Thoughtfully Modernizing the Commission’s Media Ownership Rules

Last month, Chairman Pai appropriately promised at least one Notice of Proposed Rulemaking (NPRM) per month to eliminate or modify unnecessary media regulations.  This month, he continues to make good on this, with important reforms that I have either advocated or supported: elimination of the main studio rule; elimination of FCC form submissions relating to ancillary or supplementary digital television income for parties that do not owe a fee; and updates to public notice requirements for certain broadcast applications. 

This action comes on the heels of September’s reforms, where we updated technical requirements applicable to AM broadcasters, cable operators, and satellite providers and started a process to eliminate a rule that actually requires broadcasters and cable operators to maintain paper copies of FCC rules.  It boggles the mind to think that this requirement is still being imposed on relevant parties. 

Moving forward, I continue to encourage broadcasters, cable operators, and other media stakeholders to share their ideas so that we can continue undertaking important reforms.  If a form is not needed, it should be eliminated.  If a study is duplicative or useless, it should be junked.  When public notice requirements are outdated, at the very least they should be modified.  And when FCC rules are no longer necessary, they should be removed from our books.  As many people, especially the Chairman, have properly articulated: it is time to update our rules to reflect the current media marketplace. 

In that vein, it is long overdue for the Commission to properly and sufficiently reconsider its media ownership rules.  For nearly a decade now, the Commission has failed to adequately complete the statutorily-mandated Quadrennial Review of its media ownership rules.  As a reminder, this is not optional.  Congress initiated this requirement to ensure that our rules kept pace with the media landscape.  Upon this review, the FCC is to “repeal or modify any regulation it determines to be no longer in the public interest.”[1]

Many of the Commission’s media ownership rules, written from a bygone era, are not serving the public interest, but frustrating it.  The competitive and diverse atmosphere we find ourselves in today warrants less regulation, not more.  It is time we fulfilled not only a congressional mandate but the congressional intent of keeping our rules current.  And this can and should be done thoughtfully, consistent with the fundamental propositions of localism, diversity, and competition.  We owe this not only to our broadcasting industry but more importantly, to the American people, who are paying for – in one form or another – market inefficiencies resulting from our rules.

Last year, I outlined some basic principles to guide our review and reform effort.  Given the fact that there’s a new Commission with a more open and realistic outlook on the broadcasting industry, I believe it is timely to review, reconsider and expand upon those now. 

From the outset, we must acknowledge a truism of the modern media marketplace: platform lines have blurred.  American consumers can access news and entertainment from social media giants like Google or Facebook, over-the-air broadcasters, over-the-top applications, fiber head-ends and wireless devices, wherever, whenever.  This is a wonderful development and a boon to consumer options for media content.          

Broadcasters and newspapers can and should be allowed to fully compete in today’s environment.  But, FCC rules disproportionately apply burdens on these industries that are not imposed on their newfound competitors, nor should they be.  For example, under current FCC rules, a local broadcaster is prohibited from owning a newspaper in the same market (and vice versa), but nothing stops a tech company billionaire from acquiring this same entity.  Despite bipartisan support in the U.S. Congress and past FCC efforts to repeal this ban, the newspaper/broadcast cross-ownership rules remain.

These, and other rules, must go.  Below is a summary of principles I believe should be considered as part of any media ownership reform effort given the current environment:

• Reasonably Define Markets: We must define the media market as it exists today.  That means the inclusion of newspapers, radio stations, and television stations, but also their competitors: MVPDs, over-the-top providers, Internet sites, social media platforms, streaming music services, and satellite radio.  Once we accurately acknowledge the market we are regulating, we can have an honest debate about what rules ultimately make sense.   
• Eliminate cross-ownership bans: As consumers demand innovative platforms and seamless experiences to consume content, the FCC imposes bans preventing broadcasters and newspapers from delivering synergies that could result in innovative products and more, not less local content.  Eliminating the restrictions on newspaper/radio, radio/television, and newspaper/television combinations is a crucial step.  Previous commissions and bipartisan legislation from Congress already recognized the need for an update.  It’s time to act. 
• Eliminate Status Quo Duopoly Rule: Decades ago, when this rule was originally adopted, consumers had only a handful of programming options and relied on broadcasters for news and information.  According to Pew Research Center, in 1996, 65 percent of respondents reported using broadcast TV as a new source and only 2 percent “got news yesterday” from an online source.  By 2016, only 46 percent of respondents viewed broadcast TV as a source of news and 38 percent “got news yesterday” from an online source.  To my friends who think we need regulations to ensure a diversity of viewpoints, here’s a newsflash: you are regulating the wrong market.  Today, with thousands of new options, how can the FCC justify maintaining this rule in its current form?  In many markets, duopolies or even triopolies could strengthen the overall state of broadcasting and allow stations to concentrate more resources on bringing more and higher quality local content to their viewers. 
• Reject Additional Restrictions: Earlier this year, I applauded Chairman Pai’s move to reinstate the UHF discount.  Not only did this restriction harm the media industry, but the previous Commission lacked the authority to alter it.  Similarly, the Commission must resist calls that are counter to our goals of modernization and/or often outside the scope of our authority.  
• Examine Beyond the Petitions: While the Commission has before it petitions for reconsideration that challenge certain decisions in our last Quadrennial, there are a number of other ownership restrictions that need to be pursued.  It’s possible that procedurally we may be unable to address all of our media ownership rules now, but we must tee them up for future consideration. Ignoring them completely would be a dereliction of duty.

Finally, I think it is important to address the elephant in the room.  There is currently a merger pending before the Commission that some argue will benefit from, and is the reason for, any changes to our media ownership rules.  While I make no comments regarding this, or any, merger application, let me be clear: this transaction is in no way the catalyst for FCC action on these issues.  First, the statute requires the FCC review its media rules.  Having failed that, we now have pending petitions before us to reconsider the past shoddy effort.  Second, I have been calling for media ownership reform since joining the Commission and as a staffer in the U.S. Senate before that.  It’s not a new position or reaction to a pending application.  Instead, for the first time, we finally have a Chairman receptive to these ideas. 

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I applaud the attention of the current Commission to modernize the media regulatory landscape.  To date, we have addressed important, low-hanging fruit that will benefit consumers of media content — with much more to come.  Time that was once spent on filling out irrelevant forms and resources once dedicated to maintaining unused buildings can now be put towards enhancing local content and products for the benefit of the consumer.  Despite this, true efficiencies are not possible until we update our media ownership rules.  I am hopeful this will come soon.