Proposal to Relax Cross-Ownership Rules Connected With Diversity Studies

A now abandoned eighth-floor proposal to relax newspaper/broadcast cross-ownership rules limiting common holdings of daily newspapers and radio or TV stations in the same market was connected with discussions about whether such NBCO relief would come with long-sought diversity studies, informed sources including industry officials said. The idea to eliminate the NBCO isn't being pursued because Commissioner Mignon Clyburn wanted the FCC to conduct such studies if it pursued cross-ownership deregulation, some said. Chairman Tom Wheeler had been seeking ways to get a unanimous vote on the draft media ownership order, officials told us. Now, some say, a 3-2 vote to approve the order is the most likely outcome.

Clyburn wanted the FCC to look at ways to satisfy data collection requirements of the 3rd U.S. Circuit Court of Appeals if the agency were going to eliminate the NBCO rule, officials said. The preliminary proposed change to eliminate the NBCO rule wasn’t included in a draft ownership order but was discussed among FCC Democrats, along with collecting more data on diversity, officials told us. Proposals to include the elimination of the NBCO ban or to do diversity studies in the draft media ownership order have been dropped and the order is seen as likely to be issued next week without either, FCC officials have told us (see 1608080051). The FCC and Clyburn’s office declined to comment Tuesday.

Public interest groups have been critical of the lack of FCC data collection on the effect of diversity on content and broadcast ownership since the agency announced it wouldn’t move forward with such studies in the ownership quadrennial review. Groups such as Free Press and the United Church of Christ urged the commission to undertake studies that would satisfy the strict scrutiny required by the Supreme Court’s 1995 Adarand decision on rules that single out minorities. Both public interest groups and broadcasters condemned an FCC study of Hispanic broadcast ownership as not being sufficient to meet such requirements.

Both diversity data collection and the NBCO came up in a meeting last week between National Association of Black Owned Broadcasters President Jim Winston and an aide to Wheeler, said an ex parte filing in docket 14-50. Winston noted the 3rd Circuit told the FCC that inadequate data wouldn't be an acceptable excuse for failing to promote minority ownership and also said NABOB wouldn't oppose eliminating the NBCO rule. Winston declined to comment for this story.

Performing diversity studies may not be attractive to FCC officials because they take a long time and can have inconclusive results, a former FCC official told us. It takes time to gather the data, which then must be examined by academics before conclusions are reached, the official said.

The FCC also may not be interested in pursuing data collection such as Adarand research because not doing so could strengthen its position in court, an attorney told us. The final media ownership order is expected to end up back in front of the 3rd Circuit, and the FCC could argue that it’s not possible for such studies to prove to the level required by Adarand that there is a connection between diversity of ownership and diversity of content, an attorney said.

Adarand studies have been successfully performed in other industries, said attorney Cheryl Leanza, who represents UCC. “I think they have decided it’s not possible without really trying,” Leanza said. “They can do it.”

The FCC should eliminate the NBCO rule to make it easier for newspapers to attract investors, said the Newspaper Association of America in an email. “Anyone who thinks that the existence of news organizations is in the ‘public interest,’ should also be fully supportive of policies that allow them to attract capital,” said NAA CEO David Chavern in a statement to us. “Preventing investment in journalism except for cases where a news organization is ‘failing’ is not a recipe for their success.”