FCC Media Ownership Deregulation Seen Possible Under Pai FCC by NAB Panelists Including O'Rielly

LAS VEGAS -- Media ownership rule relaxation, or at least a hard look at existing rules, is likely under this FCC, said speakers on a panel at the NAB Show, including Commissioner Mike O'Rielly. He and others cited the so-called eight-voices test, which limits common ownership of TV stations within markets with fewer than that number of outlets. Panelists also cited rules against one company publishing a daily newspaper and owning a broadcaster in the same market.

"Relaxation is probably a little too kind a word to what should happen to some of those rules," O'Rielly said in response to our question from the audience. "I think I would call it another word. So we’ll see how it goes."

The commissioner and others acknowledged political and other blowback could be significant if there's deregulation. With several other hot-button topics, O'Rielly said, critics might have plenty to protest about. "Local broadcasting tends to be one of the main conduits for local elected officials to get their word out, so they’re particularly attuned to who owns those" outlets, said ex-Commissioner and now-Cooley lawyer Robert McDowell. Another ex-FCC Republican member, economist Harold Furchtgott-Roth, said now isn't the time to hold field hearings, as happened during past ownership rule reviews. "Unless there is that will" to "get this done," the agency is "going to be back in the same situation" as it's been in previously, he said. "If we have the same field hearings … it’s not going to happen," he said of prospects for rule relaxation. "The amazing thing is that the rules have lasted as long as they have."

"If there is a will, and I certainly have it on my behalf, and when I talk to the chairman I hear the same" about "moving forward" to "modernize these rules to meet our obligations," O'Rielly said Tuesday, referring to Ajit Pai and the potential for ownership deregulation. Of the eight-voices threshold, he said "this needs to be significantly reviewed, and if not modified then junked completely, so I am open to that discussion." And "the cross-ownership bans are high and mighty on the list of items for review" by the commission, O'Rielly said. "There is interest, it may not be broad interest, in buying newspapers now," he said, saying "look at the state of our newspaper industry, it is in shambles," outside of some major national papers. On retransmission consent deals between TV outlets and MVPDs, O'Rielly doesn't see rule changes likely, he said later on the panel. FCC spokespeople didn't comment.

Local ownership rule relaxation is possible in smaller/rural markets, said broadcast lawyer David Oxenford of Wilkinson Barker. Unlike some past ownership reviews, this time broadcasters may present more of a cohesive front to the regulator, he said. Maybe Pai's coming Economics Bureau can justify rule changes to reflect updated market realities, Oxenford said. "Many of the companies now see … that the rules need to be changed, so I think you’ll see a more unified presentation from the broadcast industry."

One area where further deregulation may not occur soon is to the national cap on what percentage of the country any broadcaster can serve, panelists suggested. They noted that last week, commissioners 2-1 restored the discount to the 39 percent national cap for UHF stations (see 1704200048). That means one company can potentially serve 78 percent of the U.S., said Oxenford. "Whether Congress ever acts on changing that 39 percent for most intents and purposes is irrelevant," he said. "There are companies that certainly would like to get 100 percent, but certainly 78 percent is pretty close."

Some are doubtful of prospects that 39 percent overall limit will be raised soon, whether by congressional action or by the FCC, if that is even possible under the law. Doubters included one industry ally in the audience we spoke with. McDowell said such national deregulation by the agency "will be difficult, just from a legal perspective." And he cited the "bipartisan backlash" that occurred when the commission under then-Chairman Michael Powell lifted the cap (see 0307240043). Such efforts resulted in Congress increasing it to its current limit (see 0401230143). With several high-profile issues before the FCC, any critics of whatever shape media deregulation takes can "get in line" to voice their concerns, O'Rielly said earlier on the panel. "There are three or four other topics that are as excitable in D.C., in our space." One such issue, changing net neutrality rules, may soon get action in the form of a potential NPRM (see 1704240049 and 1704250056) that was the subject of some speculation at the show.