3-2 Party-Line Vote Expected on Media Ownership Draft; Senate Democrats Seek Pai Recusal

The FCC is expected to eliminate or relax numerous media ownership rules Thursday on a party-line 3-2 vote, industry and agency officials told us. That's despite calls Wednesday by Democratic senators for the Inspector General (IG) to investigate Chairman Ajit Pai for a possible quid pro quo relationship with Sinclair Broadcast and for Pai to recuse himself from both the media ownership and ATSC 3.0 items (see 1711140053) since they would benefit Sinclair. The FCC’s impartiality in review of Sinclair buying Tribune “may be tainted,” said 12 senators, including Tom Udall, D-N.M., Elizabeth Warren, D-Mass., Maria Cantwell, D-Wash, Bernie Sanders, I-Vt., Richard Durbin, D-Ill., and Ed Markey, D-Mass.

The recusal request “is absurd on its face and nothing more than a last-ditch attempt by those desperate to block innovation in the broadcast industry and modernization of the FCC’s outdated broadcast ownership rules,” a spokeswoman said. It's very unlikely Pai will recuse himself ahead of Thursday’s meeting, said Garvey Schubert broadcast attorney Erwin Krasnow, in an interview. If Pai did, he likely would pull the items in question from Thursday’s agenda, since a 2-2 vote would mean they wouldn’t be adopted, Krasnow said. Also at Thursday's meeting are orders on Lifeline (see 1711140020), ATSC 3.0 (see 1711140053), wireline infrastructure and wireless infrastructure (see 1711150015).

The final media ownership draft item is expected to change little from the version circulated last month, except to incorporate rules on embedded markets that have been pushed for Connoisseur Media (see 1710100057). The expected vote is the FCC majority continuing down a “destructive path” of letting down consumers, said Commissioner Mignon Clyburn, decrying much of Thursday’s agenda (see 1711150039). “They will open the door to massive media consolidation at the expense of localism, competition, and viewpoint diversity,” said Clyburn of the media ownership item. The expected 3.0 vote will “adopt a so-called ‘voluntary’ television standard that has even more outstanding and unanswered questions than the February" NPRM, she said. Clyburn and Commissioner Jessica Rosenworcel have been consistently critical of the draft media ownership order, and repeatedly connected it to Sinclair/Tribune.

Panelists at a Georgetown Law Institute for Technology Law and Policy event Wednesday moderated by deal opponent Gigi Sohn also connected the rule changes to the deal. The relaxed rules would make it possible for Sinclair to create a “broadcast behemoth,” Sohn said. Sports Fan Coalition founder David Goodfriend said the deal would make things worse for consumers by reducing the amount of local news. Sinclair Senior Vice President-Strategy and Policy Rebecca Hanson said allegations the deal with Tribune would lead to a reduction in local news are “baseless” and a “caricature.” Congress should hold at least one hearing on the possible results from Sinclair/Tribune, said Sen. Richard Blumenthal, D-Conn., who also signed the recusal letter.

The draft media ownership item would do away with rules barring newspaper and radio cross ownership and attributing joint sales agreements. It also would dissolve rules limiting duopolies to markets with at least eight voices, and allow common ownership of two top-four network stations in the same market case by case. The order would establish an incubator program to promote minority ownership, and includes an Further NPRM seeking comment on the specifics. Though Pai emphasized the relaxed cross-ownership rules in interviews and a recent New York Times commentary (see 1711090050), few broadcasters are expected to take advantage of that shift, numerous broadcast industry officials said.

The relaxed JSA and duopoly rules are seen as more likely to lead to increased consolidation, said National Association of Black-Owned Broadcasters President Jim Winston at Wednesday’s panel. Under the new rules, broadcasters could potentially own duopolies and then control further stations in the same market through JSAs, he said. Though Pai and broadcasters touted sharing arrangements as a path to minority ownership, under the relaxed rules, broadcasters won’t need to divest as many stations, making such opportunities less likely in the future, said Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman. Twenty percent of potential buyers of stations that may be spun off from Sinclair/Tribune are women or minorities, Hanson said.

Pai’s actions on Sinclair show “a disturbing pattern of a three way quid pro quo” involving Sinclair, the Trump administration and Pai, said the Senate letter to the FCC IG. House Democrats made a similar request (see 1711130038). The Senate letter cites visits between Pai and Sinclair officials, a reported deal between the Trump campaign and the company, recent FCC orders on the UHF discount and the main studio rule, and Thursday’s broadcast items. Pai denied giving Sinclair special treatment (see 1709190060).

“We appreciate that Chairman Pai has looked at facts over politics and consistently supported updates to both radio and TV broadcasting regulations since he first became a Commissioner in 2012,” said NAB President Gordon Smith on the recusal letter. Thursday’s draft items have “industry-wide implications with a profound impact that is broader than any one company,” Smith said. The rule changes raised in the letter have been the focus of NAB and broadcast industrywide lobbying for decades, Smith said.

Broadcasters and Sinclair need to be free of “outdated” media ownership regulations to compete in the modern media market, said panelist Jerald Fritz, executive vice president-strategic and legal affairs at Sinclair's One Media. They shouldn’t be bound by ownership rules beyond the antitrust regulations enforced by DOJ, he said.