The Senate this week approved Anna Gomez for the open Democratic FCC seat that has been vacant since the start of the Biden Administration. As we wrote in May when the President first nominated her, Gomez is experienced in government circles, having worked at NTIA (a Department of Commerce agency dealing with federal spectrum use and other communications matters) and recently at the State Department preparing for international meetings about communications issues. She also has a history in private law firm practice.
Together with her nomination, the President renominated Commissioners Starks and Carr for new terms as Commissioners, but those nominations remain pending – not having been approved this week with the Gomez nomination. Democratic Commissioner Starks’s term has already expired but he continues to serve under the allowable one-year carry-over which ends at the beginning of January 2024. Republican Commissioner Carr’s term will expire at the end of this year, but he would be able to serve through the end of 2024 if his renomination is not confirmed. There is some speculation that these nominations will be packaged with other pending nominations for positions at other government agencies to avoid having the FCC return to a partisan stalemate again in January if the Starks’ renomination is not approved by then.
In January, we looked ahead at some of the regulatory issues that are unresolved for broadcasters, and in May when Gomez was first nominated, we speculated as to the broadcast issues that a full Commission might address. Many of these issues have yet to be resolved, so let’s look again at the issues that remain on the table. Perhaps the most significant issue is the resolution of the 2018 Quadrennial Review to assess the current local broadcast ownership rules and determine if they are still in the public interest. As we wrote in December, the FCC has already started the 2022 review, as required by Congress, even though it has not resolved the issues raised in the 2018 review. This has brought a rebuke from the NAB, which has sought a “mandamus” from the US Court of Appeals – mandamus being an order from the court telling the FCC to fulfill its statutory obligation to complete the Quadrennial Review that should have been done by the end of 2022. The court has asked the FCC and NAB for briefing on the issue as to whether the court should order the FCC to act – and we are now waiting on a court decision. Even if such an order is granted, the court will not tell the FCC how or what to decide, but only to decide the issues. So, no matter which way the court rules on the mandamus request, a new FCC would sooner or later have to review the open issues. What are those issues?
For the radio industry, they include the potential relaxation of the local radio ownership rules. As we have written, some broadcasters and the NAB have pushed the FCC to recognize that the radio industry has significantly changed since the ownership limits were adopted in the Telecommunications Act of 1996, and local radio operators need a bigger platform from which to compete with the new digital companies that compete for audience and advertising in local markets. Other companies have been reluctant to endorse changes to the ownership rules – but even many of them recognize that relief from the ownership limits on AM stations would be appropriate. Those positions were echoed in the comments filed in the newly started 2022 Quadrennial Review filed back in March.
The Quadrennial Review also looks at the dual network rule that currently forbids the common ownership of two of the Top 4 TV networks. This issue has taken on added significance recently, as there has been some speculation that some of the companies controlling the top broadcast networks may be interested in exiting the linear TV business, but this rule might limit the options available to such companies. Also under consideration is the potential for the combination of two of the Top 4 television stations in any local market. Common ownership of such stations is only permitted now through what is essentially a waiver process. The FCC has asked if there are specific criteria that could be adopted to evaluate those requests (e.g., a combination of the 3rd and 4th stations would be allowed if their market share did not exceed a specific percentage of the market – or the share of the higher rated stations in the market) so that applicants would have more certainty about whether a proposed combination would be allowed. These issues are all fully briefed and argued to the FCC and are just awaiting an FCC decision.
While not directly part of the Quadrennial Review process, the question of the national cap on television ownership could be a subject that a new FCC could review. Television companies are limited from having an attributable interest in television stations reaching more than 39% of national television households. There are several television companies that have exceeded that threshold by relying on the “UHF Discount” that counts UHF stations as reaching only half the households in their markets, a legacy from the days of analog television broadcasting, when VHF stations (those operating on Channels 13 and below) were the preferred means of transmission. Once the conversion to digital occurred, the tables were reversed, as UHF channels are generally acknowledged to have superior transmission capabilities, an advantage that continues in the new ATSC 3.0 “Next Gen TV” transmission standard.
Recognizing that reversal, the last Democratic Commission abolished the UHF discount (see our article here) only for that action to be reversed by the Pai administration (see our article here). The Commission under Republican Chairman Pai questioned whether the FCC had the authority to repeal the UHF discount, as that discount had been in place when Congress enacted the 39% cap. The Pai administration also started a proceeding to review the national ownership cap for television companies, asking if the FCC could amend that cap on its own (or whether it needs authority from Congress) and, if the FCC has such authority, what the limits on national ownership should be. That proceeding has never been resolved, and this new Commission has not yet been faced with a large acquisition that would for the first time put any company over the limit that would exist but for the UHF discount. The recent TEGNA case, controversial for other reasons, did not raise this issue. With a full Commission, this issue may well be considered.
EEO issues for both radio and TV also could be considered by a full-strength FCC. The FCC has requested comments on bringing back the annual EEO Form 395, which has been suspended for more than 20 years and would report on the race and ethnicity of broadcast employees (see our article here). A rulemaking initiated by the last Commission looking at broader reform of the EEO rules is also still outstanding and could be given further consideration (see our article here).
The FCC Chairwoman has also circulated a proposal for the Commission to conduct a review of the video programming marketplace, looking at the obstacles faced by independent programmers seeking carriage by multichannel video programming distributors and on online platforms, how this impacts consumers, and whether there are actions the Commission could take to alleviate such obstacles. The FCC regularly assesses the state of competition in the Media Marketplace for its required annual report to Congress, and has been asking about the impact of online video providers in those annual reviews for over a decade (see our article here). Even though this proposal for a rulemaking proceeding was announced in early July, it has not yet been adopted and the text of the proposal is not publicly available. A full commission might look at this issue.
Also potentially on the table is a review of the status of “virtual MVPDs” – online offerings of cable and broadcast programming that appear very similar to packages offered by cable and satellite TV providers, but which are not currently covered by the must carry/retransmission consent rules. Some broadcast companies have urged such a review, while the broadcast networks generally oppose further review. While the Chairwoman has indicted that she did not think that the FCC had jurisdiction to review this issue without Congressional action (see the reference to her letter to Senator Grassley on this issue in our weekly update, here), the push by some prominent Democrats in Congress for a review of this question (see our reference to a request by Senator Cantwell asking that the FCC consider this matter) could lead to some FCC inquiries on the issue now that there is a full FCC.
Political broadcasting is always an issue. The requirement for quicker disclosure of advertising orders placed by political candidates and issue advertisers has been brought to the foreground by the hundreds of consent decrees signed by broadcasters across the country in the past two years (see our articles here and here). Disclosure requirements about the funding of political advertising backers has also been considered in previous administrations – and could make a return in this one (see our articles here and here). Watch for other clarifications of the political broadcasting rules that could come this year in the relative lull between election years.
For radio, there are various technical proposals that are still on the table for possible consideration. Proposals for a Class C4 FM service (here) and the limited origination of programming on FM boosters through “zonecasting” (here) are pending and could be given further consideration. The C4 proposal is only at the Notice of Inquiry stage, so any final rules, before being adopted, would have to be put out for public comment in a Notice of Proposed Rulemaking. In contrast, the zonecasting proposal has already been the subject of a Notice of Proposed Rulemaking. The FCC’s zonecasting proposals have been vigorously contested, opposed by many prominent broadcast companies while aggressively supported by the company that developed the system. This proceeding could be considered by the Commission this year. Proposals for increased power for HD subchannels for FM radio are also on the table for possible action later this year.
Enhanced public file obligations have also been proposed to obligate broadcasters to use a standard certification form for buyers of program time on a station to assess whether those buyers are acting as agents of a foreign government, with the FCC proposing that these certifications be added to the public file regardless of whether the programmer indicates that it has any connection to a foreign government (see our article here). The FCC is also considering requiring broadcasters to certify regularly as to the cybersecurity steps they are taking to secure their EAS systems from hacking and other online breaches (see our articles here and here).
These are just some of the issues that could be considered by a full-strength FCC. As we’ve seen in the past, new issues that we have not even considered could pop up at any time. So, with a full Commission now in place, keep watching to see which of these issues may move forward!
Courtesy Broadcast Law Blog