Media Ownership Recon Order Seen Coming in September

The FCC is expected to vote in September on an order of reconsideration that would roll back many media ownership regulations, industry officials said in interviews. The item, an order on recon of the 2014 quadrennial review, is expected to be circulated to commissioners' offices next month, after their Aug. 3 meeting, broadcast allies said. Though the scope of the item is likely still in flux, most broadcast industry officials we spoke with expect the item to roll back or relax rules governing the attribution of joint sales agreements (JSAs), broadcast cross-ownership, and rules that bar broadcasters from owning multiple stations in a market.

It could take a while for any changes to take effect, since it's seen as a near certainty such a move would face an immediate court challenge. Issuing a recon order without refreshing the record on those issues would leave the order “extremely vulnerable” to a legal challenge, said United Church of Christ Office of Communication policy adviser Cheryl Leanza, an opponent of ownership deregulation.

Though broadcasters and their lawyers aren’t sure how far the order will go, it's widely expected that it will include relaxation of local ownership rules such as the eight-voices test. Chairman Ajit Pai and Commissioner Mike O’Rielly have long indicated their opposition to rules preventing broadcasters from owning multiple stations in the same market, and Sinclair buying Tribune (see 1707060061) is seen as a sign that those broadcasters expect an imminent change, attorneys said. Expectations the item will relax rules on JSA attribution and newspaper cross-ownership are on firmer ground, they said. Pai previously signaled his intention to throw out the JSA rules when he did away with Media Bureau guidance on transactions involving them shortly after taking over (see 1702030070). Cross-ownership rules also have been a target of ire from Pai and O’Rielly, and were nearly rolled back under the previous administration. Relaxation received support in an opinion by the 3rd U.S. Circuit Court of Appeals.

Broadcasters have very strong arguments for ownership deregulation, BIA/Kelsey Chief Economist Mark Fratrik said in an interview. Allowing broadcasters to own more stations and newspapers in their markets makes their local news operations stronger and more financially viable, and ownership limitations such as the eight-voices test are based on arbitrary limits, he said. The FCC didn’t comment.

The record's robustness might decide which rules get relaxed in the coming recon order, attorneys said. While the record in opposition to the JSA attribution rules and cross-ownership rules is seen as strong, it could be weaker on local ownership rules since relaxation of those rules under the previous administration seemed so unlikely, an industry lawyer said. The record on any media ownership rule the FCC wants to eliminate should be refreshed, Leanza said. If Pai’s office decides some of the proposed changes are too vulnerable for a recon order, relaxing them likely would be pushed back until the required 2018 quadrennial review, attorneys said. In recent filings, radio broadcaster Connoisseur Media presses the commission to include changes to the rules for embedded markets in the upcoming media ownership rollback rather than putting it off to the QR.

The QR docket shows a flurry of recent lobbying on expected changes to the ownership rules from broadcasters and MVPD-backed groups such as the American Television Alliance. In ex parte meetings last week with Media Bureau staff (see 1707140029), the ATVA discussed possible retransmission consent implications “should the Commission seek to eliminate the top-four prong of the local ownership rule.”

The 2014 review is subject of ongoing legal challenges in the 3rd Circuit, and the FCC asked that court to hold that case in abeyance until it acts on NAB's petition for recon. Public interest groups including the Prometheus Radio Project also appealed the review but have asked the court to proceed with their portion of the case since their objections to the FCC order’s handling of shared service agreements are different from NAB’s. A 3rd Circuit decision on that matter is pending.