National Television Multiple Ownership Rule, 21124-21127 [2017-09001]
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Federal Register / Vol. 82, No. 86 / Friday, May 5, 2017 / Rules and Regulations
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Division, Media Bureau,
Brendan.Holland@fcc.gov (202) 418–
2757.
[FR Doc. 2017–09028 Filed 5–4–17; 8:45 am]
BILLING CODE 6560–50–P
47 CFR Part 73
[MB Docket No. 13–236; FCC 17–40]
National Television Multiple Ownership
Rule
Federal Communications
Commission.
ACTION: Final rule.
AGENCY:
An Order on Reconsideration
reinstates the UHF discount, which
allows commercial broadcast television
station owners to discount the audience
reach of their UHF stations when
calculating compliance with the
national television ownership rule. With
the reinstatement of the discount, the
Commission will commence a
proceeding later this year to consider
whether the national television
audience reach cap, including the UHF
discount, remains in the public interest.
The Order on Reconsideration finds that
the UHF discount is inextricably linked
to the national cap, and when the
Commission voted previously to
eliminate the discount, it failed to
consider whether this de facto
tightening of the national cap was in the
public interest and justified by current
marketplace conditions. The Order on
Reconsideration grants in part the
Petition for Reconsideration (Petition)
filed by ION Media Networks and
Trinity Christian Center of Santa Ana,
Inc. (Petitioners), and dismisses as moot
requests to reconsider the
grandfathering provisions applicable to
broadcast station combinations affected
by elimination of the discount and the
decision to forego a VHF discount.
DATES: Effective June 5, 2017.
FOR FURTHER INFORMATION CONTACT:
Brendan Holland, Industry Analysis
jstallworth on DSK7TPTVN1PROD with RULES
SUMMARY:
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This is a
summary of the Commission’s Order on
Reconsideration in MB Docket No. 13–
236, FCC 17–40, adopted April 20, 2017,
and released April 21, 2017. The full
text of this document is available for
public inspection during regular
business hours in the FCC Reference
Center, 445 12th Street SW., Room CY–
A257, Washington, DC 20554, or online
at https://www.fcc.gov/ecfs/filing/
0426267477284. To request this
document in accessible formats for
people with disabilities (e.g. braille,
large print, electronic files, audio
format, etc.) or to request reasonable
accommodations (e.g. accessible format
documents, sign language interpreters,
CART, etc.), send an email to fcc504@
fcc.gov or call the FCC’s Consumer and
Governmental Affairs Bureau at (202)
418–0530 (voice), (202) 418–0432
(TTY).
SUPPLEMENTARY INFORMATION:
FEDERAL COMMUNICATIONS
COMMISSION
Synopsis
1. Background. In 1985, when the
Commission revised the national
television multiple ownership rule to
prohibit a single entity from owning
television stations that collectively
exceeded 25 percent of the total
nationwide audience, it also adopted a
50 percent UHF discount to reflect the
coverage limitations faced by analog
UHF stations. The discount was
intended to mitigate the competitive
disadvantage that UHF stations suffered
in comparison to VHF stations, as UHF
stations were technically inferior,
producing weaker over-the-air signals,
reaching smaller audiences, and costing
more to build and operate. This
technical inferiority, inherent in analog
television broadcasting, was significant
in 1985 because the vast majority of
viewers received programming from
broadcast television stations via overthe-air signals.
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2. Eleven years later, in the
Telecommunications Act of 1996,
Congress directed the Commission to
increase the national audience reach cap
from 25 percent to 35 percent.
Subsequently, the Commission
reaffirmed the 35 percent national cap
in its 1998 Biennial Review Order. The
United States Court of Appeals for the
District of Columbia later remanded the
1998 Biennial Review Order after
finding that the decision to retain the
national cap was arbitrary and
capricious. In addition, the court found
that the Commission failed to
demonstrate that the national cap
advanced competition, diversity, or
localism. In the 2002 Biennial Review
Order, the Commission determined the
cap should be raised to 45 percent. In
both of these Orders, the Commission
also considered and retained the UHF
discount.
3. Following adoption of the 2002
Biennial Review Order and while an
appeal of that order was pending,
Congress revised the cap by including a
provision in the 2004 Consolidated
Appropriations Act (CAA) directing the
Commission to modify its rules to set
the cap at 39 percent of national
television households. The CAA further
amended Section 202(h) of the 1996 Act
to require a quadrennial review of the
Commission’s broadcast ownership
rules, rather than the previously
mandated biennial review. In doing so,
Congress excluded consideration of any
rules relating to the 39 percent national
audience reach limitation from the
quadrennial review requirement.
4. Prior to the enactment of the CAA,
several parties had appealed the
Commission’s 2002 Biennial Review
Order to the U.S. Court of Appeals for
the Third Circuit (Third Circuit). In June
2004, the Third Circuit found that the
challenges to the Commission’s actions
with respect to the national audience
reach cap and the UHF discount were
moot as a result of Congress’s action.
Specifically, the court held that the
CAA rendered moot the challenges to
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the Commission’s decision to retain the
UHF discount. The court found that the
CAA insulated the national cap,
including the UHF discount, from the
Commission’s quadrennial review of its
media ownership rules. In February
2008, the Commission similarly
concluded in the 2006 Quadrennial
Review Order that, the UHF discount is
insulated from review under Section
202(h) as a result of the CAA, and thus
beyond the scope of the quadrennial
review.
5. On June 13, 2009, the Commission
completed the transition from analog to
digital television broadcasting for fullpower stations. While UHF channels
were inferior for purposes of
broadcasting in analog, the DTV
transition affirmed the Commission’s
longstanding belief that digital
broadcasting would eliminate the
technical disparity between UHF and
VHF signals. In fact, experience has
confirmed that UHF channels are equal,
if not superior, to VHF channels for the
transmission of digital television
signals. Therefore, in 2013, the
Commission adopted a Notice of
Proposed Rulemaking (Notice) to
consider eliminating the UHF discount.
Then-Commissioner Pai dissented from
the Notice, contending that any such
rulemaking should also evaluate
whether the national cap itself should
be modified. The Notice, however, did
not seek comment on the national cap
broadly.
6. In a Report and Order adopted in
August 2016, the Commission
eliminated the UHF discount, finding
that UHF stations are no longer
technically inferior to VHF stations
following the DTV transition and that
the competitive disparity between UHF
and VHF stations had disappeared.
Then-Commissioner Pai and
Commissioner O’Rielly dissented from
the decision, with then-Commissioner
Pai noting, It is undeniable that
eliminating the UHF discount has the
effect of expanding the scope of the
national cap rule. Companies . . . that
are currently in compliance with the
national cap ownership rule will be
above the cap once the UHF discount is
terminated. Yet, the Commission has
refused to review whether the current
national cap ownership rule is sound or
whether there is a need to make it more
stringent, which is precisely what [the
Report and Order] does. On November
23, 2016, ION and Trinity filed their
Petition seeking reconsideration of the
decision. Free Press, the National
Hispanic Media Coalition, Common
Cause, Media Alliance and the United
Church of Christ Office of
Communication, Inc. (Public Interest
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Opponents) and the American Cable
Association (ACA) filed Oppositions to
the Petition; the National Association of
Broadcasters (NAB), Sinclair Broadcast
Group, Inc. (Sinclair), Nexstar
Broadcasting, Inc. (Nexstar), Univision
Communications Inc. (Univision), and
various TV licensees filed comments or
replies supporting the Petition.
7. The UHF Discount and National
Cap Should Have Been Considered in
Tandem. The Order on Reconsideration
finds that the Petitioners and their
supporters provide valid reasons to
reconsider the decision to eliminate the
UHF discount. The UHF discount and
the national audience reach cap are
closely linked, and the Commission
failed to provide a reasoned basis to
eliminate the discount in isolation
without also fully considering whether
the cap should be modified.
Accordingly, the Order on
Reconsideration reinstates the UHF
discount, and the Commission will open
a proceeding later this year to consider
whether the national audience reach
cap, including the UHF discount,
should be modified.
8. Petitioners and their supporters
assert that the Commission should not
have eliminated the UHF discount
without adducing further evidence that
the action would be in the public
interest. The Petitioners argue that in
eliminating the discount the
Commission actually harmed the public
interest by increasing the competitive
disparity between broadcasters and
other video programming distributors.
CBS and Sinclair also point to a lack of
evidence that the public interest would
be harmed by retaining the UHF
discount. NAB argues that, by
eliminating the UHF discount in
isolation, the Commission was not able
to determine whether the change
promotes the public interest purposes of
the cap itself.
9. The history of the UHF discount
and national audience reach cap
demonstrates that, with the exception of
the Report and Order, the Commission
has always considered the UHF
discount together with the national cap.
Referring to this history, Nexstar argues
that, because the cap establishes a limit
and the discount defines how to
calculate whether the limit is reached,
the cap and discount are inextricably
intertwined. Petitioners assert that the
national cap and discount go hand-inhand; the FCC has no authority to
change one without at least reviewing
the impact that the change will have on
the other. Sinclair agrees, and urges the
Commission, in any review of the cap,
to eliminate it entirely.
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10. While the Commission
determined in the Report and Order that
it should eliminate the discount without
simultaneously reassessing the cap, on
reconsideration, the Commission agrees
with the arguments presented by
Petitioners and their supporters that the
Commission’s prior decision was in
error. The Commission finds that any
adjustment to the UHF discount affects
compliance with the national cap, and
the elimination of the discount has the
effect of substantially tightening the cap
in some cases. In the Report and Order,
however, the Commission never
explained why tightening the cap was in
the public interest or justified by current
marketplace conditions. It presented no
examples of how the current cap,
including the UHF discount, was
harming competition, diversity, or
localism. Eliminating the UHF discount
on a piecemeal basis, without
considering the national cap as a whole,
was arbitrary and capricious, and
unwise from a public policy
perspective.
11. Contrary to ACA’s claims that
consideration of the discount without
consideration of the cap was
appropriate, the Commission erred by
eliminating the discount and thus
substantially tightening the cap without
considering whether the cap should be
raised to mitigate the regulatory impact
of eliminating the UHF discount. While
it is true that the UHF discount no
longer has a sound technical basis
following the DTV transition, the
Commission failed to provide a
reasoned explanation for eliminating the
discount without conducting a broader
review of the cap, which it deferred
indefinitely. Reliance on the selfimposed narrow scope of the Notice was
not a sound basis for the Commission to
conclude that it could not consider the
broader public interest issues posed by
retaining the national cap while
eliminating the UHF discount. Nothing
prevented the Commission from issuing
a broader Notice at the outset or
broadening the scope of the proceeding
by issuing a further notice to consider
whether the public interest would be
served by retaining the cap while
eliminating the UHF discount.
12. This error is problematic because
the Commission has acknowledged,
both in the record of this proceeding
and in the most recent quadrennial
media ownership review, the greatly
increased options for consumers in the
selection and viewing of video
programming since Congress directed
the Commission to modify the cap in
2004. The Report and Order, however,
failed to adequately consider the impact
of those changes on the appropriateness
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of eliminating the UHF discount while
not adjusting the national cap. The
Commission should have considered
these changes and assessed the current
need for a 39 percent national cap
before eliminating the UHF discount
and tightening the cap for some station
groups, particularly in view of the
industry’s reliance on the UHF discount
to develop long-term business strategies.
Although the Commission considered
the effect of the DTV transition, it failed
to consider current marketplace
conditions or whether tightening the
cap was in the public interest. Thus, it
is necessary to rectify the Commission’s
error by reinstating the discount so that
it can be considered as part of a broader
reassessment of the national audience
reach rule, which will begin later this
year.
13. Grounds for Reconsideration. The
record in response to the Petition
demonstrates disagreement on the
factors that can support granting a
petition for reconsideration. The
Opponents claim that the Petition must
be denied because it fails to present new
facts or arguments not already
considered and answered by the
Commission in the underlying Report
and Order. On the other hand, Nexstar
claims that Section 1.429 of our rules,
which governs petitions for
reconsideration, should not be
interpreted to preclude a petitioner for
reconsideration from raising any
argument that was mentioned in the
underlying Commission order or a
dissenting statement. Neither the
Communications Act nor Commission
rules preclude the Commission from
granting petitions for reconsideration
that fail to rely on new arguments.
Commission precedent establishes that
reconsideration is generally appropriate
where the petitioner shows either a
material error or omission in the
original order or raises additional facts
not known or not existing until after the
petitioner’s last opportunity to respond.
14. The Petition, while reiterating
some arguments made in response to the
Notice, nonetheless provides valid
grounds for the Commission to
reconsider its previous action. The
Commission failed to fully consider
important arguments and lacked a
reasoned basis for concluding that it
could eliminate the discount without a
broader review of the national cap.
These are sufficient grounds under
Section 1.429 for the Commission to
reconsider its previous action even
absent new facts or arguments.
15. Procedural Matters. As required
by the Regulatory Flexibility Act of
1980, as amended (RFA), the
Commission has prepared a
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Supplemental Final Regulatory
Flexibility Analysis (SFRFA) relating to
this Order on Reconsideration.
16. This Order on Reconsideration
does not contain proposed information
collection(s) subject to the Paperwork
Reduction Act of 1995 (PRA). In
addition, therefore, it does not contain
any 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.
17. Supplementary Regulatory
Flexibility Analysis. In compliance with
the Regulatory Flexibility Act (RFA),
this Supplemental Final Regulatory
Flexibility Analysis (SFRFA)
supplements the Final Regulatory
Flexibility Analysis (FRFA) included in
the Report and Order to the extent that
changes adopted on reconsideration
require changes in the conclusions
reached in the FRFA. As required by the
RFA, the FRFA was preceded by an
Initial Regulatory Flexibility Analysis
(IRFA) incorporated in the Notice which
sought public comment on the
proposals in the Notice.
18. This Order on Reconsideration
reinstates the UHF discount in the
Commission’s national television
multiple ownership rule. That rule
currently prohibits a single entity from
owning television stations that, in the
aggregate, reach more than 39 percent of
the total television households in the
nation. When the cap was established
and stations broadcast using analog
technology, UHF broadcasting was
considered technically inferior to VHF
broadcasting. Therefore, the UHF
discount allowed television stations
broadcasting in the UHF spectrum to
attribute those stations with only 50
percent of the television households in
their Designated Market Areas. The
Report and Order eliminated the UHF
discount, finding that UHF stations are
no longer technically inferior or
competitively disadvantaged relative to
VHF stations following the DTV
transition.
19. The Order on Reconsideration
finds that, because the UHF discount
affects calculation of compliance with
the national audience reach cap, the
discount and cap are linked and the
public interest is better served by
considering the discount and cap in
tandem. Rather than potentially
tightening the national cap in some
cases by eliminating the UHF discount,
the reinstatement of the discount
returns broadcasters to the status quo
prior to August 2016 for purposes of
calculating their compliance with the
cap. The Commission will begin a
rulemaking proceeding later this year to
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consider whether it is in the public
interest to modify the national cap,
including the UHF discount.
20. The RFA directs the Commission
to provide a description of and, where
feasible, an estimate of the number of
small entities that will be affected by the
rules adopted in this Order on
Reconsideration. The RFA generally
defines the term small entity as having
the same meaning as the terms small
business, small organization, and small
governmental jurisdiction. In addition,
the term small business has the same
meaning as the term small business
concern under the Small Business Act.
A small business concern is one which:
(1) Is independently owned and
operated; (2) is not dominant in its field
of operation; and (3) satisfies any
additional criteria established by the
SBA. The FRFA accompanying the
Report and Order described and
estimated the number of small entities
that would be affected by elimination of
the UHF discount. Reinstatement of the
UHF discount in this Order on
Reconsideration applies to the same
entities affected by elimination of the
discount.
21. Television Broadcasting. This
Economic Census category comprises
establishments primarily engaged in
broadcasting images together with
sound. These establishments operate
television broadcast studios and
facilities for the programming and
transmission of programs to the public.
These establishments also produce or
transmit visual programming to
affiliated broadcast television stations,
which in turn broadcast the programs to
the public on a predetermined schedule.
Programming may originate in their own
studio, from an affiliated network, or
from external sources. The SBA has
created the following small business
size standard for such businesses: Those
having $38.5 million or less in annual
receipts. The 2012 Economic Census
reports that 751 firms in this category
operated in that year. Of that number,
656 had annual receipts of $25,000,000
or less, 25 had annual receipts between
$25,000,000 and $49,999,999 and 70
had annual receipts of $50,000,000 or
more. Based on this data we therefore
estimate that the majority of commercial
television broadcasters are small entities
under the applicable SBA size.
22. The Commission has estimated
the number of licensed commercial
television stations to be 1,384. Of this
total, 1,275 stations (or about 92
percent) had revenues of $38.5 million
or less, according to Commission staff
review of the BIA Kelsey Inc. Media
Access Pro Television Database (BIA) on
February 24, 2017, and therefore these
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licensees qualify as small entities under
the SBA definition. In addition, the
Commission has estimated the number
of licensed noncommercial educational
(NCE) television stations to be 394.
Notwithstanding, the Commission does
not compile and otherwise does not
have access to information on the
revenue of NCE stations that would
permit it to determine how many such
stations would qualify as small entities.
23. The Commission notes, however,
that in assessing whether a business
concern qualifies as small under the
above definition, business (control)
affiliations must be included. The
estimate, therefore, likely overstates the
number of small entities that might be
affected by our action because the
revenue figure on which it is based does
not include or aggregate revenues from
affiliated companies. In addition, an
element of the definition of ‘‘small
business’’ is that the entity not be
dominant in its field of operation. The
Commission is unable at this time to
define or quantify the criteria that
would establish whether a specific
television station is dominant in its field
of operation. Accordingly, the estimate
of small businesses to which rules may
apply does not exclude any television
station from the definition of a small
business on this basis and is therefore
possibly over-inclusive.
24. The FRFA accompanying the
Report and Order stated that
elimination of the UHF discount
modified calculation of compliance
with the national audience reach cap
and would affect reporting,
recordkeeping, or other compliance
requirements. Specifically, the
Commission would have potentially
needed to modify FCC forms or related
instructions pursuant to the Report and
Order. This Order on Reconsideration
reinstates the UHF discount, thereby
maintaining the current methodology
for calculating compliance with the cap.
Therefore, no changes to FCC forms or
instructions will be necessary and the
reporting, recordkeeping, and other
compliance requirements will not be
affected. Thus, reinstatement of the UHF
discount will not impose additional
obligations or expenditure of resources
on small businesses.
25. The Order on Reconsideration
determined that the discount and cap
were linked and that considering them
in tandem would better serve the public
interest than simply eliminating the
discount alone. Examining the discount
and cap together in a rulemaking
proceeding to be opened later this year
will positively impact broadcasters,
including small entities, and avoid the
potential harms described by Petitioners
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and their supporters at paragraphs 8 and
10, above.
26. Ordering Clauses. Accordingly, it
is ordered that, pursuant to the authority
contained in Section 405(a) of the
Communications Act of 1934, as
amended, and Section 1.429 of the
Commission’s rules, the Petition for
Reconsideration filed by ION Media
Networks, Inc. and Trinity Christian
Center of Santa Ana, Inc. on November
23, 2016, is granted in part and
otherwise is dismissed as moot, to the
extent provided herein.
27. It is further ordered that pursuant
to the authority contained in Sections 1,
2(a), 4(i), 4(j), 303(r), 307, 309, and 310
of the Communications Act of 1934, as
amended, this Order on Reconsideration
is adopted. The rule modification
discussed in this Order on
Reconsideration shall be effective June
5, 2017.
28. It is further ordered that the
Commission shall send a copy of this
Order on Reconsideration to Congress
and to the Government Accountability
Office pursuant to the Congressional
Review Act.
29. It is further ordered that the
Commission’s Consumer and
Governmental Affairs Bureau, Reference
Information Center, shall send a copy of
this Order on Reconsideration,
including the Supplemental Final
Regulatory Flexibility Analysis, to the
Chief Counsel for Advocacy of the Small
Business Administration.
List of Subjects in 47 CFR Part 73
Television; Radio.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Final Rule
For the reasons discussed in the
preamble, the Federal Communication
Commission amends 47 CFR part 73 as
follows:
PART 73—RADIO BROADCAST
SERVICES
1. The authority citation for part 73
continues to read as follows:
■
Authority: 47 U.S.C. 154, 303, 334, 336
and 339.
2. Amend § 73.3555 by revising
paragraph (e)(1) and (e)(2)(i) to read as
follows:
■
§ 73.3555
Multiple ownership.
*
*
*
*
*
(e) National television multiple
ownership rule. (1) No license for a
commercial television broadcast station
shall be granted, transferred or assigned
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21127
to any party (including all parties under
common control) if the grant, transfer or
assignment of such license would result
in such party or any of its stockholders,
partners, members, officers or directors
having a cognizable interest in
television stations which have an
aggregate national audience reach
exceeding thirty-nine (39) percent.
(2) * * *
(i) National audience reach means the
total number of television households in
the Nielsen Designated Market Areas
(DMAs) in which the relevant stations
are located divided by the total national
television households as measured by
DMA data at the time of a grant,
transfer, or assignment of a license. For
purposes of making this calculation,
UHF television stations shall be
attributed with 50 percent of the
television households in their DMA
market.
*
*
*
*
*
[FR Doc. 2017–09001 Filed 5–4–17; 8:45 am]
BILLING CODE 6712–01–P
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Part 73
[MB Docket No. 12–106; FCC 17–41]
Noncommercial Educational Station
Fundraising for Third-Party Non-Profit
Organizations
Federal Communications
Commission.
ACTION: Final rule.
AGENCY:
In this document, the
Commission revises its rules to allow
noncommercial educational (NCE)
broadcast stations to conduct limited
on-air fundraising activities that
interrupt regular programming for the
benefit of third-party non-profit
organizations. Permitting NCE stations
to conduct third-party fundraising on a
limited basis will serve the public
interest by enabling NCE stations to
support charities and other non-profit
organizations in their fundraising efforts
for worthy causes without undermining
the noncommercial nature of NCE
stations or their primary function of
serving their communities of license
through educational programming.
DATES: Effective July 5, 2017, except for
the amendments to §§ 73.503(e)(1),
73.621(f)(1), and 73.3527(e)(14), which
contain new or modified information
collection requirements that require
approval by the Office of Management
and Budget (OMB) under the Paperwork
Reduction Act (PRA) and will become
effective after the Commission publishes
SUMMARY:
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Agencies
[Federal Register Volume 82, Number 86 (Friday, May 5, 2017)]
[Rules and Regulations]
[Pages 21124-21127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-09001]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MB Docket No. 13-236; FCC 17-40]
National Television Multiple Ownership Rule
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: An Order on Reconsideration reinstates the UHF discount, which
allows commercial broadcast television station owners to discount the
audience reach of their UHF stations when calculating compliance with
the national television ownership rule. With the reinstatement of the
discount, the Commission will commence a proceeding later this year to
consider whether the national television audience reach cap, including
the UHF discount, remains in the public interest. The Order on
Reconsideration finds that the UHF discount is inextricably linked to
the national cap, and when the Commission voted previously to eliminate
the discount, it failed to consider whether this de facto tightening of
the national cap was in the public interest and justified by current
marketplace conditions. The Order on Reconsideration grants in part the
Petition for Reconsideration (Petition) filed by ION Media Networks and
Trinity Christian Center of Santa Ana, Inc. (Petitioners), and
dismisses as moot requests to reconsider the grandfathering provisions
applicable to broadcast station combinations affected by elimination of
the discount and the decision to forego a VHF discount.
DATES: Effective June 5, 2017.
FOR FURTHER INFORMATION CONTACT: Brendan Holland, Industry Analysis
Division, Media Bureau, Brendan.Holland@fcc.gov (202) 418-2757.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order
on Reconsideration in MB Docket No. 13-236, FCC 17-40, adopted April
20, 2017, and released April 21, 2017. The full text of this document
is available for public inspection during regular business hours in the
FCC Reference Center, 445 12th Street SW., Room CY-A257, Washington, DC
20554, or online at https://www.fcc.gov/ecfs/filing/0426267477284. To
request this document in accessible formats for people with
disabilities (e.g. braille, large print, electronic files, audio
format, etc.) or to request reasonable accommodations (e.g. accessible
format documents, sign language interpreters, CART, etc.), send an
email to fcc504@fcc.gov or call the FCC's Consumer and Governmental
Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).
Synopsis
1. Background. In 1985, when the Commission revised the national
television multiple ownership rule to prohibit a single entity from
owning television stations that collectively exceeded 25 percent of the
total nationwide audience, it also adopted a 50 percent UHF discount to
reflect the coverage limitations faced by analog UHF stations. The
discount was intended to mitigate the competitive disadvantage that UHF
stations suffered in comparison to VHF stations, as UHF stations were
technically inferior, producing weaker over-the-air signals, reaching
smaller audiences, and costing more to build and operate. This
technical inferiority, inherent in analog television broadcasting, was
significant in 1985 because the vast majority of viewers received
programming from broadcast television stations via over-the-air
signals.
2. Eleven years later, in the Telecommunications Act of 1996,
Congress directed the Commission to increase the national audience
reach cap from 25 percent to 35 percent. Subsequently, the Commission
reaffirmed the 35 percent national cap in its 1998 Biennial Review
Order. The United States Court of Appeals for the District of Columbia
later remanded the 1998 Biennial Review Order after finding that the
decision to retain the national cap was arbitrary and capricious. In
addition, the court found that the Commission failed to demonstrate
that the national cap advanced competition, diversity, or localism. In
the 2002 Biennial Review Order, the Commission determined the cap
should be raised to 45 percent. In both of these Orders, the Commission
also considered and retained the UHF discount.
3. Following adoption of the 2002 Biennial Review Order and while
an appeal of that order was pending, Congress revised the cap by
including a provision in the 2004 Consolidated Appropriations Act (CAA)
directing the Commission to modify its rules to set the cap at 39
percent of national television households. The CAA further amended
Section 202(h) of the 1996 Act to require a quadrennial review of the
Commission's broadcast ownership rules, rather than the previously
mandated biennial review. In doing so, Congress excluded consideration
of any rules relating to the 39 percent national audience reach
limitation from the quadrennial review requirement.
4. Prior to the enactment of the CAA, several parties had appealed
the Commission's 2002 Biennial Review Order to the U.S. Court of
Appeals for the Third Circuit (Third Circuit). In June 2004, the Third
Circuit found that the challenges to the Commission's actions with
respect to the national audience reach cap and the UHF discount were
moot as a result of Congress's action. Specifically, the court held
that the CAA rendered moot the challenges to
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the Commission's decision to retain the UHF discount. The court found
that the CAA insulated the national cap, including the UHF discount,
from the Commission's quadrennial review of its media ownership rules.
In February 2008, the Commission similarly concluded in the 2006
Quadrennial Review Order that, the UHF discount is insulated from
review under Section 202(h) as a result of the CAA, and thus beyond the
scope of the quadrennial review.
5. On June 13, 2009, the Commission completed the transition from
analog to digital television broadcasting for full-power stations.
While UHF channels were inferior for purposes of broadcasting in
analog, the DTV transition affirmed the Commission's longstanding
belief that digital broadcasting would eliminate the technical
disparity between UHF and VHF signals. In fact, experience has
confirmed that UHF channels are equal, if not superior, to VHF channels
for the transmission of digital television signals. Therefore, in 2013,
the Commission adopted a Notice of Proposed Rulemaking (Notice) to
consider eliminating the UHF discount. Then-Commissioner Pai dissented
from the Notice, contending that any such rulemaking should also
evaluate whether the national cap itself should be modified. The
Notice, however, did not seek comment on the national cap broadly.
6. In a Report and Order adopted in August 2016, the Commission
eliminated the UHF discount, finding that UHF stations are no longer
technically inferior to VHF stations following the DTV transition and
that the competitive disparity between UHF and VHF stations had
disappeared. Then-Commissioner Pai and Commissioner O'Rielly dissented
from the decision, with then-Commissioner Pai noting, It is undeniable
that eliminating the UHF discount has the effect of expanding the scope
of the national cap rule. Companies . . . that are currently in
compliance with the national cap ownership rule will be above the cap
once the UHF discount is terminated. Yet, the Commission has refused to
review whether the current national cap ownership rule is sound or
whether there is a need to make it more stringent, which is precisely
what [the Report and Order] does. On November 23, 2016, ION and Trinity
filed their Petition seeking reconsideration of the decision. Free
Press, the National Hispanic Media Coalition, Common Cause, Media
Alliance and the United Church of Christ Office of Communication, Inc.
(Public Interest Opponents) and the American Cable Association (ACA)
filed Oppositions to the Petition; the National Association of
Broadcasters (NAB), Sinclair Broadcast Group, Inc. (Sinclair), Nexstar
Broadcasting, Inc. (Nexstar), Univision Communications Inc.
(Univision), and various TV licensees filed comments or replies
supporting the Petition.
7. The UHF Discount and National Cap Should Have Been Considered in
Tandem. The Order on Reconsideration finds that the Petitioners and
their supporters provide valid reasons to reconsider the decision to
eliminate the UHF discount. The UHF discount and the national audience
reach cap are closely linked, and the Commission failed to provide a
reasoned basis to eliminate the discount in isolation without also
fully considering whether the cap should be modified. Accordingly, the
Order on Reconsideration reinstates the UHF discount, and the
Commission will open a proceeding later this year to consider whether
the national audience reach cap, including the UHF discount, should be
modified.
8. Petitioners and their supporters assert that the Commission
should not have eliminated the UHF discount without adducing further
evidence that the action would be in the public interest. The
Petitioners argue that in eliminating the discount the Commission
actually harmed the public interest by increasing the competitive
disparity between broadcasters and other video programming
distributors. CBS and Sinclair also point to a lack of evidence that
the public interest would be harmed by retaining the UHF discount. NAB
argues that, by eliminating the UHF discount in isolation, the
Commission was not able to determine whether the change promotes the
public interest purposes of the cap itself.
9. The history of the UHF discount and national audience reach cap
demonstrates that, with the exception of the Report and Order, the
Commission has always considered the UHF discount together with the
national cap. Referring to this history, Nexstar argues that, because
the cap establishes a limit and the discount defines how to calculate
whether the limit is reached, the cap and discount are inextricably
intertwined. Petitioners assert that the national cap and discount go
hand-in-hand; the FCC has no authority to change one without at least
reviewing the impact that the change will have on the other. Sinclair
agrees, and urges the Commission, in any review of the cap, to
eliminate it entirely.
10. While the Commission determined in the Report and Order that it
should eliminate the discount without simultaneously reassessing the
cap, on reconsideration, the Commission agrees with the arguments
presented by Petitioners and their supporters that the Commission's
prior decision was in error. The Commission finds that any adjustment
to the UHF discount affects compliance with the national cap, and the
elimination of the discount has the effect of substantially tightening
the cap in some cases. In the Report and Order, however, the Commission
never explained why tightening the cap was in the public interest or
justified by current marketplace conditions. It presented no examples
of how the current cap, including the UHF discount, was harming
competition, diversity, or localism. Eliminating the UHF discount on a
piecemeal basis, without considering the national cap as a whole, was
arbitrary and capricious, and unwise from a public policy perspective.
11. Contrary to ACA's claims that consideration of the discount
without consideration of the cap was appropriate, the Commission erred
by eliminating the discount and thus substantially tightening the cap
without considering whether the cap should be raised to mitigate the
regulatory impact of eliminating the UHF discount. While it is true
that the UHF discount no longer has a sound technical basis following
the DTV transition, the Commission failed to provide a reasoned
explanation for eliminating the discount without conducting a broader
review of the cap, which it deferred indefinitely. Reliance on the
self-imposed narrow scope of the Notice was not a sound basis for the
Commission to conclude that it could not consider the broader public
interest issues posed by retaining the national cap while eliminating
the UHF discount. Nothing prevented the Commission from issuing a
broader Notice at the outset or broadening the scope of the proceeding
by issuing a further notice to consider whether the public interest
would be served by retaining the cap while eliminating the UHF
discount.
12. This error is problematic because the Commission has
acknowledged, both in the record of this proceeding and in the most
recent quadrennial media ownership review, the greatly increased
options for consumers in the selection and viewing of video programming
since Congress directed the Commission to modify the cap in 2004. The
Report and Order, however, failed to adequately consider the impact of
those changes on the appropriateness
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of eliminating the UHF discount while not adjusting the national cap.
The Commission should have considered these changes and assessed the
current need for a 39 percent national cap before eliminating the UHF
discount and tightening the cap for some station groups, particularly
in view of the industry's reliance on the UHF discount to develop long-
term business strategies. Although the Commission considered the effect
of the DTV transition, it failed to consider current marketplace
conditions or whether tightening the cap was in the public interest.
Thus, it is necessary to rectify the Commission's error by reinstating
the discount so that it can be considered as part of a broader
reassessment of the national audience reach rule, which will begin
later this year.
13. Grounds for Reconsideration. The record in response to the
Petition demonstrates disagreement on the factors that can support
granting a petition for reconsideration. The Opponents claim that the
Petition must be denied because it fails to present new facts or
arguments not already considered and answered by the Commission in the
underlying Report and Order. On the other hand, Nexstar claims that
Section 1.429 of our rules, which governs petitions for
reconsideration, should not be interpreted to preclude a petitioner for
reconsideration from raising any argument that was mentioned in the
underlying Commission order or a dissenting statement. Neither the
Communications Act nor Commission rules preclude the Commission from
granting petitions for reconsideration that fail to rely on new
arguments. Commission precedent establishes that reconsideration is
generally appropriate where the petitioner shows either a material
error or omission in the original order or raises additional facts not
known or not existing until after the petitioner's last opportunity to
respond.
14. The Petition, while reiterating some arguments made in response
to the Notice, nonetheless provides valid grounds for the Commission to
reconsider its previous action. The Commission failed to fully consider
important arguments and lacked a reasoned basis for concluding that it
could eliminate the discount without a broader review of the national
cap. These are sufficient grounds under Section 1.429 for the
Commission to reconsider its previous action even absent new facts or
arguments.
15. Procedural Matters. As required by the Regulatory Flexibility
Act of 1980, as amended (RFA), the Commission has prepared a
Supplemental Final Regulatory Flexibility Analysis (SFRFA) relating to
this Order on Reconsideration.
16. This Order on Reconsideration does not contain proposed
information collection(s) subject to the Paperwork Reduction Act of
1995 (PRA). In addition, therefore, it does not contain any 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.
17. Supplementary Regulatory Flexibility Analysis. In compliance
with the Regulatory Flexibility Act (RFA), this Supplemental Final
Regulatory Flexibility Analysis (SFRFA) supplements the Final
Regulatory Flexibility Analysis (FRFA) included in the Report and Order
to the extent that changes adopted on reconsideration require changes
in the conclusions reached in the FRFA. As required by the RFA, the
FRFA was preceded by an Initial Regulatory Flexibility Analysis (IRFA)
incorporated in the Notice which sought public comment on the proposals
in the Notice.
18. This Order on Reconsideration reinstates the UHF discount in
the Commission's national television multiple ownership rule. That rule
currently prohibits a single entity from owning television stations
that, in the aggregate, reach more than 39 percent of the total
television households in the nation. When the cap was established and
stations broadcast using analog technology, UHF broadcasting was
considered technically inferior to VHF broadcasting. Therefore, the UHF
discount allowed television stations broadcasting in the UHF spectrum
to attribute those stations with only 50 percent of the television
households in their Designated Market Areas. The Report and Order
eliminated the UHF discount, finding that UHF stations are no longer
technically inferior or competitively disadvantaged relative to VHF
stations following the DTV transition.
19. The Order on Reconsideration finds that, because the UHF
discount affects calculation of compliance with the national audience
reach cap, the discount and cap are linked and the public interest is
better served by considering the discount and cap in tandem. Rather
than potentially tightening the national cap in some cases by
eliminating the UHF discount, the reinstatement of the discount returns
broadcasters to the status quo prior to August 2016 for purposes of
calculating their compliance with the cap. The Commission will begin a
rulemaking proceeding later this year to consider whether it is in the
public interest to modify the national cap, including the UHF discount.
20. The RFA directs the Commission to provide a description of and,
where feasible, an estimate of the number of small entities that will
be affected by the rules adopted in this Order on Reconsideration. The
RFA generally defines the term small entity as having the same meaning
as the terms small business, small organization, and small governmental
jurisdiction. In addition, the term small business has the same meaning
as the term small business concern under the Small Business Act. A
small business concern is one which: (1) Is independently owned and
operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the SBA. The FRFA
accompanying the Report and Order described and estimated the number of
small entities that would be affected by elimination of the UHF
discount. Reinstatement of the UHF discount in this Order on
Reconsideration applies to the same entities affected by elimination of
the discount.
21. Television Broadcasting. This Economic Census category
comprises establishments primarily engaged in broadcasting images
together with sound. These establishments operate television broadcast
studios and facilities for the programming and transmission of programs
to the public. These establishments also produce or transmit visual
programming to affiliated broadcast television stations, which in turn
broadcast the programs to the public on a predetermined schedule.
Programming may originate in their own studio, from an affiliated
network, or from external sources. The SBA has created the following
small business size standard for such businesses: Those having $38.5
million or less in annual receipts. The 2012 Economic Census reports
that 751 firms in this category operated in that year. Of that number,
656 had annual receipts of $25,000,000 or less, 25 had annual receipts
between $25,000,000 and $49,999,999 and 70 had annual receipts of
$50,000,000 or more. Based on this data we therefore estimate that the
majority of commercial television broadcasters are small entities under
the applicable SBA size.
22. The Commission has estimated the number of licensed commercial
television stations to be 1,384. Of this total, 1,275 stations (or
about 92 percent) had revenues of $38.5 million or less, according to
Commission staff review of the BIA Kelsey Inc. Media Access Pro
Television Database (BIA) on February 24, 2017, and therefore these
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licensees qualify as small entities under the SBA definition. In
addition, the Commission has estimated the number of licensed
noncommercial educational (NCE) television stations to be 394.
Notwithstanding, the Commission does not compile and otherwise does not
have access to information on the revenue of NCE stations that would
permit it to determine how many such stations would qualify as small
entities.
23. The Commission notes, however, that in assessing whether a
business concern qualifies as small under the above definition,
business (control) affiliations must be included. The estimate,
therefore, likely overstates the number of small entities that might be
affected by our action because the revenue figure on which it is based
does not include or aggregate revenues from affiliated companies. In
addition, an element of the definition of ``small business'' is that
the entity not be dominant in its field of operation. The Commission is
unable at this time to define or quantify the criteria that would
establish whether a specific television station is dominant in its
field of operation. Accordingly, the estimate of small businesses to
which rules may apply does not exclude any television station from the
definition of a small business on this basis and is therefore possibly
over-inclusive.
24. The FRFA accompanying the Report and Order stated that
elimination of the UHF discount modified calculation of compliance with
the national audience reach cap and would affect reporting,
recordkeeping, or other compliance requirements. Specifically, the
Commission would have potentially needed to modify FCC forms or related
instructions pursuant to the Report and Order. This Order on
Reconsideration reinstates the UHF discount, thereby maintaining the
current methodology for calculating compliance with the cap. Therefore,
no changes to FCC forms or instructions will be necessary and the
reporting, recordkeeping, and other compliance requirements will not be
affected. Thus, reinstatement of the UHF discount will not impose
additional obligations or expenditure of resources on small businesses.
25. The Order on Reconsideration determined that the discount and
cap were linked and that considering them in tandem would better serve
the public interest than simply eliminating the discount alone.
Examining the discount and cap together in a rulemaking proceeding to
be opened later this year will positively impact broadcasters,
including small entities, and avoid the potential harms described by
Petitioners and their supporters at paragraphs 8 and 10, above.
26. Ordering Clauses. Accordingly, it is ordered that, pursuant to
the authority contained in Section 405(a) of the Communications Act of
1934, as amended, and Section 1.429 of the Commission's rules, the
Petition for Reconsideration filed by ION Media Networks, Inc. and
Trinity Christian Center of Santa Ana, Inc. on November 23, 2016, is
granted in part and otherwise is dismissed as moot, to the extent
provided herein.
27. It is further ordered that pursuant to the authority contained
in Sections 1, 2(a), 4(i), 4(j), 303(r), 307, 309, and 310 of the
Communications Act of 1934, as amended, this Order on Reconsideration
is adopted. The rule modification discussed in this Order on
Reconsideration shall be effective June 5, 2017.
28. It is further ordered that the Commission shall send a copy of
this Order on Reconsideration to Congress and to the Government
Accountability Office pursuant to the Congressional Review Act.
29. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Order on Reconsideration, including the Supplemental Final
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of
the Small Business Administration.
List of Subjects in 47 CFR Part 73
Television; Radio.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Final Rule
For the reasons discussed in the preamble, the Federal
Communication Commission amends 47 CFR part 73 as follows:
PART 73--RADIO BROADCAST SERVICES
0
1. The authority citation for part 73 continues to read as follows:
Authority: 47 U.S.C. 154, 303, 334, 336 and 339.
0
2. Amend Sec. 73.3555 by revising paragraph (e)(1) and (e)(2)(i) to
read as follows:
Sec. 73.3555 Multiple ownership.
* * * * *
(e) National television multiple ownership rule. (1) No license for
a commercial television broadcast station shall be granted, transferred
or assigned to any party (including all parties under common control)
if the grant, transfer or assignment of such license would result in
such party or any of its stockholders, partners, members, officers or
directors having a cognizable interest in television stations which
have an aggregate national audience reach exceeding thirty-nine (39)
percent.
(2) * * *
(i) National audience reach means the total number of television
households in the Nielsen Designated Market Areas (DMAs) in which the
relevant stations are located divided by the total national television
households as measured by DMA data at the time of a grant, transfer, or
assignment of a license. For purposes of making this calculation, UHF
television stations shall be attributed with 50 percent of the
television households in their DMA market.
* * * * *
[FR Doc. 2017-09001 Filed 5-4-17; 8:45 am]
BILLING CODE 6712-01-P