Broadcast Ownership Rules

The Notice of Inquiry reviews four rules that were not modified by the 1996 Act:

• UHF Television Discount which attributes 50% of television households in a local television market to the audience reach of a UHF television station for purposes of calculating whether a television station owner complies with the 35% national audience reach cap.
• Daily Newspaper/Broadcast Cross-Ownership Rule which prohibits common ownership of a broadcast station and daily newspaper in the same locale.
• Cable/Television Cross-Ownership Rule which effectively prohibits common ownership of a broadcast television station and cable system in the same market.
• Experimental Broadcast Station Multiple Ownership Rule which limits the number of experimental broadcast stations that can be licensed to or controlled by a person.

• National Television Ownership Rule which was revised by the 1996 Act to eliminate a numerical limit on the number of television stations a party could own nationally and increase the national "audience reach" cap of television station ownership from 25% to 35% of television households nationally.
• Local Radio Ownership Rules which the 1996 Act revised to allow a party to own up to 8 commercial radio stations in a market depending on the number of commercial radio stations in the market.
• Dual Network Rule which, as revised by the 1996 Act, in effect permits an entity to maintain two or more broadcast networks unless such dual or multiple networks are composed of (1) two or more of the four major networks (ABC, CBS, Fox, NBC), or (2) any of the four major networks and one of the two emerging networks (WBTN, UPN).

The Commission noted that this particular Notice of Inquiry was not soliciting additional comment on broadcast ownership rules already under review in pending proceedings. The Commission said that those ongoing proceedings satisfy the Biennial Review requirements of the Telecom Act. These rules include:

• Television Duopoly Rule which states that a party may not own, operate or control two or more broadcast television stations with overlapping "Grade B" signal contours.
• "One-to-a-Market" Rule which generally prohibits common ownership of a television and a radio station in the same market.

The Commission also reviewed and restated its approach to granting conditional waivers of broadcast ownership rules that are under active consideration by the Commission in a rulemaking or inquiry proceeding.

In this Notice of Proposed Rulemaking, we propose general competitive bidding procedures for all auctionable broadcast services within the scope of amended section 309(j) except for certain digital television services. The proposed rules implement the statutory requirement set forth in section 309(j)(1) that, except for certain commercial broadcast applications filed before July 1, 1997 and for categories of broadcast service expressly exempted from the Commission's auction authority under section 309(j)(2), we must use auctions to resolve mutually exclusive applications for initial licenses for broadcast stations. We also propose to use auctions to decide among competing applications filed before July 1, 1997 for new commercial radio and television broadcast stations. We tentatively conclude that resolving the latter cases by competitive bidding procedures, rather than comparative hearings, better serves the public interest by expediting the resolution of applications, many of which have been pending for several years. We do, however, ask for comment on whether we should instead use comparative hearings for some or all of these cases. We also seek comment on whether we are required to use auctions to resolve mutually exclusive applications to provide Instructional Television Fixed Service (ITFS). Finally, we seek further comment on proposals for resolving pending comparative broadcast renewal proceedings, in light of whatever decision we make on pending pre-July 1 applications for new stations. Status: On November 7, 1996, the Commission issued a Second Further Notice of Proposed Rule Making in MM Dockets Nos. 91-221 and 87-8, reviewing the Commission's broadcast local television ownership rules. The rules currently prohibit a person or entity from having cognizable interests in two television stations whose Grade B signal contours overlap. They also prohibit the licensee of a television station from obtaining a cognizable interest in a radio station with overlapping contours unless one or more of several waiver conditions is met. Finally, the Commission does not currently have rules governing television local marketing agreements (LMAs) as we do with radio LMAs.

The Second Further Notice seeks to update the record in this proceeding in light of the passage of the Telecommunications Act of 1996, which, among other things, directed the Commission to examine the local television ownership rule, amended the local radio ownership rules, addressed waiver standards for the radio-television cross ownership rule. The Second Further Notice seeks comment on the following:

• Local Television Ownership Rule: The Second Further Notice proposes to authorize common ownership of television stations that are in separate DMAs [Nielsen's Designated Market Areas] and whose Grade A contours do not overlap. The Second Further Notice also requests comment on several criteria by which the Commission may entertain waivers of the rule. The Commission also seeks comment on continuing to permit common ownership within a DMA if there is no Grade B overlap (the current standard). Such a rule would be no more restrictive than our current regulation and would not disrupt current ownership patterns.
• Radio-Television Cross-Ownership Rule: Parties are permitted to own, pursuant to waiver requests, radio-television combinations in the top 25 television markets where there will be at least 30 separately owned broadcast licensees after the combination. Pursuant to the 1996 Act, the Second Further Notice proposes to extend this policy to the Top 50 markets. In addition, the Second Further Notice notes that the 1996 Act significantly relaxed the local radio ownership rules. Because the proposals in the previous Notice were based on the old local radio rules, the Second Further Notice invites parties to comment on the significance of the change and asks whether the Commission should relax the cross-ownership rule beyond extending the waiver policy to the Top 50 markets. The Second Further Notice also asks the extent to which the local radio rules and the radio-television rules remain interrelated at all and, as a result, the extent to which the radio-television cross-ownership rule is still warranted.
• Television LMAs: The 1996 Act contains statements regarding the "grandfathering" of existing television LMAs. The Second Further Notice requests parties to comment on the significance and applicability of that statutory provision to television LMAs that may be deemed attributable. (The issue of whether television LMAs should be attributable under the broadcast ownership rule is addressed in the Commission's companion proceeding regarding the attribution rules).

Comments were due on February 7, 1997. Reply comments were originally due on March 7, 1997. However, the Commission extended the reply comment period to March 21, 1997.