FCC Ownership Caps

The one thing broadcasters seem to be in agreement on when it comes to the Federal Communications Commission’s quadrennial review of media ownership rules is that updates are needed – and the sooner the better. “The COVID-19 pandemic and recession, have made reform of the local radio and TV rules more urgent than ever,” the National Association of Broadcasters told the FCC. But what to change – and how far to go – continues to split the industry.

The NAB has proposed all ownership caps be eliminated for AM stations. And on the FM dial how far its proposed changes would go would depend on market size. In markets No. 1 through 75, it suggests a single entity be allowed to own as many as eight commercial FMs. In any market smaller, or in unrated markets, the NAB says there should be no cap on FM ownership whatsoever.

The NAB’s latest filing says “maximum regulatory relief” for AM radio and “meaningful relief” to FM is justified based on the “profound competitive changes” in the media and advertising markets and retention of the “analog-era restrictions” on broadcast radio will not bring new companies into the business.

It is a position that has the support of some groups. Alpha Media told the FCC it backs the NAB because of the struggles radio is going through. Alpha says four of its clusters are operating at a loss and its situation is not unique. It says the suggestion that a cluster with a sixth or seventh FM would damage competition or harm the public interest is “absurd,” considering what it says it the “inconsequential share” of the media market that radio now has.

Others think the NAB proposal may not go far enough. In comments submitted to the agency, SummitMedia backed abolishing the local radio ownership rule altogether. It says the rules were “created for a media landscape that bears no resemblance to the modern, multimedia world of today” and the record shows they now act “more as a hindrance than a help to the Commission’s goals.”

There are a handful of operators that think the FCC should do nothing, like Utah owner Red Rock Broadcasting. It says relaxing or eliminating current ownership regulations for radio station owners and operators in medium and small markets “would create disastrous affects” in their markets and the radio industry overall due to “predatory pricing strategies” by the large groups against the small operators.

Opening For Middle Ground?

With the range of opinion spanning from the status quo to doing away with all rules, several broadcasters led by iHeartMedia have suggested the FCC embrace what they call a “middle ground.” Radio’s largest group has proposed doing away with any limits on AM ownership but keeping restrictions on FMs, explaining it would be “targeted directly and narrowly to reduce the competitive disadvantage faced by AM radio in the market today.” iHeart says it continues to believe that relaxation of the FM ownership limits would exacerbate the “perilous competitive disadvantage” of AM stations in relation to their FM counterpart.

It is a viewpoint that has secured the backing of operators including Urban One, Salem Media Group, Curtis Media, and Crawford Communications, among others.

Salem says the NAB proposal would undermine the work done to help AM radio and do little to help radio achieve its true goal – even with bigger FM clusters and no limits on AMs. “It’s competition with the digital audio services and big tech companies that appear to be displacing radio in the local and national pool of advertising dollars, and this issue may not be solved by encouraging more radio station consolidation,” it told the FCC in comments filed last week.

Consensus on the proposed middle ground may not come easy. A group of ten operators, including Townsquare Media and Connoisseur Media are looking at the same trends and drawing different conclusions. They say to focus only on competition within radio is “short-sighted” and the “fundamental barometers of competition” show broadcasters compete in a vastly more extensive marketplace for both audience and advertising.

Next Move Belongs To FCC

The FCC has not indicated when it may put a draft proposal for media proceeding (MB Docket No. 18-349) that began three years ago on the table. Washington lawyers say it may not be until next year, with how ambitious the agency gets depending on whether Democrats add a third commissioner, and whether Acting FCC Chair Jessica Rosenworcel remains in the position.

The NAB is pushing the FCC to complete the delayed review and not roll it into the looming 2022 quadrennial as some have proposed. The Commission earlier combined the 2010 and 2014 reviews, but the NAB says it does not have the legal authority to do so again.

“Now that the Commission has refreshed the record in this proceeding, it should act quickly to conclude the pending quadrennial review. In fact, it already should have completed its 2018 review,” NAB said.