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PACE LAW REVIEW

Comment

THE PUBLIC INTEREST, CONVENIENCE, OR NECESSITY: A DEAD STANDARD IN THE ERA OF BROADCAST DEREGULATION?

Section III


Pace University School of Law

Summer, 1990

Marc Sophos

Copyright 1990 by the Pace Law Review; Marc Sophos

You can also read this article in pdf format.


III. Deregulation of Broadcasting

A.Broadcast Deregulation in General

In pursuing its deregulatory agenda, the Commission has done away with many of the rules and procedures it had earlier determined were necessary to protect the public interest. For radio, it eliminated the nonentertainment programming guidelines, [FN99] justifying this by stating that "marketplace solutions can be consistent with public interest concerns," [FN100] that "significant amounts of nonentertainment programming of a variety of types will continue on radio," [FN101] and that "stations will continue to present such programming as a response to market forces." [FN102] In the same proceeding, the Commission eliminated the requirement that stations conduct ascertainment studies to determine the problems and needs of their communities. [FN103] It dismissed concerns that free market competition would tend to limit broadcasters in their assessment of community problems to those of the economically significant segments of the community, [FN104] and left the methods of assessing community problems and needs to broadcasters' "good faith discretion." [FN105] In this proceeding, the Commission also eliminated its commercial guidelines, [FN106] stating that marketplace forces would more effectively curb excessive advertising [FN107] and that "[n]o government regulation should continue unless it achieves some public interest objective that cannot be achieved without the regulation." [FN108]

The television programming and commercialization policies and ascertainment requirements were also eliminated. [FN109] The Commission again trusted market incentives" to take the place of governmental regulation to ensure that television stations serve the public interest. [FN110] Additionally, the requirement that stations maintain their main origination studios in their cities of license [FN111] was eliminated in 1987, [FN112] and the anti-trafficking provision [FN113] in 1982. [FN114]

Until 1986, the Commission imposed restrictions on AM-FM simulcasting. [FN115] This restriction was eliminated, and now commonly owned AM and FM stations in the same market may simulcast 100% of the time. [FN116] Finally, and perhaps most importantly, the Commission declared the fairness doctrine facially unconstitutional. [FN117] The fairness doctrine had required stations to air at least some local programming on issues of public importance and to present opposing viewpoints to balance the presentation. [FN118] The repeal of the doctrine is important to note here because the Commission partially justified its elimination of the nonentertainment guidelines [FN119] by emphasizing that stations would have to continue to air balanced programming on issues of public importance under the fairness doctrine. [FN120]

Underlying all of these deregulatory actions are the notions, first, that the Commission is still concerned (as it must be) with the public interest, [FN121] and second, that the best way to serve the public interest is to eliminate as much regulation as possible and allow stations to respond only to the economic incentives of the "marketplace." This theory is absolutely inadequate. [FN122]

B. Deregulation of Multiple Ownership

The Commission has a congressional mandate to license broadcasting stations only when doing so would serve the public interest, convenience, or necessity. So that it could most effectively carry out this mandate, the Commission established rules, procedures, and regulations intended to ensure that broadcasting stations, operating under its authority, served the public interest. [FN123] Among these were the multiple ownership rule, [FN124] the radio duopoly rule, [FN125] and the one-to-a-market rule, [FN126] all intended to reduce the possibility of an undue concentration of control both nationally and locally. [FN127] These three rules, not only individually but more particularly in combination, were intimately bound up both with the rationale justifying application of the public interest standard to broadcasting (the fact that a scarce public resource is being used, to the exclusion of other potential users, by a private user for private gain) [FN128] and with the first amendment concerns that the marketplace of ideas contain as many diverse and antagonistic voices as possible. [FN129] However, the Commission, having now decided that free market competition was somehow better than government regulation of broadcasting, either eliminated or substantially relaxed all three of these provisions, in concert with Reagan administration policy [FN130] and pressure from the broadcasting industry itself. [FN131]

In 1984, the Commission substantially relaxed the multiple ownership rule: [FN132] the rule of sevens was changed in 1984 to the rule of twelves (twelve AM, twelve FM, and twelve television stations) for six years. [FN133] The limitation will be completely eliminated in 1990, [FN134] assuming that the Commission decides, as it is likely to, [FN135] that the public interest would not be adversely affected. This final delimitation will allow a single group owner to own as many radio and television stations as it cares to and can afford to buy.

In 1989, the Commission relaxed the radio duopoly rule: [FN136] where the rule originally prohibited the overlap of the 1 mv/m contours of commonly owned AM or FM stations, [FN137] the new relaxed rule prohibits the overlap of the 3.16 mv/m contours of commonly owned FM stations and the 5 mv/m contours of commonly owned AM stations. [FN138] The new rule eliminates the discrimination against AM stations caused by the earlier uniform 1 mv/m standard for both AM and FM stations; however, it also allows commonly owned AM or commonly owned FM stations to be considerably closer together than before, [FN139] and more people will be able to receive relatively strong signals from two different stations in the same service owned by the same entity. The Commission seems no longer concerned that the proximity of commonly owned stations will cause an undue concentration of control within a local area; it justifies this by referring to the expansion that has taken place in the "communications marketplace" since the original rule was promulgated. [FN140]

The one-to-a-market rule [FN141] now provides for favorable commission review of waiver requests. These waivers, which will allow new radio/television cross ownership within the same market, will likely be granted in certain circumstances. [FN142]

In combination, the relaxation or elimination of these three rules will now make it possible for a single entity to own and control stations which blanket the entire country. It will also be possible for this single entity to own more than one station in the same service which can be heard or viewed in the same geographic area. Finally, single entities will be allowed, in many situations, to own both radio and television stations in the same market. The Commission has decided that "marketplace forces" will create natural limits on these tendencies, and that these "natural" forces are in some way better than the "artificial" limitations on multiple ownership imposed by commission regulation.


Footnotes

FN99. Deregulation of Radio, 84 F.C.C.2d 968, 971 (1981).

FN100. Id. at 974.

FN101. Id. at 977.

FN102. Id. at 978. The Commission also noted that many commenters were concerned that it was planning to eliminate the fairness doctrine, see infra text accompanying note 118, among other provisions. 84 F.C.C.2d at 974. (The Commission refers to parties who file comments in connection with its proceedings as commenters. See, e.g., the Multiple Ownership Decision, 100 F.C.C.2d 17, 31 (1984).) However, it supported its elimination of the nonentertainment guidelines by noting that the fairness doctrine "cannot be modified by the Commission. [It] simply [is] not subject to deregulation by the Commission." Id. In eliminating the nonentertainment guidelines, the Commission emphasized that stations would still have to adhere to the fairness doctrine. 84 F.C.C.2d at 979. Yet in 1987, the Commission declared the doctrine unconstitutional, leaving the broadcasting industry with no explicit requirement that it program any news or public affairs at all. Syracuse Peace Council, 2 F.C.C. Rec. 5043, 5047 (1987). See infra note 117 and accompanying text.

FN103. 84 F.C.C.2d at 971.

FN104. Id. at 997-98.

FN105. Id. at 998.

FN106. Id. at 971.

FN107. Id. at 1003.

FN108. Id. at 1006.

FN109. Report and Order, 98 F.C.C.2d 1076 (1984).

FN110. Id. at 1077.

FN111. 47 C.F.R. 73.1125 (1986).

FN112. 2 F.C.C. Rec. 3215 (1987).

FN113. 47 C.F.R. 73.3597 (1982).

FN114. 52 Rad. Reg. 2d (P & F) 1081 (1982).

FN115. 47 C.F.R. 73.242 (1984). Simulcasting is the practice in which an owner of an AM and an FM station in the same market airs the same programming on both stations within 24 hours. Id. 73.242(b).

FN116. Report and Order, 103 F.C.C.2d 922 (1986). This allows the common owner to program two stations at once, saving operating costs by airing the same programming on both the AM and FM stations. Thus, one of the two frequencies is wasted because two different frequencies (one AM and one FM) are used to provide a single programming service. But see supra text accompanying note 92; National Broadcasting Co. v. United States, 319 U.S. 190, 218 (1943) ("With the number of radio channels limited by natural factors, the public interest demands that those who are entrusted with the available channels shall make the fullest and most effective use of them.") (quoting the Commission's Report on Chain [Network] Broadcasting of May 2, 1941). Arbitron, a major radio ratings service, estimates that 1430 stations are simulcasting under the new rule. Simulcasting: Two Much of a Good Thing, BROADCASTING, Aug. 15, 1988, at 59.

FN117. Syracuse Peace Council, 2 F.C.C. Rec. 5043, 5047 (1987). By this action, the Commission "undertook, in effect, to overrule the opinion of the Supreme Court in Red Lion Broadcasting Co. v. FCC [395 U.S. 367 (1967)]." Hyde, FCC Action Repealing the Fairness Doctrine: A Revolution in Broadcast Regulation, 38 SYRACUSE L. REV. 1175, 1175 (1987). Hyde was an FCC Commissioner and Chairman during the 1940s, 1950s, and 1960s, and was Acting Chairman when the fairness doctrine was promulgated. Id.

The Commission's elimination of the doctrine came less than two months after President Reagan's veto of a congressional attempt to codify it. R. Zaragoza, R. Bodorff, & J. Emord, The Public Interest Transformed: The Trusteeship Model Gives Way to a Marketplace Approach, in PUBLIC INTEREST AND THE BUSINESS OF BROADCASTING 27, 32, 47-48 nn.66-69 (J. Powell & W. Gair eds. 1988). After his veto of the legislation, President Reagan stated, "[t]here is no reason to substitute the judgment of Washington bureaucrats for that of professional broadcasters." Radio World Annual at 16 (1989).

FN118. See supra note 94 and accompanying text.

FN119. Deregulation of Radio, 84 F.C.C.2d 968 (1981).

FN120. Id. at 976, 979.

FN121. The Communications Act requires the Commission to license stations only when doing so would serve the public interest, convenience, and necessity. 47 U.S.C. 307(a) (1982 & Supp. V 1987)).

FN122. See infra notes 154-245 and accompanying text.

FN123. See supra notes 65-98 and accompanying text.

FN124. See supra note 79 and accompanying text.

FN125. See supra note 81 and accompanying text.

FN126. See supra note 83 and accompanying text.

FN127. Multiple Ownership of Standard, FM and Television Broadcast Stations, 22 F.C.C.2d 306, 307 (1970):

The concentration of control rules aim at achieving the aforementioned twofold objective [fostering maximum competition in broadcasting and promoting diversification of programming sources and viewpoints] nationally and regionally by providing that a license for a broadcast station will not be granted to a party if the grant would result in that party's owning, operating, or controlling more than a specified number of stations in the same broadcast service. For AM the number is 7, for FM it is 7, and for TV it is 7, with no more than 5 being VHF. The rules also provide that a grant will not be made, even though it would not result in exceeding these specified maximums, if it would result in undue concentration of control contrary to the public interest . . . .

Id. (emphasis added).

FN128. See supra notes 48, 50, and accompanying text.

FN129. See Associated Press v. United States, 326 U.S. 1, 20 (1945) ("the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public . . . ."). See also supra notes 52-55 and accompanying text.

FN130. As early as 1967, President Reagan, then Governor of California, opposed what he saw as a trend toward increased restraint on the commercial broadcasting industry. THE FIRST 50 YEARS OF BROADCASTING 187 (Broadcasting Publications 1982).

FN131. Many broadcasters, and the National Association of Broadcasters (NAB), a powerful industry lobby, filed comments with the Commission in connection with all three actions (the Multiple Ownership Decision, 100 F.C.C.2d 17 (1984), the Duopoly Decision, 4 F.C.C. Rec. 1723 (1989), and the One-to-a-Market Decision, 4 F.C.C. Rec. 1741 (1989)). See infra note 230 and accompanying text.

FN132. 47 C.F.R. 73.3555(d) (1984).

FN133. Multiple Ownership Decision, 100 F.C.C.2d 17, 18 (1984). Minority group owners may own up to 14 television stations. 47 C.F.R. 73.3555(d)(1) (1988).

FN134. Multiple Ownership Decision, 100 F.C.C.2d at 18.

FN135. Alfred Sikes, who became Chairman of the Commission in 1989, generally favors the deregulation of broadcasting. Harris, Biz Sikes Up For FCC Boss; Where Is He on the Issues?, Variety, July 5, 1989, at 43, col. 3.

FN136. Duopoly Decision, 4 F.C.C. Rec. 1723 (1988).

FN137. See supra note 82 and accompanying text.

FN138. These are the so-called primary city grade signal contours. The AM and FM contours were different (5 mv/m for AM, 3.16 mv/m for FM) because AM radios are typically less sensitive than FM radios; a signal strength of 1 mv/m produces a less listenable signal on an AM radio than it does on an FM radio. See supra note 82.

Because the old duopoly rule used the 1 mv/m standard for both AM and FM stations, it discriminated against commonly owned AM stations: two or more commonly owned FM stations conforming to the rule could readily be heard in the area where the signals intersected, while for commonly owned AM stations the signals could not be heard as well in the area in which they intersected.

FN139. Common ownership of two stations in the same service in the same principal city will continue to be prohibited. Duopoly Decision, 4 F.C.C. Rec. 1723 (1988).

FN140. Duopoly Decision, 4 F.C.C. Rec. at 1726. The Commission referred to the increased number of radio and television stations, as well as to cable television and home video cassette recorders (VCRs). Id.

FN141. See supra note 83 and accompanying text.

FN142. There are three situations in which the Commission will favorably review waiver requests: first, in the top 25 television markets when there would be at least 30 independently-owned "voices" in the market after the proposed consolidation (a "voice" is a station or group of stations in a single market under common ownership), One-to-a-Market Decision, 4 F.C.C. Rec. 1741, 1751-52 (1989); second, in markets other than the top 25 where a financially failed station is involved in the proposed consolidation, id. at 1752-53; and third, any other circumstances, subject to a more rigorous case-by-case review by the Commission, id. at 1753-54.



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