FCC Reinstates Media Ownership Rule Changes

On Friday, June 4, 2021, the Media Bureau (“the Bureau”) released an Order (DA 21-656) reinstating changes to the FCC’s media ownership rules consistent with the Supreme Court’s recent decision in FCC v. Prometheus Radio Project (“Prometheus”).  You may recall that from 2016-2017, the FCC adopted three Orders that modified the Media Ownership Rules: the 2016 Second Report and Order, the 2017 Order on Reconsideration, and the 2018 Incubator Order.  Collectively, these Orders eliminated the Newspaper/Broadcast Cross-Ownership Rule, the Radio/Television Cross-Ownership Rule, and the Television Joint Sales Agreement Attribution Rule and modified the Local Television Ownership Rule and Local Radio Ownership Rule.  These Orders were challenged in a series of proceedings before the United States Court of Appeals for the Third Circuit, which vacated and remanded them several times (the most recent being 2019). The case was appealed to the Supreme Court, and on April 1, 2021, the Supreme Court reversed the decision of the Third Circuit, finding that the FCC’s decision to repeal and modify its rules was not arbitrary and capricious and that the FCC had reasonably considered the available evidence in concluding that the rule changes were not likely to harm minority or female ownership.

The Bureau’s Order reinstates the prior Orders, such that the following changes are made to the Media Ownership Rules:

  • Reinstates:
    • The Revenue-Based Eligibility Entity Standard, which defines an eligible entity as any entity, commercial or noncommercial, that would qualify as a small business consistent with SBA standards for its industry grouping, based on revenue.
    • The Incubator Program, which seeks to support the entry of new and diverse voices in the broadcasting by paring together in a mentoring and supportive relationship, established broadcasters with either new entrants to the industry or small broadcasters, including station owners.  The established broadcasters will provide the new or small broadcasters with training, financing, and access to resources otherwise inaccessible to the new or small entities, after which the new entity will either own or retain ownership of its station.  The established broadcaster will receive a waiver of the applicable local radio ownership rules to use in the market or a comparable market within three years.
  • Eliminates:
    • The Newspaper/Broadcast Cross-Ownership Rule (47 C.F.R. § 73.3555(d)) which limited the number of newspapers and full power commercial broadcast stations a single entity could own in one market under certain circumstances.
    • The Radio/Television Cross-Ownership Rule (47 C.F.R. § 73.3555(c)) which limited the number of radio stations and television stations a single entity could own in one market under certain circumstances.
    • The Television Joint Sales Agreement Attribution Rule (47 C.F.R. § 73.3555 note 2.k) which affected how ownership was counted for the ownership rules where a station sells more than 15% of the advertising time for another station in the same market.
  • Modifies:
    • The Local Television Ownership Rule (47 C.F.R. § 73.3555(b)(1)(2)) to eliminate the Eight-Voices Test, which required that at least eight independently owned television stations remain in a market after combining ownership of two stations in a market.
    • Local Television Ownership Rule to modify the Top-Four Prohibition (47 C.F.R. § 73.3555(b)(1)(i)) to allow for a case-by-case examination of a proposed merger of two Top-Four stations, which would otherwise have been prohibited by the FCC’s rules.
    • The Local Radio Ownership Rule (47 C.F.R. § 73.3555(a)) to allow certain parties to seek a waiver of the ownership rule in embedded market transactions when there is an existing parent market with multiple embedded markets.

The Order will be effective upon publication in the Federal Register.

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