FCC changes broadcast ownership rules

There's been a lot of controversy about the Federal Communications Commission's recent changes to the broadcast ownership rules, but many people are unaware of exactly what changed.

The following is a summary, provided by the FCC, of the broadcast ownership rules adopted June 2.

Dual network ownership prohibition

Originally adopted in 1946

The FCC retained its ban on mergers among any of the top four national broadcast networks.

Local TV multiple ownership limit

Originally adopted in 1964

The new rule states:

In markets with five or more TV stations, a company may own two stations, but only one of these stations can be among the top four in ratings.

In markets with 18 or more TV stations, a company can own three TV stations, but only one of these stations can be among the top four in ratings.

In deciding how many stations are in the market, both commercial and non-commercial TV stations are counted.

The FCC adopted a waiver process for markets with 11 or fewer TV stations in which two top-four stations seek to merge. The FCC will evaluate on a case-by-case basis whether such stations would better serve their local communities together rather than separately.

National TV ownership limit

Originally adopted in 1941

The FCC incrementally increased the 35 percent limit to a 45 percent limit on national ownership.

A company can own TV stations reaching no more than a 45 percent share of U.S. TV households.

The share of U.S. TV households is calculated by adding the number of TV households in each market where the company owns a station.

Regardless of the station's ratings, it is counted for all of the potential viewers in the market. Therefore, a 45 percent share of U.S. television households is not equal to a 45 percent share of TV stations in the United States.

On March 31, 2003, there were 1,340 commercial TV stations in the United States. Of these 1,340 stations, Viacom owns 39 TV stations (2.9 percent), Fox owns 37 (2.8 percent), NBC owns 29 (2.2 percent) and ABC owns 10 (0.8 percent).

In addition, the FCC decided to maintain the "UHF Discount" when calculating a company's national reach because it currently serves the public interest. The FCC said that more than 40 million Americans still have access only to free, over-the-air television.

Local radio ownership limit

Originally adopted in 1941

The FCC found that the current limits on local radio ownership continue to be necessary in the public interest, but that the previous methodology for defining a radio market did not serve the public interest. Radio caps remain at the following levels:

In markets with 45 or more radio stations, a company may own eight stations, only five of which may be in one class, AM or FM.

In markets with 30-44 radio stations, a company may own seven stations, only four of which may be in one class, AM or FM.

In markets with 15-29 radio stations, a company may own six stations, only four of which may be in one class, AM or FM.

In markets with 14 or fewer radio stations, a company may own five stations, only three of which may be in one class, AM or FM.

Also, the FCC replaced its signal contour method of defining local radio markets with a geographic market approach assigned by Arbitron. The FCC said applying Arbitron's geographic markets method will better reflect the true markets in which radio stations compete.

Both commercial and non-commercial stations are counted in the market under this method.

For non-Arbitron markets, the FCC will conduct a short-term rulemaking to define markets comparable to Arbitron markets. These new markets will be specifically designed to prevent any unreasonable aggregation of station ownership by any one company.

Cross-media limits:

This rule replaces the broadcast-newspaper and the radio-television cross-ownership rules. The new rule states:

In markets with three or fewer TV stations, no cross-ownership is permitted among TV, radio and newspapers. A company may obtain a waiver of that ban if it can show that the television station does not serve the area served by the cross-owned property (i.e. the radio station or the newspaper).

In markets with between four and eight TV stations, combinations are limited to one of the following:

A daily newspaper; one TV station; and up to half of the radio station limit for that market (i.e. if the radio limit in the market is six, the company can only own three); or

A daily newspaper; and up to the radio station limit for that market; (i.e. no TV stations); or

Two TV stations (if permissible under local TV ownership rule); up to the radio station limit for that market (i.e. no daily newspapers).

In markets with nine or more TV stations, the FCC eliminated the newspaper-broadcast cross-ownership ban and the television-radio cross-ownership ban.

Radio and TV transferability

The FCC's new TV and radio ownership rules may result in a number of situations where current ownership arrangements exceed ownership limits. The FCC grandfathered owners of those clusters, but generally prohibited the sale of such above-cap clusters. The FCC made a limited exception to permit sales of grandfathered combinations to small businesses as defined in the order.