FCC Mulls Ownership Waivers for Foreign Investment, Those Overcoming Adversity

FCC members and Media Bureau staff are considering seeking comment on waivers of media ownership rules for foreign investments in broadcast companies and for those who've overcome economic and other types of non-racial or gender disadvantages, agency and industry officials told us this week. They expressed varying degrees of hope whether incorporating such proposals into separate rulemaking proceedings might be part of a wider-ranging compromise among commissioners to resolve a deadlock. The officials said it will be hard to end a split (CD Jan 28 p7) between the two Republicans who support broadcast/daily newspaper cross ownership and the two regular Democratic members who don’t generally support such deregulation without first studying barriers to entry faced by minorities and women.

Much of the resolution -- if one can be reached -- may depend on how amenable Chairman Julius Genachowski is to changing the draft Media Bureau order allowing common ownership of radio stations and daily newspapers in a region and waivers for a non-top four TV station to own a daily in the 20 top markets, agency, industry and a public interest official agreed. That’s because commissioners Mignon Clyburn and Jessica Rosenworcel have now expressed within the agency their concerns about allowing such cross-ownership before doing what they think is needed to meet a court remand of the last media ownership rules. Genachowski on the other hand continues to want a vote on an order with some deregulation, which commissioners Robert McDowell and Ajit Pai also seek, agency officials said. A commission spokesman declined to comment.

Various commissioners continue talking among themselves or through aides about possible changes to the draft rules, though none has formally proposed to all other members any modification, agency officials said. They said Clyburn and Rosenworcel have recently let Genachowski know their concerns about the Nov. 14 draft that was updated with additional comments on female and minority ownership Jan. 17 (CD Jan 18 p1). Genachowski, during a news conference following Thursday’s FCC meeting, declined to provide an update on the timing of an ownership order. “The commissioners continue to deliberate,” he said. “We're in active discussions and will continue that as we do our work."

Some industry officials think a resolution may be hard to come by, while others and some at the agency said they still hold out hope. Complicating matters is that a compromise floated Jan. 22 by the National Association of Black Owned Broadcasters to allow some radio/daily newspaper common ownership was withdrawn this week (CD Jan 31 p13). NABOB’s proposal had formed the basis of some consideration at the FCC of possibly scaling back as part of a compromise radio/paper cross-ownership rules from the total end of the ban contained in the draft, agency and industry officials said. The plan to allow common ownership of two radio stations and a daily in most markets, and one station in smaller markets, “was being given good consideration by all five offices” of FCC members, said NABOB Executive Director Jim Winston. “It was an unfortunate thing that we had to withdraw our position on it."

That makes it harder for a cross-ownership compromise within the agency to come to fruition, some broadcast industry lawyers said. Some members of NABOB “felt that any radio/newspaper cross of any kind was going to be bad news for our members,” Winston said. “As I got that feedback, I said we can’t be on the record agreeing to our own destruction.” NABOB’s read of 2011’s 3rd U.S. Circuit Court of Appeals remand of the 2007 media ownership order is “don’t come in here with any changes to your rules” before showing how they'd affect diversity, Winston said. “This order is putting the cart before the horse,” by not now studying the issue, based on what he’s heard is in the draft, Winston continued. “They're doing everything backwards, and the court is going to have a problem with that.” Agency officials have said Clyburn and Rosenworcel share some of those concerns.

Issuing a rulemaking notice on whether to allow exceeding caps by one on the number of radio or TV stations that can be commonly owned in a market to a broadcaster that incubates those who've overcome adversity is being looked at by some at the commission as a possibility, agency and industry officials said. NAB and the Minority Media and Telecommunications Council continue lobbying the agency to allow an incubator program or a test of one for those getting an overcoming disadvantages preference (ODP). That ODP provision could serve as a basis for changing or extending deregulation now given in the draft order through an eligible entity definition that incorporates small businesses, agency and industry officials said. An ODP “shouldn’t be considered as a trade off for relaxing the rules,” said Policy Director Matt Wood of media consolidation for Free Press. “All those things are more than worthy of exploration.”

Also under consideration by some at the FCC is whether to issue a public notice or rulemaking notice on whether to waive foreign ownership rules that limit such holdings to 25 percent of a U.S. broadcast licensee, agency and industry officials. There’s a pending petition at the agency on the subject, so one possibility is that the bureau would simply seek comment on it, industry officials said. MMTC Executive Director David Honig, who visited the commission this week to discuss ownership, sees grounds for optimism an order can be approved, because “all five commissioners want to figure this out,” he said. “I don’t see a lot of ideological warfare” on the order, “and that’s healthy,” he said. The division between FCC members may still be worked out, he said. Also possible is that Genachowski doesn’t keep pushing for a vote, and the order becomes an issue for whoever is the next FCC chairman, Honig and industry and agency officials said. That could mean “starting from scratch,” Honig said. Chances of adoption now isn’t “like a Hail Mary pass, like it was last week” when prospects seemed dimmer for an order being approved, he said.

MMTC and NAB proposed ways to start an ODP incubator program that they said could avoid triggering racial or female preferences or including rich people. “Safeguards” could “prevent the unintended consequence of allowing such individuals to meet the ODP standard by capping the maximum net worth” of someone evaluated for it, the groups said in a filing posted Thursday to docket 09-182 (http://xrl.us/bodxrr). One must have “at least partially overcome the disadvantage” like a physical injury or disability, or “unequal access” to postsecondary education or credit, the associations said. ODP wouldn’t use race, gender or ethnicity “to create a presumption of disadvantage,” they said. Broadcasters fostering a qualified entity would get a waiver to own an additional media outlet in their market, and would provide help over three years like low-interest loans or guarantee debt.