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Proposed Rule

2006 Quadrennial Regulatory Review; 2002 Biennial Regulatory Review-Review of the Commission's Broadcast Ownership Rules

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Information about this document as published in the Federal Register.

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This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

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AGENCY:

Federal Communications Commission.

ACTION:

Proposed rule.

SUMMARY:

In this document the Commission seeks comment on how to address issues raised by the U.S. Court of Appeals for the Third Circuit with respect to rules, as adopted or revised in the 2002 Biennial Review of the Commission's broadcast ownership rules. Concurrently, the next quadrennial review of the broadcast ownership rules is initiated as required by section 202(h) of the Telecommunications Act of 1996.

DATES:

The Commission must receive comments on or before September 22, 2006, and reply comments on or before November 21, 2006.

ADDRESSES:

You may submit comments, identified by MB Docket No 06-121 and/or MB Docket No 06-277, by any of the following methods:

  • Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
  • Federal Communications Commission's Web Site: http://Start Printed Page 45512www.fcc.gov/​cgb/​ecfs/​. Follow the instructions for submitting comments.
  • E-mail: ecfs@fcc.gov. Include the following words in the body of the message, “get form.” A sample form and directions will be sent in response.
  • Mail: Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service first-class, Express, and Priority mail should be addressed to 445 12th Street, SW., Washington DC 20554.
  • People with Disabilities: Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART, etc.) by e-mail: FCC504@fcc.gov or phone: 202-418-0530 or TTY: 202-418-0432.

For detailed instructions for submitting comments and additional information on the rulemaking process, see the SUPPLEMENTARY INFORMATION section of this document.

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FOR FURTHER INFORMATION CONTACT:

Mania Baghdadi, Industry Analysis Division, Media Bureau, Federal Communications Commission, (202) 418-2330. Press inquiries should be directed to Rebecca Fisher, (202) 418-2359, TTY: (202) 418-7365 or (888) 835-5322.

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SUPPLEMENTARY INFORMATION:

Pursuant to Sec. 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. All filings related to this Further Notice of Proposed Rule Making should refer to MB Docket No. 06-121 and/or MB Docket No. 02-277. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998). The public may view a full copy of this document at http://hraunfoss.fcc.gov/​edocs_​public/​attachmatch/​FCC-06-93A1.doc.

Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://www.fcc.gov/​cgb/​ecfs/​ or the Federal eRulemaking Portal: http://www.regulations.gov. Filers should follow the instructions provided on the website for submitting comments.

For ECFS filers, if multiple docket or rulemaking numbers appear in the caption of this proceeding, filers must transmit one electronic copy of the comments for each docket or rulemaking number referenced in the caption. In completing the transmittal screen, filers should include their full name, U.S. Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e-mail. To get filing instructions, filers should send an e-mail to ecfs@fcc.gov, and include the following words in the body of the message, “get form.” A sample form and directions will be sent in response.

Paper Filers: Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail (although we continue to experience delays in receiving U.S. Postal Service mail). All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

The Commission's contractor will receive hand-delivered or messenger-delivered paper filings for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building.

Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

U.S. Postal Service first-class, Express, and Priority mail should be addressed to 445 12th Street, SW., Washington DC 20554.

People with Disabilities: To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

Initial Paperwork Reduction Act Analysis. This document does not contain proposed information collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any proposed new or modified “information collection burden for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4). However, depending on the rules adopted as a result of this Further Notice of Proposed Rule Making, the Report and Order (R&O) ultimately adopted in this proceeding may contain information collections. The Commission will provide a period for public comment on any PRA burdens contained in the R&O and will submit such burdens to the Office of Management and Budget for approval when the R&O is adopted and released.

I. Introduction

1. With this Further Notice of Proposed Rule Making (“FNPRM”), MB Docket No. 06-121, MB Docket No. 02-277, FCC 06-93, released July 24, 2006, the Commission seeks comment on how to address issues raised by the U.S. Court of Appeals for the Third Circuit with respect to the rules as adopted or revised in the 2002 Biennial Review of the Commission's broadcast ownership rules. Section 202(h) of the Telecommunications Act of 1996 (“1996 Act”) requires the Commission to periodically review its media ownership rules to determine “whether any of such rules are necessary in the public interest as the result of competition” and to “repeal or modify any regulation it determines to be no longer in the public interest.” On June 2, 2003, the Commission adopted a Report and Order in its third biennial review of its broadcast ownership rules (“2002 Biennial Review Order”) 68 FR 46286 (August 5, 2003). The 2002 Biennial Review Order addressed all six of the Commission's broadcast ownership rules: the national television multiple ownership rule; the local television multiple ownership rule; the radio-television cross-ownership rule; the dual network rule; the local radio ownership rule; and the newspaper/broadcast cross-ownership rule. In the 2002 Biennial Review Order, the Commission concluded that neither the newspaper/broadcast cross-ownership rule nor the radio/television cross-ownership rule remained necessary in the public interest. Accordingly, it replaced those rules with new cross-ownership regulations called the Cross Media Limits (“CML”). The Commission also revised its market definition and the way it counts stations for purposes of the local radio ownership rule, revised the local television multiple ownership rule, modified the national television ownership cap, and retained the dual network rule. Several parties sought appellate review of various aspects of the 2002 Biennial Review Order; others Start Printed Page 45513filed petitions for reconsideration. The court challenges were consolidated into a single proceeding, and on June 23, 2004, the U.S. Court of Appeals for the Third Circuit issued its decision on review of the 2002 Biennial Review Order, affirming some Commission decisions and remanding others for further Commission justification or modification. (the “Prometheus decision”).

2. In this FNPRM, we discuss each rule that was remanded individually and invite comment on how we should address the issues remanded by the U.S. Court of Appeals for the Third Circuit. We encourage commenters to buttress their arguments with current empirical evidence and sound economic theory. Concurrently, this FNPRM initiates the next review of the media ownership rules as required by section 202(h).

II. Discussion

3. In the 2002 Biennial Review Order, the Commission determined that its longstanding goals of competition, diversity, and localism would continue to guide its actions in regulating media ownership. These policy objectives also will guide our actions on remand. In addition to the other requests for comment discussed below, we ask that commenters address whether our goals would be better addressed by employing an alternative regulatory scheme or set of rules.

4. The Prometheus court noted that the Commission deferred consideration of certain proposals for advancing ownership by minorities. We therefore seek comment on the proposals to foster minority ownership advanced by Minority Media and Telecommunications Council in its filings in the 2002 biennial review proceeding, including those that were listed in the 2002 Biennial Review Order and referenced by the court. Are any of these proposals effective and practical ways to increase minority ownership? If so, how could they best be implemented? Do we have the statutory authority to adopt them? Are there any constitutional impediments to adoption? Are there any other alternatives that we should consider that would be more effective and/or would avoid any statutory or constitutional impediments?

5. More generally, we urge commenters to explain the effects, if any, that their ownership rule proposals will have on ownership of broadcast outlets by minorities, women and small businesses. We also urge commenters to discuss the potential effects, if any, of the broadcast ownership rules currently in effect, and any changes proposed in this proceeding on advertising markets, the ability of independent stations to compete, the availability of family-friendly and children's programming, the amount of indecent and/or violent content broadcast over-the-air, and the availability of independent programming.

6. The Commission has a long-standing policy to foster broadcast “localism,” which it has defined as the airing of “programming that is responsive to the needs and interests of their communities of license.” In its 2002 Biennial Review, the Commission invited comment on the extent to which its broadcast ownership rules were necessary to foster localism. Subsequently, the Commission established its Localism Task Force (“Task Force”) to study the issue of localism and advise the Commission on whether any new rules or policies were required to promote it. In addition, the Commission issued a Notice of Inquiry, 19 FCC Rcd 12425 (not published in the Federal Registrar) seeking comment from the public on how broadcasters are serving the interests and needs of their communities, whether the Commission needs to adopt new policies, practices, or rules designed to promote localism in broadcast television and radio; and what those policies, practices, or rules should be. The record compiled in the localism docket, MB Docket No. 04-233, is extensive. The Media Bureau will compile a summary of the comments in the localism proceeding and submit it into this docket. The Commission will consider the evidence received in MB Docket No. 04-233 as it moves forward with this rulemaking.

7. Finally, we note that the media marketplace continues to evolve. We seek comment on the impact of new technologies and providers such as digital video recorders, video-on-demand, and the availability of television programming and music on the Internet on media consumption and ownership issues.

A. Local TV Ownership Rule

8. The Commission's local TV ownership rule, as currently in effect, provides that an entity may own two television stations in the same designated market area (“DMA”) if: (1) The Grade B contours of the stations do not overlap; or (2) at least one of the stations in the combination is not ranked among the top four stations in terms of audience share, and at least eight independently owned and operating commercial or non-commercial full-power broadcast television stations would remain in the DMA after the combination.

9. In the 2002 Biennial Review, the Commission revised the local TV ownership rule to permit an entity to own up to two television stations in markets with 17 or fewer television stations, and up to three television stations in markets with 18 or more television stations. The Commission retained the prohibition on combinations involving more than one station ranked among the top four in the market, thus prohibiting combinations in markets with four or fewer television stations. The Commission also eliminated consideration of overlapping Grade B contours, and decided to look instead only at whether a station is assigned by Nielsen to a DMA. All full-power commercial and non-commercial television stations within the DMA would be counted for purposes of applying the rule. The 2002 Biennial Review Order also modified the Commission's criteria for waiver of the local TV ownership rule.

10. On review, the Prometheus court, remanded the numerical limits of the new rule for further justification. The court upheld the Commission's decision to retain the top four-ranked station restriction. The court also remanded for further consideration the Commission's elimination of the requirement to demonstrate that no out-of-market buyer is reasonably available when seeking a failed, failing, or unbuilt television station waiver.

11. We invite comment on all of the issues remanded by the Prometheus court regarding the local TV ownership rule. Should the limits on the number of stations that can be commonly owned adopted in the 2002 Biennial Review Order be revised, or is there additional evidence or analysis upon which the Commission can rely to further justify the limits it adopted? How should we address the court's concern that the revised numerical limits allow concentration to exceed the 1800 HHI benchmark relied upon by the Commission in setting the limits? Is there additional evidence to support the Commission's decision to treat capacity as an important factor in measuring the competitive structure of television markets? Is there evidence to support fluidity of television station market shares? Should the limits vary depending on the size of the market? How would any changes impact the need for the top four-ranked restriction?

12. We also invite comment on the court's remand of the elimination of the requirement that waiver applicants demonstrate that there is no reasonably available out-of-market buyer. Should we reinstate this requirement? Is it unduly burdensome? Are there less Start Printed Page 45514burdensome means of ensuring that unnecessary concentration of ownership does not occur? Has the requirement had an effect on minority and/or female ownership of broadcast stations?

B. Local Radio Ownership Rule

13. In the 2002 Biennial Review Order, the Commission retained the local radio numerical limits and the AM/FM service caps that Congress adopted in the 1996 Act. The Commission modified the definition of a local radio market by replacing the contour-overlap approach with an Arbitron Metro market definition, where Arbitron markets exist. The Commission initiated a rulemaking proceeding, (MB Docket No. 03-130), to seek comment on how to define local radio markets in geographic areas that are not defined by Arbitron. In addition, the Commission decided to include non-commercial stations when determining the number of radio stations in a market for purposes of the ownership rules.

14. The Prometheus court concluded that the Commission's decision “to replace contour-overlap methodology with Arbitron radio metro markets was ‘in the public interest’ within the meaning of 202(h)” and that the decision was “a rational exercise of rulemaking authority.” The court also upheld the Commission's attribution of JSAs. The court further held that the Commission had justified its decisions to count noncommercial stations in defining the size of a market and to restrict the transfer of grandfathered combinations except to certain eligible entities. The court remanded the Commission's decision to retain the existing specific local radio ownership limits. The court held that the limits were unsupported by the Commission's rationale that they ensure five equal-sized competitors in most markets. The court further faulted the Commission for not explaining why it could not take actual market share into account when deriving the numerical limits. Finally, the court held that the Commission did not support its decision to retain the AM subcaps.

15. We invite comment on the issues remanded by the Prometheus court with respect to the local radio ownership limits. In order to address the court's concerns, should the numerical limits be revised, or is there additional evidence that could be used to further justify the limits? If the Commission should revise the limits, what revisions are appropriate? Should we create additional tiers? How should the Commission address the court's concern that the limits adopted do not account for actual market share? Should the rule still seek to ensure a specific number of competitors in a market, and, if so, what is the appropriate benchmark for that number? Finally, should we retain the AM/FM subcaps? Lastly, we seek comment on whether the local radio ownership rule currently in effect is necessary in the public interest as a result of competition.

C. Cross-Media Limits

16. In the 2002 Biennial Review Order, the Commission concluded that neither the newspaper/broadcast cross-ownership rule nor the radio/television cross-ownership rule was necessary in the public interest as the result of competition. The Commission replaced these rules with a single set of cross-media limits. To determine the availability of media outlets in markets of various sizes, the Commission developed a Diversity Index (the “DI”), which it used to analyze and measure the availability of outlets that contribute to viewpoint diversity in local media markets.

17. The Prometheus court affirmed the Commission's decision to eliminate the newspaper/broadcast cross-ownership rule. The court concluded, however, that the specific limits selected by the Commission were not supported by reasoned analysis, and remanded the CML to the Commission for further justification or modification. The court also remanded for further consideration the Commission's decision to assign all outlets within the same media type equal market shares in constructing the DI.

18. We invite comment on all of the issues remanded by the Prometheus court regarding cross-ownership. Many of these issues relate to the DI. In light of the court's extensive and detailed criticism of the DI, we tentatively conclude that the DI is an inaccurate tool for measuring diversity. Moreover, we recognize that some aspects of diversity may be difficult to quantify. To the extent that we will not use the DI to justify changes to the existing cross-ownership rules, we seek comment on how we should approach cross-ownership limits. Should limits vary depending upon the characteristics of local markets? If so, what characteristics should be considered, and how should they be factored into any limits? We seek comment on the newspaper/broadcast cross-ownership rule and the radio/television cross-ownership rule. Are there aspects of television and radio broadcast operations that make cross-ownership with a newspaper different for each of these media? If so, should limits on newspaper/radio combinations be different from limits on newspaper/television combinations? Lastly, are the newspaper/broadcast cross-ownership rule and the radio/television cross-ownership rule necessary in the public interest as a result of competition?

D. Dual Network Rule

19. The Commission's dual network rule provides “A television broadcast station may affiliate with a person or entity that maintains two or more networks of television broadcast stations unless such dual or multiple networks are composed of two or more persons or entities that, on February 8, 1996, were ‘networks’ as defined in Section 73.3613(a)(1) of the Commission's regulations” (that is, ABC, CBS, Fox, and NBC). In the 2002 Biennial Review Order, the Commission determined that the dual network rule was necessary in the public interest to promote competition and localism and retained the rule. The Petitioners in Prometheus did not appeal the Commission's retention of the rule. We seek comment on whether the dual network rule remains necessary in the public interest as a result of competition.

E. UHF Discount

20. In Prometheus, the Third Circuit held that challenges to the Commission's national television ownership rule were moot following Congressional action that set the national cap at 39 percent. In so doing, the court also addressed the Commission's UHF discount rule, which we have used in calculating a UHF station's audience reach under the national TV cap. The court stated that the UHF discount rule “is insulated from this and future periodic review requirements” and yet also noted that the “Commission is now considering its authority going forward to modify or eliminate the discount and recently took public comment on the issue.” The court then concluded that that Commission may decide the scope of our authority to modify or eliminate the UHF discount outside of the mandate of section 202(h) of the 1996 Act.

21. We seek comment on whether the court's holding on the UHF discount rule was ambiguous. We seek comment on whether the Commission should retain, modify, or eliminate the UHF discount. Commenters who urge us to modify or eliminate the UHF discount rule should discuss the basis for our authority to take such action.

III. Petitions for Reconsideration

22. A number of parties filed petitions for reconsideration of the 2002 Biennial Review Order. These petitions, opposing pleadings, and replies are Start Printed Page 45515listed in Appendix A. The petitions have already been the subject of public notice and comment during their own pleading cycle. Parties who wish to refresh the record concerning the petitions may do so in their comments filed in response to this FNPRM.

IV. Procedural Matters

A. Initial Regulatory Flexibility Analysis. As required by the Regulatory Flexibility Act, 5 U.S.C. 603, the Commission prepared an Initial Regulatory Flexibility Analysis (IRFA) in the initial Notice of Proposed Rulemaking, 67 FR 65751 (October 28, 2002), in this proceeding. For the FNPRM, a Supplemental IRFA has been prepared and set forth in Appendix B. Written public comments are requested on the Supplemental IRFA. These comments must be filed in accordance with the same filing deadlines for comments on the FNPRM and should have a separate and distinct heading designating them as responses to the Supplemental IRFA.

B. Ex Parte Rules. This is a permit-but-disclose notice and comment rulemaking proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided that they are disclosed as provided in the Commission's Rules. See generally 47 CFR 1.1202, 1.1203, 1.1206(a).

V. Ordering Clauses

33. Accordingly, it is ordered, that pursuant to authority contained in sections 1, 2(a), 4(i), 303, 307, 309, and 310 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i), 303, 307, 309, and 310, and section 202(h) of the Telecommunications Act of 1996, this Further Notice of Proposed Rulemaking is adopted.

34. It is further ordered that, pursuant to the authority contained in sections 1, 2(a), 4(i), 303, 307, 309, and 310 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i), 303, 307, 309, and 310, and section 202(h) of the Telecommunications Act of 1996, notice is hereby given of the proposals described in this Further Notice of Proposed Rulemaking.

35. It is furthered order that MB Docket 03-130 SHALL BE severed from this proceeding.

36. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Further Notice of Proposed Rulemaking, including the Supplemental Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

Start Signature

Federal Communications Commission.

Marlene H. Dortch,

Secretary.

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[FR Doc. E6-12856 Filed 8-8-06; 8:45 am]

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