2021 Outlook

The New Year rings in new opportunities and challenges – in life, and for the radio industry in Washington. From Capitol Hill to the Federal Communications Commission and the White House, many things are changing. We asked radio’s Beltway insiders what is on their radar. Here are the nine things they say the industry needs to watch for in Washington in 2021.

Supreme Court Hears Media Ownership Case

Next week the U.S. Supreme Court is scheduled to hear an appeal filed by the FCC and the National Association of Broadcasters that looks to overturn what has been a nearly two-decade hurdle blocking most media ownership rule changes. The nine justices are being asked to decide whether the Third Circuit erred when it blocked the most recent changes adopted by the FCC in 2018 from taking effect. They are also being asked to rule whether the appeals court has overstepped its bounds. A ruling is unlikely until the spring. The outcome could have a big impact on the pending quadrennial media ownership review that is on hold pending the Court’s ruling.

New FCC Chair – And New Priorities

What is seen by many as the most pro-radio Commission in a generation is coming to an end. FCC Chair Ajit Pai leaves on Inauguration Day and Commissioner Michael O’Rielly left last month. Both championed radio causes like AM radio revitalization and fighting pirates. The Biden transition has not yet said who it intends to name as Pai’s successor. Most in Washington expect Commissioner Jessica Rosenworcel to take the lead, at least on an interim basis.

Broadcasters aren’t expected to face any specific challenge from a new chair. “Radio issues for the most part have not been as partisan as telecom and some TV issues and so there’s still an opportunity for bipartisan decisions that would be beneficial to radio,” said one insider.

Lobbyists say it’s unlikely the new leadership will try to undo changes made during the Pai years, like abolishing the main studio rule. Instead, some say the most likely change is radio will struggle to get much attention. “Unless there is a crying problem on the media side that needs to be addressed, it’s going to be very easy for the FCC to be very busy with telecom issues and to just leave broadcasting alone,” said one.

Deadlocked FCC… Or Not

The impending departure of FCC Chair Ajit Pai and last month’s confirmation of Nathan Simington has set up the Commission for a 2-2 deadlock. President-elect Biden will get to appoint a new agency head, and the prospects for breaking the deadlock changed significantly last week when the Democrats won two Senate seats in Georgia. That will give the Democrats control of the Senate, allowing soon-to-be Majority Leader Chuck Schumer (D-NY) to bring the FCC chair nomination to a vote. Previously, there was speculation current leader Mitch McConnell (R-KY) would have refused to put an FCC confirmation on the calendar. That could have led the FCC to slow down the processing of deals and other applications to pressure McConnell. That threat is now dimming.

Performance Royalty Resurfaces Again

Session after session, the fight returns to Congress about whether AM/FM airplay should have a performance right that requires radio to pay music companies. Lobbyists think that will again be the case in the 117th Session, despite broadcasters repeatedly convincing a majority of lawmakers that a radio royalty is a bad idea. But that hasn’t stopped advocates from introducing legislation. “It’s a perennial but it is a real threat to us,” said one lobbyist. “It’s really important for us to be vigilant on that.”

The Ask Musicians for Music Act, or AM-FM Act for short, was introduced in November 2019 by Rep. Jerrold Nadler (D-NY) and Senator Marsha Blackburn (R-TN), both of whom remain in Congress – and Nadler remains in charge of the pivotal House Judiciary Committee. “He’s going to push, I don’t see why he would not,” said a DC insider.

Democrats Take Congress

Against long odds, the Democrats will have control of both the House and Senate beginning later this month. “The margins are thin in the House, but I think President Biden will think he has a mandate and with both chambers, he is going to try to as much as he can in the first year because that’s when a new president is always the strongest,” predicted a Washington insider. Biden has said little about telecom issues, making the Democratic majorities a wildcard.

New Faces In Congress

There won’t just be new faces at the FCC, but also in Congress. The 2020 election brought 61 new House members and nine new Senators to Washington. It means both risk and opportunity for radio, as the industry works to renew its support on Capitol Hill. The high number of new lawmakers means more uncertainty as well as a bigger job of educating them about the role broadcasters play in the U.S. economy and the media ecosystem. That could also make the task of signing names to the resolutions blocking a radio performance royalty tougher. “The good thing is a lot of them have a relationship and an appreciation for our industry,” said a lobbyist.

Growing Ad Tax Threats

Democrats in Congress are looking at more COVID-related relief for cash-strapped state and local governments. But if Republicans block a bill, it could lead to more serious consideration of adopting taxes on advertising to cover budget shortfalls. “It really could have a domino effect,” said one insider. There’s already talk of ad taxes in Maryland, Washington and New York.

Changing Tax Rates

President-elect Biden said little about media during a campaign season upended by the pandemic. But his plans for corporate tax rates have the attention of some radio lobbyists in DC. “That’s something that effects the economic environment for all of our companies,” they said. “Those can have real consequences.” The Biden tax plan would increase the corporate tax rate to 28%. That’s up from the 21% maximum adopted in 2017.

DOJ Wraps Consent Decree Review

The three-year review of the ASCAP and BMI consent decrees by the Department of Justice is expected to wind down in the coming weeks as Makan Delrahim, Assistant Attorney General for Antitrust, leaves the Department of Justice. There’s speculation he may issue a report with recommendations. That could include a roadmap for how he believes his successor or Congress could move the review forward. Broadcast lobbyists in Washington still believe the consent decree review could pose a threat to the licensing framework that has been used by radio for generations. “I think the entire industry needs to remain vigilant,” said one.