Legal Challenge to the FCCs Media Ownership Rules: An Overview of Prometheus Radio v. FCC
Legal Challenge to the
FCC’s Media Ownership Rules:
An Overview of Prometheus Radio v. FCC
Updated June 30, 2008
Kathleen Ann Ruane
Legislative Attorney
American Law Division
Legal Challenge to the FCC’s Media Ownership Rules:
An Overview of Prometheus Radio v. FCC
Summary
The 110th Congress has focused a great deal of attention on the Federal
Communication Commission’s December 2007 relaxation of its newspaper/broadcast
ownership ban (order released February 2008). Concerns about increasing media
consolidation have long been at the forefront of the debate over ownership
restrictions. The Commission’s order served to rekindle the discussion of media
consolidation and the perceived need to take action to preserve a diversity of voices
in the market place of ideas. The FCC rule, as this report illustrates, has a history
dating back to a previous failed attempt to relax a greater number of broadcast cross-
ownership restrictions, and it is worthwhile to examine this previous proceeding in
order to understand the current status of the rules.
On June 2, 2003, the FCC adopted a set of comprehensive rules addressing six
different aspects of media ownership, including cross-ownership of broadcast and
print media, local televison and radio ownership, and national television ownership.
On June 24, 2004, the United States Court of Appeals for the Third Circuit, in
Prometheus Radio v. FCC, remanded several of these rules back to the Commission
for further consideration finding that the Commission failed to adequately justify the
numerical limitations used in the rules. This report provides an overview of the
Commission’s 2002 Biennial Review from which the 2003 rules originated and the
Prometheus case.
The report also addresses current issues facing the actions taken by the FCC in
response to the Third Circuit Court of Appeals’ decision in Prometheus. On
December 18, 2007, the FCC concluded its review of broadcast ownership rules by
relaxing the newspaper/broadcast station cross-ownership restrictions in certain
markets. All other broadcast ownership rules, however, shall remain unchanged.
Some members of Congress have responded to the FCC’s relaxation of the
newspaper-broadcast cross-ownership restriction. Joint resolutions of disapproval
of the new rule have been introduced in both houses. The Senate passed its version
of the resolution, S.J.Res. 28, on May 15, 2008. The House of Representatives
resolution, H.J.Res. 79, was introduced on March 12, 2008, and has been referred to
the House Subcommittee on Telecommunications and the Internet. Further action
on the House resolution has yet to be taken.
On June 25, 2008, the House Appropriations Committee approved amendments
to Fiscal Year 2009 Financial Services and General Government Appropriations.
This bill contains a provision that would prohibit the FCC from implementing or
enforcing the changes to the newspaper-broadcast cross-ownership rules, effectively
nullifying the rule. This report will be updated as events warrant.
Contents
In troduction ......................................................1
2002 Biennial Review..............................................3
National Ownership Rules.......................................3
Local Ownership Rules.........................................3
The Court’s Decision...............................................5
Post-Prometheus ..................................................8
Legal Challenge to the FCC’s Media
Ownership Rules: An Overview of
Prometheus Radio v. FCC
Introduction1
On December 18, 2007, the Federal Communications Commission (“FCC” or
“Commission”) concluded a review of its broadcast ownership rules by relaxing the2
ban on cross-ownership of a newspaper and a broadcast station in certain markets.
The order adopted that day ended agency proceedings that had been ongoing for five3
years. In 2003, the FCC had adopted a comprehensive order (in its 2002 Biennial
Review) revising many of its cross-ownership rules but, as will be discussed below,
the United States Court of Appeals for the Third Circuit found insufficient basis for
many of the proposed changes in that order and remanded it to the FCC for
reconsideration. This report discusses the 2002 Biennial Review, the decision by the
Third Circuit that struck many of those rules down, and the FCC’s actions uponth
remand. The report also addresses reaction in the 110 Congress to the ownership
rules adopted by the FCC in 2007 and measures introduced in response to those rules.
The Telecommunications Act of 1996 sought to create a “pro-competitive,
deregulatory national policy framework designed to accelerate rapidly private sector
development of advanced telecommunications and information technologies and
services to all Americans by opening all telecommunications markets to
competition.”4 Among other things, the act eliminated limits on national radio
ownership, raised the cap on the percentage of the national audience that a single
1 This report was originally written by Angie A. Welborn, Legislative Attorney.
2 In the Matter of 2006 Quadrennial Regulatory Review — Review of the Commission’s
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the
Telecommunications Act of 1996; 2002 Biennial Regulatory Review — Review of the
Commission’s Broadcast Ownership Rules Pursuant to Section 202 of the
Telecommunications Act of 1996; Cross-Ownership of Broadcast Stations and Newspapers;
Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local
Markets; Definition of Radio Markets; Ways to Further Section 257 Mandate to Build on
Earlier Studies; Public Interest Obligations of TV Broadcast Licensees, MB Docket No. 06-
121, MB Docket No. 02-227, MM Docket No. 01-235, MM Docket No. 01-317, MM
Docket No. 00-244, MB Docket No. 04-228, MM Docket No. 99-360 (Released February
3 Id. The FCC consolidated the proceeding remanded by the Third Circuit in the
Prometheus case with its quadrennial review of its broadcast ownership rules and other
broadcast ownership proceedings.
4 S.Rept. 104-230, pp. 1-2 (1996).
station owner may reach, set new limits for local radio ownership, and directed the
Commission to conduct a rulemaking proceeding to determine whether to retain,
modify, or eliminate the local television ownership limitations.5 The act also directed
the Commission to review its broadcast ownership rules every two years to
“determine whether any of such rules are necessary in the public interest as the result
of competition.”6
The Commission initiated its 2002 Biennial Review in September of 2002 with
a Notice of Proposed Rulemaking announcing that it would review four of its
broadcast ownership rules: the national audience reach limit; the local television rule;
the radio/television cross-ownership (“one-to-a-market”) rule; and the dual network
ownership rule.7 The Commission had previously initiated proceedings regarding the
local radio ownership rule and the newspaper/broadcast cross-ownership rule.8
Those proceedings were incorporated into the Biennial Review.
On June 2, 2003, the Commission adopted a Report and Order modifying its
ownership rules.9 In the Order, the Commission concluded that “neither an absolute
prohibition on common ownership of daily newspapers and broadcast outlets in the
same market (the “newspaper/broadcast cross-ownership rule”) nor a cross-service
restriction on common ownership of radio and television outlets in the same market
(the “radio-television cross-ownership rule”) [remained] necessary in the public
interest.”10 The Commission found that “the ends sought can be achieved with more
precision and with greater deference to First Amendment interests through [its]
modified Cross Media Limits (“CML”).”11 The Commission also revised the market
definition and the way it counted stations for purposes of the local radio rule, revised
the local television multiple ownership rule to permit the common ownership of up
to three stations in large markets, modified the national television ownership cap to
raise the national audience reach limit to 45%, and retained the dual network rule.
Following the publication of the Commission’s Order, several organizations
filed petitions for review of the new rules. The petitions for review were
consolidated and heard by the United States Court of Appeals for the Third Circuit.
After an initial hearing on September 3, 2003, the court entered a stay for the
effective date of the proposed rules, preventing their enforcement, and ordered that
5 Telecommunications Act of 1996, P.L. 104-104 (1996).
6 P.L. 104-104, Sec. 202(h).
7 In the Matter of 2002 Biennial Regulatory Review — Review of the Commission’s
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the
Telecommunications Act of 1996, 17 FCC Rcd 18503 (2002).
8 See 16 FCC Rcd 19861 (2001) and 16 FCC Rcd 17283 (2001).
9 In the Matter of 2002 Biennial Regulatory Review, Report and Order and Notice of
Proposed Rulemaking, 18 FCC Rcd 13620 (2003). Hereinafter, cited as Report and Order.
For more information on the Commission’s media ownership rules, see CRS Report
RL34416, The FCC’s Broadcast Media Ownership Rules, by Charles B. Goldfarb.
10 Id at ¶ 2.
11 Id.
the prior ownership rules remain in effect pending resolution of the proceedings.12
On February 14, 2004, the court heard oral arguments and issued its opinion on June
2002 Biennial Review
As noted above, on June 2, 2003, the Commission approved a Report and Order
modifying its media ownership rules to provide a “new, comprehensive framework14
for broadcast ownership regulation.” The Commission determined that new
technologies necessitated new rules and that the prior rules “inadequately [accounted]
for the competitive presence of cable, [ignored] the diversity-enhancing value of the
Internet, and [lacked] any sound basis for a national audience reach cap.”15
According to the Commission, the newly adopted rules were “not blind to the world
around them, but reflective of it,” and “necessary in the public interest.”16
National Ownership Rules
With respect to the ownership of broadcast stations on a nationwide level, the
Commission determined that while “a national TV ownership limit is necessary to
promote localism by preserving the bargaining power of affiliates and ensuring their
ability to select programming responsive to tastes and needs of their local
communities,” the evidence demonstrated that a 35% cap was not necessary to
“preserve that balance” and raised the limit to 45%.17 Under the new rule, a single
entity was prohibited from owning stations that would allow it to reach more than
45% of the national audience. The Commission also elected to retain the “UHF
discount,” which attributes UHF stations with only 50% of the households in their
DMA, despite many cable operators now carrying UHF stations.
While it modified the national television ownership cap, the Commission
determined that its dual network rule, which prohibits common ownership of the top
four television networks, remained necessary in the public interest and did not
attempt to repeal or modify it.18
Local Ownership Rules
In the 2002 Biennial Review, the Commission either modified or repealed its
local ownership rules. The cross-ownership rules prohibiting the common ownership
12 Prometheus Radio Project v. FCC, 2003 U.S. App. LEXIS 18390 (3rd Cir. 2003).
13 Prometheus Radio Project v. FCC, 373 F.3d 372 (3rd Cir. 2004).
14 Report and Order, ¶ 3.
15 Id. at ¶ 4.
16 Id. at ¶ 8.
17 Id. at ¶ 507.
18 Id. at ¶ 592.
of a full-service broadcast television station and a daily newspaper in the same
community and limiting the ownership of television and radio combinations by a
single entity in a given market were both repealed.19 The Commission determined
that neither rule remained necessary in the public interest and replaced both rules
with a single set of cross-media limits based on market size. In large markets,
defined as those with more than eight television stations, cross-ownership was
unrestricted.
The Commission combined an earlier remand from the D.C. Circuit Court of
Appeals20 of its modified “duopoly rule” with the 2002 Biennial Review and adopted
a new rule that would permit common ownership of two commercial television
stations in markets that have seventeen or fewer full-power commercial and
noncommercial stations, and common ownership of three commercial stations in
markets that have eighteen or more stations.21 These limitations are subject to a
further restriction on the common ownership of stations that are ranked among the
market’s largest four stations based on audience share. The Commission also elected
to repeal the “Failed Station Solicitation Rule” related to the sale of failed, failing,
or unbuilt stations, which required notice of the sale to be provided to out-of-market
buyers.
With respect to local radio ownership, the FCC modified its prior rule by
adopting a new method for determining the size of a local market, but retaining the
rule’s prior numerical limits on station ownership.22 The Commission’s prior
regulations defined the local market by using the “contour-overlap methodology,”23
which the Commission abandoned in favor of the “geography-based market
definition used by Arbitron, a private entity that measures local radio audiences for
19 Id. at ¶ 327.
20 Sinclair Broadcast Group v. FCC, 284 F.3d 148 (D.C. Cir. 2002). The
Telecommunications Act of 1996 directed the FCC to determine whether to “retain, modify,
or eliminate its limitations on the number of television stations that a person or entity may
own, operate, or control, or have a congnizable interest in, within the same television
market.” P.L. 104-104, Sec. 202(c)(2). In response to this directive, the Commission
modified its rules in 2000 to allow an entity to own two television stations in a DMA
(designated market area), provided that (1) the Grade B field strength contours of the
stations do not overlap; and (2) at least one of the stations is not ranked among the top four
highest-ranked stations in the DMA, and at least eight “independent voices” would remain
in the DMA after the proposed combination. The United States Court of Appeals for the
D.C. Circuit reviewed this rule, and remanded it to the Commission to justify its definition
of “voices,” which included only broadcast television stations and not other types of non-
broadcast media. The Commission consolidated the Sinclair remand with its 2002 Biennial
Review leading to this challenge.
21 Report and Order, ¶ 186.
22 Id. at ¶ 235 et seq. For more information, see CRS Report RL31925, FCC Media
Ownership Rules: Current Status and Issues for Congress, by Charles B. Goldfarb.
23 For a description of the “contour-overlap methodology,” see supra note 6 at Appendix F.
its customer stations.”24 The Arbitron markets include both commercial and
noncommercial stations. While it changed the definition of local market, the
Commission retained its numerical limits, which allow a single entity to own as many
as eight radio stations in markets of forty-five or more commercial stations.25
An additional modification to the local radio ownership rule created a new
system for the attribution of joint sales agreements (JSAs).26 Generally, a JSA
authorizes a broker to sell advertising time for the brokered station in return for a fee
paid to the licensee. The Commission noted that because the broker station normally
assumes much of the market risk with respect to the station it brokers, it typically has
the authority to make decisions with respect to the sale of advertising time on the
station. Under the prior rules, JSAs were not attributable to the brokering entity and
were not counted toward the number of stations the brokering licensee may own in
a local market. The new rules made the JSAs attributable to the brokering entity for
the purpose of determining the brokering entity’s compliance with the local
ownership limits if the brokering entity owns or has an attributable interest in one or
more stations in the local market, and the joint advertising sales amount to more than
The Court’s Decision
Several organizations filed petitions for review of the new rules upon their
publication. The numerous petitions for review were consolidated and the case was
heard by the United States Court of Appeals for the Third Circuit in Philadelphia.
As noted above, after an initial hearing, the court entered a stay for the effective date
of the proposed rules.27 On February 14, 2004, the court heard oral arguments and28
issued its opinion on June 24, 2004.
24 The Telecommunications Act of 1996 did not define local markets using any particular
methodology.
25 The Telecommunications Act of 1996 established the current numerical limits. Under the
‘96 Act, in a radio market with 45 or more commercial radio stations, a party may own,
operate, or control up to 8 commercial radio stations, not more than 5 of which are in the
same service (AM or FM); in a radio market with between 30 and 44 (inclusive) commercial
radio stations, a party may own, operate, or control up to 7 commercial radio stations, not
more than 4 of which are in the same service (AM or FM); in a radio market with between
15 and 29 (inclusive) commercial radio stations, a party may own, operate, or control up to
and in a radio market with 14 or fewer commercial radio stations, a party may own, operate,
or control up to 5 commercial radio stations, not more than 3 of which are in the same
service (AM or FM), except that a party may not own, operate, or control more than 50
percent of the stations in such market. P.L. 104-104, Sec. 202(b).
26 Report and Order, ¶ 317.
27 Prometheus Radio Project v. FCC, 2003 U.S. App. LEXIS 18390 (3rd Cir. 2003).
28 Prometheus Radio Project v. FCC, 373 F.3d 372 (3rd Cir. 2004).
With respect to the national ownership rules, the court did not address the
Commission’s decision to raise the national audience reach cap from 35% to 45%
citing Congress’ modification of the rule in the 2004 Consolidated Appropriations
Act.29 Section 629 of the act directed the Commission to modify the rule by setting
a 39% cap on national audience reach.30 The court determined that because the
Commission was under “a statutory directive to modify the national television
ownership cap to 39%, challenges to the Commission’s decision to raise the cap to
Additional challenges to the UHF discount provisions in the rule were also
deemed moot even though the UHF discount rules were not mentioned in the 2004
Consolidated Appropriations Act. The court determined that the UHF discount was
intrinsically linked to the 39% national audience reach cap because “reducing or
eliminating the discount for UHF stations audiences would effectively raise the
audience reach limit.”32 The court also noted with respect to the UHF discount that
the 2004 Consolidated Appropriations Act specifically provided that the periodic
review provisions set forth in the amendment did not apply to “any rules relating to
the 39% national audience limitation,” and as a rule “relating to” the national
audience limitation, Congress intended to insulate the UHF discount from review.
None of the parties bringing the Prometheus case challenged the retention of the
dual network rule, so this was not addressed by the court.
With respect to the Commission’s local ownership rules, the court agreed with
the Commission’s decision to modify these rules in many respects. However, the
court found fault with the numerical limits set by the FCC in each of the local
ownership rules. The court stated that “[t]he Commission’s derivation of new Cross-
Media Limits, and its modification of the numerical limits on both television and
radio station ownership in local markets, all have the same essential flaw: an
unjustified assumption that media outlets of the same type make an equal
contribution to diversity and competition in local markets.”33
The court determined that the Commission’s decision to repeal the ban on
broadcast/newspaper cross-ownership was justified and supported by evidence in the
record and found that the Commission’s decision to retain some limits on common
ownership was constitutional and not in violation of the Communications Act.34
However, the court found that the FCC failed to provide reasoned analysis to support
the specific limits that it chose with respect to the new “cross-media” rules, stating
29 P.L. 108-199, Sec. 629.
30 Section 629 also amended section 202(h) of the Telecommunications Act of 1996 to
change the review period from a biennial review to a quadrennial review, and it exempted
the 39% cap on national audience reach from review.
31 Prometheus, 373 F.3d at 396.
32 Id.
33 Id. at 435.
34 Id. at 397 - 401.
that the limits “employ several irrational assumptions and inconsistencies.”35 The
court rejected the Commission’s use of a “diversity index,”36 because of what the
court saw as the fallacies upon which it was based and because the Commission
failed to provide adequate notice of the new methodology in the rulemaking
proceedings leading up to the 2002 Order.37 The court remanded the cross-media
limits and advised the Commission to make any “new metric for measuring diversity
and competition in a market ... subject to public notice and comment before it is
incorporated into a final rule.”38
The court in Prometheus upheld the restriction on common ownership of the
market’s top four broadcast television stations, but remanded the numerical limits
“for the Commission to harmonize certain inconsistencies and better support its
assumptions and rationale.”39 In making its decision, the court found that the
Commission had presented evidence in the record to adequately support the “top-four
restriction,”40 while failing to justify the market share assumptions used as the basis
for the numerical limits. The court stated that “[n]o evidence supports the
Commission’s equal market share assumption, and no reasonable explanation
underlies its decision to disregard actual market share.”41 The court also remanded
the Commission’s repeal of the Failed Station Solicitation Rule, finding that the
Commission failed to consider “the effect of its decision on minority television
station ownership,” and thus failed “‘to consider an important aspect of the problem’
[amounting] to arbitrary and capricious rulemaking.”42
In addition to upholding the Commission’s restriction on common ownership
of a market’s top four broadcast television stations, the court upheld the
Commission’s new definition of local markets with respect to radio finding that the
Commission’s decision was “in the public interest” and that it was a “rational
exercise of rulemaking authority.”43 The court also found that the Commission
justified the inclusion of noncommercial stations in the new definition. However,
with respect to the numerical limits retained by the Commission, the court concluded
35 Id. at 402.
36 The Commission’s diversity index was not based on the actual market shares of
companies, but rather on the assumption that each television station in a market provides the
same diversity impact regardless of the actual size of its audience, and the same for each
newspaper, each radio station, etc. The court rejected the contention that each outlet
provides the same diversity impact, saying that “[a] diversity index that requires us to accept
that a community college television station makes a greater contribution to viewpoint
diversity than a conglomerate that includes the third-largest newspaper in America also
requires us to abandon both logic and reality.” Prometheus, 373 F.3d at 408.
37 Id. at 411-413.
38 Id. at 412.
39 Id. at 412.
40 Id. at 418.
41 Id. at 420.
42 Id. at 421.
43 Id. at 425.
that while the numerical limits approach was rational and in the public interest, the
Commission failed to support its decision to retain these particular limits with
“reasoned analysis.”44 The court rejected the Commission’s contention that five
equal-sized competitors would ensure that local markets are competitive, and found
that even if it were to justify the “five equal-sized competitors” benchmark, that it
failed to sufficiently demonstrate that under the existing numerical limits five equal-
sized competitors would actually emerge.45 The court remanded the numerical limits
to the Commission “to develop numerical limits that are supported by a rational
anal ys i s .”46
With respect to the new rules providing for the attribution of joint sales
agreements, the court affirmed the Commission’s decision, finding that the
Commission changed its rules as the result of “reasoned decisionmaking,” and that
such a change was “necessary in the public interest” due to “the potential for
brokering entities to influence the brokered stations.”47
Post-Prometheus
On September 3, 2004, the Third Circuit granted the Commission’s motion
requesting a partial lifting of the stay to allow those parts of the rules approved by the
court in its June 24 decision to go into effect. Specifically, the stay was lifted with
respect to the use of Arbitron metro markets to define local markets, the inclusion of
noncommercial stations in determining the size of a market, the attribution of stations
whose advertising is brokered under a Joint Sales Agreement to a brokering station’s
permissible ownership totals, and the imposition of a transfer restriction. The stay
remained in place pending FCC action on remand with respect to all other aspects of48
the Biennial Review Order.
On January 27, 2005, the United States Solicitor General and the FCC decided
not to appeal the Third Circuit’s decision.49 However, several media companies filed
a formal appeal with the Supreme Court asking for a review of the Third Circuit’s
decision.50 On June 13, 2005, the Supreme Court denied certiorari in all relevant51
appeals.
44 Id. at 426.
45 Id. at 432-433.
46 Id. at 434.
47 Id. at 429-430.
48 Prometheus Radio v. FCC, 03-3388 (3rd Cir., September 3, 2004).
49 Feds Leave Broadcasters Alone in FCC Media Ownership Appeal, Communications
Daily, January 28, 2005.
50 Media Group Asks Supreme Court to Hear Ownership Case, Communications Daily,
January 31, 2005.
51 Media Gen., Inc. v. FCC, 2005 U.S. LEXIS 4807 (June 13, 2005).
2007 Broadcast Ownership Rules and
Congressional Response
On July 24, 2006, the FCC issued a Further Notice of Proposed Rulemaking
(FNPR) in the Broadcast Media Ownership proceedings that had been remanded to
the Commission in 2003.52 The FNPR sought comment for new ownership rules that
would comport with the Third Circuit’s decision in Prometheus.53 Specifically, the
FCC sought comment suggesting new rules that would foster “localism,” increase
opportunities for ownership among minorities and females, revise the numerical
limits placed on cross ownership of local television stations and local radio stations,
revise the Diversity Index used to calculate the availability of outlets that contribute
to diversity of viewpoints in local media markets, and other suggestions for
improvement of existing and proposed rules.54 The FCC also commissioned multiple
studies on media ownership and sought comment on these studies to determine
whether and to what extent to take the studies into account in the final ownership
rules.55 The reply comment period on the ownership studies closed November 1,
On August 1, 2007, the FCC issued a Second Further Notice of Proposed
Rulemaking (SFNPR) in its ongoing review of the broadcast ownership rules.57 The
SFNPR sought comments on new initiatives specifically related to encouraging
minority and female ownership of broadcast stations proposed by the Minority Media
and Telecommunications Council (MMTC), as well as potential constitutional issues
related to race specific classifications.58 Reply comments were due for the SFNPR
on October 16, 2007.59
52 In the Matter of 2006 Quadrennial Regulatory Review - Review of the Commission’s
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the
Telecommunications Act of 1996, Further Notice of Proposed Rulemaking, 21 FCC Rcd
53 Id.
54 Id. For a thorough discussion of the rules proposed in 2002 and the current state of the
FCC’s media ownership rules, see CRS Report RL34416, The FCC’s Broadcast Media
Ownership Rules, by Charles B. Goldfarb.
55 FCC Seeks Comment on Research Studies on Media Ownership, Public Notice, MB
Docket No. 06-121 (July 31, 2007), available at [http://fjallfoss.fcc.gov/edocs_public/
attachma tch/DA-07-3470A1.pdf].
56 Media Bureau Extends Filing Deadline for Comments on Media Ownership Studies,
Public Notice, MB Docket No. 06-121 (September 28, 2007), available at
[http://fj allfoss.fcc.gov/ edocs_public/attachmatch/DA-07-4097A1.pdf].
57 In the Matter of 2006 Quadrennial Regulatory Review - Review of the Commission’s
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the
Telecommunications Act of 1996, Second Further Notice of Proposed Rule Making, 2007
FCC LEXIS 5775 (August 1, 2007).
58 Id.
59 In the Matter of 2006 Quadrennial Regulatory Review - Review of the Commission’s
(continued...)
On November 13, 2007, following the close of all comment and reply comment
periods, FCC Chairman Martin proposed that the review of broadcast ownership
rules should conclude by adopting a relaxation of the ban on newspaper and
broadcast cross-ownership.60 The proposal also indicated that no changes would be
made in the local television “duopoly” rule, the local radio ownership rule, or the
local radio-television cross-ownership rule already in force.
In response to this proposal, Senator Dorgan introduced S. 2332, the Media
Ownership Act of 2007. The bill, if enacted, would require the FCC to publish the
text of a prospective ownership rule in the Federal Register at least 90 days prior to
voting on the rule and allow for 60 days of public comment on the proposed rule with
30 days for reply comments. The bill would prevent the FCC from enacting any new
ownership rules before completing its studies on localism and convening an
independent panel to review minority and female ownership of broadcast stations.
S. 2332 was approved and ordered reported by the Senate Commerce, Science, and
Transportation Committee on December 4, 2007. Companion legislation, H.R. 4835,
also has been introduced in the House of Representatives. No further action has been
taken regarding either bill.
The FCC adopted a revised version of Chairman Martin’s proposal to ease the
ban on newspaper/broadcast cross-ownership on December 18, 2007.61 The Report
and Order in the proceeding was released on February 4, 2008.62 The new rule
establishes the presumption that newspaper/radio broadcast station cross-ownership
in the top 20 largest DMAs is in the public interest and that newspaper/television
broadcast station cross-ownership in the top 20 largest DMAs is in the public interest
when the television station is not among the top four ranked stations in the market
59 (...continued)
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the
Telecommunications Act of 1996, Second Further Notice of Proposed Rule Making, 2007
FCC LEXIS 5775 (August 1, 2007).
60 Press Release, Federal Communications Commission, Chairman Kevin J. Martin Proposes
Revision to Newspaper/Broadcast Cross-Ownership Rule (November 13, 2007), available
at [http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-278113A1.pdf].
61 Press Release, Federal Communications Commission, FCC Adopts Revision to
Newspaper/Broadcast Cross-Ownership Rule (December 18, 2007), available at
[http://hraunfoss.fcc.gov/ edocs_public/attachmatch/DOC-278932A1.pdf].
62 In the Matter of 2006 Quadrennial Regulatory Review — Review of the Commission’s
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the
Telecommunications Act of 1996; 2002 Biennial Regulatory Review — Review of the
Commission’s Broadcast Ownership Rules Pursuant to Section 202 of the
Telecommunications Act of 1996; Cross-Ownership of Broadcast Stations and Newspapers;
Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local
Markets; Definition of Radio Markets; Ways to Further Section 257 Mandate to Build on
Earlier Studies; Public Interest Obligations of TV Broadcast Licensees, MB Docket No. 06-
121, MB Docket No. 02-227, MM Docket No. 01-235, MM Docket No. 01-317, MM
Docket No. 00-244, MB Docket No. 04-228, MM Docket No. 99-360 (Released February
and at least eight “major media voices” would remain in the DMA post-merger.63
For all other DMAs, the new rule establishes the presumption that
newspaper/broadcast station cross-ownership is not in the public interest, except in
two circumstances (discussed below).64 Applicants attempting to overcome a
presumption that the proposed combination is not in the public interest will have to
demonstrate, through clear and convincing evidence, that the merged entity will
increase the diversity of independent news outlets and increase competition among
independent news sources in the relevant market.65 The FCC also has laid out four
factors to help inform its evaluation of these proposed combinations.66
The new rules identify two circumstances in which the presumption that cross-
ownership is not in the public interest will be reversed.67 The first circumstance
adapts the FCC’s failed or failing station waivers to newspaper/broadcast
combinations.68 Therefore, when either the broadcast station or the newspaper
involved in a proposed combination is “failed” or “failing” the FCC will presume
that the proposed combination is in the public interest.69 The presumption that a
combination is not in the public interest also will be reversed when the proposed
combination will result in a new source of local news in a market, specifically
defined as a combination that would initiate at least seven hours of new local news
programming per week on a broadcast station that previously has not aired local
news.70 All other cross-ownership rules and restrictions will remain unchanged.71
On April 24, 2008, the Senate Commerce Committee passed S.J.Res. 28, a
resolution of disapproval of the new cross-ownership rule. The resolution was
reported on May 8, 2008,72 and was passed by the full Senate on May 15, 2008. The
resolution states that “Congress disapproves of the rule submitted by the Federal
Communications Commission relating to broadcast media ownership (Report and
Order FCC 07-216), received by Congress on February 28, 2008, and such rule shall
have no force or effect.” A companion resolution, H.J.Res. 79, was introduced in the
House of Representatives on March 12, 2008, and has been referred to the House
Subcommittee on Telecommunications and the Internet.
Though the House has yet to act regarding the joint resolution of disapproval,
on June 25, 2008, the House Appropriations Committee approved amendments to the
63 Id. at ¶¶ 20, 53-62.
64 Id. at ¶¶ 20, 63-75.
65 Id. at ¶ 68.
66 Id.
67 Id. at ¶ 65.
68 Id. at ¶¶ 65-66.
69 Id.
70 Id. at ¶ 67.
71 Id. at ¶ 1.
72 S.Rept. 110-334, 110th Cong., 2d Sess. (2008).
Fiscal Year 2009 Financial Services and General Government Appropriations.73 This
bill contains a provision that would prohibit the FCC from implementing or
enforcing the December 2007 changes to the newspaper-broadcast cross-ownership
rules, effectively nullifying the rule.
The FCC also adopted rules in December to promote diversification of
broadcast ownership in a separate order from the newspaper/broadcast station cross-
ownership rule. The new rules are intended to allow “eligible entities” to more easily
access financing and spectrum by, for example, modifying the distress sale policy to
allow a licensee whose licenses were designated for a revocation hearing to sell its
station to an eligible entity prior to the commencement of the hearing, revising the
FCC’s equity/debt plus attribution standard to facilitate investment in eligible
entities, and giving priority to any entity financing an eligible entity in certain
duopoly situations.74 “Eligible entities” are defined as “entities that would qualify
as a small business consistent with Small Business Administration standards, based
on revenue.”75 The FCC is seeking further comment on whether it can expand the
definition of “eligible entity” to include other business.76
73 Press Release, Committee on Appropriations, Summary: 2009 Financial Services and
General Government Appropriations, Full Committee Markup (June 25, 2008) available at
[http://appropriations.house.gov/ pdf/FSFY09FCSumma ry06-08.pdf].
74 In the Matter of Promoting Diversification of Ownership in Broadcasting Services, 2006
Quadrennial Regulatory Review — Review of the Commission’s Broadcast Ownership Rules
and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996,
2002 Regulatory Review — Review of the Commission’s Broadcast Ownership Rules and
Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996,
Cross-Ownership of Broadcast Stations and Newspapers, Rules and Policies Concerning
Multiple Ownership of Radio Broadcast Stations in Local Markets, Definition of Radio
Markets, Ways to Further Section 257 Mandate to Build on Earlier Studies, MB Docket No.
07-294, MB Docket No. 06-121, MB Docket No. 02-277, MM docket No. 01-235, MM
Docket No. 01-317, MM Docket No. 00-244, MB Docket No. 04-228 adopted December 18,
75 Id.
76 Id.