2018 Quad Review Could Tackle Subcaps, Tri-Opolies, Broadcast Markets
The FCC will tackle the 2018 quadrennial review of ownership regulations this year, and the item is expected to take up matters left over from the recent order on reconsideration (see 1711160054), industry and FCC officials told us. The remaining top-four network rule, AM/FM subcaps, disclosure of shared service agreements, and rules barring tri-opolies and the dual network rule could all be on the table, said industry and FCC officials. The quad review also could be used to respond to any issues over judicial review of the recon order, published in the Federal Register Monday (see 1801050049. “They may want to wait and see what happens in the courts,” said Georgetown University Institute for Public Relations Senior Counselor Andrew Schwartzman, who's involved in the ongoing appeal of the 2014 and 2010 quadrennial reviews in the 3rd U.S. Circuit Court of Appeals. With so many ownership rules already rolled back under the recon order, the 2018 quadrennial review could be “anticlimactic,” said Pillsbury Winthrop broadcast attorney Scott Flick.
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Though some broadcast attorneys said they expected the FCC to take up the review in the first quarter, an FCC official said the item is expected to be put out for public comment this summer. That likely would mean a rulemaking in early 2019, and would leave time for possible court proceedings against the recon order to develop, the FCC and industry officials said. Many industry officials said the timing of the item is likely still being determined.
It’s seen by broadcast industry officials as a near-certainty that the 2018 quadrennial review will take up the matter of AM/FM subcaps, and FCC officials confirmed that’s the plan. The subcaps limit how many AM and FM stations a single entity can own. Commissioner Mike O’Rielly said in comments on the media ownership recon order that subcaps should be eliminated, but companies also asked for the caps to be simply increased to allow ownership of more stations, said Womble Bond radio attorney John Garziglia. An increase or removal of the caps likely would lead to a flurry of deal-making, and could be a blow to AM radio, industry officials said.
The 2018 review is also expected to address the agency’s top-four network rule, which was altered by the recent recon order to allow exceptions on a case-by-case basis. A senior FCC official said the criteria for receiving those exceptions could be clarified in the quadrennial review. Some industry officials believe the FCC could seek to do away with the top-four rule entirely in the 2018 review. Without some form of clarification, it’s unlikely any broadcaster will soon seek to be granted permission to own two top-four network stations, Flick said. Deals of that size don’t move forward without some certainty they'll be approved, he said. Ruling on such matters case by case without a clear standard is “a big obstacle” to such deals, he said.
With older ownership rules like the eight-voices test out of the way, broadcasters and the FCC could seek to aim higher in their deregulation, said industry officials. Rules barring tri-opolies, or a single entity from owning affiliates of two major broadcast networks could be targets in the 2018 review, industry officials said. The recon order stuck closely to the petitions for reconsideration that brought it about, and retained a rule from the 2014 quadrennial that required disclosure of shared service agreements. That rule could now be a target for the 2018 order, said an FCC official.
This year's review could also examine the definition of what a broadcaster’s market is, to consider the competition broadcasters face from other media providers, an FCC official said. O’Rielly described a similar idea in an October blog post. “Once we accurately acknowledge the market we are regulating, we can have an honest debate about what rules ultimately make sense,” O’Rielly said then.