MMTC Compromise May Guide FCC Media Ownership Rules—If Split Can Be Resolved

Some commissioners were waiting for Genachowski to decide whether he wants to revise the bureau’s Jan. 17 draft, which was substantively the same as the first one, or proceed to a vote that seems all but certain to be non-unanimous, agency and industry officials said. They said commissioners Mignon Clyburn and Jessica Rosenworcel appear to continue to think the draft rules are too deregulatory and that the agency should have finished minority and women barrier-to-broadcast-ownership studies that Genachowski planned to have ready for the next quadrennial review slated for 2014. Commissioners Robert McDowell and Ajit Pai, meanwhile, don’t think the draft relaxes rules enough, agency and industry officials said. No commissioner has yet proposed changes to all the other FCC members to the draft, and there haven’t been many discussions among the regulators about how to proceed to a compromise, commission officials said. A bureau spokeswoman declined to comment.

That divide threatens to result in Genachowski pulling the rules entirely, or as a much less likely outcome seeking to get a vote that Clyburn and Rosenworcel might dissent from over the “yes” votes from McDowell and Pai, commission and industry officials said. MMTC’s proposal to approve some deregulation now, with the rules not taking effect until the barrier-to-entry studies are completed, may not be practical to implement and has drawn some skepticism at the agency, commission officials said. But they said there’s openness to considering other diversity proposals long championed by MMTC that are part of the group’s compromise. The National Association of Black Owned Broadcasters, which had opposed deregulation, last week advanced its own proposal for some rule changes.

MMTC on Tuesday held a series of meetings with the four regular commissioners, bureau Chief Bill Lake and an aide to Genachowski to seek a vote now on an order that wouldn’t allow common ownership of broadcasters and daily newspapers in the same market until those barriers-to-entry studies are done, a filing in docket 09-182 said (http://xrl.us/bocb24). Executive Director David Honig told us he wants to punt on the issue of attributing various types of sharing deals between separately owned stations in the same market until the 2014 review. The draft would attribute TV joint services agreements to the station brokering ads for the JSA, when that broker dealt with more than 15 percent of the station’s ads. McDowell and Pai continue to oppose such JSA attribution, agency officials said. They said Clyburn and Rosenworcel oppose the draft’s killing of a ban on common ownership of radio stations and dailies, and a waiver for common holdings of a same-market TV station that’s not top-four rated and a daily.

MMTC’s plan is to make the effective date of cross-ownership deregulation six months after ongoing research is completed, Honig said. “If the study finds that there’s a serious problem, the commission could extend or cancel the effective date. If the study finds no serious problem, the commission would only need to allow the effective date to pass.” That may not fly with Genachowski, said attorney Andrew Schwartzman, representing cross-ownership foe Free Press in the proceeding. “I don’t think that’s acceptable to Julius, so I don’t think that’s going to move the ball on that, which is a major stumbling block” at the agency, Schwartzman said. The outcome of the proceeding is “very much up in the air,” he said.

Honig, holding out hope for a 5-0 vote, believes such unanimity would bolster prospects of the rules not being remanded for a third time by the 3rd U.S. Circuit Court of Appeals, he said. “It’s intended as a ‘compromise’ because there really isn’t an ideological split on most issues based on political party affiliation, there are different views among the different commissioners,” some of whom like or dislike different parts of the proposed rules, Honig said. “The goal really is to come up with something that everyone will like enough to be able to ... generate a unanimous vote.” That’s important, because regardless of the outcome of the proceeding, it will be appealed, Honig predicted. Past commissioners’ dissents to rules have played a role in appellate court reversals of FCC orders over the years, he said.

NABOB’s compromise would allow radio/paper cross ownership among broadcasters owning no more than two radio stations in all but the smallest markets, where the limit would be one, Executive Director Jim Winston reported telling all FCC members and/or their aides (http://xrl.us/bocb4m). It’s not a “real-world view” that radio-only companies couldn’t compete with radio/paper firms for auto ads, Newspaper Association of America executives and board members told an aide to Clyburn, a filing said (http://xrl.us/bocb4s). NABOB had that fear (CD Jan 17 p18). Journal Communications Chairman Steven Smith, Publisher James Moroney of Belo Corp.’s Dallas Morning News and others at NAA said “the limited liberalization of the cross-ownership rule proposed in this docket would not have an impact on minority ownership."

Free Press sees things differently. The FCC “cannot remove or relax cross-ownership provisions on the basis of unsupported assertions from the few commenters who suggest that deals would be unlikely to follow such rule changes,” President Craig Aaron and others told aides to Clyburn, a filing recounted (http://xrl.us/bocb42). “If the Commission were to relax its rules before conducting and completing the proper analysis, it would violate the Third Circuit’s directives.” Nexstar and WNCF Montgomery, Ala. (http://xrl.us/bocb5p), opposed attribution of TV JSAs, while Bayou City Broadcasting CEO DuJuan McCoy, the only black person to own a Fox affiliate and possibly the only to own a station affiliated with ABC, CBS or NBC before selling his stations Dec. 31, asked the agency (http://xrl.us/bocb5t) to “move forward” with the deregulation plans. Attributing TV JSAs would violate the Administrative Procedure Act as the rulemaking that led to the draft order didn’t propose such attribution, and several weeks before comments on the notice were due, the FCC said it was considering killing a docket on such attribution, Nexstar said (http://xrl.us/bocb5x).