on such options, and on what level 
or market concentration, numerical limits, or media combinations would 
be appropriate.
    44. Waiver Standards. As indicated, under current policy, the 
Commission presumes it is in the public interest to waive the 
newspaper/broadcast cross-ownership rule if: (1) A combination could 
not sell a station; (2) a combination could not sell a station except 
at an artificially depressed price; (3) separate ownership and 
operation of a newspaper and a station could not be supported in a 
locality; or (4) for whatever reason, the purposes of the rule would be 
disserved. Should the Commission amend its waiver policies? What 
standards would best satisfy our competition and diversity goals?
    45. We note that, in amending the TV duopoly and radio/TV cross-
ownership rules, the Commission presumed it was in the public interest 
to waive the rules if at least one of the stations had failed. To prove 
that a station has failed, an applicant must show that: (1) The station 
has been dark for at least four months or is involved in involuntary 
insolvency proceedings and (2) the in-market buyer is the only entity 
willing and able to operate the station, and sale to an out-of-market 
buyer is impossible except at an artificially depressed price. In 
addition, the Commission presumes that it is in the public interest to 
waive the TV duopoly rule if at least one of the stations is failing, 
or authorized but not yet constructed. To prove that a station is 
failing, an applicant must show that: (1) At least one of the merging 
stations has a low audience share; (2) the financial condition of at 
least one of the stations is poor; (3) the merger will produce public 
interest benefits that outweigh harm to competition and diversity; and 
(4) the in-market buyer is the only entity willing and able to operate 
the station, and sale to an out-of-market buyer is impossible except at 
an artificially depressed price. To qualify for a waiver under the 
``unbuilt station'' standard, the applicant must show that: (1) The 
combination will result in the construction of an authorized but as yet 
unconstructed station; (2) the permittee has made reasonable efforts to 
construct; and (3) the in-market buyer is the only entity willing and 
able to operate the station, and sale to an out-of-market buyer is 
impossible except at an artificially depressed price. Should these 
standards be adapted to newspaper/broadcast cross-ownership policies, 
such that combinations would be permitted if one of the parties to the 
combination has failed, is failing, or if the combination would result 
in new service?
    46. Retention Period. When the Commission adopted the newspaper/
broadcast cross-ownership rule, the Commission had to grapple with the 
issue of how long a broadcast licensee could retain a daily newspaper 
it acquired in a community in which it already owned a broadcast 
station. It resolved this issue by stating:

if a broadcast station licensee were to purchase one or more daily 
newspapers in the same market, it would be required to dispose of 
its stations there within 1 year or by the time of its next renewal 
date, whichever is longer. If the newspaper is purchased less than a 
year from the expiration of the license, the renewal application may 
be filed, but it will be deferred pending sale of the station, if 
necessary, until the year has expired.

At the time this policy was adopted, the license period for broadcast 
stations was three years. Thus, a broadcaster obtaining a local daily 
newspaper was to be given until its next renewal, which was no more 
than three years away, or, at least one year, whichever period was 
longer, to divest itself of one of the media properties. Now, however, 
the license term for a broadcast station is eight years. We seek 
comment on whether or not, if we decide to retain the newspaper/
broadcast cross-ownership prohibition in some form, we should modify 
the retention policy that applies to acquisition of a newspaper by a 
broadcast licensee. We also seek comment on whether the Commission 
should require broadcast licensees to notify the Commission at the time 
they acquire a daily newspaper in a market in which they hold a 
television or radio station license. We also seek comment on whether, 
if we decide to shorten the length of time a licensee has to come into 
compliance after purchasing a newspaper, we should apply the current 
criteria to existing combinations.
    47. Structural Separation. As stated, we have modeled many of the 
proposals after approaches the Commission has taken in amending other 
broadcast cross-ownership rules, such as the TV duopoly rule and the 
radio/TV cross-ownership rule. Should we, however,

[[Page 50998]]

instead allow combinations subject to certain structural separation 
requirements? We note that the Canadian Radio-television 
Telecommunications Commission (CRTC) recently concluded to allow common 
ownership of newspapers and TV stations, but required the combinations 
to maintain separate management and presentation structures for the 
news operations of their newspapers and TV stations. The CRTC noted 
that common ownership could create more efficient news operations, but 
it also was concerned that common ownership ``could potentially lead to 
the complete integration of the owner's television and newspaper news 
operations. This integration could eventually result in a reduction of 
the diversity of the information presented to the public and of the 
diversity of distinct editorial voices available in the markets 
served.'' The CRTC thus required separation of news management 
functions, but not newsgathering activities. Should we consider an 
approach similar to that of the CRTC? We note that, although the 
Commission traditionally has not promulgated structural separation 
requirements as part of its broadcast ownership rules, it has in other 
contexts. For example, in order to approve the application of a Bell 
Operating Company (BOC) to provide in-region long-distance service, the 
Commission must find that the BOC will provide the service through a 
separate affiliate that satisfies a variety of statutory criteria. 
Would structural separation requirements both allow broadcast stations 
and newspapers to realize the economic benefits of combined operations, 
but at the same time preserve the interest of the public in having 
access to distinct editorial viewpoints? Have grandfathered 
combinations been able to realize economic efficiencies from 
consolidating their broadcast and newspaper news operations, but still 
maintain editorial independence? What sort of protections and 
structural separation requirements would be necessary to ensure that 
editorial independence would not be compromised?

Elimination/Retention of the Rule

    48. Some commenters in response to our biennial review argued that 
the Commission should either completely eliminate or retain the 
newspaper/broadcast cross-ownership rule in its current form. Those who 
supported retaining the rule argued that many of the new media outlets 
do not add to viewpoint diversity on the local level, and that new 
programs by the same broadcasters do not add to viewpoint diversity. 
They also pointed out that current policies already allow broadcast 
stations and newspapers to realize many economic efficiencies, because 
the current rule permits them to form joint ventures, and it permits 
broadcast stations to merge with newspapers when the broadcast 
station's service contour does not encompass the newspaper's city of 
publication. Those who supported eliminating the rule argued that the 
multimedia markets are competitive and provide a wide variety of 
information sources. They also contended that the efficiencies of 
combinations are not driven by consolidation of content or editorial 
decisions, and have enabled grandfathered combinations to air more 
extensive news and public affairs programming and to develop new media 
ventures. If the rule were eliminated, newspaper/broadcast combinations 
would be permitted, subject only to the antitrust laws and Commission 
review of an application for grant, renewal, or transfer of a 
particular broadcast license. We seek comment on the appropriateness of 
either retaining or eliminating entirely our newspaper/broadcast cross-
ownership rule. In particular, we seek comment on whether prophylactic, 
structural regulation remains necessary to maintain sufficiently 
competitive local advertising markets, as well as sufficiently diverse 
sources of local information. Are the antitrust laws sufficient to 
protect our competition goals? Is the rule necessary in its current 
form to protect our diversity goals?
    49. Is there some rationale for eliminating the rule as it applies 
to certain combinations? For example, should we eliminate the rule for 
newspaper/radio combinations, but retain the rule in some form for 
newspaper/TV combinations? Are there different efficiencies from 
newspaper/radio combinations as compared to newspaper/TV combinations? 
Would the efficiencies of combinations allow radio stations to provide 
additional news programming? Would limiting deregulation to newspaper/
radio combinations best serve our diversity goals, since Americans have 
reported that they rely more on TV stations and newspapers than radio 
stations for local news? In addition to the options presented, we 
encourage commenters to propose additional options not suggested here.

Conclusion

    The Commission adopted its newspaper/broadcast cross-ownership rule 
twenty-five years ago, when the local media marketplace was 
significantly different than it is today. Through this proceeding, we 
seek to examine our cross-ownership policies in the context of the 
current realities of today's local media marketplace, in order to 
ensure that our rules serve the public interest as effectively as 
possible.

Administrative Matters

    50. Comments and Reply Comments. Pursuant to sections 1.415 and 
1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested 
parties may file comments on or before December 3, 2001, and reply 
comments on or before January 7, 2002. Comments may be filed using the 
Commission's Electronic Comment Filing System (ECFS) or by filing paper 
copies. See Electronic Filing of Documents in Rulemaking Proceedings, 
63 FR 24121 (1998).
    51. Comments filed through ECFS can be sent as an electronic file 
via the Internet to http://www.fcc.gov/e-file/ecfs.html>. Generally, 
only one copy of an electronic submission must be filed. In completing 
the transmittal screen, commenters should include their full name, Post 
Service mailing address, and the applicable docket or rulemaking 
number. Parties may also submit an electronic comment by Internet e-
mail. To get filing instructions for e-mail comments, commenters should 
send an e-mail to [email protected], and should include the following words 
in the body of the message, ``get form your e-mail address>.'' A sample 
form and directions will be sent in reply.
    52. Parties who choose to file by paper must file an original and 
four copies of each filing. All filings must be sent to the 
Commission's Secretary, Magalie Roman Salas, Office of the Secretary, 
Federal Communications Commission, 445 Twelfth Street SW., TW-A325, 
Washington, DC 20554. Parties who choose to file by paper should also 
submit comments on diskette. These diskettes should be addressed to: 
Wanda Hardy, 445 Twelfth Street SW., 2-C221, Washington, DC 20554. Such 
a submission should be on a 3.5 inch diskette formatted in an IBM 
compatible format using Word 97 or compatible software. The diskette 
should be accompanied by a cover letter and should be submitted in 
``read only'' mode. The diskette should be clearly labeled with the 
commenter's name, docket number of the proceeding, type of pleading 
(comment or reply comment), date of submission, and the name of the 
electronic file on the diskette. The label should also include the 
following phrase: ``Disk Copy--Not

[[Page 50999]]

an Original.'' Each diskette should contain only one party's pleading, 
preferably in a single electronic file. In addition, commenters must 
send diskette copies to the Commission's copy contractor.
    53. This document is available in alternative formats (computer 
diskette, large print, audio cassette, and Braille). Persons who need 
documents in such formats may contact Brian Millin at (202) 418-7426, 
TTY (202) 418-7365, or [email protected].
    54. Ex Parte Rules. This is a permit-but-disclose notice-and-
comment rulemaking proceeding. Ex parte presentations are permitted 
except during the Sunshine Agenda period, provided they are disclosed 
as provided in the Commission's rules. See generally 47 CFR 1.1202, 
1.1203, 1.1206(a).
    55. Initial Regulatory Flexibility Analysis. With respect to this 
NPRM, an Initial Regulatory Flexibility Analysis (``IRFA'') is set 
forth below. As required by section 603 of the Regulatory Flexibility 
Act, 5 U.S.C. 603, the Commission has prepared an IRFA of the possible 
significant economic impact on small entities of the proposals 
contained in this NPRM. 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 broadcasting and newspaper 
industry. Comments on the IRFA must be filed in accordance with the 
same filing deadlines as comments on the NPRM, but they must have a 
distinct heading designating them as responses to the IRFA.
    56. Initial Paperwork Reduction Act Analysis. This NPRM may contain 
either proposed or modified information collections. As part of our 
continuing effort to reduce paperwork burdens, we invite the public to 
take this opportunity to comment on the information collections 
contained in this NPRM, as required by the Paperwork Reduction Act of 
1996. Public and agency comments are due at the same time as other 
comments on the NPRM. Comments should address: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) ways to enhance the quality, utility, 
and clarify of the information collected; (c) ways to minimize the 
burden of the collection of information on the respondents, including 
the use of automated collection techniques or other forms of 
information technology. In addition to filing comments with the 
Secretary, a copy of any comments on information collections contained 
in this NPRM should be submitted to Judy Boley, Federal Communications 
Commission, 445 Twelfth Street SW., 1-C804, Washington, DC 20554, or 
over the Internet to [email protected] and to Edward Springer, OMB Desk 
Officer, 10236 NEOB, 725 17th Street NW., Washington, DC 20503, or over 
the Internet to [email protected].

Ordering Clauses

    57. Pursuant to the authority contained in sections 1, 2(a), 4(i), 
303, 307, 309, and 310 of the Communications Act of 1934, as amended, 
47 U.S.C. 151, 152(a), 154(i), 303, 307, 309, and 310, and section 
202(h) of the Telecommunications Act of 1996, this NPRM is adopted.
    58. The Commission's Consumer Information Bureau, Reference 
Information Center, shall send a copy of this NPRM, including the 
Initial Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.

Initial Regulatory Flexibility Analysis

    59. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this present Initial 
Regulatory Flexibility Analysis (IRFA) of the possible significant 
economic impact on a substantial number of small entities the policies 
and rules proposed in this NPRM. Written public comments are requested 
on this IRFA. Comments must be identified as responses to the IRFA and 
must be filed by the deadlines for comments on the NPRM provided above. 
The Commission will send a copy of the NPRM, including this IRFA, to 
the Chief Counsel for Advocacy of the Small Business Administration 
(SBA).

Need for, and Objectives of, Proposed Rules

    60. The goal of this proceeding is to consider possible revisions 
to the newspaper/broadcast cross-ownership rule, which prohibits common 
ownership of broadcast stations and newspapers within the same 
geographic area. The Commission adopted the rule in 1975 to preserve a 
diversity of information sources for the public. At that time, there 
were fewer local media outlets than there are today. The rule in its 
current form therefore may no longer be necessary to achieve its 
intended public interest benefits in certain circumstances. The 
Commission thus committed last year to initiate this proceeding.

Legal Basis

    61. Authority for the actions proposed in the NPRM may be found in 
sections 1, 2(a), 4(i), 303, 307, 309 and 310 of the Communications Act 
of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i), 303, 307, 309 and 
310, and section 202(h) of the Telecommunications Act of 1996.

Description and Estimate of the Number of Small Entities to Which the 
Proposed Rules Will Apply

    62. The RFA directs agencies to provide a description of, and, 
where feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA defines the term 
``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, a small business concern is one which: (1) 
Is independently owned and operated; (2) is not dominant in its field 
of operation; and (3) satisfies any additional criteria established by 
the SBA.
    63. The newspaper/broadcast cross-ownership rule applies to daily 
newspapers and broadcast stations. As set forth in the NPRM, as of the 
year 2000, there were 1,422 daily newspapers published. The SBA defines 
a newspaper publisher with less than 500 employees as a small business. 
According to the 1992 Economic Census, only 138 newspaper publishers 
had less than 500 or more employees. The data does not distinguish 
between newspaper publishers that publish daily and those that publish 
less frequently, and the latter are more likely to be small businesses 
than the former because of the greater expense to publish daily. Thus, 
since the newspaper/broadcast cross-ownership rule applies only to 
daily newspapers, it is likely that less than 138 small newspaper 
publishers would be affected by the rule.
    64. As set forth in the NPRM, as of June 30, 2001, the Commission 
had licensed 1,678 full-power TV stations, 2,396 low power TV stations, 
and 232 Class A TV stations. The SBA defines television broadcasting 
establishments that have $10.5 million or less in annual receipts as a 
small business. According to Commission staff review of the BIA 
Publications, Inc., Master Access Television Analyzer Database on March 
14, 2001, fewer than 800 commercial television broadcast stations have 
revenues of $10.5 million or less. We note, however, that under SBA's 
definition, revenues of affiliates that are

[[Page 51000]]

not television stations should be aggregated with the television 
station revenues in determining whether a concern is small. Our 
estimate, therefore, likely overstates the number of small entities 
that might be affected by any changes to the newspaper/broadcast cross-
ownership rule, because the revenue figure on which it is based does 
not include or aggregate revenues from non-television affiliated 
companies.
    65. As set forth in the NPRM, as of June 30, 2001, the Commission 
had licensed 12,392 radio stations. The SBA defines a radio station 
that has $5 million or less in annual receipts as a small business. 
According to Commission staff review of BIA Publications Inc. Master 
Access Radio Analyzer Database on March 14, 2001, about 10,400 
commercial radio stations have revenue of $5 million or less. We note, 
however, that many radio stations are affiliated with much larger 
corporations with much higher revenue. Our estimate, therefore, likely 
overstates the number of small entities that might be affected by any 
changes to the newspaper/broadcast cross-ownership rule.

Description of Projected Recording, Recordkeeping, and Other Compliance 
Requirements

    66. We anticipate that none of the proposals presented in the NPRM 
will result in an increase to the reporting and recordkeeping 
requirements of broadcast stations or newspapers.

Steps Taken To Minimize Significant Economic Impact on Small Entities, 
and Significant Alternatives Considered

    67. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): (1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance or 
reporting requirements under the rule for small entities; (3) the use 
of performance, rather than design, standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for small entities.
    68. This NPRM invites comment on a number of alternatives to modify 
or eliminate the newspaper/broadcast cross-ownership rule. The 
Commission will also consider additional significant alternatives 
developed in the record.
    69. With respect to modification of the rule, the NPRM proposes 
five specific options. First, the Commission might redefine the 
geographic area in which the rule operates to allow broadcast stations 
and newspapers to combine if they are in different markets, without 
regard to whether the station's service contour encompasses the 
newspaper's city of publications (the current standard). This option 
might permit more entities, including small newspapers and stations, to 
combine. In the second option, the ``market concentration'' standard, 
the Commission would allow newspapers and stations to combine, provided 
their combined market share would not exceed a defined limit. Under the 
third option, the ``voice count'' standard, the Commission would permit 
combinations so long as a certain number of independently owned media 
``voices'' would remain in the market. The fourth option would combine 
the ``market concentration'' and the ``voice count'' standards. In each 
of these several options, the Commission would limit the number and 
type of combinations in any market to ensure that no market participant 
attains unconstrained or unrivaled market power or otherwise controls 
the information sources available. These options would thus permit some 
smaller businesses to combine to realize economic efficiencies and 
strengthen their ability to compete, but at the same time ensure that 
the markets in which they operate do not become too concentrated. Under 
the fifth option, the Commission would permit newspapers and stations 
to combine, subject to a structural separations approach. This would 
permit newspapers and stations to combine and realize economic 
efficiencies but preserve editorial diversity.
    70. In addition to, or as an alternative to, modifying the current 
rule, the circumstances under which the newspaper/broadcast cross-
ownership rule should be waived could be enhanced. In particular, the 
NPRM seeks comment on whether a waiver should be granted if one of the 
parties to the combination has failed, is failing, or if a new service 
would result. This would benefit small entities that wish to combine 
with another in order to save their business, compete more efficiently, 
or better realize economic efficiencies through economies of scale.
    71. As an alternative to modifying the current rule and/or adding 
to the list of circumstances under which the rule should be waived, the 
rule could be eliminated entirely. The NPRM seeks comment on this 
alternative. Under this alternative, entities, including small 
entities, would be subject only to the antitrust laws and the 
Commission's general public interest review when granting, renewing or 
transferring a license.

Federal Rules that May Overlap, or Conflict With the Proposed Rules

    72. The rules under consideration in this proceeding do not 
overlap, duplicate, or conflict with any other rules.

    Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 01-24950 Filed 10-4-01; 8:45 am]
BILLING CODE 6712-01-P