[Federal Register Volume 71, Number 153 (Wednesday, August 9, 2006)]
[Proposed Rules]
[Pages 45511-45515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-12856]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MB Docket No 06-121; MB Docket No 02-277; FCC 06-93]


2006 Quadrennial Regulatory Review; 2002 Biennial Regulatory 
Review--Review of the Commission's Broadcast Ownership Rules

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document the Commission seeks comment on how to 
address issues raised by the U.S. Court of Appeals for the Third 
Circuit with respect to rules, as adopted or revised in the 2002 
Biennial Review of the Commission's broadcast ownership rules. 
Concurrently, the next quadrennial review of the broadcast ownership 
rules is initiated as required by section 202(h) of the 
Telecommunications Act of 1996.

DATES: The Commission must receive comments on or before September 22, 
2006, and reply comments on or before November 21, 2006.

ADDRESSES: You may submit comments, identified by MB Docket No 06-121 
and/or MB Docket No 06-277, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web Site: http://

[[Page 45512]]

www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
     E-mail: [email protected]. Include the following words in the 
body of the message, ``get form.'' A sample form and directions will be 
sent in response.
     Mail: Commercial overnight mail (other than U.S. Postal 
Service Express Mail and Priority Mail) must be sent to 9300 East 
Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service first-
class, Express, and Priority mail should be addressed to 445 12th 
Street, SW., Washington DC 20554.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: [email protected] or phone: 202-418-
0530 or TTY: 202-418-0432.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Mania Baghdadi, Industry Analysis 
Division, Media Bureau, Federal Communications Commission, (202) 418-
2330. Press inquiries should be directed to Rebecca Fisher, (202) 418-
2359, TTY: (202) 418-7365 or (888) 835-5322.

SUPPLEMENTARY INFORMATION: Pursuant to Sec. 1.415 and 1.419 of the 
Commission's rules, 47 CFR 1.415, 1.419, interested parties may file 
comments and reply comments on or before the dates indicated on the 
first page of this document. All filings related to this Further Notice 
of Proposed Rule Making should refer to MB Docket No. 06-121 and/or MB 
Docket No. 02-277. Comments may be filed using: (1) The Commission's 
Electronic Comment Filing System (ECFS), (2) the Federal Government's 
eRulemaking Portal, or (3) by filing paper copies. See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998). The 
public may view a full copy of this document at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-06-93A1.doc.
    Electronic Filers: Comments may be filed electronically using the 
Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ or the 
Federal eRulemaking Portal: http://www.regulations.gov. Filers should 
follow the instructions provided on the website for submitting 
comments.
    For ECFS filers, if multiple docket or rulemaking numbers appear in 
the caption of this proceeding, filers must transmit one electronic 
copy of the comments for each docket or rulemaking number referenced in 
the caption. In completing the transmittal screen, filers should 
include their full name, U.S. Postal Service mailing address, and the 
applicable docket or rulemaking number. Parties may also submit an 
electronic comment by Internet e-mail. To get filing instructions, 
filers should send an e-mail to [email protected], and include the following 
words in the body of the message, ``get form.'' A sample form and 
directions will be sent in response.
    Paper Filers: Parties who choose to file by paper must file an 
original and four copies of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail (although we continue to experience delays in receiving U.S. 
Postal Service mail). All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
    The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building.
    Commercial overnight mail (other than U.S. Postal Service Express 
Mail and Priority Mail) must be sent to 9300 East Hampton Drive, 
Capitol Heights, MD 20743.
    U.S. Postal Service first-class, Express, and Priority mail should 
be addressed to 445 12th Street, SW., Washington DC 20554.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an e-mail to [email protected] or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
    Initial Paperwork Reduction Act Analysis. This document does not 
contain proposed information collection(s) subject to the Paperwork 
Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, 
it does not contain any proposed new or modified ``information 
collection burden for small business concerns with fewer than 25 
employees,'' pursuant to the Small Business Paperwork Relief Act of 
2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4). However, depending 
on the rules adopted as a result of this Further Notice of Proposed 
Rule Making, the Report and Order (R&O) ultimately adopted in this 
proceeding may contain information collections. The Commission will 
provide a period for public comment on any PRA burdens contained in the 
R&O and will submit such burdens to the Office of Management and Budget 
for approval when the R&O is adopted and released.

I. Introduction

    1. With this Further Notice of Proposed Rule Making (``FNPRM''), MB 
Docket No. 06-121, MB Docket No. 02-277, FCC 06-93, released July 24, 
2006, the Commission seeks comment on how to address issues raised by 
the U.S. Court of Appeals for the Third Circuit with respect to the 
rules as adopted or revised in the 2002 Biennial Review of the 
Commission's broadcast ownership rules. Section 202(h) of the 
Telecommunications Act of 1996 (``1996 Act'') requires the Commission 
to periodically review its media ownership rules to determine ``whether 
any of such rules are necessary in the public interest as the result of 
competition'' and to ``repeal or modify any regulation it determines to 
be no longer in the public interest.'' On June 2, 2003, the Commission 
adopted a Report and Order in its third biennial review of its 
broadcast ownership rules (``2002 Biennial Review Order'') 68 FR 46286 
(August 5, 2003). The 2002 Biennial Review Order addressed all six of 
the Commission's broadcast ownership rules: the national television 
multiple ownership rule; the local television multiple ownership rule; 
the radio-television cross-ownership rule; the dual network rule; the 
local radio ownership rule; and the newspaper/broadcast cross-ownership 
rule. In the 2002 Biennial Review Order, the Commission concluded that 
neither the newspaper/broadcast cross-ownership rule nor the radio/
television cross-ownership rule remained necessary in the public 
interest. Accordingly, it replaced those rules with new cross-ownership 
regulations called the Cross Media Limits (``CML''). The Commission 
also revised its market definition and the way it counts stations for 
purposes of the local radio ownership rule, revised the local 
television multiple ownership rule, modified the national television 
ownership cap, and retained the dual network rule. Several parties 
sought appellate review of various aspects of the 2002 Biennial Review 
Order; others

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filed petitions for reconsideration. The court challenges were 
consolidated into a single proceeding, and on June 23, 2004, the U.S. 
Court of Appeals for the Third Circuit issued its decision on review of 
the 2002 Biennial Review Order, affirming some Commission decisions and 
remanding others for further Commission justification or modification. 
(the ``Prometheus decision'').
    2. In this FNPRM, we discuss each rule that was remanded 
individually and invite comment on how we should address the issues 
remanded by the U.S. Court of Appeals for the Third Circuit. We 
encourage commenters to buttress their arguments with current empirical 
evidence and sound economic theory. Concurrently, this FNPRM initiates 
the next review of the media ownership rules as required by section 
202(h).

II. Discussion

    3. In the 2002 Biennial Review Order, the Commission determined 
that its longstanding goals of competition, diversity, and localism 
would continue to guide its actions in regulating media ownership. 
These policy objectives also will guide our actions on remand. In 
addition to the other requests for comment discussed below, we ask that 
commenters address whether our goals would be better addressed by 
employing an alternative regulatory scheme or set of rules.
    4. The Prometheus court noted that the Commission deferred 
consideration of certain proposals for advancing ownership by 
minorities. We therefore seek comment on the proposals to foster 
minority ownership advanced by Minority Media and Telecommunications 
Council in its filings in the 2002 biennial review proceeding, 
including those that were listed in the 2002 Biennial Review Order and 
referenced by the court. Are any of these proposals effective and 
practical ways to increase minority ownership? If so, how could they 
best be implemented? Do we have the statutory authority to adopt them? 
Are there any constitutional impediments to adoption? Are there any 
other alternatives that we should consider that would be more effective 
and/or would avoid any statutory or constitutional impediments?
    5. More generally, we urge commenters to explain the effects, if 
any, that their ownership rule proposals will have on ownership of 
broadcast outlets by minorities, women and small businesses. We also 
urge commenters to discuss the potential effects, if any, of the 
broadcast ownership rules currently in effect, and any changes proposed 
in this proceeding on advertising markets, the ability of independent 
stations to compete, the availability of family-friendly and children's 
programming, the amount of indecent and/or violent content broadcast 
over-the-air, and the availability of independent programming.
    6. The Commission has a long-standing policy to foster broadcast 
``localism,'' which it has defined as the airing of ``programming that 
is responsive to the needs and interests of their communities of 
license.'' In its 2002 Biennial Review, the Commission invited comment 
on the extent to which its broadcast ownership rules were necessary to 
foster localism. Subsequently, the Commission established its Localism 
Task Force (``Task Force'') to study the issue of localism and advise 
the Commission on whether any new rules or policies were required to 
promote it. In addition, the Commission issued a Notice of Inquiry, 19 
FCC Rcd 12425 (not published in the Federal Registrar) seeking comment 
from the public on how broadcasters are serving the interests and needs 
of their communities, whether the Commission needs to adopt new 
policies, practices, or rules designed to promote localism in broadcast 
television and radio; and what those policies, practices, or rules 
should be. The record compiled in the localism docket, MB Docket No. 
04-233, is extensive. The Media Bureau will compile a summary of the 
comments in the localism proceeding and submit it into this docket. The 
Commission will consider the evidence received in MB Docket No. 04-233 
as it moves forward with this rulemaking.
    7. Finally, we note that the media marketplace continues to evolve. 
We seek comment on the impact of new technologies and providers such as 
digital video recorders, video-on-demand, and the availability of 
television programming and music on the Internet on media consumption 
and ownership issues.

A. Local TV Ownership Rule

    8. The Commission's local TV ownership rule, as currently in 
effect, provides that an entity may own two television stations in the 
same designated market area (``DMA'') if: (1) The Grade B contours of 
the stations do not overlap; or (2) at least one of the stations in the 
combination is not ranked among the top four stations in terms of 
audience share, and at least eight independently owned and operating 
commercial or non-commercial full-power broadcast television stations 
would remain in the DMA after the combination.
    9. In the 2002 Biennial Review, the Commission revised the local TV 
ownership rule to permit an entity to own up to two television stations 
in markets with 17 or fewer television stations, and up to three 
television stations in markets with 18 or more television stations. The 
Commission retained the prohibition on combinations involving more than 
one station ranked among the top four in the market, thus prohibiting 
combinations in markets with four or fewer television stations. The 
Commission also eliminated consideration of overlapping Grade B 
contours, and decided to look instead only at whether a station is 
assigned by Nielsen to a DMA. All full-power commercial and non-
commercial television stations within the DMA would be counted for 
purposes of applying the rule. The 2002 Biennial Review Order also 
modified the Commission's criteria for waiver of the local TV ownership 
rule.
    10. On review, the Prometheus court, remanded the numerical limits 
of the new rule for further justification. The court upheld the 
Commission's decision to retain the top four-ranked station 
restriction. The court also remanded for further consideration the 
Commission's elimination of the requirement to demonstrate that no out-
of-market buyer is reasonably available when seeking a failed, failing, 
or unbuilt television station waiver.
    11. We invite comment on all of the issues remanded by the 
Prometheus court regarding the local TV ownership rule. Should the 
limits on the number of stations that can be commonly owned adopted in 
the 2002 Biennial Review Order be revised, or is there additional 
evidence or analysis upon which the Commission can rely to further 
justify the limits it adopted? How should we address the court's 
concern that the revised numerical limits allow concentration to exceed 
the 1800 HHI benchmark relied upon by the Commission in setting the 
limits? Is there additional evidence to support the Commission's 
decision to treat capacity as an important factor in measuring the 
competitive structure of television markets? Is there evidence to 
support fluidity of television station market shares? Should the limits 
vary depending on the size of the market? How would any changes impact 
the need for the top four-ranked restriction?
    12. We also invite comment on the court's remand of the elimination 
of the requirement that waiver applicants demonstrate that there is no 
reasonably available out-of-market buyer. Should we reinstate this 
requirement? Is it unduly burdensome? Are there less

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burdensome means of ensuring that unnecessary concentration of 
ownership does not occur? Has the requirement had an effect on minority 
and/or female ownership of broadcast stations?

B. Local Radio Ownership Rule

    13. In the 2002 Biennial Review Order, the Commission retained the 
local radio numerical limits and the AM/FM service caps that Congress 
adopted in the 1996 Act. The Commission modified the definition of a 
local radio market by replacing the contour-overlap approach with an 
Arbitron Metro market definition, where Arbitron markets exist. The 
Commission initiated a rulemaking proceeding, (MB Docket No. 03-130), 
to seek comment on how to define local radio markets in geographic 
areas that are not defined by Arbitron. In addition, the Commission 
decided to include non-commercial stations when determining the number 
of radio stations in a market for purposes of the ownership rules.
    14. The Prometheus court concluded that the Commission's decision 
``to replace contour-overlap methodology with Arbitron radio metro 
markets was `in the public interest' within the meaning of 202(h)'' and 
that the decision was ``a rational exercise of rulemaking authority.'' 
The court also upheld the Commission's attribution of JSAs. The court 
further held that the Commission had justified its decisions to count 
noncommercial stations in defining the size of a market and to restrict 
the transfer of grandfathered combinations except to certain eligible 
entities. The court remanded the Commission's decision to retain the 
existing specific local radio ownership limits. The court held that the 
limits were unsupported by the Commission's rationale that they ensure 
five equal-sized competitors in most markets. The court further faulted 
the Commission for not explaining why it could not take actual market 
share into account when deriving the numerical limits. Finally, the 
court held that the Commission did not support its decision to retain 
the AM subcaps.
    15. We invite comment on the issues remanded by the Prometheus 
court with respect to the local radio ownership limits. In order to 
address the court's concerns, should the numerical limits be revised, 
or is there additional evidence that could be used to further justify 
the limits? If the Commission should revise the limits, what revisions 
are appropriate? Should we create additional tiers? How should the 
Commission address the court's concern that the limits adopted do not 
account for actual market share? Should the rule still seek to ensure a 
specific number of competitors in a market, and, if so, what is the 
appropriate benchmark for that number? Finally, should we retain the 
AM/FM subcaps? Lastly, we seek comment on whether the local radio 
ownership rule currently in effect is necessary in the public interest 
as a result of competition.

C. Cross-Media Limits

    16. In the 2002 Biennial Review Order, the Commission concluded 
that neither the newspaper/broadcast cross-ownership rule nor the 
radio/television cross-ownership rule was necessary in the public 
interest as the result of competition. The Commission replaced these 
rules with a single set of cross-media limits. To determine the 
availability of media outlets in markets of various sizes, the 
Commission developed a Diversity Index (the ``DI''), which it used to 
analyze and measure the availability of outlets that contribute to 
viewpoint diversity in local media markets.
    17. The Prometheus court affirmed the Commission's decision to 
eliminate the newspaper/broadcast cross-ownership rule. The court 
concluded, however, that the specific limits selected by the Commission 
were not supported by reasoned analysis, and remanded the CML to the 
Commission for further justification or modification. The court also 
remanded for further consideration the Commission's decision to assign 
all outlets within the same media type equal market shares in 
constructing the DI.
    18. We invite comment on all of the issues remanded by the 
Prometheus court regarding cross-ownership. Many of these issues relate 
to the DI. In light of the court's extensive and detailed criticism of 
the DI, we tentatively conclude that the DI is an inaccurate tool for 
measuring diversity. Moreover, we recognize that some aspects of 
diversity may be difficult to quantify. To the extent that we will not 
use the DI to justify changes to the existing cross-ownership rules, we 
seek comment on how we should approach cross-ownership limits. Should 
limits vary depending upon the characteristics of local markets? If so, 
what characteristics should be considered, and how should they be 
factored into any limits? We seek comment on the newspaper/broadcast 
cross-ownership rule and the radio/television cross-ownership rule. Are 
there aspects of television and radio broadcast operations that make 
cross-ownership with a newspaper different for each of these media? If 
so, should limits on newspaper/radio combinations be different from 
limits on newspaper/television combinations? Lastly, are the newspaper/
broadcast cross-ownership rule and the radio/television cross-ownership 
rule necessary in the public interest as a result of competition?

D. Dual Network Rule

    19. The Commission's dual network rule provides ``A television 
broadcast station may affiliate with a person or entity that maintains 
two or more networks of television broadcast stations unless such dual 
or multiple networks are composed of two or more persons or entities 
that, on February 8, 1996, were `networks' as defined in Section 
73.3613(a)(1) of the Commission's regulations'' (that is, ABC, CBS, 
Fox, and NBC). In the 2002 Biennial Review Order, the Commission 
determined that the dual network rule was necessary in the public 
interest to promote competition and localism and retained the rule. The 
Petitioners in Prometheus did not appeal the Commission's retention of 
the rule. We seek comment on whether the dual network rule remains 
necessary in the public interest as a result of competition.

E. UHF Discount

    20. In Prometheus, the Third Circuit held that challenges to the 
Commission's national television ownership rule were moot following 
Congressional action that set the national cap at 39 percent. In so 
doing, the court also addressed the Commission's UHF discount rule, 
which we have used in calculating a UHF station's audience reach under 
the national TV cap. The court stated that the UHF discount rule ``is 
insulated from this and future periodic review requirements'' and yet 
also noted that the ``Commission is now considering its authority going 
forward to modify or eliminate the discount and recently took public 
comment on the issue.'' The court then concluded that that Commission 
may decide the scope of our authority to modify or eliminate the UHF 
discount outside of the mandate of section 202(h) of the 1996 Act.
    21. We seek comment on whether the court's holding on the UHF 
discount rule was ambiguous. We seek comment on whether the Commission 
should retain, modify, or eliminate the UHF discount. Commenters who 
urge us to modify or eliminate the UHF discount rule should discuss the 
basis for our authority to take such action.

III. Petitions for Reconsideration

    22. A number of parties filed petitions for reconsideration of the 
2002 Biennial Review Order. These petitions, opposing pleadings, and 
replies are

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listed in Appendix A. The petitions have already been the subject of 
public notice and comment during their own pleading cycle. Parties who 
wish to refresh the record concerning the petitions may do so in their 
comments filed in response to this FNPRM.

IV. Procedural Matters

    A. Initial Regulatory Flexibility Analysis. As required by the 
Regulatory Flexibility Act, 5 U.S.C. 603, the Commission prepared an 
Initial Regulatory Flexibility Analysis (IRFA) in the initial Notice of 
Proposed Rulemaking, 67 FR 65751 (October 28, 2002), in this 
proceeding. For the FNPRM, a Supplemental IRFA has been prepared and 
set forth in Appendix B. Written public comments are requested on the 
Supplemental IRFA. These comments must be filed in accordance with the 
same filing deadlines for comments on the FNPRM and should have a 
separate and distinct heading designating them as responses to the 
Supplemental IRFA.
    B. Ex Parte Rules. This is a permit-but-disclose notice and comment 
rulemaking proceeding. Ex parte presentations are permitted, except 
during the Sunshine Agenda period, provided that they are disclosed as 
provided in the Commission's Rules. See generally 47 CFR 1.1202, 
1.1203, 1.1206(a).

V. Ordering Clauses

    33. Accordingly, it is ordered, that pursuant to authority 
contained in sections 1, 2(a), 4(i), 303, 307, 309, and 310 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i), 
303, 307, 309, and 310, and section 202(h) of the Telecommunications 
Act of 1996, this Further Notice of Proposed Rulemaking is adopted.
    34. It is further ordered that, pursuant to the authority contained 
in sections 1, 2(a), 4(i), 303, 307, 309, and 310 of the Communications 
Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i), 303, 307, 309, 
and 310, and section 202(h) of the Telecommunications Act of 1996, 
notice is hereby given of the proposals described in this Further 
Notice of Proposed Rulemaking.
    35. It is furthered order that MB Docket 03-130 SHALL BE severed 
from this proceeding.
    36. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Further Notice of Proposed Rulemaking, including the 
Supplemental Initial Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
 [FR Doc. E6-12856 Filed 8-8-06; 8:45 am]
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