FCC Votes Media Ownership Order 3-2; NBCO Rules Remain in Place

The FCC voted 3-2 along party lines to approve a media ownership order Wednesday that, as expected (see 1608080051), largely resembles its 2014 NPRM, industry and agency officials told us. An spokesman confirmed the item had been voted, but details of the voting breakdown and the text of the order weren't released. FCC and industry officials told us the item was approved by all three Democratic commissioners and opposed by both Republicans, and keeps most ownership rules in place and resurrects joint sales agreement (JSA) ownership attribution rules that were vacated by the 3rd U.S. Circuit Court of Appeals.

An alternate proposal that also would have eliminated newspaper/broadcast cross ownership (NBCO) rules didn't get the support of all three of the commission's Democrats and the effort lost momentum this week (see 1608090058). Broadcasters had been pushing hard on the NBCO issue, with NAB filing multiple ex partes each week for a month. “NAB strongly disagrees with the FCC’s decision to cling to long-outdated media ownership rules that no longer serve their purpose,” an NAB spokesman said in a statement.

The media ownership order will “further hasten the great decline of our nation’s newspapers and the quality of journalism as a whole,” NAB said. The Newspaper Association of America also said the order is bad for newspapers. “The decision is deeply disappointing, and is counter to an U.S. Court of Appeals determination -- more than a decade ago -- that the outright ban is 'no longer in the public interest," said NAA CEO David Chavern in a statement. The rule “is outdated and does not reflect the current state of media,” Chavern said. Newspapers are the only industry barred from investment by owners of local broadcast companies, NAA said.

“The FCC’s order is a weak attempt to fulfill its mandate, and likely sets the stage for additional involvement by the courts to prod the FCC to correctly do its job,” said House Commerce Committee Chairman Fred Upton, R-Mich., and Communications Subcommittee Chairman Greg Walden, R-Ore., in an emailed statement. “The current media ownership regulations only serve to prevent traditional sources of journalism from innovating and evolving, while permitting national new media companies to siphon off more and more local advertising revenue.”

Public interest groups support the NBCO ban. Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman told us the FCC's leaving it in place is “a sound decision.”

The ownership order will reestablish the JSA rule and grandfather existing combinations until 2025, FCC officials told us. It also will allow some JSAs that were dissolved in connection with transaction approvals to be resurrected until the 2025 unwinding deadline, as expected (see 1607210055), they said. The item also will require shared service agreements to be uploaded to stations' online public files and re-adopts the revenue-based standard for eligible entities, officials told us.

Broadcast ownership rules will remain largely unchanged, and as an alternative to eliminating the NBCO the order will provide an exception for failing entities and a waiver process. That's not nearly enough, NAA said. “Requiring newspapers to fail or be close to failing before they can draw much needed investment from broadcasters is a ‘too little, too late’ recipe that will never be pursued given the low barrier entry for news on digital and mobile platforms,” Chavern said.

The item also doesn't include any FCC studies of ownership diversity, a particular sore point for public interest groups such as the United Church of Christ and American Civil Liberties Union. Not pursuing such studies is a “continuing failure” of the FCC, Schwartzman said. Such studies were on the table as part of the proposal to eliminate NBCO, but the studies went away when that possibility evaporated, FCC officials told us. Both public interest and broadcast officials have told us they intend to pursue legal action against the agency over media ownership, and a return to the 3rd U.S. Circuit is expected.