Efforts to convince the Federal Communications Commission to rethink how one of the key components of its new radio incubator program is designed have so far proven unsuccessful for the National Association of Black Owned Broadcasters (NABOB) and Multicultural Media, Telecom and Internet Council (MMTC). Now the two organizations are going to court. MMTC and NABOB filed a petition in the U.S. Court of Appeals for the D.C. Circuit on Thursday asking a federal judge to review the mechanism dictating how established broadcasters can use the waivers they receive as a reward for participating in the incubator program. The two organizations say the market comparability standard adopted by the FCC is “arbitrary and capricious” and the decision was “an abuse of discretion” not supported by the law.
As part of the program adopted by the Commission in August, the incubator program will pair existing radio station owners with new entrants or small and struggling broadcasters. As an incentive to get established broadcasters to take part in the program and potentially help a new competitor get on their feet, the FCC would give the established company a waiver to the local radio ownership limits, including the AM/FM subcap restrictions. Broadcasters will be able to use the waiver in the market where the incubator relationship is located, or in a comparably sized metro area. It’s that transferability of the waiver to another city where the friction is.
“The market comparability standard was not proposed in the FCC’s notice,” MMTC and NABOB tell the court, explaining that the proposed rulemaking only referenced using similarly sized markets as the standard. “The difference between these two concepts is substantial,” they argue. “Rather than allowing reward waivers to be used in markets that are similarly sized, the market comparability standard would allow an incubating broadcaster in markets that are substantially smaller… to use the waiver in any of the ten largest markets.”
One idea that had been considered inside the Commission as a potential compromise was to give a broadcaster the ability to take their reward and use it in any city that’s up to five markets larger or smaller than where the incubation takes place. But the National Association of Broadcasters has urged the FCC to keep the incubator program as it is. That’s because the NAB believes stricter limits on how a participant could use their reward would make the program a lot less attractive to established companies.
But FCC commissioner Michael O’Rielly said he’s worried that the move into federal court will “further delay” implementation of the incubator program. And that, he pointed out, would only exacerbate the “abysmally low” number of women- and minority-owned radio stations in the U.S. In a speech at the Radio Show in Orlando on Thursday, O’Rielly said attempts to limit the comparable markets algorithm to more than five market rank sizes up or down is something he’ll continue to object to. “This is an overly complex alternative that I fear will restrict participation in our program,” he said.
Speaking earlier at the Radio Show, Audio Division chief Albert Shuldiner echoed that point. “We see a big upside for the broadcasters that are participating because you get the relief that you are looking for in markets that you think are important to you,” he said.
The decision to go to court is an unexpected move by MMTC and NABOB, which have both been pushing the FCC to create an incubator program for nearly three decades. But the groups have told agency staffers in recent weeks that they do not believe it makes sense to allow a company to lend a hand to an upstart broadcaster in a small market – only to reap their reward in the largest metro area. They worry it will lead to even more radio consolidation, which would undermine any progress the incubator is designed to achieve.