**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | MM Docket No. 01-235         |
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| Cross-Ownership of Broadcast     | ) | MM Docket No. 96-197         |
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**ORDER AND**

**NOTICE OF PROPOSED RULE MAKING**

**Adopted:** September 13, 2001 **Released:** September 20, 2001

Comment Date: December 3, 2001

Reply Comment Date: January 7, 2002

By the Commission: Commissioner Copps issuing a statement.

# INTRODUCTION

1.  The Commission committed to initiate this *Notice of Proposed
    Rulemaking* to consider revisions to its newspaper/broadcast
    cross-ownership rule in the June 2000 *Biennial Review Report* on
    broadcast ownership rules. In this proceeding, we seek comment on
    whether and to what extent we should revise our cross-ownership rule
    that bars common ownership of a broadcast station and a daily
    newspaper in the same market. The rule was designed to promote two
    of the Commission's longstanding goals in broadcast regulation --
    competition and diversity of information sources. The Commission
    first adopted the rule in 1975, when there were approximately 1,700
    daily newspapers, 7,500 radio stations, and fewer than 1,000 TV
    stations. Three national commercial broadcast networks that had a
    combined prime time audience share of 95%.[^1] Today, the multimedia
    environment in which broadcast stations and newspapers operate is
    significantly different. Although there are now fewer than 1,500
    daily newspapers, there are not only many more broadcast stations,
    but also wholly new programming networks and distribution platforms.
    There are more than 12,000 radio stations, and more than 1,600
    full-power TV stations. Commercial TV stations distribute the
    programming of seven national commercial networks, and cable
    television systems and satellite carriers distribute multiples of
    that number. In the current 2000-2001 TV season just completed, the
    four largest broadcast networks have a combined prime time audience
    share of 50%, and basic cable networks have a combined prime time
    audience share of 42%.[^2] This proceeding seeks comment on the
    relevance of the various changes in the multimedia environment to
    the newspaper/broadcast cross-ownership rule. We note that currently
    there are approximately fifty grandfathered newspaper/broadcast
    combinations and 4 permanent waivers of the cross-ownership rule. We
    urge commenters to provide specific information about the effects
    these combinations have had in their markets. This data will enable
    the Commission to analyze the issues based on a solid and complete
    factual foundation and make decisions accordingly. As the Commission
    stated when it adopted the rule, "\[t\]he Commission is obliged to
    give recognition to the changes which have taken place and see to it
    that its rules adequately reflect the situation as it is, not
    was."[^3]

# BACKGROUND

2.  The newspaper/broadcast cross-ownership rule prohibits common
    ownership of a full-service broadcast station and a daily newspaper
    when the broadcast station's service contour encompasses the
    newspaper's city of publication.[^4] As the Commission explained
    when it adopted the rule, "\[t\]he multiple ownership rules," such
    as the newspaper/broadcast cross-ownership rule, "rest on two
    foundations: the twin goals of diversity of viewpoints and economic
    competition."[^5] The Commission largely based the
    newspaper/broadcast cross-ownership rule in particular on the
    diversity goal, explaining that "it is essential to a democracy that
    its electorate be informed and have access to divergent viewpoints
    on controversial issues."[^6] The Commission reasoned that
    structural regulation, such as the newspaper/broadcast
    cross-ownership rule, promotes diversification of ownership that in
    turn promotes diversification of viewpoint, because "it is
    unrealistic to expect true diversity from a commonly owned
    station-newspaper combination. The divergency of their viewpoints
    cannot be expected to be the same as if they were antagonistically
    run."[^7] The Supreme Court agreed, upholding the
    newspaper/broadcast cross-ownership rule against a First Amendment
    challenge. The Supreme Court explained that "notwithstanding the
    inconclusiveness of the rulemaking record, the Commission acted
    rationally in finding that diversification of ownership would
    enhance the possibility of achieving greater diversity of
    viewpoints."[^8]

3.  In adopting its rule, the Commission had not only prohibited future
    newspaper/broadcast combinations, but also required existing
    combinations in highly concentrated markets to divest holdings to
    come into compliance within five years. The Commission grandfathered
    combinations in other markets, so long as the parties to the
    combination remained the same. The Commission, however, contemplated
    waiving the rule, for existing or future combinations, if: (1) a
    combination could not sell a station; (2) a combination could not
    sell a station except at an artificially depressed price; (3)
    separate ownership and operation of a newspaper and a station could
    not be supported in a locality; or (4) for whatever reason, the
    purposes of the rule would be disserved.[^9] In upholding the rule,
    the Supreme Court noted the availability of waivers to underscore
    the reasonableness of the rule.[^10] The Commission has granted only
    four permanent waivers in the twenty-six years since it adopted the
    rule.[^11]

4.  For a number of years in the 1980s and 1990s, Congress prohibited
    the Commission from spending any of its appropriations "to repeal,
    retroactively apply changes in, or to begin or continue a
    reexamination of the rules and the policies established to
    administer" the newspaper/broadcast cross-ownership rule.[^12] In
    the Commission\'s 1994 appropriation, however, Congress permitted
    the Commission to revise its policies with respect to waivers for
    newspaper/radio combinations.[^13] Beginning with the Commission's
    1996 appropriation, Congress has not restricted the Commission's
    review of either its waiver policies or the rule itself.[^14]

5.  Following the changes in the Commission's appropriations legislation
    and to develop issues raised by the merger of Capital Cities/ABC and
    The Walt Disney Company,[^15] the Commission issued a *Notice of
    Inquiry* in 1996 to seek comment on possible revisions to its
    newspaper/radio cross-ownership waiver policies.[^16] In the
    *Newspaper/Radio NOI*, the Commission asked whether it should revise
    its waiver policy in ways that might make it less stringent and/or
    more objective. For example, it asked whether the Commission should
    adopt a policy to waive the rule when a transaction involves parties
    in a market of a particular rank and/or a certain number of
    independently owned voices would remain in the market after a
    proposed newspaper/radio combination.[^17]

6.  In February 1996, the Telecommunications Act of 1996 also became
    law.[^18] Section 202 instructed the Commission to revise particular
    ownership rules and waiver policies, but the newspaper/broadcast
    cross-ownership rule and waiver policies were not among them.[^19]
    In fact, the legislative history of the 1996 Act shows that Congress
    expressly considered but rejected making changes to the
    newspaper/broadcast cross-ownership policies.[^20] At the same time,
    section 202(h) of the 1996 Act instructs the Commission to review
    each of its ownership rules biennially, to determine whether the
    rule is "necessary in the public interest as a result of
    competition" and repeal or modify any rule it finds is no longer in
    the public interest. In sum, Congress has directed the Commission to
    review its newspaper/broadcast cross-ownership rule as part of its
    biennial review process, but has not directed it to take any
    particular action.[^21]

7.  As required by section 202(h) of the 1996 Act, the Commission
    examined the newspaper/broadcast cross-ownership policies more
    broadly in its first biennial review proceeding on broadcast
    ownership rules. The Commission adopted another *Notice of Inquiry*
    in 1998,[^22] and issued a report last year, on six of its broadcast
    ownership rules, including the newspaper/broadcast cross-ownership
    rule. The Commission concluded that the newspaper/broadcast
    cross-ownership rule continues to serve the public interest because
    it furthers diversity, and therefore should be retained.[^23]
    However, the Commission also noted that the rule might not be
    necessary to achieve its intended public interest benefits under
    certain circumstances. More specifically, the Commission stated that
    "\[t\]here may be instances, for example, in which, given the size
    of the market and the size and type of the newspaper and broadcast
    outlet involved, sufficient diversity and competition would remain
    if a newspaper/broadcast combination were allowed."[^24] Thus, the
    Commission committed to undertaking a rulemaking proceeding to
    tailor the rule accordingly.[^25]

# 

**DISCUSSION**

8.  Since the Commission adopted the newspaper/broadcast cross-ownership
    rule over twenty-five years ago, the local media marketplace has
    changed dramatically. We focus on the *local* media marketplace
    because this is the marketplace with which the Commission's
    newspaper/broadcast policies have been concerned: the rule prohibits
    common ownership of broadcast stations and newspapers within the
    same community. In this proceeding, we seek to examine our
    newspaper/broadcast cross-ownership policies in the context of these
    changes in the local media marketplace, evaluating the extent to
    which the rule is, in the language of section 202(h) of the Act,
    "necessary in the public interest as a result of competition," and
    taking into account our diversity and competition goals.[^26] We
    therefore seek comment on how the changes in the local media
    marketplace impact our competition and diversity goals, and whether
    these changes should impact our newspaper/broadcast cross-ownership
    rule and waiver policies.

9.  [Current Status of the Media Marketplace]{.underline}. The number of
    local media outlets has grown substantially since 1975. A
    significant portion of this growth has occurred within the broadcast
    industry itself. A total of 7,785 radio stations were on the air as
    of January 1, 1975;[^27] as of June 30, 2001, the Commission had
    licensed 12,932 radio stations.[^28] A total of 952 TV stations were
    on the air on January 1, 1975;[^29] as of June 30, 2001, the
    Commission had licensed 1,678 full power television stations, 2,396
    low power TV stations, and 232 Class A TV stations.[^30] In 1975,
    there were three national commercial broadcast networks, and today
    there are seven such networks. Although the number of broadcast
    networks and stations has increased, however, the relative
    viewership of them has declined. The prime time audience share of
    the affiliates of the three major broadcast networks (ABC, CBS, NBC)
    was 95% in 1975; today, the prime time audience share of all
    commercial television stations (affiliates of ABC, CBS, Fox, NBC,
    PaxNet, UPN, WB, and independent stations) is only 61%. We seek
    comment on the relevance of these developments to our
    newspaper/broadcast cross-ownership policies.

10. Changes in the newspaper industry since 1975 have been more mixed.
    Although the number of daily newspapers has decreased since 1975,
    the number of weekly newspapers has increased. The number of daily
    newspapers has declined from 1,756 in 1975, to 1,422 in 2000.[^31]
    The total circulation of morning and evening daily newspapers has
    declined by about 8% from 60.6 million in 1975 to 55.8 million in
    2000.[^32] However, the combined circulation of smaller, more
    targeted newspapers, often published weekly, has more than doubled:
    7,612 weekly newspapers had a circulation of approximately 35.9
    million in 1975, whereas 7,915 such newspapers had a circulation of
    approximately 81.6 million in 1996.[^33] These weekly newspapers are
    often the source of local information. We seek comment on these
    figures and their significance to our newspaper/broadcast
    cross-ownership rule, as well as any other data we should consider.

11. Besides the changes in the broadcast and newspaper industries, there
    has been a proliferation of other outlets in the local media
    marketplace. In 1975, cable television systems served only 13% of TV
    households.[^34] By June 2000, they served 67.4% of TV households,
    or 67.7 million people.[^35] There are over 200 video programming
    services available on cable systems.[^36] In October 2000, 99% of
    all cable customers subscribed to systems with capacities of 30
    channels or more, and over 68% subscribed to systems with capacities
    of 54 of more channels.[^37] More than 6% subscribed to systems with
    a channel capacity of 91 or more channels.[^38] The combined
    audience share of basic and premium networks is 48%.[^39] Other
    multichannel programming distributors (MVPDs), most notably direct
    broadcast satellite (DBS) providers, now compete in the marketplace
    but were nonexistent in 1975. DBS has grown rapidly, and now serves
    nearly 13 million subscribers, or over 15% of MVPD households.[^40]
    Other MVPDs serve another nearly 4 million subscribers. All of these
    MVPDs distribute the programming of many networks. Today, almost 84%
    of all TV households subscribe to an MVPD.[^41] We seek comment on
    the impact of these alternative media outlets on our
    newspaper/broadcast cross-ownership policies.

12. As of November 2000, 56% of Americans had access to the Internet
    from home,[^42] which was not commercially available in 1975. The
    Internet has the potential to be a significant source of local and
    national news and information, and, to a limited though increasing
    extent, audio and video programming. The Internet may provide
    advertisers with alternative means of reaching their potential
    customers. We seek specific data on the impact of the Internet in
    the local media marketplace.

13. Although the number of media outlets has grown, so has the
    concentration in their ownership. Historically, the Commission has
    had both local and national ownership limits for broadcast stations.
    In 1975, on the local level, the Commission prohibited common
    ownership of two radio stations within the same type of service, or
    two TV stations when their signal contours overlapped. On the
    national level, the Commission prohibited common ownership of more
    than seven AM, seven FM, and seven TV stations. Pursuant to the 1996
    Act, the Commission eliminated any national ownership limit on radio
    stations, and relaxed the national TV ownership limit to permit
    common ownership of TV stations that reach as many as 35% of TV
    households. It also relaxed its local radio ownership rules, and in
    1999, its local TV multiple ownership rule. The result is that,
    while in 1975 a single entity could not own more than fourteen radio
    stations nationwide, today one entity owns more than 1,000 radio
    stations nationwide.[^43] In addition, at approximately the same
    time that the 1996 Act became law, there were approximately 5,100
    owners of commercial radio stations, while now there are only
    approximately 3,800 owners, a decrease of 25%. Moreover, in 1995
    there were 543 entities that owned commercial TV stations,[^44]
    while today there are only 360.[^45] We seek comment on the
    relevance of consolidation in the broadcast industry to our
    newspaper/broadcast cross-ownership policies, and additional data on
    how this consolidation has impacted the local media marketplace.

14. [Diversity]{.underline}. As noted above, the Commission adopted the
    newspaper/broadcast cross-ownership rule largely to promote and
    protect a diversity of viewpoints.[^46] The Commission has sought to
    ensure that the public has access to a diversity of viewpoints to
    promote First Amendment values. In the words of the Supreme Court,
    "\[t\]hat Amendment rests of the assumption that the widest possible
    dissemination of information from diverse and antagonistic sources
    is essential to the welfare of the public. . . ."[^47] The
    Commission historically has sought to promote its goal of viewpoint
    diversity indirectly through structural regulation, such as
    ownership rules.[^48] We note that the Commission goal of diversity
    of viewpoint has been particularly important in the context of
    newspaper/broadcast cross-ownership, given the reliance the public
    has placed on these media as sources of local news and
    information.[^49]

15. As we evaluate our newspaper/broadcast cross-ownership rule, we
    begin by asking whether the newspaper/broadcast cross-ownership rule
    continues to be necessary to protect a diversity of viewpoints. As
    noted above, consumers today have many media outlets from which to
    obtain news and information. While the number of daily newspapers
    has declined, the number of weekly newspapers has doubled
    since 1975. In addition, approximately 77% of commercial TV stations
    provide local news.[^50] Virtually all affiliates of ABC, CBS, and
    NBC provide local news, and approximately one third of other
    broadcast TV stations do.[^51] This latter group includes stations
    affiliated with the Fox network, which did not even exist in 1975.
    As of 1999, approximately thirty regional cable news networks
    provided news and information targeted to more local areas than
    their national counterparts, such as CNN.[^52] These networks did
    not exist in 1975. Recent studies also show that the Internet is
    becoming an increasingly significant source of news and information.
    Indeed, these studies suggest that some Americans are turning to the
    Internet for news instead of TV, in particular broadcast TV.[^53] We
    seek comment on what information consumers actually access and how
    successful independent Internet-based providers of information have
    been. Are the data different for different types of local markets,
    or for different demographic and income groups? If so, what is the
    relevance of those differences for purposes of evaluating the
    newspaper/broadcast cross-ownership rule? Are there still other
    media that are sources of local news and information? Does the
    proliferation of these new media mean that the newspaper/broadcast
    cross-ownership rule is no longer necessary to ensure that consumers
    of news and information have access to diverse ideas and
    viewpoints?[^54]

16. Although the number of media outlets has increased, the Commission
    traditionally has focused on the number of different owners, as
    opposed to the number of media outlets, because as noted, the
    Commission has thought that diversity in ownership promotes
    diversity in viewpoint. According to this theory, common ownership
    of media outlets means that they are one and the same for purposes
    of viewpoint diversity. Under this view, the growth in the number of
    broadcast outlets is counterbalanced by the consolidation in
    ownership of them. Accordingly, the development of regional cable
    news networks might not be considered especially important in terms
    of diversity analysis, because more than half of them are owned by
    co-located broadcast stations or newspapers.[^55] In addition, the
    growth of news-oriented websites likewise might not be considered
    particularly significant, because many do not focus on local news
    and information, and those that do are often operated by existing
    local media, such as broadcast stations and newspapers.[^56] We seek
    comment on the level of independence of other media, including the
    Internet.

17. The relationship between ownership diversity and viewpoint diversity
    is the subject of considerable debate. The Commission has noted the
    argument that "the greater the concentration of ownership, the
    greater the opportunity for diversity of content."[^57] Under this
    view, competing parties in a market have a commercial incentive to
    air "greatest common denominator" programming, while a single party
    that owns all stations in a market has a commercial incentive to air
    more diverse programming to appeal to all substantial interests. On
    the other hand, there also is the argument that the existence of
    multiple owners competing in a market is likely to provide viewpoint
    diversity -- rather than content diversity -- providing the
    "divergent viewpoints on controversial issues" which the Commission
    has stated is "essential to democracy."[^58] We seek comment on
    these competing theories of the relationship between ownership
    diversity and viewpoint diversity. Are commercial incentives
    adequate to protect the public's access to a variety of viewpoints
    from commonly owned media? Is there a difference between the
    relevance of the competing theories in terms of diversity of
    entertainment programming and news or public affairs programming? Or
    as applied across different media? We note that the Commission has
    suggested that the theory that consolidation promotes diversity in
    content might apply to entertainment programs and formats, but not
    to news and public affairs programming.[^59] Should the Commission
    give greater weight to viewpoint diversity in the latter area
    because it serves core First Amendment values of helping to ensure
    robust discussion of issues of public concern?[^60] Are there ways
    that the Commission can attempt to promote viewpoint diversity
    beyond structural regulation? What role if any do other legal
    requirements, for example those that require broadcasters to provide
    political candidates access to their facilities under certain
    conditions,[^61] or that require cable systems to set aside channel
    capacity for certain uses (*e.g.*, PEG, leased access),[^62] play in
    promoting diversity? Historically, broadcast stations and newspapers
    have been viewed as the gatekeepers in the local marketplace of
    ideas. Given the significant changes in the local media marketplace,
    is this viewpoint still accurate?

18. In addition to comments on the competing theories of viewpoint
    diversity described above, we seek comment on and data about actual
    and potential effects on diversity of the newspaper/broadcast
    cross-ownership rule and our proposed options for modifying the
    rule. Is it possible that the effect on diversity will be different
    depending on the size of the markets involved, or the predominance
    of newspapers and broadcast stations in a particular local market?
    Would the increase or decrease in access to diverse viewpoints
    affect different demographic or income groups differently? Is there
    some other variable that would affect the relationship between
    ownership diversity and viewpoint diversity? Commenters arguing for
    or against these theories are encouraged to provide specific
    analyses and data to support their arguments.

19. [Competition]{.underline}. Our multiple ownership rules
    traditionally have been designed to serve the "twin" goals of
    competition and diversity.[^63] In addition, section 202(h) of the
    1996 Act instructs the Commission to review each of it ownership
    rules, including the newspaper/broadcast cross-ownership rule,
    biennially to determine whether the rule is "necessary in the public
    interest as a result of competition," and then to tailor the rule
    accordingly. As we review our newspaper/broadcast cross-ownership
    policies, we therefore seek information about the economic impact of
    maintaining or modifying the rule. As we do so, we focus on the
    primary economic market in which broadcast stations and newspapers
    may compete: advertising. As the Commission stated in its recent
    proceeding relaxing the dual network rule, the Commission has
    historically considered and promoted competition in advertising
    markets in order to enhance the welfare of listeners and viewers of
    broadcast services.[^64] This is because advertisers provide all of
    the financial support for programming on broadcast stations, and
    have a commercial incentive to prefer programming with widespread
    appeal, all other things remaining the same.[^65] As more and more
    Americans, however, subscribe to MVPDs, and thus do not receive
    their television service free and over-the-air, it may be
    appropriate for the Commission to reexamine its approach to and
    emphasis on the advertising market.[^66] Who benefits from lower
    advertising rates? Is it the role of the Commission to ensure these
    benefits? What are the other economic markets in which broadcast
    stations and newspapers compete? Is there a better measure of the
    state of economic competition than the advertising market?

20. Competition analysis requires us to define the relevant product and
    geographic markets in which broadcasters and newspapers compete, as
    well as the market share of the participants within the relevant
    market, and then weigh the competitive benefits of consolidation
    (*e.g*., economies of scale and scope that may lead to lower costs
    and prices or superior products) against the harms (*e.g*., the
    exercise of market power).[^67] We seek information that would help
    us conduct our analysis.

21. Our first task is to define the relevant product market. Measured on
    an aggregate, national basis, advertisers spend about 45% of all
    local advertising dollars on newspapers, about 16% on radio
    stations, and about 15% on broadcast TV stations.[^68] There is
    considerable debate, however, on the extent to which advertising in
    one of these media is a substitute for advertising on another, and
    thus the extent to which they are in fact in the same product
    market.[^69] We seek comment on this issue. To what extent is
    advertising on a broadcast station a substitute for advertising in a
    newspaper, *i.e*., to what extent do advertisers shift their
    expenditures between broadcast stations and newspapers as one medium
    raises the prices it charges for advertising? Does the answer depend
    on whether the broadcast medium is radio or television? Does the
    answer depend on whether the newspaper is published daily or weekly?
    Do advertisers seek to use broadcast media and newspapers to reach
    different demographic groups? We also note that classified
    advertising appears to be a type of advertising for which broadcast
    stations do not compete with newspapers. What other types of
    advertising should be viewed as a separate market? Have the decrease
    in the number of daily newspapers, and the increase in the number of
    broadcast stations, affected the way in which these media compete?
    We note that when the Commission adopted the newspaper/broadcast
    cross-ownership rule, it observed that the Department of Justice
    defined the relevant product market to include newspapers and
    broadcast stations.[^70] Currently, however, the Department of
    Justice views radio as a separate product market.[^71] Courts have
    likewise concluded that the local newspaper advertising market is a
    distinct antitrust market from the local media advertising
    markets.[^72] We seek comment on these views.

22. Are other media reasonable substitutes for advertising on broadcast
    stations, newspapers or both, such that these other media should be
    considered in the same product market? Measured on an aggregate
    national basis, advertising on cable now accounts for nearly 4% of
    the total of all local advertising dollars.[^73] Cable systems'
    share of the local advertising market thus appears small currently,
    but it is continuing to grow. For example, cable systems' share of
    the local advertising market was only 1% in 1990, meaning that it
    has quadrupled in the last decade.[^74] Does the availability of
    advertising on cable systems constrain broadcast stations' and
    newspapers' ability to raise their advertising prices? Do other
    MVPDs such as DBS compete with broadcast stations and newspapers in
    the local advertising market? Do they have plans to do so? How do
    banner ads on websites affect the relevant product market? How
    substitutable is Internet advertising for other forms of media
    advertising? Are there other media that should be included in the
    relevant market?

23. When analyzing the potential competitive effects of a proposed
    newspaper/broadcast combination, what is the relevant geographic
    market? The relevant geographic market is some local area, but what
    are the precise parameters of that area? We note that antitrust
    analysis defines the relevant geographic market as the region where
    a hypothetical monopolist that is the only producer of the relevant
    product in the region could profitably raise the price of the
    relevant product.[^75] Under the Commission's current rule,
    newspaper/broadcast combinations are prohibited when the broadcast
    station's service contour encompasses the entire community in which
    the newspaper is published. If local advertisers would respond to an
    advertising price increase in the community in which the newspaper
    is published by shifting to alternative suppliers located outside
    this geographic area, the relevant geographic market should be
    larger than the community in which the newspaper is published. We
    seek comment on how to define the relevant geographic market for
    purposes of our newspaper/broadcast cross-ownership analysis.

24. Once we define the relevant product and geographic markets, how
    should we measure the market share of those that compete in the
    market? Market share is often measured by revenue. Local advertising
    revenue, however, is often not publicly available for some media.
    Should we therefore instead rely on circulation and ratings
    information, which presumably correlate to advertising rates, and
    therefore overall revenue and share? Commenters arguing against
    reliance on circulation or ratings information should propose
    alternative bases of measurement. Industry-accepted ratings services
    report on how many listeners and viewers "consume" particular
    content of broadcast stations. The Arbitron Company reports on the
    radio marketplace, and Nielsen Media Research reports on the TV
    marketplace. Other entities, such as SRDS, provide data on the
    circulation of newspapers. Based on these reports, it is possible to
    determine how many listeners or viewers tune in to a broadcast
    station for a particular program, and how many people purchase a
    newspaper within a particular area. How should we compare newspaper
    circulation with radio and television ratings?

25. What are the benefits of newspaper/broadcast combinations, not only
    to the combinations, but also to advertisers, and the public? The
    joint operation of a broadcast station and a newspaper may create
    efficiencies and synergies. For example, the efficiencies of a
    merger may enable a broadcast station and a newspaper to combine
    sales operations and staff, and thereby save expenses or reduce
    advertising prices. At least some of these savings could be passed
    on to advertisers in the form of lower advertising rates. Some of
    the additional savings in advertising expenses could also be passed
    on to listeners, viewers, and subscribers in the form of enhanced
    content. Is there a difference in efficiencies between combining a
    newspaper and a radio station, as compared to combining a newspaper
    and a TV station? Commenters in our 1998 biennial review proceeding
    stated that common ownership produces cost savings in business
    administration.[^76] We seek information on the nature and scope of
    efficiencies combinations might realize, and the nature and
    magnitude of benefits that flow through to advertisers and
    ultimately to consumers.[^77] We seek evidence that
    newspaper/broadcast combinations produce efficiencies that flow
    through to advertisers and consumers. Studies showing that
    advertising rates for newspaper/broadcast combinations are
    significantly lower than advertising rates for separately owned
    newspapers and broadcast stations would be particularly useful.

26. What economic harms might newspaper/broadcast combinations bring?
    The potential harms of such combinations include creating and
    exercising market power. A particular combination may garner such a
    share of the local advertising market that advertisers believe they
    must advertise on the combination's media in order to reach
    consumers, such that the combination can charge anticompetitive
    prices. We seek additional information on the nature and scope of
    the economic harms that newspaper/broadcast combinations might
    bring. Studies and other evidence showing that advertising rates for
    newspaper/broadcast combinations are significantly higher than
    advertising rates for separately owned newspapers and broadcast
    stations would be particularly useful. It would also be useful to
    identify the associated harm to consumers.[^78]

27. We have sought comment above on the degree to which broadcast
    stations and newspapers compete for advertising dollars. Are there
    other markets in which broadcast stations and newspapers compete?
    For example, broadcast stations and newspapers compete to provide
    news. They do so to attract readers, listeners, and viewers, in
    order to attract advertisers. Do they compete to provide news for
    other reasons that should be relevant to our analysis? How should
    the non-advertising economic markets in which broadcast stations and
    newspapers compete affect our newspaper/broadcast cross-ownership
    policies?

28. [Existing Newspaper/Broadcast Combinations]{.underline}. As we
    consider the environment in which broadcast stations and newspapers
    operate, we seek comment in particular on the experience of existing
    newspaper/broadcast combinations. As noted above, the Commission
    grandfathered most combinations that existed at the time it adopted
    its rule, and approximately fifty of these remain today. In
    addition, the Commission has granted four permanent waivers of the
    rule. We seek further comment on the experience of co-located
    newspaper/broadcast combinations, because they provide concrete
    examples of how the marketplace may be affected by changes to our
    rule. What sorts of public interest benefits or harms have these
    combinations produced?

29. How have combinations affected advertising rates? Have the
    combinations sold advertising at lower rates than their competitors?
    Or are advertising rates higher in these markets? Has there been a
    difference between combinations involving newspapers and radio
    stations, as opposed to newspapers and TV stations? At least one
    study concluded that common ownership of a newspaper and a TV
    station in the same market significantly decreases newspaper
    advertising rates, but common ownership of a newspaper and a radio
    station does not.[^79]

30. How have combinations affected news? Have the combinations brought
    additional news outlets to the marketplace, or otherwise enhanced
    news coverage? We note that commenters in our 1998 biennial review
    proceeding stated that common ownership has enabled them to provide
    more news, to distribute it through new media (such as cable systems
    and websites), and to treat subjects in more depth.[^80] What sorts
    of harms have the combinations produced? Even if the amount or
    quality of news has increased, has viewpoint diversity decreased?

31. [Legal Issues]{.underline}. As we consider our competition and
    diversity goals in the context of newspaper/broadcast combinations,
    we note the recent decision of the U.S. Court of Appeals for the
    D.C. Circuit striking down two ownership rules that the Commission
    had adopted to implement the Cable Act of 1992.[^81] One of these
    rules restricted the number of subscribers that a given multiple
    system operator can serve to 30% of MVPD subscribers,[^82] and the
    other prohibited cable systems from filling more than 40% of their
    channel capacity with affiliated programming networks.[^83] In
    analyzing petitioners' arguments that these rules interfered with
    their speech in violation of the First Amendment, the court applied
    the "intermediate scrutiny" test on review. Under that test, a
    regulation will be upheld if "it furthers an important or
    substantial governmental interest; if the governmental interest is
    unrelated to the suppression of free expression; and if the
    incidental restriction on alleged First Amendment freedoms is no
    greater than is essential to the furtherance of that interest."[^84]
    Consistent with earlier holdings of the Supreme Court,[^85] the D.C.
    Circuit found the Commission's interest in "the preservation of
    competition" and "the promotion of diversity in speech and ideas"
    important government interests.[^86]

32. The D.C. Circuit also found, however, that the Commission had not
    provided the "substantial evidence" necessary to show how its rules
    furthered its interest in "the preservation of competition," and
    remanded the matter to the Commission. The court explained that
    "\[s\]ubstantial evidence does not require a complete factual record
    -- we must give appropriate deference to predictive judgments that
    necessarily involved the expertise and experience of the
    agency."[^87] Holding that the Commission had not satisfied the
    applicable test, it remanded the matter to the Commission for
    further proceedings. We seek comment on the relevance of the *Time
    Warner* decision to the competition goals that inform our
    newspaper/broadcast cross-ownership policies. Are the First
    Amendment interests at stake here the same as in *Time Warner*? As
    commenters advocate particular public policy options, we encourage
    them to consider the level of proof required to support them under
    *Time Warner*, and whether these standards are applicable in the
    newspaper/broadcast context.

33. We note that the court in *Time Warner* held that the Commission
    could not rely on its diversity goal alone to support the horizontal
    and vertical restraints at issue in that case.[^88] We also note,
    however, that the court's holding was based on its interpretation of
    the specific provision of the Cable Act of 1992 authorizing adoption
    of the cable limits, which focused on competition; the statutory
    source of the newspaper/broadcast cross-ownership policies, on the
    other hand, is the broad public interest standard of Title III. As
    discussed above, the Supreme Court upheld the Commission's
    predominant reliance on the diversity rationale to support its
    newspaper/broadcast cross-ownership policies.[^89] We seek comment
    on the impact of the *Time Warner* case on our diversity analysis,
    and how the marketplace changes that have occurred since the Supreme
    Court upheld the newspaper/broadcast cross-ownership rule may affect
    the First Amendment analysis.

# OPTIONS

34. As the Commission stated in the *Biennial Review Report*, "we
    believe that there may be circumstances in which the rule may not be
    necessary to achieve its intended public interest benefits. We,
    therefore, will initiate a rulemaking proceeding to consider
    tailoring the rule accordingly."[^90] We outline below a variety of
    different approaches that might serve the public interest. We seek
    comment on each of the options below.

    **Modification of Rule or Waiver Policies**

35. We could modify our newspaper/broadcast cross-ownership rule in a
    number of ways to ensure that it best serves our competition and
    diversity goals. Should the Commission adopt any changes by amending
    the rule or by modifying its waiver policies? Amending the rule,
    including adopting clearly defined waiver standards, would provide
    greater guidance and predictability to the public. Modifying our
    waiver policies, however, would allow the Commission to fashion the
    most appropriate solution to any given situation. We seek comment on
    how we can best modify our cross-ownership rule or waiver policies
    to serve the public interest.

36. We outline below possible modifications we could make to the
    newspaper/broadcast cross-ownership rule. These proposals are based
    largely on revisions the Commission has made to other multiple
    ownership rules. Commenters supporting adoption of one or more of
    these proposals should explain how the proposed modification would
    advance our public interest goals of promoting competition and
    diversity. Similarly, commenters proposing modifications not
    discussed in this *Notice* should explain why the public interest
    supports their proposal.

37. [Redefining the Geographic Area]{.underline}. As explained above,
    the current rule prohibits common ownership of a broadcast station
    and a newspaper when the broadcast station's service contour
    encompasses the newspaper's city of publication. We seek comment on
    whether to redefine the geographic area in which the rule operates
    to that local area in which broadcast stations and newspapers
    compete, without regard to contour overlap. Under this approach,
    combinations would be permitted so long as the broadcast station and
    the newspaper are in different markets. This change could be made on
    its own, or in conjunction with other modifications, such as the
    ones set forth below. We seek comment on defining the relevant
    geographic area. In particular, we seek comment on how to define the
    market in which a particular newspaper competes. We have recognized
    that the commonly accepted geographic market for TV is the
    Designated Market Area, or DMA, defined by Nielsen Media
    Research.[^91] Does a newspaper compete throughout a DMA? A commonly
    accepted geographic market within the radio industry is the radio
    metro, defined by The Arbitron Company.[^92] Does a newspaper
    compete throughout a radio metro? How should we treat radio markets
    that are not located in a radio metro? What will be the effect of
    any proposed changes in the geographic market definition on
    competition and diversity?

38. ["Market Concentration" Standard]{.underline}. When the Commission
    revised the TV duopoly rule, it decided not only to redefine the
    geographic scope of the rule to enable stations in separate markets
    to combine, but also to permit smaller stations in the same market
    to combine with each other or with a larger station. One option for
    modifying our newspaper/broadcast cross-ownership policies therefore
    might be to adopt a "market concentration" standard of some kind.
    For example, the Commission might permit combinations between
    broadcast stations and newspapers, so long as their combined or
    individual market shares do not exceed a certain level.

39. We seek comment on a "market concentration" standard. What is the
    appropriate measure of "market concentration" for broadcast stations
    and newspapers, advertising or audience share? How should we define
    the broadcast stations and newspapers with the largest market share?
    With respect to newspapers, should we identify the largest
    participants in a local area by their circulation? What circulation
    should count as large, and what newspaper publications should count
    as being in the market? As we asked above, what should be the
    geographic boundaries of the local area over which we measure
    newspaper circulation?

40. We seek comment on how we should define the top ranked TV stations
    in a market. We note that, in revising the TV duopoly rule, the
    Commission decided to prohibit combinations between stations when
    both are ranked within the top four in the DMA.[^93] The Commission
    explained that "\[t\]hese stations generally have a large share of
    the audience and advertising in their area, and requiring them to
    operate independently will promote competition. In addition, our
    analysis has indicated that the top four-ranked stations in each
    market generally have a local newscast, whereas lower-ranked
    stations often do not have significant local news programming, given
    the costs involved. Permitting mergers among these two categories of
    stations, but not among the top four-ranked stations, consequently
    might pose less concern over diversity of viewpoints in local news
    presentation, which is at the heart of our diversity goal."[^94] We
    seek comment on the relevance of this reasoning to our
    newspaper/broadcast cross-ownership policies.

41. We also seek comment on how to define the top ranked radio stations
    in a market. We note that, according to our Mass Media Bureau's most
    recent report on the radio industry, "\[t\]he two largest radio
    firms in each radio market have, on average, 70 percent of the
    market's radio advertising revenue."[^95] Would it therefore be
    appropriate to prohibit combinations between the two largest radio
    station owners, or radio station owners with stations that have an
    advertising or audience share that exceeds a certain limit, and the
    largest newspapers in the same market? We also note, however, that
    in revising its radio/TV cross-ownership rule, the Commission
    treated all radio stations similarly, and thus permitted TV stations
    to combine with radio stations up to a voice-dependent numerical
    limit, without regard to the radio station's market share. Would it
    therefore be appropriate not to restrict the type of radio stations
    that can combine with newspapers? Regardless of whether we limit the
    kind of radio station that a newspaper may acquire, should we limit
    the number of radio stations it may acquire? How many radio stations
    should we permit to be commonly owned with a newspaper? Should any
    limit depend on the market share of the radio station(s) involved?
    Should the appropriate number depend on the other media properties
    attributed to the radio station owner, such as broadcast TV or cable
    systems? We seek comment on the mechanism that will best serve the
    public interest.

42. ["Voice Count" Standard]{.underline}. Another option for modifying
    the newspaper/broadcast cross-ownership policies would be to permit
    combinations so long as a certain number of independently owned
    media "voices" would remain in the market post-merger. This approach
    would be consistent with the recently revised radio/TV
    cross-ownership rule, which permits common ownership of a TV station
    and up to four radio stations if at least ten media voices would
    remain in the market, and up to six radio stations if at least
    twenty media voices would remain in the market.[^96] Several
    commenters in the 1998 biennial review proceeding favored such an
    approach.[^97] Under our current radio/TV cross-ownership rule,
    media "voices" include TV stations within the DMA, radio stations
    within the radio market within the DMA, newspapers published four or
    more days a week with a circulation of 5% or more within the DMA,
    and cable (as one voice) if generally available in the DMA.[^98]
    This approach would ensure a "floor" of independently owned outlets,
    regardless of market size. However, since the requirement that a
    minimum number of voices remain in a market necessarily disfavors
    combinations in markets with fewer voices, are there alternative
    approaches that might provide relief in these markets but still
    preserve our competition and diversity goals? If we were to adopt a
    voice count approach, how should we resolve mutually exclusive
    applications, *i.e*., applications filed at the same time both of
    which could not be granted without reducing the "floor" that our
    policy would be designed to protect against?

43. One particular formulation of the newspaper/broadcast
    cross-ownership policy might treat a daily newspaper as the
    equivalent of a TV station, and thus permit common ownership of
    newspapers and several radio stations, or one TV station, if a
    certain number of voices would remain in the market. Or are
    newspapers a sufficiently distinct medium of expression, such that
    they should not be treated similar to a TV station? We seek comment
    on whether it would be appropriate to adopt a voice count test in
    the newspaper/broadcast context, and if so, on how many voices we
    should require, and what voices should qualify. In revising the
    radio/TV cross-ownership rule, the Commission decided to count
    toward the number of voices necessary for a particular transaction
    only those newspapers published at least four days a week with a
    circulation of 5% or more in the DMA.[^99] The Commission explained
    that "\[o\]ur intent in this regard is to include only those
    newspapers that are widely available throughout the DMA and that
    provide coverage of issues of interest to a sizeable portion of the
    population. Although we recognize that other publications also
    provide a source of diversity and competition, many of these are
    targeted to particular communities and are not accessible to, or
    relied upon by, the population throughout the local market."[^100]
    Is this rationale equally appropriate for determining the newspapers
    with such a significant market presence that we should not permit
    them to combine with co-located broadcast stations that also have a
    significant presence?

44. In the radio/TV cross-ownership context, the Commission decided to
    count cable systems because they provide some local information, but
    to count them as only one voice because, despite the many channels
    available on the systems, the cable operator either originates or
    selects almost all of the programming.[^101] Should we give greater
    weight to the fact that many cable systems provide leased access and
    PEG channels,[^102] which can provide local information, given that
    the cable system does not control the content of these channels? For
    the revised radio/TV cross-ownership rule, the Commission also
    decided not to count other media, such as other MVPDs and websites,
    because it concluded that they generally do not provide local news
    or were not widely available.[^103] The Commission also decided not
    to count media such as billboards, direct mail, and yellow pages,
    because they are not meaningful sources of information on issues of
    local concern.[^104] We seek comment on whether recent changes in
    the media marketplace, including DBS' potential for providing local
    news and information and the growing availability of local content
    on Internet websites, should impact these decisions.

45. We also note that, in revising the TV duopoly and radio/TV
    cross-ownership rules, the Commission decided to count only those TV
    stations that have service contours that overlap with the service
    contour of at least one of the stations in a proposed combination.
    The Commission did so because some TV stations in a DMA may serve
    very local communities, such that allowing them to combine based on
    circumstances elsewhere in the DMA disserved competition and
    diversity objectives.[^105] If we decide to adopt a voice count
    standard for our newspaper/broadcast cross-ownership policies,
    should we similarly limit the circumstances in which a particular
    voice counts to ensure that the test adequately promotes our goals?
    If so, how could we accomplish this in the newspaper/broadcast
    context? For example, how could we ensure that the only local
    newspaper and the only local TV station that serve a community do
    not combine and threaten competition and diversity in the community?

46. ["Market Concentration"/"Voice Count" Standard]{.underline}. Another
    option for modifying the newspaper/broadcast cross-ownership
    policies would be to combine the "market concentration" and "voice
    count" standards. Under this approach, a combination would be
    permitted so long as both parties do not have a certain market share
    (combined or individual), and so long as a minimum number of voices
    would remain in the market post-merger. This approach would be
    consistent with the recently revised TV duopoly rule, which permits
    common ownership of two TV stations within the same DMA if both are
    not ranked among the top four in the market, and at least eight
    independently owned TV stations would remain in the DMA
    post-merger.[^106] As the Commission explained when it revised the
    TV duopoly rule, "the station rank and voice criteria are designed
    to protect both our competition and diversity concerns."[^107] As
    the Commission further explained, the combined standard permits
    weaker market participants to combine with each other, or with a
    larger participant, and thereby preserves and strengthens their
    ability to compete.[^108]

47. A particular formulation might blend the TV duopoly rule (which
    combines both a market concentration and voice count standard) with
    the radio/TV cross-ownership rule (which is a cross-media policy).
    For example, a combination of a smaller newspaper and a certain
    number of radio stations might be permitted so long as a minimum
    number of media voices would remain. We seek comment on such
    options, and on what level or market concentration, numerical
    limits, or media combinations would be appropriate.

48. [Waiver Standards]{.underline}. As indicated, under current policy,
    the Commission presumes it is in the public interest to waive the
    newspaper/broadcast cross-ownership rule if: (1) a combination could
    not sell a station; (2) a combination could not sell a station
    except at an artificially depressed price; (3) separate ownership
    and operation of a newspaper and a station could not be supported in
    a locality; or (4) for whatever reason, the purposes of the rule
    would be disserved.[^109] Should the Commission amend its waiver
    policies? What standards would best satisfy our competition and
    diversity goals?

49. We note that, in amending the TV duopoly and radio/TV
    cross-ownership rules, the Commission presumed it was in the public
    interest to waive the rules if at least one of the stations had
    failed. To prove that a station has failed, an applicant must show
    that: (1) the station has been dark for at least four months or is
    involved in involuntary insolvency proceedings and (2) the in-market
    buyer is the only entity willing and able to operate the station,
    and sale to an out-of-market buyer is impossible except at an
    artificially depressed price.[^110] In addition, the Commission
    presumes that it is in the public interest to waive the TV duopoly
    rule if at least one of the stations is failing, or authorized but
    not yet constructed. To prove that a station is failing, an
    applicant must show that: (1) at least one of the merging stations
    has a low audience share; (2) the financial condition of at least
    one of the stations is poor; (3) the merger will produce public
    interest benefits that outweigh harm to competition and diversity;
    and (4) the in-market buyer is the only entity willing and able to
    operate the station, and sale to an out-of-market buyer is
    impossible except at an artificially depressed price.[^111] To
    qualify for a waiver under the "unbuilt station" standard, the
    applicant must show that: (1) the combination will result in the
    construction of an authorized but as yet unconstructed station; (2)
    the permittee has made reasonable efforts to construct; and (3) the
    in-market buyer is the only entity willing and able to operate the
    station, and sale to an out-of-market buyer is impossible except at
    an artificially depressed price.[^112] Should these standards be
    adapted to newspaper/broadcast cross-ownership policies, such that
    combinations would be permitted if one of the parties to the
    combination has failed, is failing, or if the combination would
    result in new service?

50. [Retention Period]{.underline}. When the Commission adopted the
    newspaper/broadcast cross-ownership rule, the Commission had to
    grapple with the issue of how long a broadcast licensee could retain
    a daily newspaper it acquired in a community in which it already
    owned a broadcast station. It resolved this issue by stating:

    if a broadcast station licensee were to purchase one or more daily
    newspapers in the same market, it would be required to dispose of
    its stations there within 1 year or by the time of its next renewal
    date, whichever is longer. If the newspaper is purchased less than a
    year from the expiration of the license, the renewal application may
    be filed, but it will be deferred pending sale of the station, if
    necessary, until the year has expired.[^113]

At the time this policy was adopted, the license period for broadcast
stations was three years. Thus, a broadcaster obtaining a local daily
newspaper was to be given until its next renewal, which was no more than
three years away, or, at least one year, whichever period was longer, to
divest itself of one of the media properties. Now, however, the license
term for a broadcast station is eight years.[^114] We seek comment on
whether or not, if we decide to retain the newspaper/broadcast
cross-ownership prohibition in some form, we should modify the retention
policy that applies to acquisition of a newspaper by a broadcast
licensee. We also seek comment on whether the Commission should require
broadcast licensees to notify the Commission at the time they acquire a
daily newspaper in a market in which they hold a television or radio
station license. We also seek comment on whether, if we decide to
shorten the length of time a licensee has to come into compliance after
purchasing a newspaper, we should apply the current criteria to existing
combinations.

51. [Structural Separation]{.underline}. As stated above, we have
    modeled many of the above proposals after approaches the Commission
    has taken in amending other broadcast cross-ownership rules, such as
    the TV duopoly rule and the radio/TV cross-ownership rule. Should
    we, however, instead allow combinations subject to certain
    structural separation requirements? We note that the Canadian
    Radio-television Telecommunications Commission (CRTC) recently
    concluded to allow common ownership of newspapers and TV stations,
    but required the combinations to maintain separate management and
    presentation structures for the news operations of their newspapers
    and TV stations.[^115] The CRTC noted that common ownership could
    create more efficient news operations,[^116] but it also was
    concerned that common ownership "could potentially lead to the
    complete integration of the owner's television and newspaper news
    operations. This integration could eventually result in a reduction
    of the diversity of the information presented to the public and of
    the diversity of distinct editorial voices available in the markets
    served."[^117] The CRTC thus required separation of news management
    functions, but not newsgathering activities.[^118] Should we
    consider an approach similar to that of the CRTC? We note that,
    although the Commission traditionally has not promulgated structural
    separation requirements as part of its broadcast ownership rules, it
    has in other contexts. For example, in order to approve the
    application of a Bell Operating Company (BOC) to provide in-region
    long-distance service, the Commission must find that the BOC will
    provide the service through a separate affiliate that satisfies a
    variety of statutory criteria.[^119] Would structural separation
    requirements both allow broadcast stations and newspapers to realize
    the economic benefits of combined operations, but at the same time
    preserve the interest of the public in having access to distinct
    editorial viewpoints? Have grandfathered combinations been able to
    realize economic efficiencies from consolidating their broadcast and
    newspaper news operations, but still maintain editorial
    independence? What sort of protections and structural separation
    requirements would be necessary to ensure that editorial
    independence would not be compromised?

    **Elimination/Retention of the Rule**

52. Some commenters in response to our *Biennial Review* *NOI* argued
    that the Commission should either completely eliminate or retain the
    newspaper/broadcast cross-ownership rule in its current form. Those
    who supported retaining the rule argued that many of the new media
    outlets do not add to viewpoint diversity on the local level, and
    that new programs by the same broadcasters do not add to viewpoint
    diversity.[^120] They also pointed out that current policies already
    allow broadcast stations and newspapers to realize many economic
    efficiencies, because the current rule permits them to form joint
    ventures, and it permits broadcast stations to merge with newspapers
    when the broadcast station's service contour does not encompass the
    newspaper's city of publication.[^121] Those who supported
    eliminating the rule argued that the multimedia markets are
    competitive and provide a wide variety of information sources.[^122]
    They also contended that the efficiencies of combinations are not
    driven by consolidation of content or editorial decisions, and have
    enabled grandfathered combinations to air more extensive news and
    public affairs programming and to develop new media ventures.[^123]
    If the rule were eliminated, newspaper/broadcast combinations would
    be permitted, subject only to the antitrust laws and Commission
    review of an application for grant, renewal, or transfer of a
    particular broadcast license. We seek comment on the appropriateness
    of either retaining or eliminating entirely our newspaper/broadcast
    cross-ownership rule. In particular, we seek comment on whether
    prophylactic, structural regulation remains necessary to maintain
    sufficiently competitive local advertising markets, as well as
    sufficiently diverse sources of local information. Are the antitrust
    laws sufficient to protect our competition goals? Is the rule
    necessary in its current form to protect our diversity goals?

53. Is there some rationale for eliminating the rule as it applies to
    certain combinations? For example, should we eliminate the rule for
    newspaper/radio combinations, but retain the rule in some form for
    newspaper/TV combinations? Are there different efficiencies from
    newspaper/radio combinations as compared to newspaper/TV
    combinations? Would the efficiencies of combinations allow radio
    stations to provide additional news programming? Would limiting
    deregulation to newspaper/radio combinations best serve our
    diversity goals, since Americans have reported that they rely more
    on TV stations and newspapers than radio stations for local news? In
    addition to the options presented above, we encourage commenters to
    propose additional options not suggested here.

    **CONCLUSION**

54. The Commission adopted its newspaper/broadcast cross-ownership rule
    twenty-five years ago, when the local media marketplace was
    significantly different than it is today. Through this proceeding,
    we seek to examine our cross-ownership policies in the context of
    the current realities of today's local media marketplace, in order
    to ensure that our rules serve the public interest as effectively as
    possible.

    **ADMINISTRATIVE MATTERS**

55. [Comments and Reply Comments]{.underline}. Pursuant to sections
    1.415 and 1.419 of the Commission's rules, 47 C.F.R. §§ 1.415,
    1.419, interested parties may file comments on or before December 3,
    2001, and reply comments on or before January 7, 2002. Comments may
    be filed using the Commission's Electronic Comment Filing System
    (ECFS) or by filing paper copies. *See Electronic Filing of
    Documents in Rulemaking Proceedings*, 63 Fed. Reg. 24,121 (1998).

56. Comments filed through ECFS can be sent as an electronic file via
    the Internet to \<http://www.fcc.gov/e-file/ecfs.html\>. Generally,
    only one copy of an electronic submission must be filed. In
    completing the transmittal screen, commenters should include their
    full name, Post Service mailing address, and the applicable docket
    or rulemaking number. Parties may also submit an electronic comment
    by Internet e-mail. To get filing instructions for e-mail comments,
    commenters should send an e-mail to <ecfs@fcc.gov>, and should
    include the following words in the body of the message, "get form
    \<your e-mail address\>." A sample form and directions will be sent
    in reply.

57. Parties who choose to file by paper must file an original and four
    copies of each filing. All filings must be sent to the Commission's
    Secretary, Magalie Roman Salas, Office of the Secretary, Federal
    Communications Commission, 445 Twelfth Street SW, TW-A325,
    Washington, DC 20554. Parties who choose to file by paper should
    also submit comments on diskette. These diskettes should be
    addressed to: Wanda Hardy, 445 Twelfth Street SW, 2-C221,
    Washington, DC 20554. Such a submission should be on a 3.5 inch
    diskette formatted in an IBM compatible format using Word 97 or
    compatible software. The diskette should be accompanied by a cover
    letter and should be submitted in "read only" mode. The diskette
    should be clearly labeled with the commenter's name, docket number
    of the proceeding, type of pleading (comment or reply comment), date
    of submission, and the name of the electronic file on the diskette.
    The label should also include the following phrase: "Disk Copy --
    Not an Original." Each diskette should contain only one party's
    pleading, preferably in a single electronic file. In addition,
    commenters must send diskette copies to the Commission's copy
    contractor, Qualex International, Portals II, 445 12^th^ Street SW,
    CY-B402, Washington, DC 20554.

58. The full text of this document, and comments and reply comments
    filed in this proceeding, are available for public inspection and
    copying during regular business hours at the FCC Reference Center,
    Portals II, 445 Twelfth Street SW, Room CY-A257, Washington,
    DC 20554. Persons with disabilities who need assistance in the FCC
    Reference Center may contact Bill Cline at (202) 418-0270, TTY (202)
    418-2555, or <bcline@fcc.gov>. Comments and reply comments are
    available electronically in ASCII text, Word 97, and Adobe Acrobat.
    The full text of this document may also be purchased from the
    Commission's duplicating contractor, Qualex International, Portals
    II, 445 12^th^ Street SW, Room CY-B-402, Washington, DC 20554,
    telephone (202) 863-2893, facsimile (202) 863-2898, or via email
    <qualexint@aol.com>.

59. This document is available in alternative formats (computer
    diskette, large print, audio cassette, and Braille). Persons who
    need documents in such formats may contact Brian Millin at (202)
    418-7426, TTY (202) 418-7365, or <bmillin@fcc.gov>.

60. [*Ex Parte* Rules]{.underline}. This is a permit-but-disclose
    notice-and-comment rulemaking proceeding. *Ex parte* presentations
    are permitted except during the Sunshine Agenda period, provided
    they are disclosed as provided in the Commission's rules. *See
    generally* 47 C.F.R. §§ 1.1202, 1.1203, 1.1206(a).

61. [Initial Regulatory Flexibility Analysis]{.underline}. With respect
    to this *Notice*, an Initial Regulatory Flexibility Analysis
    ("IRFA") is contained in Appendix A. As required by section 603 of
    the Regulatory Flexibility Act, 5 U.S.C. § 603, the Commission has
    prepared an IRFA of the possible significant economic impact on
    small entities of the proposals contained in this *Notice*. Written
    public comments are requested on the IRFA. In order to fulfill the
    mandate of the Contract with America Advancement Act of 1996
    regarding the Final Regulatory Flexibility Analysis, we ask a number
    of questions in our IRFA regarding the prevalence of small
    businesses in the broadcasting and newspaper industry. Comments on
    the IRFA must be filed in accordance with the same filing deadlines
    as comments on the *Notice*, but they must have a distinct heading
    designating them as responses to the IRFA.

62. [Initial Paperwork Reduction Act Analysis]{.underline}. This
    *Notice* may contain either proposed or modified information
    collections. As part of our continuing effort to reduce paperwork
    burdens, we invite the public to take this opportunity to comment on
    the information collections contained in this *Notice*, as required
    by the Paperwork Reduction Act of 1996. Public and agency comments
    are due at the same time as other comments on the *Notice*. Comments
    should address: (a) whether the proposed collection of information
    is necessary for the proper performance of the functions of the
    Commission, including whether the information shall have practical
    utility; (b) ways to enhance the quality, utility, and clarify of
    the information collected; (c) ways to minimize the burden of the
    collection of information on the respondents, including the use of
    automated collection techniques or other forms of information
    technology. In addition to filing comments with the Secretary, a
    copy of any comments on information collections contained in this
    *Notice* should be submitted to Judy Boley, Federal Communications
    Commission, 445 Twelfth Street SW, 1-C804, Washington, DC 20554, or
    over the Internet to <jboley@fcc.gov> and to Edward Springer, OMB
    Desk Officer, 10236 NEOB, 725 17^th^ Street NW, Washington, DC
    20503, or over the Internet to <edward.springer@omb.eop.gov>.

63. [Additional Information]{.underline}. For additional information,
    contact Eric J. Bash, Mass Media Bureau, Policy and Rules
    Division, (202) 418-2130 or <ebash@fcc.gov>.

    **ORDERING CLAUSES**

64. Accordingly, IT IS ORDERED that, pursuant to the authority contained
    in sections 1, 2(a), 4(i), 303, 307, 309, and 310 of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152(a),
    154(i), 303, 307, 309, and 310, and section 202(h) of the
    Telecommunications Act of 1996, this *Notice of Proposed Rulemaking*
    is ADOPTED.

65. IT IS FURTHER ORDERED that the Commission's Consumer Information
    Bureau, Reference Information Center, SHALL SEND a copy of this
    *Notice*, including the Initial Regulatory Flexibility Analysis, to
    the Chief Counsel for Advocacy of the Small Business Administration.

66. IT IS FURTHER ORDERED that MM Docket No. 96-197 (Newspaper/Radio
    Cross-Ownership Waiver Policy) is TERMINATED.

    FEDERAL COMMUNICATIONS COMMISSION

    Magalie Roman Salas

    Secretary

APPENDIX A

INITIAL REGULATORY FLEXIBILITY ANALYSIS

As required by the Regulatory Flexibility Act of 1980, as amended
(RFA),[^124] the Commission has prepared this present Initial Regulatory
Flexibility Analysis (IRFA) of the possible significant economic impact
on a substantial number of small entities the policies and rules
proposed in this *Notice of Proposed Rulemaking* (*Notice*). Written
public comments are requested on this IRFA. Comments must be identified
as responses to the IRFA and must be filed by the deadlines for comments
on the *Notice* provided above in paragraph 55. The Commission will send
a copy of the *Notice*, including this IRFA, to the Chief Counsel for
Advocacy of the Small Business Administration (SBA). *See* 5 U.S.C. §
603(a). In addition, the *Notice* and IRFA (or summaries thereof) will
be published in the Federal Register. *See id*.

**A. Need for, and Objectives of, the Proposed Rules**

The goal of this proceeding is to consider possible revisions to the
newspaper/broadcast cross-ownership rule, which prohibits common
ownership of broadcast stations and newspapers within the same
geographic area. The Commission adopted the rule in 1975 to preserve a
diversity of information sources for the public. At that time, there
were fewer local media outlets than there are today. The rule in its
current form therefore may no longer be necessary to achieve its
intended public interest benefits in certain circumstances. The
Commission thus committed last year to initiate this proceeding

**B. Legal Basis**

Authority for the actions proposed in the *Notice* may be found in
sections 1, 2(a), 4(i), 303, 307, 309 and 310 of the Communications Act
of 1934, as amended, 47 U.S.C. §§ 151, 152(a), 154(i), 303, 307, 309 and
310, and section 202(h) of the Telecommunications Act of 1996.

**C. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply**

The RFA directs agencies to provide a description of, and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted.[^125] The RFA defines the
term "small entity" as having the same meaning as the terms "small
business," "small organization," and "small governmental
jurisdiction."[^126] In addition, a small business concern is one which:
(1) is independently owned and operated; (2) is not dominant in its
field of operation; and (3) satisfies any additional criteria
established by the SBA.[^127]

The newspaper/broadcast cross-ownership rule applies to daily newspapers
and broadcast stations. As set forth in the *Notice*, as of the year
2000, there were 1,422 daily newspapers published.[^128] The SBA defines
a newspaper publisher with less than 500 employees as a small
business.[^129] According to the 1992 Economic Census, only 138
newspaper publishers had less than 500 or more employees. The data does
not distinguish between newspaper publishers that publish daily and
those that publish less frequently, and the latter are more likely to be
small businesses than the former because of the greater expense to
publish daily. Thus, since the newspaper/broadcast cross-ownership rule
applies only to daily newspapers, it is likely that less than 138 small
newspaper publishers would be affected by the rule.

As set forth in the *Notice*, as of June 30, 2001, the Commission had
licensed 1,678 full-power TV stations, 2,396 low power TV stations, and
232 Class A TV stations.[^130] The SBA defines television broadcasting
establishments that have \$10.5 million or less in annual receipts as a
small business.[^131] According to Commission staff review of the BIA
Publications, Inc., Master Access Television Analyzer Database on March
14, 2001, fewer than 800 commercial television broadcast stations have
revenues of \$10.5 million or less. We note, however, that under SBA's
definition, revenues of affiliates that are not television stations
should be aggregated with the television station revenues in determining
whether a concern is small. Our estimate, therefore, likely overstates
the number of small entities that might be affected by any changes to
the newspaper/broadcast cross-ownership rule, because the revenue figure
on which it is based does not include or aggregate revenues from
non-television affiliated companies.

As set forth in the *Notice*, as of June 30, 2001, the Commission had
licensed 12,392 radio stations.[^132] The SBA defines a radio station
that has \$5 million or less in annual receipts as a small
business.[^133] According to Commission staff review of BIA Publications
Inc. Master Access Radio Analyzer Database on March 14, 2001, about
10,400 commercial radio stations have revenue of \$5 million or less. We
note, however, that many radio stations are affiliated with much larger
corporations with much higher revenue. Our estimate, therefore, likely
overstates the number of small entities that might be affected by any
changes to the newspaper/broadcast cross-ownership rule.

D. Description of Projected Recording, Recordkeeping, and Other
Compliance Requirements

We anticipate that none of the proposals presented in the *Notice* will
result in an increase to the reporting and recordkeeping requirements of
broadcast stations or newspapers.

**E. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered**

The RFA requires an agency to describe any significant, specifically
small business, alternatives that it has considered in reaching its
proposed approach, which may include the following four alternatives
(among others): (1) the establishment of differing compliance or
reporting requirements or timetables that take into account the
resources available to small entities; (2) the clarification,
consolidation, or simplification of compliance or reporting requirements
under the rule for small entities; (3) the use of performance, rather
than design, standards; and (4) an exemption from coverage of the rule,
or any part thereof, for small entities.[^134]

This *Notice* invites comment on a number of alternatives to modify or
eliminate the newspaper/broadcast cross-ownership rule. The Commission
will also consider additional significant alternatives developed in the
record.

With respect to modification of the rule, the *Notice* proposes five
specific options. First, the Commission might redefine the geographic
area in which the rule operates to allow broadcast stations and
newspapers to combine if they are in different markets, without regard
to whether the station's service contour encompasses the newspaper's
city of publications (the current standard). This option might permit
more entities, including small newspapers and stations, to combine. In
the second option, the "market concentration" standard, the Commission
would allow newspapers and stations to combine, provided their combined
market share would not exceed a defined limit. Under the third option,
the "voice count" standard, the Commission would permit combinations so
long as a certain number of independently owned media "voices" would
remain in the market. The fourth option would combine the "market
concentration" and the "voice count" standards. In each of these several
options, the Commission would limit the number and type of combinations
in any market to ensure that no market participant attains unconstrained
or unrivaled market power or otherwise controls the information sources
available. These options would thus permit some smaller businesses to
combine to realize economic efficiencies and strengthen their ability to
compete, but at the same time ensure that the markets in which they
operate do not become too concentrated. Under the fifth option, the
Commission would permit newspapers and stations to combine, subject to a
structural separations approach. This would permit newspapers and
stations to combine and realize economic efficiencies but preserve
editorial diversity.

In addition to, or as an alternative to, modifying the current rule, the
circumstances under which the newspaper/broadcast cross-ownership rule
should be waived could be enhanced. In particular, the *Notice* seeks
comment on whether a waiver should be granted if one of the parties to
the combination has failed, is failing, or if a new service would
result. This would benefit small entities that wish to combine with
another in order to save their business, compete more efficiently, or
better realize economic efficiencies through economies of scale.

As an alternative to modifying the current rule and/or adding to the
list of circumstances under which the rule should be waived, the rule
could be eliminated entirely. The *Notice* seeks comment on this
alternative. Under this alternative, entities, including small entities,
would be subject only to the antitrust laws and the Commission's general
public interest review when granting, renewing or transferring a
license.

**F. Federal Rules that May Duplicate, Overlap, or Conflict with the
Proposed Rule**s

The rules under consideration in this proceeding do not overlap,
duplicate, or conflict with any other rules.

SEPARATE STATEMENT

OF COMMISSIONER MICHAEL J. COPPS

ON NEWSPAPER/BROADCAST NPRM

The role of the news media in providing Americans with critical
information is of the utmost importance to our society. Therefore, I
welcome the Commission's intention to take a thorough look at the issue
of the cross-ownership of newspapers and broadcast stations in local
communities.

Broadcast stations and newspapers make up the center of the local
marketplace of ideas, a function critical to a democratic society. As
competing purveyors of ideas, they have the potential to present diverse
viewpoints on issues important to their communities. As the *Red Lion*
Court stated "it is the purpose of the First Amendment to preserve an
uninhibited marketplace of ideas in which truth will ultimately prevail,
rather than to countenance monopolization of that market."[^135] In
commencing our examination of the Newspaper/Broadcast cross ownership
rules today, we must keep in mind the importance to the public interest
of preserving diversity in the local marketplace of ideas.

In commencing this proceeding today, we solicit information from all
stakeholders. Whether supporting the retention of the
Newspaper/Broadcast cross-ownership prohibition or the relaxation or
elimination of these rules, it is important that interested parties
provide data to the Commission that will help us make an informed
decision about the future of these rules. As the Commission considers
the effect of our rules on industry, we cannot be left with a paucity of
hard information about these industries. I have discussed with Chairman
Powell the importance of collecting and compiling databases of
information about the communications industries implicated by our rules.
I think the Chairman, my colleagues and I all want the best possible
data and analysis to base our judgments on. Having better information
doesn't mean we will all agree on every issue at the end of the day; but
it does mean that we will have to base our judgments on a corpus of
facts reflecting the actual operation of the marketplace rather than on
our various theoretical impressions.

I hope no stakeholders will say, "Let somebody else respond to this
notice, I'm too busy with other things." Everyone is going to be living
with the consequences of this rule-making exercise, probably for a long
time, and I've always believed in the old adage that "decisions made
without you are decisions against you."

I look forward to reviewing the information compiled in response to this
NPRM. As always, I will review the record thoroughly, without
prejudgment. If I am to support any changes to these rules -- or any
other rule -- I expect to know with as much precision as possible how
those proposed changes serve the public interest, convenience and
necessity.

[^1]: Nielsen Media Research.

[^2]: *Id*.

[^3]: Amendment of Sections 73.34, 73.240, and 73.636 of the
    Commission's Rules Relating to Multiple Ownership of Standard, FM,
    and Television Broadcast Stations, Docket No. 18110, *Second Report
    & Order*, 50 FCC 2d 1046, 1075 (1975) (*Second Report & Order*),
    *recon*. 53 FCC 2d 589 (1975), *aff'd sub nom. FCC v. National
    Citizens Comm. for Broadcasting*, 436 U.S. 775 (1978) (*NCCB*).

[^4]: 47 C.F.R. § 73.3555(d). For AM radio stations, the service contour
    is the 2mV/m contour, *id*. § 73.3555(d)(1); for FM radio stations,
    the service contour is the 1mV/m contour, *id*. § 73.3555(d)(2); for
    TV stations, the service contour is the Grade A contour, *id*. §
    73.3555(d)(3). A daily newspaper is defined to be one that is
    published in the English language four or more times per week. *Id*.
    § 73.3555 n.6.

[^5]: *Second Report and Order*, 50 FCC 2d at 1074.

[^6]: *Id*.

[^7]: *Id*. at 1079-1080.

[^8]: *FCC v. National Citizens Comm. for Broadcasting*, 436 U.S. 775,
    796 (1978) (*NCCB*).

[^9]: *Second Report & Order*, 50 FCC 2d at 1085.

[^10]: *NCCB*, 436 U.S. at 820 n.20.

[^11]: Kortes Communications, Inc., *Memorandum Opinion & Order*, 15 FCC
    Rcd 11846 (2000) (allowing co-ownership of newspaper and AM station,
    based on the fact that the station was financially troubled and
    might go off the air, and was a small participant in the market);
    Columbia Montour Broadcasting Co., *Memorandum Opinion & Order*, 13
    FCC Rcd 13007 (1998) (allowing co-ownership of newspaper and small
    station, based on the fact that the AM station was financially
    troubled and could not be sold, and was a small participant in a
    competitive, diverse market); Fox Television Stations, Inc.,
    *Declaratory Ruling*, 8 FCC Rcd 5341 (1993) (allowing co-ownership
    of newspaper and TV station in large market, based on the fact that
    the TV station was reacquiring the newspaper such that the
    combination did not constitute a new ownership pattern, and the
    newspaper might not be financially viable on its own), *aff'd sub
    nom. Metropolitan Council of NAACP Branches v. FCC*, 46 F.3d 1154
    (D.C. Cir. 1995); Field Communications Corp., 65 FCC 2d 959 (1977)
    (allowing co-ownership of two newspapers and TV station, based on
    the fact that the newspapers were reacquiring the TV station such
    that the combination did not constitute a new ownership pattern, and
    the TV station had only recently become financially viable).

[^12]: *See, e.g.,* Departments of Commerce, Justice, & State, the
    Judiciary, & Related Agencies Appropriations Act, 1989, Pub. L. No.
    100-459, 102 Stat. 2186 (1988); Departments of Commerce, Justice, &
    State, the Judiciary, & Related Agencies Appropriations Act, 1990,
    Pub. L. No. 101-162, 103 Stat. 988, 1021 (1989); Departments of
    Commerce, Justice, & State, the Judiciary, & Related Agencies
    Appropriations Act, 1991, Pub. L. No. 101-515, 104 Stat. 2101, 2136
    (1990); Departments of Commerce, Justice, & State, the Judiciary, &
    Related Agencies Appropriations Act, 1992, Pub. L. No. 102-140, 105
    Stat. 782, 797 (1991); Departments of Commerce, Justice, & State,
    the Judiciary, & Related Agencies Appropriations Act, 1993, Pub. L.
    No. 102-395, 106 Stat. 1828, 1846 (1992). The newspaper/broadcast
    cross-ownership rule was codified at 47 C.F.R. § 73.3555(c) until
    1992, at which time it was codified at 47 C.F.R. § 73.3555(d).

[^13]: Departments of Commerce, Justice, & State, the Judiciary, &
    Related Agencies Appropriations Act, 1994, Pub. L. No. 103-121, 107
    Stat. 1153, 1167 (1993). Congress intended to permit the Commission
    to waive the rule for newspaper/radio combinations only in the top
    25 markets where at least 30 independent broadcast voices would
    remain after the combination. *Id*.

[^14]: Omnibus Consolidated Rescission and Appropriations Act of 1996,
    Pub. L. 104-134, 110 Stat. 1321 (1996).

[^15]: Capital Cities/ABC, Inc., *Memorandum Opinion & Order*, 11 FCC
    Rcd 5841 (1996). The Commission granted the applicants temporary
    waivers of the rule, and committed to reexamining its waiver
    policies for newspaper/radio combinations in a subsequent
    proceeding.

[^16]: Newspaper/Radio Cross-Ownership Waiver Policy, MM Docket No.
    96-197, *Notice of Inquiry*, 11 FCC Rcd 13003 (1996)
    (*Newspaper/Radio NOI*). The issues raised by the *Newspaper/Radio
    NOI* are subsumed within this proceeding, which considers both rule
    and waiver changes for both newspaper/radio and newspaper/TV
    combinations. Accordingly, we will terminate the *Newspaper/Radio
    NOI* proceeding.

    We are aware, however, that the Commission in a handful of cases has
    waived the newspaper/broadcast cross-ownership rule, subject to the
    outcome of the *Newspaper/Radio NOI*. For example, in 1997, the
    Commission waived the rule to permit Cox Radio, Inc. to own a
    newspaper that was published in a community within the signal
    contour of a commonly owned radio station, until six months after
    the issuance of a final order in the *Newspaper/Radio NOI*
    proceeding. Because we terminate that proceeding today, this waiver
    and all similar waivers will now be subject to the outcome of the
    instant proceeding, initiated by this *Notice of Proposed
    Rulemaking*.

[^17]: *Newspaper/Radio NOI*, 11 FCC Rcd at 13009-13010, ¶ 10.

[^18]: Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
    (1996).

[^19]: For example, sections 202(a)-(f) instructed the Commission to
    eliminate its national radio ownership rule, and to revise its local
    radio ownership rules, national TV ownership rule, radio/TV
    cross-ownership waiver policies, dual network rule, and cable
    system/broadcast network cross-ownership rule.

[^20]: 141 Cong. Rec. E1571 (Aug. 1, 1995) (indicating that Congressman
    Stearns had proposed an amendment to repeal the newspaper/broadcast
    cross-ownership rule).

[^21]: Last year, the Commission concluded that, "while the Commission
    now has the authority and the obligation to reevaluate the
    newspaper/broadcast cross-ownership rule, and its policy regarding
    waivers thereof, there is no explicit Congressional guidance on how
    that authority should be exercised." 1998 Biennial Regulatory Review
    -- Review of the Commission's Broadcast Ownership Rules and Other
    Rules Adopted Pursuant to Section 202 of the Telecommunications Act
    of 1996, MM Docket No. 98-35, *Report*, 15 FCC Rcd 11058, 11102, ¶
    83 (2000) (*Biennial Review Report*).

[^22]: 1998 Biennial Regulatory Review -- Review of the Commission's
    Broadcast Ownership Rules and Other Rules Adopted Pursuant to
    Section 202 of the Telecommunications Act of 1996, MM Docket No.
    98-35, *Notice of Inquiry*, 13 FCC Rcd 11276 (1998) (*Biennial
    NOI*). The Commission incorporated the record from the
    *Newspaper/Radio NOI* into the record of the *Biennial NOI. See id*.
    at 11286, ¶ 30.

[^23]: *Biennial Review Report*, 15 FCC Rcd at 11105-11108, ¶¶ 89-93.

[^24]: *Id.* at 11105, ¶ 88. The Newspaper Association of America
    challenged the Commission's decision not to repeal the rule.
    *Newspaper Ass'n of America v. FCC*, Case No. 00-1375 (D.C. Cir.
    filed Aug. 16, 2000). By order dated August 30, 2000, the court held
    the case in abeyance, and requires periodic status reports from the
    parties.

[^25]: *Biennial Review Report*, 15 FCC Rcd at 11105, ¶ 88. In its 2000
    biennial regulatory review proceeding, the Commission did not alter
    the recommendations it had made with respect to the
    newspaper/broadcast cross-ownership rules in the 1998 biennial
    review proceeding. *See* 2000 Biennial Regulatory Review, CC Docket
    No. 00-175, *Report*, 16 FCC Rcd 1207 (2001). In the Updated Staff
    Report, Appendix IV, Part 73, the staff noted that the comments of
    Newspaper Association of America filed in the 2000 biennial
    regulatory review proceeding would be placed in the record of this
    proceeding. We hereby include these comments in the instant record.

[^26]: The Commission recently engaged in a similar review and revision
    process with its local TV multiple ownership rules, ultimately
    amending those rules to permit common ownership of two TV stations
    under certain circumstances, and at least one TV station and one or
    more radio stations, within the same area. Review of the
    Commission's Regulations Governing Television Broadcasting, MM
    Docket No. 91-221, *Report and Order*, 14 FCC Rcd 12903 (1999)
    (*Local TV Ownership Report & Order*). Common ownership of a
    newspaper and even a single broadcast station within the same area,
    however, remains prohibited.

[^27]: *Broadcasting & Cable Yearbook 2000*, at D-718.

[^28]: FCC News Release "Broadcast Station Totals as of June 30, 2001,"
    July 13, 2001.

[^29]: *Broadcasting & Cable Yearbook 2000*, *supra* note 27, at B-250.

[^30]: FCC News Release "Broadcast Station Totals as of June 30, 2001,"
    July 13, 2001.

[^31]: SRDS, *Circulation 2001*, at 1038.

[^32]: *Id*.

[^33]: Newspaper Ass'n of America, Petition for Rulemaking, at 24 (filed
    Apr. 28, 1997) (NAA Petition).

[^34]: National Cable Television Association, Cable Television
    Developments at 2 (Fall 1996).

[^35]: Annual Assessment of the Status of Competition in the Market for
    the Delivery of Video Programming, CS Docket No. 00-132, *Seventh
    Annual Report*, 16 FCC Rcd 6005, 6017, ¶ 19 (2001) (*Seventh Annual
    Report*).

[^36]: *Id.* at Table B-5.

[^37]: *Id.* at 6018, ¶ 21.

[^38]: *Id*.

[^39]: Nielsen Media Research, *2000 Report on Television*, at 17.

[^40]: *Seventh Annual Report*, 16 FCC Rcd at 6037, ¶ 61.

[^41]: *Id*. at 6008, ¶ 6.

[^42]: *Id.* at 6054, ¶ 107.

[^43]: BIA MasterAccess Database, Mar. 2001.

[^44]: *Broadcasting & Cable Yearbook 1995*, at A98-A123.

[^45]: BIA MasterAccess Database, Mar. 2001.

[^46]: *See supra* ¶ 2.

[^47]: *Associated Press v. United States*, 326 U.S. 1, 20 (1945)
    (*Associated Press*).

[^48]: In the past, the Commission also used direct techniques of
    programming regulation to achieve its goal. *See* Review of the
    Commission's Regulations Governing Television Broadcasting, MM
    Docket No. 91-221, *Further Notice of Proposed Rulemaking*, 10 FCC
    Rcd 3524, 3547-3549, ¶¶ 58-59 (1995) (*TV Further Ownership
    Notice*).

[^49]: According to a 1998 survey, 41% of Americans cited television as
    their primary source of local news, 17% cited newspapers, and 11%
    cited radio stations. *See* RTNDA, *Americans Rely on Local
    Television News, Rate It Highly, and Consider It Fair*, available at
    \<[www.rtnda.org/issues/survey.htm#download](http://www.rtnda.org/issues/survey.htm#download)\>.
    We seek additional and updated information on the relative
    importance of various media to the public in terms of where it turns
    for local news and information.

[^50]: Vernon Stone, *News Operations at U.S. TV Stations*, available at
    \<[web.missouri.edu/\~jourvs/gtvops.html](http://www.web.missouri.edu/~jourvs/gtvops.html)\>.

[^51]: *Id*. Professor Stone last formally surveyed stations in 1994,
    and updated those results with estimates in 2001. The general
    percentage of stations with news operations is an estimate; the
    specific percentages for network affiliates is based on the 1994
    survey data, which he believes are still accurate: "over the
    1994-2000 period, new shops appear to have offset shutdowns, leaving
    little net change in the numbers."

[^52]: Deborah D. McAdams, *Cable News Nets Go Small*, Broadcasting &
    Cable at 42-50 (Sept. 27, 1999). Although some of these regional
    cable news networks are new independent sources of information
    within their service areas, many are not, because they are owned and
    operated by co-located broadcast stations or newspapers.

[^53]: Pew Research Center, *Investors Now Go Online for Quotes, Advice:
    Internet Sapping Broadcast News Audience*, available at
    \<[www.people-press.org/media00rpt.htm](http://www.people-press.org/media00rpt.htm)\>.

[^54]: We note, however, that although the number of radio stations has
    increased over the years, the number with newsrooms has dropped from
    approximately 5,500 in 1994 to 4,500 in 2001. Vernon Stone, News
    Operations at U.S. Radio Stations, available at
    \<[web.missouri.edu/\~jourvs/graops.html](http://www.web.missouri.edu/~jourvs/graops.html)\>

[^55]: Deborah D. McAdams, *supra* note 52, at 44-50.

[^56]: Howard Kurtz, *Is Online Journalism On Its Way Out? Web Sites
    Struggle Financially Despite Millions of Visitors*, Washington Post,
    Feb. 21, 2001. Moreover, many online journalism companies have
    recently left the marketplace due to capital problems. *Id*.

[^57]: *TV Further Ownership Notice*, 10 FCC Rcd at 3551, ¶ 63.

[^58]: *Second Report & Order*, 50 FCC 2d at 1074.

[^59]: *Id*.

[^60]: *See, e.g., Associated Press*, 326 U.S. at 20 ("The First
    Amendment . . . rests on the assumption that the widest possible
    dissemination of information from diverse and antagonistic sources
    is essential to the welfare of the public. . . .").

[^61]: 47 U.S.C. § 312(a)(7) (authorizing the Commission to revoke a
    broadcaster's license for failure to provide legally qualified
    candidates for federal office access to its facilities); 47 U.S.C. §
    315(a) (requiring a licensee to provide equal opportunities to all
    legally qualified candidates for a political office to use its
    facilities).

[^62]: 47 U.S.C. §§ 531, 532.

[^63]: *See, e.g., Biennial Review Report*, 15 FCC Rcd at 11061, ¶ 5;
    *Local TV Ownership Report & Order*, 14 FCC Rcd at 12911-12917, ¶¶
    17-27.

[^64]: *See* Amendment of Section 73.658(g) of the Commission's Rules --
    the Dual Network Rule, MM Docket No. 00-108, *Report & Order*, 16
    FCC Rcd 11114, 11122, n.44 (rel. May 15, 2001) (*Dual Network Report
    & Order*).

[^65]: More precisely, advertisers have an incentive to reach customers
    who are likely to buy their products. They thus have an incentive to
    reach the widest audience possible for their product at the lowest
    price.

[^66]: *Dual Network Report & Order*, 16 FCC Rcd at 11122, n.44.

[^67]: *TV Further Ownership Notice*, 10 FCC Rcd at 3532, ¶ 16.

[^68]: U.S. Advertising Volume 2000-2001, prepared for Advertising Age
    by Robert J. Coen, Universal McCann. TV networks and stations have a
    much higher percentage of all national advertising dollars.

[^69]: *See, e.g*., *Second Report & Order*, 50 FCC 2d at 1056-1057.
    *Compare* Robert Ekelund, George Ford, and John Jackson, *Is Radio
    Advertising a Distinct Local Market? An Empirical Analysis*, 14
    Review of Industrial Organization, 239 (1999) (concluding that radio
    advertising constitutes a distinct antitrust market) *with* Barry
    Seldon, R. Todd Jewell, Daniel O'Brien, *Media Substitution and
    Economics of Scale in Advertising*, 18 Int'l Journal of Industrial
    Organization 1153 (2000) (finding a high degree of substitutability
    at the national level) *and* James Ferguson, *Daily Newspaper
    Advertising Rates, Local Media Cross-Ownership, Newspaper Chains,
    and Media Competition*, 26 Journal of Law & Economics 635 (1983)
    (concluding that newspapers and TV advertisements are substitutes).

[^70]: *Second Report & Order*, 50 FCC 2d at 1056-1057.

[^71]: *See, e.g., United States v. Jacor Communications Inc*., 1996 WL
    784589, \*10 (S.D. Ohio 1996). *See also* Joel Klein, Assistant
    Attorney General/Antitrust Division, Address at ANA Hotel on DOJ
    Analysis of Radio Mergers (Feb. 19, 1997), available at
    \<[www.usdoj.gov/public/speeches/jlk97219.htm](http://www.usdoj.gov/public/speeches/jlk97219.htm)\>.

[^72]: *Community Publishers Inc. v. Donrey Corp*., 892 F. Supp. 1146,
    1155-1157 (W.D. Ark. 1995).

[^73]: U.S. Advertising Volume 2000-2001, *supra* note 68.

[^74]: *Id*.

[^75]: U.S. Dep't of Justice & FTC, *1992 Horizontal Merger Guidelines*,
    § 1.21 (revised 1997).

[^76]: Others claimed, however, that businesses do not need to combine
    to realize these efficiencies because they could simply form a joint
    venture. Independent Free Papers Comments at 2-4.

[^77]: For profit-maximizing firms, including monopolies, facing many
    customers, reductions in fixed costs that do not affect marginal
    cost ordinarily do not create an incentive to lower price. *See 1992
    Horizontal Merger Guidelines, supra* note 75, at § 4. If, however,
    the firm faces just one or few customers, then the seller may
    bargain with the customer or customers over price and other terms of
    sale. In this case, then reductions in the seller's fixed costs may
    be "shared" with the customers to an extent that reflects the
    relative bargaining power of the seller and buyer.

[^78]: This depends on how advertisers respond to higher rates, and the
    proportion of total "production" costs that are accounted for by
    advertising expenditures.

[^79]: Ferguson, *supra* note 69, at 636.

[^80]: Belo Comments at 11-13; Chronicle Comments at 16; Gannett
    Comments at 22; Tribune Comments at 60-65.

[^81]: *Time Warner Entertainment v. FCC*, 240 F.3d 1126 (D.C. Cir.
    2001) (*Time Warner*).

[^82]: 47 C.F.R. § 76.503.

[^83]: *Id*. at § 76.504.

[^84]: *United States v. O'Brien*, 391 U.S. 367, 377 (1968).

[^85]: *Turner Broadcasting Sys., Inc. v. FCC*, 512 U.S. 622, 662-63
    (1994).

[^86]: *Time Warner*, 240 F.3d at 1130.

[^87]: *Id*. at 1133.

[^88]: *Id*. at 1135-1136.

[^89]: *NCCB*, 436 U.S. at 797.

[^90]: *Biennial Review Report*, 15 FCC Rcd at 11105, ¶ 88.

[^91]: *Local TV Ownership Report & Order*, 14 FCC Rcd at 12926-12929.

[^92]: *See, e.g*., Definition of Radio Markets, MM Docket No. 00-244,
    *Notice of Proposed Rulemaking*, 15 FCC Rcd 25077, 25081 ¶ 10
    (2000).

[^93]: 47 C.F.R. § 73.3555(b)(2)(i).

[^94]: *Local TV Ownership Report & Order*, 14 FCC Rcd at 12933, ¶ 66.

[^95]: FCC Mass Media Bureau, Policy & Rules Division, *Review of the
    Radio Industry, 2000,* at 2 (Jan. 2001).

[^96]: 47 C.F.R. § 73.3555(c)(2).

[^97]: *See, e.g.,* Gannett Comments at 34-38.

[^98]: 47 C.F.R. § 73.3555(c)(3).

[^99]: *Id*. § 73.3555(c)(3)(iii).

[^100]: *Local TV Ownership Report & Order*, 14 FCC Rcd at 12953, ¶ 113.

[^101]: *Id*.

[^102]: The Communications Act authorizes cable franchising authorities
    to require cable operators to provide channels for "public,
    educational, or governmental use" (PEG), 47 U.S.C. § 531, and "for
    commercial use by persons unaffiliated with the operator." 47 U.S.C.
    § 532. In either case, the cable operator is not permitted to
    exercise editorial control over the content provided on those
    channels, subject to several limited exceptions. 47 C.F.R. §§
    611(e), 612(c)(2).

[^103]: *Local TV Ownership Report & Order*, 14 FCC Rcd at 12954, ¶ 114.

[^104]: *Id*.

[^105]: Review of the Commission's Regulations Governing TV
    Broadcasting, *Memorandum Opinion and Second Order on
    Reconsideration*, 16 FCC Rcd 1067, 1072-1073, ¶¶ 16-19 (2001).

[^106]: 47 C.F.R. § 73.3555(b)(2).

[^107]: *Local TV Ownership Report & Order*, 14 FCC Rcd at 12933, ¶ 65.

[^108]: *Id*.

[^109]: *Second Report & Order*, 50 FCC 2d at 1085.

[^110]: 47 C.F.R. § 73.3555 note 7(1).

[^111]: *Id*. at note 7(2).

[^112]: *Id*. at note 7(3).

[^113]: *Second Report & Order*, 50 FCC 2d at 1076 n. 25.

[^114]: Section 203 of the Telecom Act, codified at 47 U.S.C §
    307(c)(1).

[^115]: Canadian Radio-television Telecommunications Commission,
    Decision CRTC 2001-457 (Aug. 2, 2001), available at
    \<[www.crtc.gc.ca/archive/ENG/Decisions/2001/DB2001-457.htm](http://www.crtc.gc.ca/archive/ENG/Decisions/2001/DB2001-457.htm)\>
    (visited Aug. 6, 2001) (*CRTC 457*); Canadian Radio-television
    Telecommunications Commission, Decision CRTC 2001-458 (Aug. 2,
    2001), available at
    [www.crtc.gc.ca/archive/ENG/Decisions/2001/DB2001.458.htm](http://www.crtc.gc.ca/archive/ENG/Decisions/2001/DB2001.458.htm)
    (visited Aug. 6, 2001) (*CRTC 458*).

[^116]: *CRTC 457* at ¶ 16; *CRTC 458* at ¶¶ 14, 117.

[^117]: *CRTC 457* at ¶ 95; *CRTC 458* at ¶ 107.

[^118]: *CRTC 457* at ¶ 113; *CRTC 458* at ¶ 122.

[^119]: 47 U.S.C. §§ 271(d)(3)(B), 272.

[^120]: *Biennial Review Report*, 15 FCC Rcd at 11104, ¶ 87.

[^121]: *Id*. at 11104-11105, ¶ 87.

[^122]: *Id*. at 11103, ¶ 86.

[^123]: *Id*. at 11104, ¶ 86.

[^124]: *See* 5 U.S.C. § 603(3). The RFA, *see* 5 U.S.C. § 601 *et.
    seq*. has been amended by the Contract With America Advancement Act
    of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II
    of the CWAAA is the Small Business Regulatory Enforcement Fairness
    Act of 1996 (SBREFA).

[^125]: 5 U.S.C. § 603(b)(3).

[^126]: *Id*. at § 601(6).

[^127]: *Small Business Act*, 15 U.S.C. § 632.

[^128]: *See Notice* at ¶ 10.

[^129]: NAIC Code 511110.

[^130]: *See Notice* at ¶ 9.

[^131]: NAIC Code 513120.

[^132]: *See Notice* at ¶ 9.

[^133]: NAIC Code 513112.

[^134]: 5 U.S.C. § 603(c).

[^135]: *Red Lion Broadcasting Company* v. *Federal Communications
    Commission*, 395 U.S. 367, 390, 89 S.Ct. 1794, 1806 (1969).