FCC Announces New Media Regulations

WASHINGTON, D.C., December 19: The Federal Communications
Commission has approved a new rule limiting an individual cable operator’s
nationwide market share to 30 percent, and has relaxed the ban on the ownership
of a broadcast station and a daily newspaper in the same market.

The decision to set a 30-percent cap on a cable operator’s
market share is intended to boost competition in the pay-TV market. The limit
was first set in 1993, modified in 1999 and then challenged by Time Warner in
2001. The D.C. Circuit Court remanded the rule back to the FCC seeking further
justification, where it has been pending for the last six years. The FCC said
in its ruling that the limit “will ensure that no
single cable operator can create a barrier to a video programming network’s
entry into the market or cause a video programming network to exit the market
simply by declining to carry the network.”

The move is a major blow to
Comcast, the biggest cable platform in the U.S., which is already nearing the
30-percent cap.

Also announced late yesterday was
an amendment to the 32-year-old ban on newspaper and broadcast outlet
cross-media ownership in local markets. The new regulations allow a newspaper
to own one television station or one radio station in the 20 largest markets.
If the transaction involves a television station, there must be at least eight,
independently owned “major media voices (defined to include major newspapers
and full-power TV stations)” remaining in the local market. The station also
cannot be among the top four ranked stations in the market. If those conditions
do not apply, a waiver can be granted if an outlet is “failing” or has
“failed.” “To be deemed “failed,” the newspaper or broadcast station would have
to have ceased publication or gone dark at least four months before the filing
of an application, or be in bankruptcy proceedings. To be treated as “failing,”
the applicant must show that (a) the broadcast station has had an all-day
audience share of 4 percent or lower, (b) the newspaper or broadcast station
has had a negative cash flow for the previous three years, (c) the combination
will produce public interest benefits, and (d) the in-market buyer is the only
reasonably available candidate willing and able to acquire and operate the
newspaper or station.”

“Permitting cross-ownership can preserve the viability of
newspapers by allowing them to share their operational costs across multiple
media platforms,” the FCC said.

The new cross-media rules are more moderate than those first
proposed in 2003, which would have allowed transactions
in the top 170 markets.

Both rules were approved by votes
of 3 to 2, and both are likely to be challenged in court.

—By Mansha Daswani