Monday, November 12, 2012

FCC to move on cross-ownership

The 1996 Telecommunications Act requires the FCC to periodically its ownership rules, primarily to consider whether the existing limits can be relaxed or dropped.  The FCC's actually a cycle or two behind schedule, due in part to the inevitable legal challenges that surface if they change any of the previous rules.  Still, the word in DC is that the FCC is planning on releasing a formal Notice of Proposed Rulemaking on ownership rules before the end of the year.  That's normally the last step before formally adopting the proposed rule changes.
  The last formal proposals included dropping the rule against owning a TV station and radio stations in the same market, and loosen restrictions against owning both TV stations and newspapers in the same market.  The FCC is expected to leave its local market ownership limits for radio and TV as they are.  And if past history is any indication, they might propose some minor increases to the current national ownership limits for radio and TV.  The FCC has also floated a proposal for dropping the national ownership limits for cable - but the negative reaction to that proposal at that time suggests that they may try raising cap limits substantially rather than dropping them entirely.

  While there's likely to be the same hue and cry from various interest groups to any proposed changes that relax ownership limits, I have to say that they make sense - particularly if the rationale is to preserve existing channels and service.  The FCC's worked hard to keep local radio stations on the air, and with the coming economic changes facing smaller TV stations, allowing radio-TV crossownership in local markets might keep stations on the air.  On the other hand, relaxing TV-newspaper ownership limits (in top markets) are designed more to keep newspapers alive, letting TV station profits help subsidize failing newspapers.  As for concerns about concentration, national caps for broadcasters were mostly irrelevant anyway, as stations operate in local markets, not in national markets - and the FCC's likely preservation of local market ownership limits is what's important in that regard.
  The cable national caps issue is probably the most controversial.  Initially, cable systems were local monopolies in almost all communities, and the national caps were there to protect against cable MSO's using their monopoly power against cable networks, equipment manufacturers, and advertisers.  Since then, however, DBS systems have gone national, AT&T and Verizon have been implementing their own multichannel video programming delivery services (and with Google just starting), and online video streaming services have taken off.  It's increasingly difficult to make the case that cable systems are local monopolies (here in Knoxville, for instance, we have access to 5 multichannel providers).
  It's also becoming apparent that platform-specific ownership limits aren't that helpful in controlling concentration and monopoly power, as two of the top 3 MVPDS systems (in terms of subscribers) are DBS systems, and another 2 of the top 10 are telco MVPDS.  On the other hand, one of the problems that the small local cable operators face is the cost of upgrading their systems to be competitive.  The larger cable MSOs have the know-how and access to capital that could help smaller cable systems to upgrade their systems to be competitive with other video delivery platforms.  Lifting caps, particularly if targeted towards acquisitions or partnerships with small systems, could be beneficial for viewers and communities.
  I look forward to the new ownership proposals, and to the debate they'll engender.

Source  -  FCC Sources: Chairman Wants Media-Ownership Vote on Nov. 30,  Multichannel News

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