6-5-14
John Garziglia says: Our radio ownership rules have been consistent for many years. The last big change in the FCC?s radio ownership rules took place almost two decades ago under the Telecommunications Act of 1996. The 1996 Act resulted in the elimination of all radio station national ownership limits. In addition, the Act established the limitation of no more than eight radio stations, and a sub-cap of five in the same service, being owned by the same broadcaster in the largest markets. Further, since joint sales agreements among radio broadcasters have been regulated since 2003, radio broadcasters must be looking at their TV brethren and wondering what all the commotion is about.
So, do any of these proceedings and court challenges centered on TV ownership rules have any relevance to radio broadcasters?
There are several ways that radio?s local ownership restrictions could be changed as a result of the court challenge to the TV ownership rules. The first and most direct way would be if the court found that the FCC?s restrictions on television JSAs and SSAs were, in a broad way, not justifiable, and that finding spilled over into a negation of the FCC?s similar radio JSA and LMA rules and policies.
A court reviewing the TV ownership rules might also delve much deeper into the FCC?s ownership restrictions and envelope the radio restrictions. A court could find that that the maximum eight radio station ownership limitation in the largest markets is not justifiable. In markets with 45 or more radio stations, it is difficult to make a cogent argument that eight stations should be the magic limitation on radio ownership.
The other way the local radio ownership restrictions could be changed is the more sub-rosa route of eliminating service sub-caps. Right now, in larger markets where up to eight radio stations may be owned, there is a sub-cap of five stations in the same service. The argument is that a distinction between AM and FM stations no longer makes sense. It must be noted, however, that the U.S. Court of Appeals disagreed that there were no distinctions between AM and FM stations the last time this issue came before it.
The stronger argument for the elimination of sub-caps is that it would encourage those broadcasters at the ownership limits to sell stations in one service (which would likely be AM stations), to acquire stations in the other service. Therefore, there would be a one-time flood of stations coming on the market for potentially new and diverse owners. Whether a multitude of AM stations coming on the market would be viewed by new owners as an opportunity is another question entirely.
The only certain observation that may be made about the FCC radio ownership restrictions is that it is difficult to fathom a justification for any particular specific numerical limitation. As an overall matter, there is solid argument for some restriction because our government makes available only a limited number of radio station licenses. Therefore, it arguably should not allow one person or entity to acquire them all.
But beyond that overall observation, just how and under what criteria should the FCC set what are to be radio ownership limits is a dilemma. Recall that not too many years ago the national ownership limits were seven AMs and seven FMs. Moreover, only one AM and one FM station could be owned in any particular area with an overlap of the service area contours restricting additional same-service station ownership. And, only three radio stations could be owned within a 100 mile radius of each other. It was easy to argue that those restrictions were unduly restrictive as other media such as cable television and satellite radio proliferated. But, what are the foundations for what is now an eight radio station limitation per market? It is difficult, if not impossible, to come up with a justification for that number.
The danger to our radio industry is that a court finds that the FCC has not justified the radio ownership number of eight, or the lesser numbers applicable to smaller markets. The court then might tell the FCC to cease applying the limitations and granting sale applications until it comes up with a solid justification for the numerical restrictions. That could throw our radio broadcasting industry into a tizzy as there would be nothing worse than the regulatory uncertainty that would ensue.
In a related vein, the FCC has never justified the contour-overlap method it now uses to determine the number of stations and allowable ownership in unrated markets. If you do not understand how the number of stations allowed to be owned in unrated markets is calculated by the FCC, you likely should not ask as the explanation will make your head spin. At least as for now, however, the FCC and the courts both appear to have put aside any imminent change to the unrated radio market methodology.
In sum, the television industry?s challenges to the FCC on JSA and SSA restrictions could entwine other broadcast station ownership rules in the process. If this occurs, it could have an impact on radio. If a court was to question why and how the specific numerical FCC radio broadcast station ownership limitations make sense, those radio ownership limits could become part of the review with the result that where there is certainty now, there may be uncertainty tomorrow.
John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455 or jgarziglia@wcsr.com. Have a question for our "Ask The Attorney" feature? Send to edryan@radioink.com.
Add a Comment Send This Story To A Friend
