New TV multiple ownership rules adopted

Twenty months and 500,000 comments later, the commission, by a 3-2 vote along party lines, adopted its new media ownership rules on June 2, 2003.

The new rules for television are as follows:

First, the commission modified the Local Television Multiple Ownership rule. The eight-station test established in 1999 has been replaced by a three-tier rule:

• In DMAs with between five and 17 TV stations, a company may own up to two stations, but only one of these stations can be among the top four in ratings.

• In DMAs with 18 or more TV stations, a company can own up to three TV stations, but only one of these stations can be among the top four in ratings.

• In DMAs with 11 or fewer TV stations, companies can seek a waiver which would permit two top-four stations to be commonly owned. The FCC will evaluate on a case-by-case basis whether such station combinations would provide their local communities better service than would be the case if the stations remain under separate ownership.

In addition to modifying the local television ownership rules, the commission also increased the National Television Multiple Ownership limit from 35 percent to 45 percent of the national audience. The national audience share will be calculated by combining the total number of TV households in each market in which the company owns a station. At the same time, the Commission will maintain the “UHF discount,” which reduces the audience share of a particular station by half if it is UHF.

The commission also eliminated the Radio-Television and the Broadcast-Newspaper Cross-Ownership Rules for markets with more than nine television stations. For smaller markets, the commission adopted the following rules:

In markets with between four and eight TV stations, combinations are limited to one of the following:

• A daily newspaper; one TV station; and up to half of the radio station limit for that market (i.e., if the radio limit in the market is six, the company can own no more than three) OR

• A daily newspaper; and up to the radio station limit for that market; (i.e. no TV stations) OR

• Two TV stations (if permissible under the local TV ownership rule) and up to the radio station limit for that market (i.e. no daily newspapers).

For those markets with three or fewer TV stations, no cross-ownership is permitted among TV, radio and newspapers. The commission will consider a waiver request if the parties can demonstrate that the television station does not serve the area served by the proposed acquisition (i.e., the radio station or the newspaper).

As is evident from this summary, the new rules provide significant deregulation for large companies already operating in large markets, companies that want to combine newspapers and broadcast stations in large markets, and the networks, which want to increase their nationwide inventory of owned-and-operated stations. However, the medium and small-market TV station owners, who needed relief the most, got little from this round of deregulation, in spite of the quadruple threats of DTV buildout costs, no DTV must-carry, increasing competition from cable and satellite providers, and diminishing network compensation.

Harry C. Martin is an attorney with Fletcher, Heald & Hildreth PLC, Arlington, VA.

Dateline

The renewal cycle for television stations begins in 2004. On April 1, 2004, stations in Maryland, Virginia, Washington, D.C., and West Virginia must begin their pre-filing renewal announcements and then file the renewals on June 1, 2004.

In the meantime, stations in Alaska, Florida, Hawaii, Iowa, Missouri, Oregon, the Pacific Islands, Puerto Rico, the Virgin Islands and Washington must file their biennial ownership reports by Oct. 1, 2003 and, also by Oct. 1, place their annual EEO reports in their public files and on their Web sites.