Split FCC Loosens Cross-Ownership Rule, Imposes Cable Cap

Commissioners Jonathan Adelstein and Michael Copps said in interviews that they were upset by last-minute changes that Martin had made to the order. The chairman circulated three changes between 9:44 p.m. Monday and about 11 a.m. Tuesday, FCC officials said. The last tweak came minutes before the slightly-delayed meeting. Commissioner Robert McDowell said in an interview that he’s satisfied with the process and outcome of the rulemaking. Martin said he involved all the other commissioners at every step of the way during the 18-month ownership review. The chairman discussed the changes with all his colleagues days before circulating them, he told reporters.

The order makes only modest changes to FCC media ownership rules, Media Bureau officials, Martin and the two other Republican commissioners said during the meeting Tuesday. Although the order presumes that cross-ownership in the top 20 markets is in the public interest, the FCC will review proposed deals “case by case,” bureau attorney-adviser Jamila-Bess Johnson said at the meeting. “Today’s media marketplace is much changed” from 1975, when the cross-ownership ban was imposed, she said. During that time, thousands of full-power broadcasters have started operations, Johnson said.

Deals in markets No. 21 to 210 “would be presumed not in the public interest,” Johnson said. To overcome that hurdle and persuade the FCC that a waiver would benefit the public, a broadcaster or paper must show it’s in financial distress or a station must commit to airing seven hours a week of local news when it hadn’t previously broadcast any, bureau officials said. To prove financial distress, a station must have had three years of negative cash flow and an all-day audience share of 4 percent or less of the market.

To be considered a failed property, a paper or broadcaster must have filed for bankruptcy or stopped operating for at least four months before seeking a cross-ownership waiver, officials said. Waiver seekers in all markets must show that they would increase the amount of local news they produce and would maintain independent news and editorial staff at each property, bureau officials said. Under the order, 36 newspaper-broadcast combinations predating a 1975 ban got exemptions, along with six other waiver-seekers, Martin said.

Democrats assailed what they called weak waiver standards and last-minute changes to the order. They attacked the steps that Martin took over the full course of the ownership review as insufficient and tilted toward a preconceived outcome, and said he shouldn’t have bucked requests to delay a vote from several dozen members of Congress. “The FCC has never attempted such an act of defiance against Congress,” Adelstein said. “We should have slowed down rather than putting everything at risk,” he added, saying there was a “frantic scramble to make policy changes to this item.” Copps said the order won’t pass “the red face test” with Congress, courts or the public. “This is not the way to do rational, fact-based and public interest-minded policymaking.” The order ends the FCC’s review of rules remanded to it by the 3rd U.S. Circuit Court of Appeals in Philadelphia in 2004.

Martin said it would be harder to get waivers under the new rules than current FCC policy. Section 202(h) of the 1996 Telecommunications Act requires the agency to periodically examine ownership rules and repeal those that the FCC finds no longer in the public interest, he said at the meeting. McDowell and Commissioner Deborah Tate made similar comments. Martin said the cross-ownership rule was the “one exception” to the 3rd Circuit’s remand, the court having held that a “reasoned analysis” supported the finding that a total ban didn’t benefit the public. “The commission has had to grapple with the most contentious and divisive issue to come before it,” Martin said.

Martin implied that the FCC Democrats were hypocritical in their criticisms that he hadn’t followed the will of Congress and didn’t allow more time for public comment. He said Copps had sought changes to the FCC’s order approving BellSouth’s purchase of AT&T just days before the deal was approved and hadn’t sought public comment. Martin said Adelstein wanted a net-neutrality provision in the order, though the House had rejected legislation to impose such rules 269-152. “I don’t raise these issues to attack any of my colleagues,” he said, but to make the point that Martin did all he could to include other commissioners. “For a year and a half I have attempted to respond to legitimate concerns about process” but then “the goalposts were moved,” Martin said. “I have come to the conclusion that it won’t ever be possible to reach consensus.”

Martin also failed to create consensus on the cable caps. McDowell and Tate dissented in a 3-2 vote. The caps will apply to all cable operators, Martin said, who indicated they could apply to telecommunications companies. FCC officials later said only cable operators face the limit, but it might apply to Verizon’s FiOS service, which the Bell calls a cable offering. It’s not clear whether a company like AT&T, which says it’s not a cable operator under some FCC rules, would be exempt from the 30 percent limit. The FCC also sought comment on whether to impose restrictions on the percentage of cable-affiliated channels that each system can carry as part of the total number of networks.

McDowell warned that a court probably will throw the cable order back to the FCC. In 2001, the U.S. Appeals Court for the District of Columbia Circuit remanded the 30 percent cap. Recalling Charles Dickens’ A Christmas Carol, McDowell said “the ghost of the future will foretell an inescapable future for this order” because it “will be overturned by the D.C. Circuit… This order goes out of its way to remain ignorant of current market conditions which obviate the need for any cap.”

McDowell concurred in part on starting a rulemaking in which the FCC proposes requirements for broadcasters to serve their communities, such as convening an advisory board. Adelstein and Copps both dissented in part from an order that would define small broadcasters to benefit from additional rule waivers as those with $13 million or less in annual sales for a TV station and $6.5 million or less for radio. The Democrats said that definition was too broad and likely wouldn’t do much to help minorities and women. The vote for the cross-ownership order was interrupted by a handful of protestors from Code Pink, but the protest was far milder than when the FCC last voted on media deregulation, in 2003.