**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

# In the Matter of {#in-the-matter-of .unnumbered}

1998 Biennial Regulatory Review -- Review of )

the Commission's Broadcast Ownership Rules ) MM Docket No. 98-35

and Other Rules Adopted Pursuant to Section )

202 of the Telecommunications Act of 1996. )

**BIENNIAL REVIEW REPORT**

By the Commission: Chairman Kennard and Commissioner Ness issuing
separate statements; Commissioners Furchtgott-Roth and Powell concurring
in part, dissenting in part, and issuing separate statements;
Commissioner Tristani approving in part, dissenting in part and issuing
a statement.

Adopted: May 26, 2000 Released: June 20, 2000

**TABLE OF CONTENTS**

[Paragraph]{.underline}

I. Introduction 1

II\. Background 5

III\. Status of Media Marketplace 7

IV\. Rules

A. National TV Ownership Rule and UHF Discount 14

B. Local Radio Ownership Rules 39

C. Dual Network Rule 69

D. Daily Newspaper/Broadcast Cross-ownership Rule 79

E. Cable/Television Cross-ownership Rule 97

F. Experimental Broadcast Station 110

V. Constitutional Issues 115

VI\. Conclusion 119

**I. INTRODUCTION**

1.  This [Report]{.underline} reviews our broadcast ownership rules as
    required by Section 202(h) of the Telecommunications Act of 1996
    (\"Telecom Act\").[^1] That section provides:

The Commission shall review its rules adopted pursuant to this section
and all of its ownership rules biennially as part of its regulatory
reform review under section 11 of the Communications Act of 1934 and
shall determine whether any of such rules are necessary in the public
interest as the result of competition. The Commission shall repeal or
modify any regulation it determines to be no longer in the public
interest.[^2]

More recently, Congress has prescribed a period of 180 days from
November 29, 1999, in which the Commission is to complete the 1998
biennial review of its broadcast ownership rules.[^3] The Conference
Report for this 1999 Act states that within the subject period the
Commission shall issue a report and if it concludes that it should
retain any of the rules unchanged, it "shall issue a report that
includes a full justification of the basis for so finding."[^4]

2.  Six rules are reviewed in this [Report]{.underline}: (1) the
    national TV ownership rule (including the \"UHF discount\"); (2) the
    local radio ownership rules; (3) the dual network rule; (4) the
    daily newspaper/broadcast cross-ownership rule; (5) the
    cable/television cross-ownership rule; and (6) an experimental
    broadcast station ownership rule. The [Report]{.underline} provides
    a regulatory history of each rule, followed by a discussion of the
    competitive and diversity issues that justify our decision as to
    whether the rule remains in the public interest.

3.  On March 12, 1998, we adopted a [Notice of Inquiry]{.underline}
    ("NOI")[^5] in this proceeding seeking comment on the six rules
    included in this biennial ownership report. The [NOI]{.underline}
    did not seek comment on the local television ownership rule or
    one-to-a-market ownership rule because these rules were already the
    subject of pending proceedings and we reasoned that their
    examination in those proceedings complied with Congress' mandate
    that we review all of our ownership rules biennially beginning in
    1998.[^6] On August 5, 1999, we adopted a [Report and
    Order]{.underline}[^7] relaxing our local television ownership rule
    and one-to-a-market ownership rule. Those decisions provided
    broadcasters with expanded opportunities to realize the efficiencies
    of television duopolies and local radio/television combinations in
    markets where an essential level of competition and diversity would
    be preserved. More specifically, we narrowed the geographic scope of
    the television duopoly rule from the Grade B contour approach to a
    "DMA" test. This new approach allows the common ownership of two
    television stations without regard to contour overlap if the
    stations are in separate Nielsen Designated Market Areas ("DMAs").
    Additionally, it allows the common ownership of two television
    stations in the same DMA if their Grade B contours do not overlap or
    if eight independently owned, full-power and operational television
    stations will remain post merger, and one of the stations is not
    among the top four ranked stations in the market based on audience
    share. Furthermore, we adopted waiver criteria presuming, under
    certain circumstances, that a waiver to allow common local
    television station ownership is in the public interest where one of
    the stations is a "failed station," is a "failing station," or where
    the applicants can show that the combination will result in the
    construction and operation of an authorized but as yet "unbuilt"
    station. We also substantially relaxed the radio/television
    cross-ownership ("one-to-a-market") rule to permit more such
    combinations, including allowing a party to own as many as one TV
    station and seven radio stations under certain circumstances. These
    actions were taken in fulfillment of our obligations under Section
    202(h) of the Telecom Act and satisfy its requirements as to the
    subject rules.[^8]

4.  In the instant phase of our biennial review of broadcast ownership
    rules, we conclude that the local radio ownership rules, the
    national television ownership rule (including the UHF discount), and
    cable/TV cross-ownership rule continue to serve the public interest
    and so retain these rules. As noted above, we have just recently
    substantially relaxed our local television ownership and
    one-to-a-market rules. It is currently too soon to tell what effect
    this will have on consolidation, competition and diversity. Until we
    have further information in this regard we believe that these rules
    remain necessary in the public interest in their current form.
    However, we will issue Notices of Proposed Rule Making proposing
    modification of the dual network and newspaper/broadcast
    cross-ownership rules. Additionally, in the case of the local radio
    ownership rule, we will issue a Notice seeking comment on
    alternative methods of correcting certain anomalies in the way we
    currently define radio markets and the way we count the number of
    stations in a radio market and the number of radio stations that an
    entity owns in a market. Finally, we conclude that the experimental
    broadcast station multiple ownership rule may no longer be in the
    public interest and will issue a Notice of Proposed Rule Making
    proposing its elimination.

II\. BACKGROUND

5.  For more than a half century, the Commission\'s regulation of
    broadcast service has been guided by the goals of promoting
    competition and diversity.[^9] These goals are separate and
    distinct, yet also related. Indeed, as recently as 1997, the Supreme
    Court noted that \"\[f\]ederal policy . . . has long favored
    preserving a multiplicity of broadcast outlets regardless of whether
    the conduct that threatens it is motivated by anticompetitive animus
    or rises to the level of an antitrust violation.\"[^10] The Supreme
    Court has also held that both of these goals are important and
    substantial public policies for First Amendment purposes.[^11]
    Competition is an important part of the Commission\'s public
    interest mandate, because it promotes consumer welfare and the
    efficient use of resources and is a necessary component of
    diversity.[^12] Diversity of ownership fosters diversity of
    viewpoints, and thus advances core First Amendment principles. As
    the Supreme Court has said, 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 . . . .\"[^13] Promoting diversity in the number of
    separately owned outlets has contributed to our goal of viewpoint
    diversity by assuring that the programming and views available to
    the public are disseminated by a wide variety of speakers.

6.  This Report uses the framework for reviewing competition and
    diversity outlined in the NOI to evaluate, as required by the
    Telecom Act, whether the six rules included in this biennial review
    continue to be in the public interest.[^14] Thus, we assess current
    levels of competition in the market for delivered video programming,
    the advertising market, and the program production market to
    determine whether such competition has eliminated the need for the
    six rules. Our diversity analysis focuses upon the degree to which
    broadcast and non-broadcast media, operating within the framework of
    our ownership rules, advance the three types of diversity
    ([i.e.]{.underline}, viewpoint, outlet and source) that our
    broadcast ownership rules have attempted to foster. Viewpoint
    diversity refers to the range of diverse and antagonistic opinions
    and interpretations presented by the media. Outlet diversity refers
    to a variety of delivery services ([e.g.]{.underline}, broadcast
    stations, cable and DBS) that select and present programming
    directly to the public. Source diversity refers to the variety of
    program or information producers and owners.[^15]

    **III. STATUS OF MEDIA MARKETPLACE**

7.  Our decision here concerning the broadcast ownership rules takes
    account of the ongoing changes in the structure of the broadcast
    industry. The UHF television discount, the daily newspaper/broadcast
    cross-ownership rule, the cable/television cross-ownership rule, and
    the experimental broadcast station ownership rule have not been
    examined for many years. In reviewing these rules, we recognize that
    there has been substantial growth in the number and variety of media
    outlets in local markets. In contrast, the national television
    ownership rule, the local radio ownership rules, and the dual
    network rule were modified in 1996 in accordance with Section 202 of
    the Telecom Act. While there has been growth in the number and
    variety of media outlets since the Telecom Act, there have also been
    significant changes in the ownership structure of the broadcast
    industry during that period, chiefly consisting of extensive
    consolidation in the radio and television industries.

8.  Section 202(h) of the Telecom Act requires us to determine whether
    any of our broadcast ownership rules "are necessary in the public
    interest as the result of competition.\" We note that some
    commenters express the belief that this limits our review only to
    competitive matters and that our analysis must be devoid of
    diversity considerations. Because the statutory language requires
    reference to the public interest standard, and because diversity and
    competition have both been critical components of that
    standard,[^16] our review must consider diversity issues as well.
    Indeed, the United States Supreme court has identified as a
    "governmental purpose of the highest order" ensuring the public's
    access to "a multiplicity of information sources."[^17] Also, there
    is support for our consideration of diversity in this context in the
    legislative history of the Telecom Act itself. As discussed in our
    recent local television ownership decision,[^18] Congress expressed
    diversity concerns with regard to at least two of our rules and,
    with respect to our review of the radio/television cross-ownership
    rule, expressly instructed the Commission to take into account not
    only the increased competition facing broadcasters but also "the
    need for diversity in today's radio marketplace."[^19] Finally in
    this regard, the statutory language appears to focus on whether the
    public interest basis for the rule has changed as a result of
    competition, and does not appear to be intended to limit the factors
    we should consider. Therefore, our public interest determination for
    each rule is based on an examination of both competition and
    diversity issues in light of competitive market conditions. The
    material below provides a brief overview of the number of outlets,
    ownership structure, and other information relevant to the current
    status of competition in the video, audio, and newspaper industries.
    The numbers alone, of course, are not sufficient to determine
    whether particular media compete with one another in relevant
    markets or whether different media are adequate substitutes for one
    another from a diversity perspective.

9.  [Video]{.underline}. There are currently over 100 million TV
    households in the U.S.[^20] served by a variety of video outlets.
    Over-the-air outlets include: 1,243 commercial TV stations (682 UHF,
    561 VHF); 373 non-commercial, educational TV stations (248 UHF, 125
    VHF); and, over 2,100 low-power TV stations.[^21] Sixty percent of
    commercial TV stations are affiliated with one of the top four
    networks (ABC, CBS, Fox, & NBC). Another 18 percent are affiliated
    with the newer national networks: United Paramount (UPN), Warner
    Brothers (WB) and the Paxson Network (Paxnet).[^22] The remaining
    commercial stations are affiliated with smaller networks or are
    independents. The average TV household in the U.S. can receive 13
    over-the-air TV stations, while 36 percent of all homes can receive
    15 or more stations and 9 percent can receive 20 or more stations
    over the air.[^23]

10. There are over 10,400 cable systems passing 96+ million homes and
    serving almost 67 million TV households.[^24] This represents
    sixty-six percent cable penetration.[^25] Sixty-four percent of all
    subscribers have at least 54 channels and over 98% have a minimum of
    30 channels.[^26] Today there are over 170 national cable
    programming networks and 50 regional networks.[^27] Many cable
    systems offer PEG access channels, and some, albeit fewer than a
    dozen, offer local cable news, educational and public affairs
    programming. Most, if not all, of these latter type of channels are
    owned by a local television station or newspaper.

11. Other video providers include Direct Broadcast Satellite (DBS),
    which currently provides up to 350 channels to over 10 million
    subscribers. Multichannel Multipoint Distribution Service (MMDS)
    serves over 800,000 subscribers; Satellite Master Antenna Television
    (SMATV) has approximately 1.5 million subscribers; Home Satellite
    Dishes (HSD) serve over 1.7 million households; Open Video Systems
    (OVS) have 60 thousand subscribers.[^28] By 1999, fifty percent of
    households owned a PC and over 100 million Americans were Internet
    users.[^29]

12. [Audio]{.underline}. Over 12,600 radio stations are currently on the
    air (4,783 AM, 5,766 commercial FM and 2,066 educational FM).[^30]
    The average radio market has 22 commercial radio stations. Of 270
    Arbitron radio markets, 128 markets (47 percent) are served by more
    than 20 stations and 90 percent of markets (244 of 270 ) have over
    10 stations.[^31]

13. [Newspapers]{.underline}. In 1998, there were 1,489 daily newspapers
    in the U.S. The total circulation for those dailies was about 56
    million.[^32] There were also 8,193 weekly newspapers with a
    combined circulation of over 74 million, and a Sunday circulation of
    over 60 million.[^33] There are also a number of special interest
    newspapers available to readers, catering to a wide variety of
    audiences. There are 185 African-American newspapers in 35 states
    and the District of Columbia, 107 Hispanic newspapers published in
    35 states and the District of Columbia, 98 Jewish newspapers in 31
    states, 159 other \"ethnic\" newspapers published in the U.S., 43
    gay and lesbian newspapers published in 24 states and the District
    of Columbia, 134 military newspapers published in 38 states, 132
    religious newspapers published in 40 states and the District of
    Columbia, and 1,236 college newspapers published in all 50 states
    and the District of Columbia.[^34] Many of these newspapers, however
    are not published daily, are not in the English language, and are
    not circulated generally in the community of publication, or have
    insufficient circulation in the DMA.

    **IV. RULES**

**A. National TV Ownership Rule and UHF Discount**

**1. Regulatory History**

14. Section 73.3555(e)(1) sets forth the current national TV ownership
    rule. That section states:

No license for a commercial TV broadcast station shall be granted,
transferred or assigned to any party (including all parties under common
control) if the grant, transfer, or assignment of such license would
result in such party or any of its stockholders, partners, members,
officers or directors, directly or indirectly, owning, operating or
controlling, or having a cognizable interest in TV stations which have
an aggregate national audience reach exceeding thirty-five (35)
percent.[^35]

15. Section 73.3555(e)(2) sets forth the \"UHF discount.\" That section
    explains that \"national audience reach\" is based on the number of
    TV households in Nielsen Designated Market Areas (DMA), and that UHF
    TV stations are attributed with only 50% of the TV households in the
    DMA.[^36]

16. The Commission first adopted a national ownership limit for
    television broadcast stations in the 1940s by imposing numerical
    caps on the number of stations that could be commonly owned, and
    originally limited common ownership to no more than three stations
    nationwide.[^37] Several years later this was expanded to allow
    ownership of no more than five stations.[^38] In retaining the five
    station rule in 1953, the Commission explained:

The purpose of the multiple ownership rules is to promote
diversification of ownership in order to maximize diversification of
program and service viewpoint as well as to prevent any undue
concentration of economic power contrary to the public interest and thus
to carry out the underlying purpose of the Communications Act to
effectuate the policy against monopolization of broadcast facilities and
the preservation of the broadcasting system on a free competitive
basis.[^39]

17. In 1954, the Commission adopted the \"Seven Station Rule\" by
    raising the multiple ownership limit from five stations to seven,
    with no more than five being VHF stations.[^40] The Commission
    believed that the more rapid and effective development of the UHF
    band warranted permitting the ownership of additional UHF
    stations.[^41] The Commission noted that it was aware of the serious
    problems confronting the development of the UHF service, especially
    in markets with VHF-only set saturation, and that it was in these
    areas particularly where the prestige, capital, and know-how of the
    networks and other multiple owners would be most effective in aiding
    UHF.[^42]

18. Thirty years later, in 1984, the Commission eliminated the Seven
    Station Rule and established a six-year transitional period during
    which common ownership of twelve television broadcast stations would
    be permitted.[^43] The Commission determined that repeal of the
    Seven Station Rule would not adversely affect the Commission\'s
    traditional policy objectives of promoting viewpoint diversity and
    preventing economic concentration.[^44] The Commission explained
    that: 1) changes in the broadcasting and communications
    markets,[^45] 2) new evidence of the positive effects of group
    ownership on the quality and quantity of public affairs and other
    programming responsive to community needs,[^46] and 3) the lack of
    relevance of a national ownership rule to the availability of
    diverse and independently owned radio and TV voices to individual
    consumers in their respective local markets[^47] led to the
    conclusion that the rule was unnecessary to ensure diversity of
    viewpoints.[^48] The Commission determined that the better focus for
    addressing viewpoint diversity and economic competition concerns was
    the number and variety of information and advertising outlets in
    local markets.[^49] Nevertheless, the Commission recognized the
    concerns of some commenters that, if the rule were repealed
    immediately and in its entirety, a significant restructuring of the
    broadcast industry might occur before all ramifications of such a
    change became apparent. Therefore, the Commission established a
    transitional limit of twelve television broadcast stations.[^50] The
    transitional limit would automatically sunset in six years unless
    experience showed that continued Commission involvement was
    warranted.

19. On reconsideration, the Commission, modified its decision.[^51]
    Specifically, the Commission 1) established an audience reach cap of
    25 percent,[^52] in addition to the twelve station limit, to better
    account for the effect that relaxation of the rule would have on
    population penetration; 2) attributed owners of UHF stations with
    only 50 percent of their ADI audience reach to take cognizance of
    the limitations inherent in UHF broadcasting; 3) permitted common
    ownership of an additional two television stations, provided that
    they were minority controlled; and 4) eliminated the automatic
    sunset provision. The stated objective was to permit reasonable
    expansion so as to capture the benefits of group ownership while
    avoiding the possibility of potential disruptive restructuring of
    the national broadcast industry.[^53] The Commission explained that
    a numerical cap would prevent the acquisition of a tremendous number
    of stations in the smaller markets, thus reducing the possibility of
    disruptive restructuring in small markets, while an audience reach
    cap would temper dramatic changes in the ownership structure by the
    largest group owners in the largest markets.[^54] The Commission
    noted that its decision to use both a numerical cap and an audience
    reach cap was also predicated on concerns regarding the potential
    impact on industry structure.[^55] The Commission further explained
    that attributing UHF stations with 50 percent of an ADI market\'s
    audience reach was intended to address the fundamental disadvantage
    of UHF television in reaching viewers.[^56] The Commission found it
    inadvisable to terminate the multiple ownership rules for television
    broadcast stations automatically at the end of six years. The
    Commission explained that 1) it was appropriate to proceed
    cautiously in relaxing the rules and 2) an automatic sunset of the
    ownership rules was unnecessary to achieve the Commission\'s policy
    objectives.[^57]

20. On March 7, 1996, the Commission amended the national television
    station multiple ownership rules to conform to the provisions in
    Section 202(c)(1) of the Telecom Act.[^58] Specifically, the
    Commission eliminated the numerical limit on the number of broadcast
    television stations a person or entity could own nationwide and
    increased the audience reach cap on such ownership from 25 percent
    to 35 percent of television households.

21. In our [Notice of Inquiry]{.underline} in this proceeding we sought
    comment on this rule. Particularly, we asked about its effect on
    competition in the national advertising market and the program
    production market at the national level. We also sought comment on
    the rule's effect on existing television networks and the formation
    of new networks and sought information on the economies of scale
    that may have been realized as a result of the consolidation
    permitted by the Telecom Act.[^59] Finally, we asked whether the UHF
    discount should be retained, modified or eliminated in view of the
    decreasing disparity between VHF and UHF television and, in the
    event of a decision to modify the rule, whether and, if so, how
    group owners that exceed any new limits should be
    grandfathered.[^60]

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2.  **Comments on National TV Ownership Rule**

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22. All of the major networks (ABC, CBS, Fox, and NBC) support total
    repeal of the national television ownership rule. These networks
    argue that abolition of the rule would have no effect on the level
    of diversity and competition in local markets,[^61] and retention of
    the rule hinders broadcasters from achieving economic
    efficiencies.[^62] These networks maintain that group owned stations
    provide more news and public affairs programming than non-group
    owned stations.[^63] They also argue that removal of the audience
    reach cap would promote the development of new broadcast television
    networks.[^64] Finally, they argue that the only two markets that
    may be affected by elimination of the rule, the national advertising
    market and the market for national exhibition rights to video
    programming, would remain unconcentrated.[^65]

23. Two group owners (Paxson and Council Tree) support relaxation of the
    rule. Paxson proposes facilitating the construction of new
    television stations by allowing group owners to take an equity
    interest in the new stations in exchange for financing the
    construction of new stations.[^66] The ownership interest would not
    count for purposes of the audience reach cap. Council Tree suggests
    permitting group owners that have reached the 35 percent cap to take
    an equity interest in additional stations, as long at the stations
    are controlled by small businesses.[^67] Again, the ownership
    interest would not count for purposes of the audience reach cap.

24. A number of commenters support retaining the national television
    ownership rule.[^68] NAB argues that the new television ownership
    limits have not been in effect long enough to warrant any
    modification at this time.[^69] Network Affiliated Stations Alliance
    (NASA) asserts that an increase in the audience reach cap will
    increase the bargaining power of networks and, therefore, diminish
    localism by making it more difficult for affiliates to program their
    stations in the interests of the communities they are licensed to
    serve.[^70] Center for Media Education (CME), [et al]{.underline}.,
    contend that the recent increase in the cap has led to unprecedented
    concentration and diminished competition that may enable networks to
    exercise monopsony power in the program production market.[^71]
    According to CME, et. al., the public is receiving less news and
    information from fewer sources.[^72] American Federation of
    Television and Radio Artists (AFTRA) asserts that maintaining the
    existing 35 percent cap will not harm competition and is essential
    to protect diversity on the airwaves.[^73] AFTRA argues that group
    owners recycle news and public affairs programming from one reporter
    or news writer, whereas the public interest is better served by
    having different reporters and news writers in separate markets
    provide different angles and perspective on the news.[^74] One
    commenter wants the Commission to increase viewpoint diversity by
    reducing the number of stations a company may own if group owners do
    not spin off properties on a voluntary basis.[^75]

**3. Discussion of National TV Ownership Rule**

25. We believe that the audience reach cap should be retained at its
    current level for the present. As an initial matter, Congress
    prescribed an increase in the cap from 25% to 35% in the Telecom
    Act. Several considerations motivate our decision not to change the
    national TV ownership rule. First, we believe that the effects of
    our recent change to the local television ownership rule should be
    observed and assessed before we make any alteration to the national
    limit. Second, the existing reach cap has already resulted in many
    group owners acquiring large numbers of stations nationwide since
    the cap was increased to 35 percent in 1996. We also believe that
    this trend needs further observation prior to any change in the
    cap.[^76]

26. One factor in our decision is the recent relaxation of our local
    television ownership rules.[^77] As noted above, those decisions
    provided increased flexibility for the creation of television
    duopolies and television/radio combinations in local markets while
    safeguarding an essential level of competition and diversity. We
    conclude that prudence dictates that we should monitor the impact of
    our recent decisions regarding local television ownership and any
    impact they may have on diversity and competition prior to relaxing
    the national reach cap. Commenters supporting relaxation or
    elimination of the cap make credible arguments in favor of their
    position. These arguments include the contention that elimination
    of, or increase in, the cap would allow additional economic
    efficiencies and more news and public affairs, increase minority
    ownership by removing the cap as an impediment to broadcasters
    obtaining attributable equity interests in minority-owned television
    stations, and promote the development of new broadcast television
    networks. We believe, however, that the competitive concerns of
    opponents of relaxation or elimination of the cap[^78] are more
    convincing under current circumstances. Until we gain experience
    under the new local television ownership rules we are disinclined to
    correspondingly relax them on the national level. While we will
    reexamine this decision in our future biennial reviews of broadcast
    ownership rules, we intend to proceed cautiously in this area at the
    present time.

27. Also, elimination of the 12 station numerical cap has already
    permitted group owners to acquire a large number of stations.[^79]
    The Appendix to this [Report]{.underline} provides a snapshot view
    of the restructuring that has taken place in the broadcast
    television industry since enactment of the Telecom Act in
    February 1996. The table lists the number of commercial television
    stations owned by the top 25 group television owners for 1996 and
    2000 ranked by the national audience reach of these television
    owners. The data show that many group owners have acquired
    additional stations and increased their audience reach since the
    Telecom Act's passage.

28. Moreover, consolidation is a feature of other video media. In cable,
    the seven largest operators now serve almost 90 percent of all U.S.
    cable subscribers, which is up from 63 percent being served by the
    top 10 multiple system operators ("MSO") in 1990.[^80] Thirty-seven
    percent of satellite-delivered national programming networks are now
    vertically integrated with a cable MSO. In 1999, for example, one or
    more of the top six cable MSOs held an ownership interest in each of
    101 vertically integrated national programming services. In
    addition, a significant percentage of the top national programming
    services are controlled by approximately eleven companies, including
    cable MSOs, broadcasters and other media entities.[^81] Of the top
    50 programming services in terms of subscribership, 46 are owned by
    one or more of these 11 companies.[^82]

29. The evidence suggests that the television broadcast industry is
    still adapting to the recent relaxation of the national and local
    ownership rules and we wish to avoid actions with the potential for
    disruptive restructuring. For example, applications for duopolies
    under our new local television ownership rule were only filed this
    past November and we believe that we should monitor developments
    under this new rule prior to making any changes to the national
    television ownership reach cap.

30. We also intend to proceed cautiously because the Commission has
    previously recognized that a change in the audience reach cap may
    well influence the bargaining positions between broadcast television
    networks and their affiliates.[^83] We noted that in some
    situations, relaxation of the national ownership limits could
    increase the bargaining power of networks by expanding their option
    to own rather than affiliate with broadcast television stations. In
    other situations, however, relaxation of the national ownership
    limits could increase the bargaining position of group-owned
    affiliates by creating larger, more powerful groups. In its
    comments, NASA asserts that the national ownership rule is the
    essential mechanism for maintaining the balance between networks and
    their affiliates to ensure that affiliates can program their
    stations in the interests of the communities they are licensed to
    serve.[^84] NASA argues that an increase in the audience reach cap
    will increase the bargaining power of networks.[^85] We believe that
    in considering relaxation of the national ownership rule we should
    act cautiously in light of the potential impact of this rule on the
    bargaining positions of networks and affiliates, particularly given
    the restructuring that may be taking place concurrently on the local
    level. We do not believe that consolidation of ownership of all or
    most of the television stations in the country in the hands of a few
    national networks would serve the public interest. The national
    networks have a strong economic interest in clearing all network
    programming, and we believe that independently owned affiliates play
    a valuable counterbalancing role because they have the right to
    decide whether to clear network programming or to air instead
    programming from other sources that they believe better serves the
    needs and interests of the local communities to which they are
    licensed. Independent ownership of stations also increases the
    diversity of programming by providing an outlet for non-network
    programming. We do not believe that the role played by independently
    owned affiliates is any less important today than it was four years
    ago when Congress determined that the public interest was served by
    maintaining a national ownership limit, albeit it at a slightly
    relaxed (35% rather than 25%) level.

**4. Comments on the UHF Discount**

31. A number of commenters advocate elimination or substantial
    modification of the UHF discount.[^86] These groups argue that the
    original basis for the discount appears to have fallen away.
    Specifically, the deficiencies in UHF reception that existed in the
    early years of television have largely been ameliorated by improved
    television receiver design and the fact that more than two-thirds of
    all television homes now receive local signals via cable.[^87] ABC
    maintains that the only television households that might have
    trouble receiving UHF signals are the 32 percent that do not
    subscribe to cable. ABC contends that if half of those households
    cannot receive UHF signals, a 50 percent discount is being applied
    to rectify a 16 percent disparity.[^88] ABC suggests replacing the
    50 percent discount with an approach that estimates coverage
    disparities on a market-by-market basis. Press Broadcasting and
    Greater Media suggest that all stations that reach at least 51
    percent of their market households be treated exactly the same for
    multiple ownership purposes. Only those stations that, as a matter
    of demonstrable fact, are unable to reach (either over-the-air or by
    cable carriage) at least 51 percent of the households in their
    markets should be accorded some special treatment.[^89] CME, [et
    al]{.underline}. argue that the UHF discount contributes to the lack
    of competition and diversity in the national television market.
    According to CME, [et al]{.underline}., the UHF discount provides an
    unfair competitive advantage by allowing UHF owners to evade
    national ownership reach caps.[^90] They warn that retaining the UHF
    discount will reduce the diversity of sources available to the
    public and potentially allow a handful of owners to control the
    national news agenda.[^91]

32. A number of commenters, however, support retention of the UHF
    discount.[^92] These commenters argue that the original basis for
    the discount remains. Specifically, these commenters maintain that
    cable carriage, must-carry rules, and improved receiver design have
    not created a level playing field between UHF and VHF stations. They
    argue that economic and technical disparities between UHF and VHF
    stations continue to disadvantage UHF stations. These disparities
    include UHF stations having weaker signals, inferior propagation
    characteristics, higher operating costs, lower ratings, and lower
    profits, relative to VHF stations. Many of these commenters also
    contend that the UHF discount is critical to the continued growth of
    the emerging broadcast networks.[^93] Fox and USA Broadcasting
    maintain that VHF stations typically have a signal reach of 72 to 76
    miles, while UHF stations\' signal reach is 44 miles.[^94] Fox and
    USA Broadcasting argue that the signal reach disparity results in
    similar inequalities in Grade B coverage, with UHF stations
    typically achieving approximately 55 to 75 percent of the Grade B
    area coverage of VHF stations.[^95] Two studies submitted by NAB
    conclude that UHF stations continue to face a penalty in ratings and
    financial performance.[^96] ALTV contends that despite must-carry
    provisions, many smaller UHF stations are not carried throughout
    their local area.[^97] ALTV explains that stations must provide a
    Grade B quality signal to the cable system\'s headend in order to
    qualify for carriage but, in most instances, the Grade B of a UHF
    facility does not extend as far as the Grade B contour of a VHF
    facility. As a result UHF stations are carried on fewer cable
    systems. Univision asserts that if the UHF disparity no longer
    exists, then group owners would be taking advantage of the UHF
    discount by selling their VHFs and buying UHFs.[^98] Univision notes
    that this has not occurred.

33. Commenters seeking elimination or modification of the UHF discount
    advocate differing grandfathering options. For example, ABC opposes
    grandfathering,[^99] while CME, [et al]{.underline}., favor phasing
    out grandfather rights over a three-year period.[^100] In contrast,
    commenters favoring retention of the UHF discount argue that if the
    discount is eliminated, existing ownership interests should be
    grandfathered. For example, Paxson contends that forced divestiture
    could threaten its ability to compete with other networks and
    threaten the many stations that would lose access to Paxson\'s
    financial resources and programming.[^101]

34. Commenters\' responses were sharply divided on whether it makes
    sense to retain the UHF discount once we have transitioned to
    digital television transmission. Commenters advocating elimination
    of the UHF discount argue that retention of the UHF discount serves
    no legitimate purpose when a large majority of DTV stations operate
    on UHF frequencies.[^102] In contrast, commenters favoring retention
    of the UHF discount argue that the conversion to digital television
    broadcasting will not eliminate the UHF/VHF disparity. Paxson, and
    Fox and USA Broadcasting note that DTV allotments are based
    primarily on replication of existing analog service, and VHF NTSC
    stations that have been assigned a UHF channel for digital service
    have been allotted higher power levels precisely in recognition of
    the UHF handicap.[^103] NAB and Paxson argue that digital carriage
    rights and the number of television stations choosing to remain on
    the UHF band following the digital transition are still
    undetermined, and these factors should be solidified before the
    Commission makes any changes to the UHF discount rule.[^104]

**5. Discussion of the UHF Discount**

35. We believe that, for the present time, the UHF discount remains
    necessary in the public interest. As commenters note, there remains
    a UHF handicap that has not yet been overcome. Although roughly
    two-thirds of American viewers obtain their local television
    stations over a cable television system, still roughly one third do
    not. They rely on over-the-air reception. UHF stations have greater
    difficulty in reaching these viewers and cable headends \-- thereby
    hindering their ability to obtain cable carriage \-- because of
    their weaker signal. While the Commission has observed in other
    contexts that this UHF signal disparity has been ameliorated over
    the years[^105] it has not yet been eliminated. Additionally,
    because of the higher operating costs of UHF stations, particularly
    due to their higher power requirements, even when they can reach
    these viewers they still incur greater expenses than VHF stations in
    doing so and, thus, remain under a competitive handicap warranting a
    50 percent discount.

36. As Univision points out in its comments, if there were no
    competitive disparity between VHF and UHF television, we would
    expect group owners to take advantage of the UHF discount by selling
    their VHFs and buying UHFs. The fact that few, if any, group owners
    have used this strategy suggests that the market recognizes a
    continuing competitive disparity between the two services.
    Accordingly, we cannot say the discount is no longer in the public
    interest as a result of competition.

37. While the technical and engineering evidence submitted by commenters
    continues to support the UHF discount, we believe that it will
    likely not continue to do so in the future. The information received
    in the proceeding suggests that the reach disparity between VHF and
    UHF stations differs from market-to-market and station-to-station.
    In addition, we agree with commenters arguing that advances in
    technology now provide us with the tools to more accurately measure
    the household reach for each UHF station.[^106]

38. In this regard, we note that the existing UHF discount will likely
    not work well for DTV. Our efforts to replicate existing signal
    coverage provide DTV stations the ability to reach approximately the
    same number of television households they currently reach with NTSC
    stations. Thus, it is not clear that a VHF NTSC station assigned a
    UHF DTV channel should be permitted a UHF discount if the station
    reaches the same number of households as did its NTSC counterpart.
    Nor is it clear that a UHF NTSC station assigned a VHF DTV channel
    should lose the discount if the DTV station does not reach more
    households. In this regard, however, we note that, pursuant to
    Section 5009(c) of Pub. Law 106-113, 113 Stat. 1501, Appendix I
    (1999), the Commission, on December 7, 1999, issued a Public Notice
    giving DTV licensees until December 31, 1999, in which to file
    notice that they intend to seek maximization of their DTV service
    area.[^107] One thousand three hundred and sixteen letters of
    notification manifesting the intent to file to maximize DTV
    stations' service areas were filed by that deadline. Accordingly,
    DTV licensees, including those operating on UHF channels, have been
    given the opportunity to maximize their DTV coverage areas, and not
    merely replicate their analog coverage. This should ameliorate at
    least some of the disparities between UHF and VHF stations' access
    to viewership in the digital context. Additionally, unlike analog
    signal reception, where picture quality gets progressively worse as
    distance from the antenna increases, digital reception is
    characterized by the so-called "cliff effect." That effect is
    characterized by DTV television receivers obtaining the same quality
    of reception at a distance from the transmitting antenna as is
    obtained close to it until such a point as the data stream is no
    longer useable by the receiver. At that point reception "falls off a
    cliff" and no picture or sound is produced. In other words, the
    reception quality remains high when an adequate signal is available.
    Effectively, as the average DTV signal strength gets weaker at the
    edge of a station's service area, the picture and sound will be
    produced for smaller percentages of time, until reception is
    considered unacceptable. Generally, DTV UHF viewers should have
    better quality reception at greater distances from the station than
    is currently the case with respect to analog UHF reception. This,
    too, should allow DTV UHF stations to obtain better access to
    off-the-air viewers and should rectify the VHF/UHF disparity to an
    extent. We believe that under these circumstances, the eventual
    modification or elimination of the discount for DTV will be
    appropriate. Accordingly, at such time near the completion of the
    transition to digital television we will issue a Notice of Proposed
    Rulemaking proposing a phased-in elimination of the discount.[^108]

**B. Local Radio Ownership Rules**

1.  **Regulatory History**

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39. In 1996, the Commission amended the local radio ownership rules to
    conform to provisions in Section 202(b) of the Telecommunications
    Act of 1996.[^109] Section 73.3555(a)(1) of the Commission\'s rules
    sets forth the current local radio ownership rules. These rules
    currently allow: (1) combinations of up to 8 commercial radio
    stations, not more than 5 of which are in the same service (AM or
    FM), in markets with 45 or more commercial radio stations; (2)
    combinations of up to 7 commercial radio stations, not more than 4
    of which are in the same service, in markets with between 30 and 44
    commercial radio stations; (3) combinations of up to 6 commercial
    radio stations, not more than 4 of which are in the same service, in
    markets with between 15 and 29 commercial radio stations; (4)
    combinations of up to 5 commercial radio stations, not more than 3
    of which are in the same service, if no party controls more than 50
    per cent of the stations in the radio market, in radio markets with
    14 or fewer commercial radio stations.

40. In 1938, the Commission adopted a strong presumption against
    granting radio licenses that would create duopolies (i.e., common
    ownership of more than one station in the same service in a
    particular community) based largely on the principle of
    \"diversification of service.\"[^110] In the early 1940s this
    presumption against duopoly ownership became an absolute prohibition
    when the Commission 1) adopted rules governing commercial FM service
    and 2) prohibited the licensing of two AM stations in the same area
    to a single network.[^111] The AM rule barred overlap of AM stations
    where a \"substantial portion of the applicant\'s existing
    station\'s primary service area\" would receive service from the
    station in question, except upon a showing that the public interest
    would be served through such multiple ownership; and the FM rule
    prohibited the licensing of a new station which would serve
    \"substantially the same area\" as another station owned or operated
    by the same licensee.[^112] The Commission explained that the radio
    duopoly rules sought to promote economic competition and diversity
    of programming viewpoints through station-ownership diversity.

41. In 1964, the Commission abandoned its case-by-case adjudication
    approach and barred common ownership of radio stations when the
    predicted 1 mV/m contours of the stations overlapped.[^113] In
    adopting the rule, the Commission stated: \"When two stations in the
    same broadcast service are close enough together so that a
    substantial number of people can receive both, it is highly
    desirable to have the stations owned by different people.\"[^114]
    The Commission explained that this objective flowed logically from
    two basic principles underlying the multiple ownership rules.

First, in a system of broadcasting based upon free competition, it is
more reasonable to assume that stations owned by different people will
compete with each other, for the same audience and advertisers, than
stations under the control of a single person or group. Second, the
greater the diversity of ownership in a particular area, the less chance
there is that a single person or group can have an inordinate effect, in
a political, editorial, or similar programming sense, on public opinion
at the regional level.[^115]

The Commission concluded that the rules were based upon the view of the
First Amendment to the Constitution articulated by the Supreme Court in
the [Associated Press]{.underline} case - i.e., a notion that the
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.\"[^116]

42. In 1988, the Commission replaced the 1 mV/m contour-overlap duopoly
    standard, which prohibited the common ownership of stations with
    overlapping 1 mV/m signal contours, with a more relaxed \"principal
    city\" contour-overlap standard that prohibited common ownership of
    AM stations when the predicted 5 mV/m contours overlapped and common
    ownership of FM stations when the predicted 3.16 mV/m contours
    overlapped.[^117] As such, the rule prohibited combinations of 2 AM
    or 2 FM stations in the same \"principal city\" but permitted AM/FM
    combinations within the same community. The Commission explained
    that efficiencies of common ownership might be realized by allowing
    radio broadcasters to own two or more radio stations in the same
    geographic area, although not in the same principal city. The
    Commission also explained that the goals of the duopoly rule
    remained the same: to promote economic competition and diversity of
    programming and viewpoints through local ownership diversity. The
    Commission noted a changed marketplace, with an increased number of
    broadcast stations, the introduction of new services and
    technologies, and the abundance of competition in local markets, as
    the compelling reasons to relax the local ownership
    regulation.[^118]

43. In 1992, the Commission again cited changed economic conditions in
    radio markets as a basis for further relaxing the local radio
    ownership rules.[^119] Specifically, the Commission permitted
    combinations of up to (i) 3 AM and 3 FM in markets with 40 or more
    stations, (ii) 3 AM and 2 FM in markets with 30 to 39
    stations, (iii) 2 AM and 2 FM in markets with 15 to 29 stations
    and (iv) 3 stations (with no more than 2 in the same service) in
    markets with 14 or fewer stations.[^120] Under cases (i)-(iii),
    combinations were permitted if the combined audience share did not
    exceed 25 percent. In case (iv), the combination was permitted if it
    would not result in a single party controlling 50 percent or more of
    the stations in the market. The Commission noted growth in the
    number of radio stations and increased competition from non-radio
    outlets such as cable and MTV. The Commission noted that stations
    faced declining growth in radio revenues and concluded that economic
    circumstances threatened radio\'s ability to serve the public
    interest. The Commission explained that consolidation within the
    industry would allow radio broadcasters to realize economies of
    scale that would then generate greater programming investment and
    increase radio stations' competitiveness.

44. In response to petitions for reconsideration, the Commission
    moderated the relaxation of its rules permitting combinations of up
    to (i) 2 AM/2 FM in markets with 15 or more stations, if the
    combined audience share did not exceed 25 percent; and (ii) 3
    stations in markets of 14 or fewer stations, with no more than 2 in
    the same service, if the combination would not control 50 percent or
    more of the stations in the market.[^121] The Commission concluded
    "that adopting more moderate increases . . . in the permissible
    level of station ownership in certain local markets at this time
    will provide necessary relief while enabling us to monitor
    marketplace developments as they unfold."[^122]

45. Pursuant to the Telecommunications Act of 1996, the Commission
    further relaxed its local radio ownership rules in March 1996, as
    set forth above.[^123] The Commission did not change from its 1992
    reconsideration decision, however, how it defined the relevant radio
    market or which stations it counted.[^124]

46. In our biennial review [NOI]{.underline}, we asked for comment on
    how the relaxation of local radio ownership rules under the Telecom
    Act has impacted competition, diversity and economic efficiencies
    within local radio markets. We noted that since the passage of the
    Telecom Act, the radio industry has experienced an ongoing trend
    towards increasing ownership concentration, both in terms of local
    and national radio markets; although the number of radio stations
    has increased, the number of owners has decreased. The
    [NOI]{.underline} asked for comment on whether this trend has had a
    significant impact on local market competition among radio stations,
    and with other local media outlets, in terms of the program delivery
    and local advertising markets.[^125] The [NOI]{.underline} also
    asked for comment on whether radio ownership concentration has had a
    significant influence over the expression of viewpoint diversity and
    the level of news coverage within local radio markets.[^126] We
    noted in the [NOI]{.underline} that the NTIA's 1997 annual report on
    minorities and broadcasting showed that there has been a drop in the
    number of minority-owned broadcast stations, and sought comment on
    the relationship between our ownership limits and the opportunities
    for minority and female broadcast station ownership.[^127] In
    addition, the [NOI]{.underline} sought comment on whether our
    current counting method for purposes of applying the local radio
    ownership rules should be modified to more realistically account for
    the number of stations in a radio market.[^128]

**2. Comments**

47. Commenters were divided on whether the current local radio ownership
    rules, mandated by the Telecommunications Act, have produced
    positive or negative results. Commenters concerned about the effects
    of the rules on the marketplace ask the Commission to maintain or
    strengthen, the current rules.[^129] CME, for example, argues that
    radio market consolidations have increased the market power of group
    owners, and explains that by November 1997 all top-250 radio markets
    were above 1800 on the Herfindahl-Hirschmann Index, implying
    substantial market concentration.[^130] Some commenters further
    contend that consolidation has increased radio owners\' influence
    over local advertising rates. Americans for Radio Diversity (ARD)
    explains that the cost of radio advertising is accelerating at
    roughly triple the rate of inflation, and that it is common for two
    or three radio station owners to receive 80% to 90% of the
    advertising revenues in a local market. ARD further argues that
    consolidation has negatively impacted small business owners who
    cannot afford the inflated advertising costs which the current
    conditions help create.[^131]

48. Commenters concerned about ownership consolidation also state that
    such consolidation has diminished local viewpoint diversity. While
    group owners may have greater resources to invest in local news and
    public affairs programming, ARD and CME argue that the scale
    economies from concentrated radio ownership arise in part from a
    homogenization of news reporting.[^132] Similarly, Greater Media,
    Inc., and Press Communications LLC believe that radio consolidation
    has reduced viewpoint diversity in broadcasting.[^133]

49. Other commenters, however, rejoin that consolidation was the intent
    behind deregulation of local radio ownership restrictions, and that
    any resulting problems that may arise with market power should be
    left to antitrust authorities.[^134] Commenters opposing
    strengthening the local radio ownership rules also state that
    anti-competitive effects are unlikely in local advertising markets.
    For example, CBS argues that competitive effects of changes in the
    local radio ownership limits must be evaluated in the context of the
    broad advertising markets where radio competes, and cites the fierce
    inter-media and intra-radio competition that occurs in advertising
    markets, the willingness of stations to change formats and the sharp
    fluctuations in listener preferences as evidence that radio
    incumbents can easily be challenged.[^135] NAB asserts that higher
    ratings and higher quality service resulting from ownership
    consolidation account for the higher advertising rates.[^136]
    Commenters supporting further relaxation of the local radio
    ownership rules also argue that consolidation has produced economic
    gains that reflect improved economies of scale, in terms of
    operating cost reductions and the improved quality and quantities of
    radio services offered. CBS cites transactional efficiencies that
    occur when a group owner can offer \"one stop shopping\" for
    advertisers, with benefits for both buyer and sellers of advertising
    time. Cumulus cites lower costs and improved radio service, and
    asserts that the improved economies of scale from group ownership
    allows radio stations in small and mid-sized markets to compete
    against local newspaper and television stations, which in many cases
    have enjoyed near-monopoly status with respect to their service to
    major local advertisers.[^137] A.H. Belo and CBS also state that
    common ownership of multiple media sources results in greater format
    diversity.[^138]

50. Commenters also differed on the Commission's methodology for
    counting stations in determining compliance with the ownership
    rules. Commenters such as Air Virginia, Americans for Radio
    Diversity (ARD), Greater Media, Inc., Press Communications, LLC, and
    Gross Communications Corporation argue that too many stations are
    counted under the Commission\'s current methodology. These
    commenters proposed to use an Arbitron or other rating service
    market definition,[^139] taking into account listener audience and
    station power,[^140] and to include only those stations that place a
    1mV/m (FM) or 2 mV/m (AM) primary service contour over the furthest
    city limit of the market\'s principal city,[^141] or using
    Department of Commerce MSA definitions in place of Arbitron.[^142]

51. In contrast, some commenting parties urged the Commission to retain,
    or even expand, its current radio market definition and station
    count method. CBS points to Congress\' awareness of how the
    Commission defines a "market" in setting the current regulations,
    and opposes any changes.[^143] ABC proposes using an all-inclusive
    measure that includes television, radio, cable, DBS, newspapers,
    video cassettes, yellow pages, direct mail and the Internet, and
    would substitute antitrust enforcement for the Commission\'s current
    local ownership regulation.[^144] Cumulus would allow parties to
    supplement their applications with findings prepared in accordance
    with Technical Note 101 of the National Bureau of Standards (now
    National Institute of Standards and Technology), arguing that this
    alternative approach generally provides a more accurate method for
    predicting the location of signal contours. [^145]

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3.  **Discussion**

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52. [Overview]{.underline}. We conclude that our current local radio
    ownership rules, as mandated by the Telecommunications Act of 1996,
    generally continue to serve the public interest. The longstanding
    goal of the Commission\'s local radio ownership restrictions has
    been to promote competition and viewpoint diversity within local
    radio markets. While some commenters argued that consolidation has
    had a positive impact on the economic viability of the radio
    industry, in terms of improved station profitability and increased
    value of radio ownership, and has also yielded potential benefits
    for both the listening public and advertisers, others raised
    significant concerns about the impact of radio ownership
    consolidation on both our competition and diversity goals.

53. We recognize that the industry has undergone significant
    consolidation since 1996. Moreover, we expect further consolidation
    as a result of our recent ownership decisions relaxing the
    television duopoly and one-to-a-market rules. We intend to monitor
    the consolidation and gather information regarding the overall
    impact on competition and diversity. As discussed more fully below,
    although we will maintain our current local radio ownership rules
    for the time being, we are persuaded that further proceedings are
    warranted to address certain definitional and methodological issues
    affecting our local radio ownership rules. Specifically, we will
    commence a proceeding to seek comment on alternative means of
    defining radio markets and alternative methods of calculating the
    total number of stations "in a market" and the number owned by a
    particular party in a market to correct anomalies in our current
    methodology. We believe that proceeding will lead to rules and
    procedures that will be easier to apply, provide more certainty for
    entities contemplating acquisitions, and result in a more rational
    and consistent application of our multiple ownership limits.

54. [Competition]{.underline}. Relaxation of the ownership limits under
    the Telecom Act has produced financial benefits for the broadcast
    radio industry. Financial data indicate that the industry has made
    significant gains since passage of the Telecom Act. For the industry
    as a whole, station profitability has increased and station values
    have reached new heights. However, it is not clear whether these
    gains are the result of greater efficiencies, enhanced market power,
    or both.

55. We are concerned that increasing consolidation may be having adverse
    effects on competition, especially in the local radio advertising
    market. Current data show that in 85 out of a total of 270 Arbitron
    radio markets, two entities already control more than 80% of
    advertising revenue; in 143 markets two entities control more than
    70 percent of such.[^146] We recognize that many advertisers
    consider alternative media to be good substitutes for radio
    advertising. However, the Department of Justice (DOJ) has concluded
    that there are a significant number of advertisers that do not. In
    distinguishing radio advertising as a distinct market from that of
    television and newspaper advertising, the DOJ explains that 1) radio
    advertising is unique in reaching a mobile broadcast audience; 2)
    radio has a greater ability to target particular audience segments;
    and 3) radio can be more cost effective and more flexible in
    responding to changes in local advertising conditions.[^147]
    Additionally, as we noted in our recent [TV Ownership
    Order]{.underline}, "\[a\] recent econometric study finds that other
    advertising media are not good substitutes for radio advertising and
    that radio advertising probably constitutes a separate antitrust
    market."[^148] Thus, for certain advertisers, newspapers, cable, and
    broadcast television stations do not constitute an effective
    substitute for radio stations. For these advertisers, the
    consolidation of local radio markets may raise significant
    competitive concerns.

56. [Diversity]{.underline}. Consolidation of radio stations under group
    ownership might allow owners to increase investment in news
    coverage, through the acquisition of more sophisticated news
    coverage equipment and by maintaining larger, more efficient news
    staffs. Some commenters thus suggest that ownership concentration
    has fostered viewpoint diversity. For example, Fuller-Jeffrey
    Broadcasting Companies, Inc. believes that viewpoint diversity is
    \"alive and well,\" and that pre-Telecom Act ownership limits had
    placed a severe economic strain on small to medium-sized companies.
    It also believes that the present level of consolidation should
    allow the radio industry to enjoy unprecedented success and
    stability, which will allow it to better contribute to the public
    interest. One impact of consolidation, it argues, has been to reduce
    unnecessary format duplication and to minimize audience
    overlap.[^149] Commenters such as NAB assert that the Commission
    should look at all media, including television, radio, cable, DBS,
    Internet and newspapers, along with smaller services such as MMDS
    and SMATV, when judging program diversity. NAB also finds that group
    owners do not impose their views on audiences.[^150]

57. The scale and scope efficiencies discussed above might in part arise
    from the consolidation of news coverage at commonly-owned stations,
    leading to a lessening of viewpoint diversity and to a smaller local
    market for news talent. If this were the case, this would conflict
    with the longstanding intent of the radio multiple ownership rules
    to promote viewpoint diversity through independently owned local
    stations. Viewpoint diversity has traditionally been viewed in terms
    of the number of independent viewpoints expressed in local markets,
    in which case ownership consolidation could have a negative impact
    on both viewpoint and source diversity. A related concern is that
    even without the loss of news staffs, viewpoint expression might
    become homogenized within a commonly owned group of radio stations
    as a result of the sharing of common news facilities and a common
    corporate culture.

58. Several commenters lend support to these notions. Air Virginia notes
    a trend by large group-owned stations towards less news and public
    affairs and more revenue-generating entertainment programming,
    particularly with local marketing agreements (\"LMAs\").[^151]
    Americans for Radio Diversity (ARD) believes that independent
    broadcasters are more likely to provide diverse and unbiased
    programming, and that group owners tend to ignore public service to
    demographic groups deemed to be small or unprofitable, which often
    impacts minorities and those of lower economic status.[^152] CME
    believes that consolidation has led to reduced public-affairs and
    local-news programming, since group owners increasingly use
    syndicated programming and out-sourcing to produce news and public
    affairs programs, often with the same production company as is used
    by competitors.[^153] It reports that, for example, Metro Networks
    Inc., a Houston-based company, provides all of the news programming
    to 10 Washington, D.C., radio stations. Metro, it states, is one of
    the fastest growing companies in the United States and its growth,
    according to one of its executives, has been due to the
    "out-sourcing" his company has found at many radio stations.[^154]
    Similarly, CME reports that Capstar Broadcasting uses ten announcers
    based in Austin, Texas, to record all between-song breaks and
    weather and traffic breaks for 37 of its stations in Texas, Arkansas
    and Louisiana.[^155]

59. In view of the large-scale consolidation in the radio industry, we
    believe that the existing local radio ownership limitations remain
    necessary to prevent further diminution of competition and diversity
    in the radio industry. It appears that while there may have been a
    number of salutary effects flowing from the consolidation that has
    taken place since 1996, largely in financial strength and enhanced
    efficiencies, it cannot be said that consolidation has enhanced
    competition or diversity, and, indeed, may be having the opposite
    effect. There currently are hundreds of fewer licensees than there
    were four years ago and, in many communities, far fewer radio
    licensees compete against each other.

60. Our competition and diversity concerns outlined above lead us to
    conclude that the local radio ownership rules should not be further
    relaxed at this time. The industry is still adapting to the
    substantial relaxation of local ownership rules that followed
    enactment of the 1996 Act, and we expect consolidation to continue
    under our current ownership limits. While some commenters argue that
    we should tighten the ownership limits, we do not believe this
    appropriate given that Congress directed the Commission to adopt
    these limits in 1996.

61. [Market Definition and Counting Methodology]{.underline}. Although
    we have decided to retain our ownership rule, our experience in
    administering the rule since its implementation in 1996 suggests
    several concerns that should be addressed, including our method of
    defining markets, counting the number of stations within them and
    counting the number of stations owned by a party in a radio market.
    These definitions and methodologies may be undermining Congress'
    intent in adopting the 1996 Act.

62. Our definition of a radio market and our method for counting the
    number of stations in a market were adopted in 1992.[^156] These
    were not altered when we amended our rules to implement Section 202
    of the 1996 Act.[^157] To evaluate whether a proposed transaction
    complies with our ownership rules, we first determine the boundaries
    of each market created by the transaction.[^158] Our rules define a
    radio market as the "area encompassed by the principal community
    contours (*i.e.*, predicted or measured 5 mV/m for AM stations and
    predicted 3.16 mV/m contour for FM stations) of the mutually
    overlapping stations proposed to have common ownership."[^159] Thus,
    we look to all stations that will be commonly owned after the
    proposed transaction is consummated and group these stations into
    "markets" based on which stations have mutually overlapping signal
    contours. A market is defined as the area within the combined
    contours of the stations to be commonly owned that have a common
    overlap. For example, suppose an applicant proposes to own stations
    A, B, C and D. The contours of stations A, B and C each overlap the
    contours of the other two stations -- that is, there is some area
    which the contours of all three stations have in common. Station D,
    on the other hand, overlaps the principal community contour of
    station A, but not those of stations B or C. Under our current
    definitions, the area encompassed by the combined contours of
    stations A, B and C form one "market" and the area within the
    combined contours of stations A and D form another market.[^160]

63. To determine the total number of stations "in the market," as
    defined above, we count all stations whose principal community
    contours overlap the principal community contour of
    [any]{.underline} one or more of the stations whose contours define
    the market. Thus, in the market formed by the contours of stations
    A, B and C, any station whose contour overlapped the contour of A, B
    [or]{.underline} C would be counted as "in the market." We use a
    different methodology, however, to determine the number of stations
    that any single entity is deemed to own in a given market. For this
    purpose, we only count those stations whose principal community
    contours overlap the common overlap area of [all]{.underline} of the
    stations whose contours define the market. Thus, a station owned by
    the applicant that is counted as being \"in the market\" because its
    contour overlaps the contour of at least one of the stations that
    create the market will not be counted as a station owned by the
    applicant in the market unless its contour overlaps the area which
    the contours of [all]{.underline} of the stations that define the
    market have in common. Referring to our example of the market formed
    by the contours of stations A, B and C, station D would be counted
    as "in the market" because its contour overlaps the contour of
    station A. But, station D would not be counted as a station owned by
    the applicant in the ABC market because station D's contour does not
    also overlap the contours of stations B and C. In short, the
    applicant's ownership of station D would not be counted against it
    in determining compliance with the ownership cap in the ABC market.

64. These definitions and methodologies may be producing unintended
    results that are contrary to Congress' intent. In the 1996 Act,
    Congress directed us to adopt radio ownership limits that increase
    as the size of the market increases. Implicit in Congress' statutory
    directive is: (1) a rational definition of radio "market" that
    reflects the number of stations to which listeners in a particular
    community actually have access; and (2) a consistent definition of
    radio market when counting the number of stations in a market and
    when counting the number of stations an entity owns within that
    market.

65. The Commission's current policies raise concerns on both counts.
    First, the Commission's use of overlapping signal contours to assess
    the number of stations in the market can produce unrealistic
    results.[^161] In other contexts, such as our television duopoly and
    one-to-a-market rules, we recently opted for market definitions
    based on commercial reality -- as measured by ratings services like
    Arbitron and Nielsen -- rather than contour overlaps. In changing
    our duopoly rule from a contour-based restriction to a DMA-based
    restriction, we stated that the DMAs "are a better measure of actual
    television viewing patterns, and thus serve as a good measure of the
    economic marketplace in which broadcasters, program suppliers and
    advertisers buy and sell their services and products."[^162] We
    believe that the same reasoning could apply to radio markets.
    Arbitron markets reflect the number of stations that actually target
    listeners in a particular community because they are the listeners
    that advertisers pay to reach. We will issue a Notice of Proposed
    Rulemaking seeking comment on whether Arbitron markets (or a proxy
    in non-Arbitron areas) would be a more accurate measure of
    marketplace reality than our current approach.

66. Second, our current methodology for counting the number of stations
    a party owns in a market may result, as in the example discussed
    above, in a station being counted in the market for purposes of
    establishing the number of stations in the market but not being
    counted against a licensee's cap on the number of stations it may
    own in that market. In one case, this would have led to a party
    being permitted, in effect, to own three stations in a four-station
    market because our method of counting the stations it owned in the
    market excluded one of its stations.[^163]

67. This shifting market definition appears illogical and contrary to
    Congress' intent. For instance, in the 1996 Act, Congress provided
    that:

in *a radio market* with 14 or fewer commercial radio stations, a party
may own, operate, or control up to 5 commercial radio stations, not more
than 3 of which are in the same service (AM or FM), except that a party
may not own, operate, or control more than 50 percent of the stations in
*such market*.[^164]

Thus, the plain language of the statute seems to require us to look at
the *same market* \-- i.e., to use the same definition of \"market\" \--
when determining the number of radio stations in the market and when
counting the number of stations that an entity owns, operates, or
controls within that market. As a logical matter, if a station has
sufficient presence that it should be counted as contributing to the
number of stations \"in the market,\" it seems appropriate to count it
as being \"in the market\" for purposes of calculating the ownership
cap.

68. We tentatively conclude that our definitions and methodologies in
    this area may be having effects inconsistent with what Congress
    intended. In addition, they may be undermining the legitimate
    expectations of broadcasters, advertisers and the public as to the
    size of their market, the number of stations in their market, and
    the number of stations that can be owned by an individual party in
    that market. To consider appropriate changes to our rules, we will
    issue a *Notice of Proposed Rule Making* soliciting comment on
    proposed modifications of our rules in this area.

**C. Dual Network Rule**

**1. Regulatory History**

69. Section 73.658(g) sets forth the Commission\'s current dual network
    rule. It directly reflects the provisions of Section 202(e) of the
    Telecom Act, which permits a television broadcast station to
    affiliate with a person or entity that maintains two or more
    networks of television broadcast stations unless such networks are
    composed of: 1) two or more persons or entities that were
    \"networks\" on the date the Telecom Act was enacted;[^165] or 2)
    any such network and an English-language program distribution
    service that on the date of the Telecom Act\'s enactment provided 4
    or more hours of programming per week on a national basis pursuant
    to network affiliation arrangements with local television broadcast
    stations in markets reaching more than 75 percent of television
    households. The Conference Report identified with precision the
    networks to which these definitions were to apply. It stated that
    the Commission was being directed to revise its dual network rule,

> to permit a television station to affiliate with a person or entity
> that maintains two or more networks unless such dual or multiple
> networks are composed of (1) two or more of the four existing networks
> (ABC, CBS, NBC, Fox) or, (2) any of the four existing networks and one
> of the two emerging networks (WBTN, UPN). The conferees do not intend
> these limitations to apply if such networks are not operated
> simultaneously, or if there is no substantial overlap in the territory
> served by the group of stations comprising each such networks.[^166]

70. The Commission first adopted a dual network rule for broadcast radio
    networks in 1941 following an investigation to determine whether the
    public interest required \"special regulations\" for radio stations
    engaged in chain or other broadcasting.[^167] The rule provided that
    no license would be issued to a broadcast station affiliated with a
    network organization that maintained more than one broadcast
    network.[^168] The Commission extended the dual network rule to
    television networks in 1946.[^169] The Commission believed that
    permitting an entity to operate more than one network might preclude
    new networks from developing and affiliating with desirable stations
    because those stations might already be tied up by the more powerful
    network entity. In addition, the Commission expressed concern that
    dual networking could give a network too much market power. The dual
    network prohibition, therefore, was intended to remove barriers that
    would inhibit the development of new networks, as well to serve the
    Commission\'s more general diversity and competition goals.[^170]
    The dual network rule for broadcast television remained unchanged
    until 1996, when the Commission amended the rule, as noted above, to
    conform with the provisions in Section 202(e) of the Telecom
    Act.[^171]

**2. Comments**

71. Four parties (ABC, CBS, Paxson and WB) submitted comments regarding
    the dual network rule; all favored repeal. These four broadcast
    networks argue that the rule constrains their ability to restructure
    and achieve efficiencies of common ownership.[^172] They also argue
    that antitrust enforcement would be sufficient to address any
    anticompetitive concerns that might arise in the absence of the dual
    network rule.[^173] ABC and CBS argue that broadcast networks are in
    poor economic health and struggling to compete with cable and
    satellite.[^174] CBS, Paxson, and WB maintain that competition among
    broadcast networks and between networks and other video media has
    never been more intense and mergers between networks, especially
    those involving an emerging network and an established network,
    would seldom raise competitive concerns.[^175] CBS argues that only
    the national advertising and program production markets are relevant
    to competition analysis of the rule and both markets are
    sufficiently competitive so as not to warrant a *per se* prohibition
    of any and all mergers between certain broadcast networks.[^176]

72. With respect to diversity, ABC maintains that a network combination
    would not harm local news and public affairs. ABC argues that a
    network combination operating two networks would provide national
    programming while local news and information programming would
    remain in the hands of the affiliates.[^177] Paxson maintains that
    the diversity of local programming outlets has never been greater
    and WB asserts that repeal of the dual network rule would increase
    both diversity and competition because combinations involving an
    emerging network and an established network could produce efficient
    economies of scale and marketing advantages.[^178]

73. These four networks maintain that the rule discriminates against
    broadcast networks, as opposed to cable, by allowing mergers between
    broadcast networks and cable networks, while limiting mergers
    between broadcast networks themselves.[^179] CBS contends that the
    rule is a \"striking example of regulatory inconsistency.\"[^180]
    CBS argues that there is a diminishing difference between networking
    and syndication and every major syndicator, except All American and
    Hearst, produces at least four hours of programming per week with at
    least 75 percent audience reach and yet remains uncovered by the
    rule.[^181]

**3. Discussion**

74. The current dual network rule differs markedly from the dual network
    rule that remained unchanged from 1946 to 1996. The latter
    prohibited a broadcast station from affiliating with a network
    organization that maintained more than one broadcast network. In
    contrast, the current rule effectively permits a broadcast station
    to affiliate with a network organization that maintains more than
    one broadcast network, unless such networks are created by a merger
    between ABC, CBS, Fox, or NBC, or a merger between one of these four
    established networks and UPN or WB. Thus, the current rule supports
    common ownership of multiple broadcast networks created through
    internal growth and new entry, and discourages common ownership of
    multiple broadcast networks created by mergers between specific
    network organizations.

75. Under the current dual network rule, all existing network
    organizations, and all new network organizations, may create and
    maintain multiple broadcast networks. There are no limits on the
    number of broadcast networks that may be maintained by a network
    organization, or the number of television stations that may
    affiliate with a network organization. As such, it is theoretically
    possible for a network organization with sufficient programming to
    enter into affiliation agreements with every broadcast television
    station, in every market, and supply all of their programming. The
    opportunity to create and maintain multiple broadcast networks
    places broadcast networks on more equal footing with cable,
    satellite and other multichannel video programming distributors.

76. While the dual network rule gives all network organizations the
    opportunity to pursue any economic efficiencies that may arise from
    the maintenance of multiple broadcast networks, it restricts the
    manner in which specific network organizations become multiple
    broadcast networks. Specifically, the rule permits ABC, CBS, Fox and
    NBC to develop multiple [broadcast]{.underline} networks by (1)
    creating new broadcast networks, (2) acquiring new broadcast
    networks created after passage of the Telecom Act, and (3) acquiring
    video networks from nonbroadcast media ([e.g]{.underline}., cable or
    satellite) and moving them to broadcast, assuming they could find
    additional local stations with which to affiliate. However, the rule
    prohibits ABC, CBS, Fox, and NBC from developing multiple broadcast
    networks by merging with one another or UPN or WB.

77. We believe that the rule as it applies to UPN and WB may no longer
    be necessary in the public interest. Accordingly, we will adopt a
    *Notice of Proposed Rule Making* seeking comment on modifying the
    dual-network rule. We recognize that program production and
    broadcast networking are complementary inputs with economic
    characteristics ([e.g]{.underline}., large sunk costs and large
    transaction costs) that make vertical integration desirable. Since
    UPN and WB are nascent subsidiaries of large, well-established
    program producers, a merger of ABC or CBS or Fox or NBC with UPN or
    WB may be characterized as a merger of an established broadcast
    network with an established program producer. We believe that
    allowing such mergers may permit realization of substantial economic
    efficiencies without undue harm to our diversity and competition
    goals.[^182] However, because we are concerned about the effect of
    such a merger on our diversity goals, that *Notice* seeks comment on
    what, if any, safeguards should be imposed to assure a minimal
    reduction in diversity assuming we alter the rule in some fashion.

78. We do not, however, believe that, at the present time, the dual
    network rule should be eliminated in its entirety. While there may
    be some economic efficiencies associated with mergers between
    established broadcast networks, we believe such mergers would raise
    significant competition and diversity concerns. As such, our
    forthcoming *Notice of Proposed Rule Making* concerning the dual
    network rule will not propose elimination of that portion of the
    rule that prevents mergers between ABC, CBS, Fox, and NBC.

**D. Daily Newspaper/Broadcast Cross-Ownership Rule**

**1. Regulatory History**

79. Section 73.3555(d) of the Commission\'s rules sets forth the
    newspaper/broadcast cross-ownership rule. That section states:

No license for an AM, FM or TV broadcast station shall be granted to any
party (including all parties under common control) if such party
directly or indirectly owns, operates or controls a daily newspaper and
the grant of such license will result in: (1) The predicted or measured
2 mV/m contour of an AM station, computed in accordance with §73.183 or
§73.186, encompassing the entire community in which such newspaper is
published; or (2) The predicted 1 mV/m contour for an FM station,
computed in accordance with §73.313, encompassing the entire community
in which such newspaper is published; or (3) The Grade A contour of a TV
station, computed in accordance with §73.684, encompassing the entire
community in which such newspaper is published.[^183]

80. The Commission adopted the newspaper/broadcast cross-ownership rule
    in 1975.[^184] Like all of the Commission\'s cross-ownership and
    multiple ownership rules in the broadcast context, the
    newspaper/broadcast cross-ownership rule rests on \"the twin goals
    of promoting diversity of viewpoints and economic
    competition.\"[^185] In adopting the rule, the Commission made clear
    that its diversity goal is paramount; sometimes competition must
    \"yield . . . to the even higher goals of diversity and the delivery
    of quality broadcasting service to the American people.\"[^186] The
    Commission explained that diversification of ownership promoted
    diversification of viewpoint in that \"it is unrealistic to expect
    true diversity from a commonly owned station-newspaper combination.
    The divergence of their viewpoints cannot be expected to be the same
    as if they were antagonistically run.\"[^187] Thus, the Commission
    determined that, as a general rule, granting a broadcast license to
    an entity in the same community in which the entity also publishes a
    newspaper would harm local diversity, and should be
    prohibited.[^188] The Commission did not foreclose, however, waiver
    requests under certain circumstances,[^189] although it has only
    granted three waiver requests on a permanent basis.[^190] In
    [Fox]{.underline} and [Field Communications]{.underline},
    essentially, former owners of a newspaper were reacquiring ownership
    and, accordingly, new broadcast/newspaper combinations were not
    being created. Additionally, in [Fox]{.underline} the Commission
    found that without a waiver there was substantial risk to the
    continued viability of the [New York Post]{.underline} newspaper. In
    [Columbia Montour]{.underline}, a waiver was granted because there
    were documented, unsuccessful efforts to sell the broadcast station
    separately, the broadcast station was a financially troubled small
    AM station, the common ownership would only involve a newspaper and
    a small AM station, there was already a high level of media
    diversity in the market where the facilities were located, the AM
    station was not a significant competitive force in the market, and
    the proposed combination was unlikely to have an adverse effect on
    media competition in the market

81. In 1978, the Supreme Court, in [FCC v. National Citizens Committee
    for Broadcasting]{.underline},[^191] upheld the Commission\'s rules
    and waiver policies in their entirety. The Supreme Court found the
    Commission\'s diversity goal an important public policy that
    furthered the First Amendment values of public access to diverse and
    antagonistic sources of information.[^192] Although the Supreme
    Court noted the arguments of opponents of the rule to the contrary,
    it stated 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.\"[^193] The Supreme Court
    approvingly cited the lower court\'s observation that "\[d\]iversity
    and its effects are . . . elusive concepts, not easily defined let
    alone measured without making qualitative judgments objectionable on
    both policy and First Amendment grounds."[^194] It also confirmed
    the Commission's opinion in the [Second Report and Order in Docket
    18110]{.underline} that \"\'it is unrealistic to expect true
    diversity from a commonly-owned station-newspaper combination. The
    divergency of their viewpoint cannot be expected to be the same as
    if they were antagonistically run.\'\"[^195] The Supreme Court noted
    the availability of waivers to underscore the reasonableness of the
    rule.[^196]

82. For several years in the 1980s and early 1990s, Congress precluded
    the Commission from spending authorized funds \"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.[^197] In
    the Commission\'s 1994 appropriation, however, Congress provided
    that the Commission could amend policies with respect to waivers of
    the newspaper/broadcast cross-ownership rule as it applied to
    radio.[^198] Subsequently, Congress dropped all restrictive language
    concerning the rule from the Commission\'s appropriations, and thus
    removed the statutory ban on the Commission\'s review of the rule
    itself.[^199]

83. Although the Telecommunications Act of 1996 addresses various
    broadcast cross-ownership issues, it does not address
    newspaper/broadcast cross-ownership issues; indeed, the legislative
    history of that Act reveals that the House of Representatives
    explicitly considered and rejected changes to the
    newspaper/broadcast cross-ownership rule.[^200] Thus, while the
    Commission now has the authority and 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. However, we believe that there
    may be certain circumstances in which the rule may not be necessary
    to achieve the rule's public interest benefits. We, therefore, will
    initiate a rulemaking proceeding to consider tailoring the rule
    accordingly.

84. As a result of issues raised in the merger of The Walt Disney
    Company and Capital Cities/ABC, Inc.,[^201] in September 1996 we
    issued a [Notice of Inquiry]{.underline} soliciting comment on the
    possible revision of our waiver policy as to newspaper/radio
    combinations.[^202] In that [Notice]{.underline} we asked whether we
    should revise our waiver policy in ways that might make it less
    stringent and/or more objective, such as by adopting a voice count
    test.

85. Subsequently, in the instant proceeding, we solicited comment on
    whether the overall newspaper/broadcast cross-ownership rule should
    be retained, modified or eliminated.[^203] In the biennial review
    [NOI]{.underline} we expressed the view that permitting the owner of
    a broadcast TV or radio station to own a newspaper, or visa versa,
    could give a common owner the market power to unilaterally raise
    local radio, television, and/or newspaper advertising rates.[^204]
    However, we also expressed the belief that the broadcast media and
    newspapers were not likely to compete in the markets for delivered
    programming or program production and, accordingly, elimination of
    the rule would likely not have adverse competitive impact in these
    markets.[^205] We asked for comment on alternatives to elimination
    of the rule and other possible economic effects from such
    elimination (e.g., benefits to the public from efficiencies to be
    realized from joint operations).[^206] Finally, we solicited comment
    on the effects elimination of the rule might have on our diversity
    concerns and specifically solicited comment on the arguments made in
    a Petition for Rulemaking filed by the Newspaper Association of
    America seeking repeal of the rule.[^207]

**2. Comments**

86. Opponents of the rule claim that the Commission has never
    empirically demonstrated that the rule furthers its competition and
    diversity objectives.[^208] In any event, they assert, media markets
    are dramatically more competitive and diverse now than when the
    Commission adopted the rule, such that the rule is no longer in the
    public interest,[^209] and perhaps is even unconstitutional on First
    Amendment or other grounds.[^210] Opponents explain that the
    efficiencies of grandfathered combinations have enabled them to air
    more extensive and in-depth news and public affairs programming than
    their competitors, and to develop new media ventures, and therefore
    suggest that the efficiencies of combinations promote outlet
    diversity.[^211] They claim that efficiencies are better realized
    through combinations than non-attributable joint ventures,[^212] and
    are not driven by consolidation of content or editorial decisions
    and so do not compromise viewpoint diversity.[^213] Opponents also
    contend that combinations would not affect competition in the
    advertising market, because the market share of newspapers is
    overstated in that it includes classified advertising, a market in
    which broadcast radio and television do not compete.[^214] For these
    reasons, many commenters urged the Commission to repeal the
    newspaper/broadcast cross-ownership rule, or modify it to allow
    combinations if a certain number of independent voices remain after
    consummation of the transaction.[^215]

87. Proponents of the rule counter that many of the new media outlets,
    such as the Internet, OVS and DBS, do not add to viewpoint diversity
    on the local level.[^216] They also point out that new programs by
    the same broadcasters do not add to viewpoint diversity.[^217] Rule
    proponents also state that the rule does not prohibit all
    combinations, but rather only those in the same market; moreover,
    existing waiver policies allow combinations where a broadcaster or
    newspaper publisher is failing and cannot survive but for the
    combination.[^218] Proponents also state that the broadcast and
    newspaper industries are already highly concentrated,[^219] and that
    efficiencies could be realized from joint ventures rather than
    attributable combinations.[^220] Proponents further claim that
    newspapers dominate the local advertising market, particularly in
    smaller markets, such that combinations would harm competition in
    that market.[^221]

**3. Discussion**

88. We believe the newspaper/broadcast cross-ownership rule continues to
    serve the public interest because it furthers our important and
    substantial policy of viewpoint diversity. We therefore conclude
    that, as a general matter, the rule should be retained. However, 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.

89. [Effects on Diversity]{.underline}. While the media marketplace has
    changed since we adopted the rule, we find that the changes are
    insufficient to justify repeal and we will need to gather a more
    complete record to determine what modifications may be appropriate.
    First, many of the new media outlets do not yet appear to be
    substitutes for broadcast stations and newspapers on the local level
    for diversity purposes.[^222] As we have stated in the biennial
    review [NOI]{.underline} and elsewhere, we are most concerned with
    viewpoint diversity at the local level. This is because
    \"\[m\]onopolization on the means of mass communication in a
    locality assures the monopolist control of information received by
    the public and based upon which it makes elective, economic, and
    other choices.\"[^223] New outlets such as DBS and MMDS, however,
    typically do not provide locally originated programming. In
    addition, even though cable systems may originate local programming,
    they are required to dedicate PEG channels only if their franchise
    authorities require them to do so, and to provide leased access
    channels only as a function of their activated channels.[^224] There
    is no requirement that the material offered on cable access channels
    be locally originated or oriented. By contrast, as part of their
    public interest obligations, broadcasters are required to air
    programming that is responsive to issues facing their communities of
    license, and, although they are not required to do so, local daily
    newspapers typically cover local issues, endorse local candidates,
    and provide a platform for the presentation of local opinion.[^225]
    Thus, the fact remains that broadcast services, in particular
    broadcast television, and newspapers have been and continue to be
    the dominant sources of local news and public affairs information in
    any given market.[^226] Importantly, while the number of broadcast
    stations has increased in the past several years, the number of
    daily newspapers has [decreased.]{.underline}[^227] On one hand,
    some commenters argue that this warrants the Commission allowing
    newspapers to combine with local broadcast stations in order to
    realize the economies of joint operation, helping them to preserve
    their newspaper. On the other hand, to the extent that this suggests
    that the survival of some newspapers may depend on their joint
    operation with local broadcast stations, we have a waiver standard
    that can accommodate such instances.[^228]

90. Second, we note that not all of the new media in a given market are
    available to all consumers in the market to the same extent as
    broadcast services and newspapers. Broadcast radio and TV are
    available free of charge to anyone who makes an investment in
    receiving equipment, and much of the public have such equipment; for
    example, 98.2% of Americans own a TV set.[^229] Similarly,
    newspapers are available to anyone for a nominal charge. DBS, MMDS,
    and the Internet, however, are available only to those who both
    purchase or rent equipment [and]{.underline}, except in the case of
    the Internet where some Internet Service Providers offer Internet
    connections free of direct charge, subscribe to a service, the
    monthly fees for which services are typically several times the cost
    of a newspaper subscription.[^230] In addition, in the case of the
    Internet, the sunk cost of a computer and the software necessary to
    browse the Internet is typically several times that of a radio or
    TV.

91. Third, although some grandfathered combinations report that
    efficiencies they have derived therefrom have enabled them to air
    more news and public affairs programming than their competitors such
    additional programming does not necessarily enhance our policy goal
    of viewpoint diversity if the additional programs all come from the
    same source. The Commission has previously explained that its
    cross-ownership and multiple ownership rules encourage \"outlet\"
    and \"source\" diversity as an indirect means to achieve viewpoint
    diversity:[^231]

The Commission has felt that without a diversity of outlets, there would
be no real viewpoint diversity \-- if all programming passed through the
same filter, the material and views presented to the public would not be
diverse. Similarly, the Commission has felt that without diversity of
sources, the variety of views would necessarily be circumscribed.[^232]

92. Thus, as the Commission stated when it adopted the
    newspaper/broadcast cross-ownership rule: \"it is unrealistic to
    expect true diversity from a commonly-owned newspaper combination.
    The divergence of their viewpoints cannot be expected to be the same
    as if they were antagonistically run.\"[^233]

93. We also emphasize that media markets are undergoing significant
    changes, occasioned by the Telecommunications Act of 1996 and our
    decision to relax other cross-ownership and multiple ownership rules
    and waiver policies. The Telecommunications Act directed the
    Commission to modify its radio ownership rules. Between the
    enactment of the Telecom Act and March 2000, the number of radio
    station owners declined by 22 percent from approximately 5,100
    owners in March 1996, to about 4,000 in March 2000. In addition, we
    have recently amended our \"TV duopoly\" and \"one-to-a-market\"
    rules and waiver policies and we propose other changes to still
    other broadcast ownership rules or policies as a result of this
    biennial review. The response of the market to these rule changes
    will provide us concrete, empirical information about their impact
    on our public policy goals for use in our future biennial reviews.
    Therefore, the dominance of broadcast services and newspapers in
    providing local news and public affairs information, may suggest
    that a measured approach to modifying the newspaper/broadcast
    cross-ownership rule is appropriate at this time.

94. [Effects on Competition]{.underline}. With respect to competition,
    we also emphasize that the record was not clear on several points.
    First, it was not clear that grandfathered combinations derived
    efficiencies only from [co-located]{.underline} combinations. For
    example, Chronicle provided information that its combination aired
    more news and public affairs programming than its competitors in a
    given market, but the combination that produced these benefits
    included both co-located and non-co-located broadcast stations and
    newspapers. The newspaper/broadcast cross-ownership rule only
    prohibits combinations in the same market. Second, it was not clear
    that the efficiencies grandfathered combinations derived could not
    be realized from non-attributable joint ventures. Managers of
    existing newspaper/broadcast combinations, as well as other
    commenters, report that the broadcast station and the newspaper keep
    separate news staffs in combination situations because the
    combination does not derive efficiencies from consolidation of such
    staff. Accordingly, it does not appear that mergers of newspapers
    and broadcast stations would produce such efficiencies. Third, it
    was not clear that the efficiencies of newspaper/broadcast
    combinations produced any meaningful benefits for advertisers, and
    therefore for viewers as consumers of the advertisers\' goods. As
    indicated above, some commenters explain that grandfathered
    combinations have provided more news and public affairs programming,
    and one could extrapolate that this translates into more advertising
    and viewing options. There was no evidence, however, that any of
    these additional options translated into benefits for advertisers in
    the form of reduced rates, or corresponding benefit for viewers in
    the form of reduced prices for advertised products and services.
    Accordingly, we conclude that the newspaper/broadcast
    cross-ownership rule continues to provide important public interest
    benefits and that its elimination would not necessarily provide any
    offsetting benefits to competition.

95. Notwithstanding our general conclusion that the rule should be
    retained, we recognize that there may be situations in which the
    rule may not be necessary to protect the public interest in
    diversity and competition. We wish to examine in greater detail such
    situations. There 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.
    While the record contains several proposals for tailoring the rule
    to address this issue, we believe that a more complete record can
    and should be developed regarding the circumstances in which the
    rule may not be necessary to achieve its intended public interest
    benefits. We will examine whether the rule needs to be tailored to
    address contemporary market conditions. We will issue a notice of
    proposed rulemaking seeking comment on these and other potential
    modifications of our rule. While we generally believe that the
    newspaper/broadcast cross-ownership rule should be retained, this
    rulemaking will ensure that the rule is tailored to cover only those
    circumstances in which it is necessary to protect the public
    interest.

96. [Additional Matter]{.underline}. In 1996, the Tribune Company, which
    publishes a newspaper in Fort Lauderdale, Florida, agreed to merge
    with Renaissance Communications Corporation, which owned six
    television stations including one in Miami, Florida. Although
    Tribune sought a permanent waiver of the newspaper/broadcast
    cross-ownership rule to permit this combination, the Commission
    granted the license transfer subject to the condition that Tribune
    divest itself of either the Ft. Lauderdale newspaper or the Miami
    television station within one year, expiring March 22, 1998. On
    March 6, 1998, Commission staff granted an extension of Tribune's
    temporary waiver subject to the review of the newspaper/broadcast
    cross-ownership in the instant proceeding and required that it come
    into compliance within six months of the completion of the 1998
    biennial review (unless, of course, Tribune's combination was in
    compliance with any new cross-ownership rule adopted as a
    consequence of that review).[^234] We explained that an extension
    was appropriate because it would be unduly harsh for Tribune not to
    receive further interim relief given the confusion that may have
    resulted from the Commission's initial waiver decision with respect
    to its policy on interim waivers pending rulemaking. We also stated
    that an extension would not so compromise our diversity and
    competition interests as to outweigh the substantial equitable
    considerations favoring the grant.[^235] Given our decision here to
    issue a Notice of Proposed Rulemaking seeking comment on possible
    modifications of the newspaper/broadcast cross-ownership rule, and
    the unusual circumstances that led to the prior extension of
    Tribune's waiver,[^236] we will extend that temporary waiver, under
    the same terms and conditions now applicable, until the completion
    of the rulemaking.

######### E. Cable/Television Cross-Ownership Rule

**1. Regulatory History**

97. Section 76.501(a) of the Commission\'s rules sets forth the
    \"cable/TV cross-ownership rule.\" That section states:

> No cable television system (including all parties under common
> control) shall carry the signal of any television broadcast station if
> such system directly or indirectly owns, operates, controls, or has an
> interest in a TV broadcast station whose predicted Grade B contour . .
> . overlaps in whole or in part the service area of such system (i.e.,
> the area within which the system is serving subscribers).[^237]

The Commission adopted the cable/TV cross-ownership rule in 1970.[^238]
In doing so, the Commission noted its concerns about concentration in
the broadcast industry,[^239] and stated that the rule would further the
Commission\'s policy favoring diversity of control over local mass
communications media, and thereby lead to diverse sources of
programming.[^240] The Commission noted that it wished to avoid
over-concentration of media control.[^241] On reconsideration, the
Commission reiterated that its \"adoption of these provisions \--
designed to foster diversification of control of the channels of mass
communication \-- was guided by two principal goals, both of which have
long been established as basic legislative policies. One of these goals
is increased competition in the economic marketplace; the other is
increased competition in the marketplace of ideas.\"[^242]

98. Congress codified and then repealed a statutory prohibition on
    cable/TV cross-ownership. On October 30, 1984, the Cable
    Communications Policy Act of 1984 became law.[^243] Section
    613(a)(1) of the Cable Act of 1984 codified the cable/TV
    cross-ownership rule.[^244] Section 202(i) of the Telecommunications
    Act of 1996, however, eliminated section 613(a)(1) of the Cable Act
    of 1984,[^245] thereby ending the statutory bar to cable/TV
    cross-ownership. In eliminating the bar, however, Congress stated:
    \"The conferees do not intend that this repeal of the statutory
    prohibition should prejudge the outcome of any review by the
    Commission of its rules.\"[^246] The instant proceeding is the first
    one in which the Commission has reviewed the rule since its
    adoption.

99. In the Biennial Review NOI we solicited comment on the cable/TV
    cross-ownership rule. Specifically we asked for comment on the
    possible effects that repeal or relaxation of the rule might have on
    various markets, including the market for delivered programming, on
    the appropriate scope of the product and geographic advertising
    markets in which cable and broadcast television compete, and on
    whether cable/broadcast television combinations could exercise
    monopsony power[^247] in the program production markets.
    Additionally, we sought comment on the impact on diversity of both
    the increased number of video outlets and allowing cable/television
    cross-ownership.

**2. Comments**

2.  

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100. Twelve parties commented on the cable/TV cross-ownership rule;
     seven supported retention of the rule,[^248] and five supported
     repeal or modification.[^249] Opponents of the rule note that
     relevant markets are more competitive and diverse than when the
     Commission adopted the rule, and state that the rule no longer
     serves the public interest,[^250] and perhaps is even
     unconstitutional.[^251] Opponents explain that the current
     delivered programming market now includes more broadcast television
     stations, DBS, MMDS, SMATV, OVS, VCRs, and even the Internet.[^252]
     They contend that the advertising market is competitive and that
     the market share of broadcasters is significantly larger than that
     of cable.[^253] Opponents also suggest that the program production
     market would not be affected by repeal of the rule, because most
     cable systems that provide local programming produce it themselves;
     very few cable systems buy syndicated programming for their own
     local channels. Opponents also claim that carriage and channel
     positioning rules, and the incentive of cable operators to provide
     their customers with the television stations that they desire on
     channel positions that work best for customers ensure that cable/TV
     combinations would not discriminate in favor of their owned
     stations.[^254] Opponents further suggest that repeal of the
     cable/TV cross-ownership rule would not impact diversity. They
     explain that consumers of news and public affairs information have
     numerous alternatives from which to choose, and they point out that
     cable operators provide local programming through leased-access and
     PEG channels, and in many instances do not have control over that
     programming.[^255] For these reasons, opponents of the rule contend
     that its economic costs outweigh its benefits;[^256] some claim
     that repeal would increase competition and diversity by
     facilitating the development of new broadcast networks, and suggest
     that if the Commission repeals the rule, it could accomplish its
     competition and diversity objectives through certain conditions and
     safeguards.[^257]

101. Proponents of the rule claim that the rule continues to serve the
     public interest because cable is the dominant competitor in the
     multichannel video programming distribution market, and thus serves
     as a \"gatekeeper\" to the delivered programming market.[^258]
     Proponents also contend that a cable/TV combination could harm
     competition in the advertising market by discriminating in favor of
     its television station and cable programming services, manipulating
     carriage and channel positioning and offering joint advertising
     rates, realizing economies of scale, driving competitors out of the
     market and frustrating new entrants.[^259] Proponents also explain
     that our carriage and channel positioning rules are not sufficient
     to deter anticompetitive discriminatory conduct as a joint owner
     could still offer joint advertising opportunities and joint
     cross-promotions unavailable to other competitors.[^260]
     Additionally, absent the cable/TV cross-ownership rule, they
     contend that there would be no structural regulatory impediment to
     combined ownership of, for example, AT&T/TCI, GE and NBC by a
     single entity, creating a combination with unique competitive
     advantages.[^261] Proponents suggest that cable/TV combinations
     would compromise diversity, and explain that a combination would
     reduce the number of independent sources of local news.[^262]

**3. Discussion**

102. As explained more fully below, we agree with proponents of the rule
     that it continues to serve the public interest because it furthers
     our important public policies of fostering competition and
     viewpoint diversity. The cable/TV cross-ownership rule promotes
     competition and diversity and prevents unfair discrimination
     against competitors, including in forms not covered by existing
     law. We therefore retain the rule.

103. [Effects on Competition]{.underline}. We conclude that the rule
     continues to serve the public interest because it furthers our goal
     of competition in the delivered video programming market.[^263]
     This market includes an array of participants, such as operators or
     providers of broadcast television, cable systems, DBS, MMDS, OVS,
     SMATV, and possibly even the Internet and videocassettes for VCRs.
     Sixty-seven percent of American television households, however,
     subscribe to cable.[^264] In the context of discussing the status
     of competition in the market for the delivery of multichannel video
     programming, the Commission stated in its most recent [Cable
     Competition Report]{.underline} that \"\[t\]he market for the
     delivery of video programming to households continues to be highly
     concentrated and characterized by substantial barriers to
     entry."[^265] Under these circumstances, we agree with proponents
     of the rule that cable, in many instances, functions as the
     \"gatekeeper\" to local markets for delivered video
     programming.[^266] As commenters point out, this status gives cable
     system operators both the incentive and the means to discriminate
     against their competitors with respect to such core issues as
     carriage and channel positioning[^267] as well as in areas not
     covered by statute or Commission rule such as joint advertising
     rates and promotions. As commenters also point out, a cable/TV
     combination would have even greater incentive and means to
     discriminate against others and in favor of its own broadcast
     affiliate in this fashion, and both the broadcast station and the
     cable system would stand to unfairly benefit.[^268]

104. The record indicates that current carriage and channel position
     rules prevent some of the discrimination problems, but not all of
     them. For example, opponents of relaxing the rule note that current
     law would not prevent discrimination through joint advertising
     sales and rates practices and joint promotions unavailable to
     competitors. Additionally, although section 614(b)(6) of the
     Communications Act entitles a local commercial television station
     to be carried by a cable system on the same channel as it
     broadcasts over the air,[^269] Univision describes protracted
     disputes with a cable system in securing its \"on air\" channel,
     with one cable system shuffling Univision\'s channel position four
     times in four years.[^270] Univision also claims that a cable
     system abruptly changed the channel position of one of Univision\'s
     stations in order to provide that position to the cable system's
     own local news channel.[^271] Univision further claims that cable
     system operators sometimes otherwise delay carriage by denying that
     they receive an adequate signal from a station, which forces the
     broadcast station to divert resources away from obtaining quality
     programming and toward obtaining carriage and channel
     position.[^272] Other commenters also emphasize that cable systems
     can delete broadcasters from carriage through waiver, and that
     cable/TV combinations will be unlikely to offer retransmission
     consent agreements.[^273] Univision emphasizes that all of this
     anti-competitive behavior occurred in spite of the cable/TV
     cross-ownership rule, and claims that such behavior will only be
     exacerbated by cable/TV combinations that seek to favor their own
     broadcast affiliate over others.[^274]

105. Although, as we noted in the [NOI]{.underline}, DTV holds the
     potential to enable broadcasters to compete better with cable in
     the multichannel video programming distribution market, the reality
     is that DTV is now nascent. In addition, because of the advent of
     DTV, our DTV must-carry rules are the subject of a pending
     proceeding.[^275] Modification of the cable/TV cross-ownership rule
     at this time could frustrate and undermine the potential that DTV
     holds for broadcasters if, as suggested by ALTV, a cable/TV
     combination, in order to give its own broadcast station a
     competitive advantage, denied carriage to a competitor and
     inhibited its DTV roll-out.[^276] We believe that it is
     particularly important to ensure stability and a level playing
     field as the technology of DTV reaches the marketplace and
     competitive forces determine its fate in the marketplace. Cable/DTV
     competition may ultimately provide a basis for some modification of
     the cable/TV cross-ownership rule, but we believe that time has not
     yet arrived.

106. [Effects on Diversity]{.underline}. We also conclude that the
     cable/TV cross-ownership rule is necessary to further our goal of
     diversity at the local level. As we noted above, current media
     markets include a variety of participants; as we also noted above
     in our discussion of the newspaper/broadcast cross-ownership rule,
     however, many new media do not contribute to diversity at the local
     level. Broadcasters contribute to local diversity through the
     fulfillment of their public interest obligations to air programming
     responsive to the issues facing their communities of license; cable
     contributes through PEG and leased access channels and to some
     degree through origination of local cable news channels. In the [TV
     Further Ownership Notice]{.underline}, the Commission thus
     tentatively concluded that broadcast television and cable are to a
     certain extent substitutes for diversity purposes,[^277] but also
     stated:

\[w\]e tentatively see no reason to include in our diversity analysis
the other electronic video media \[beyond cable\], such as MMDS, VCRs,
and VDT, as substitutable for a broadcast television station. None of
these has nearly the ubiquity of cable and most do not have the
capability for local origination that cable has. All provide similar
entertainment programming; however, our core concern with respect to
diversity is news and public affairs programming especially with regard
to local issues and events.[^278]

107. More recently, we reaffirmed this view in the [TV Ownership
     Order]{.underline} where we stated that many of these alternative
     video delivery systems "are still establishing themselves in the
     marketplace and generally do not provide an independent source of
     local news and informational programming."[^279] While newspapers
     and radio contribute to local diversity, broadcast television and
     cable television are the only participants in the market for
     delivered news and public affairs [video]{.underline} programming
     at the local level. The Commission has distinguished the influence
     of television from that of newspapers as being more immediate, and
     from that of both newspapers and radio as having more visual impact
     and serving more people as a primary source of news.[^280] The
     Commission has also noted that the public receives more news from
     television than from any other source;[^281] while broadcast
     television is the more dominant source of local news and public
     affairs programming, cable functions as the \"gatekeeper\" to
     broadcast television, as we have noted above.[^282] Cable/TV
     combinations thus would represent the consolidation of the only
     participants in the video market for local news and public affairs
     programming, and would therefore compromise diversity.

108. Opponents of rule retention argue that cable does not control the
     content of its PEG channels and, therefore, contend that cable/TV
     combinations do not threaten diversity at the local level.[^283]
     However, PEG programming typically is not the cable programming
     that provides the closest substitute for broadcast local news and
     public affairs programming. The cable programming that is the
     closest substitute for such broadcast programming is originated by
     local cable systems. NCTA suggests that it is the efficiencies and
     synergies that could be derived from combining just this type of
     programming that makes the combinations desirable, and, in fact,
     contends that these efficiencies and synergies would enable
     combinations to produce more local news and public affairs
     programming, perhaps targeted at niche markets.[^284] Such cable/TV
     combinations, however, would erode the number of
     [independent]{.underline} local news and public affairs voices in
     the market. As CME explains, \"\[e\]ven if the common owner created
     a local cable news station, it would not be providing a diverse
     source of local news programming because of the common
     ownership.\"[^285]

109. The television industry has just begun adapting to the recent
     relaxation of our local television ownership rule. Further
     consolidation of local television broadcast stations will reduce
     the number of independent voices providing local news and public
     affairs programming. Prudence dictates that we monitor and
     ascertain the impact of these changes on diversity and competition
     before relaxing the cable/TV cross-ownership rule.

**F. Experimental Broadcast Stations**

**1. Regulatory History**

110. The multiple ownership rule for experimental broadcast stations was
     initially adopted in 1946 in Part 4 (4.134), and generally limited
     ownership to one station.[^286] In 1963 this rule was redesignated
     as Part 74 (74.134) with no changes. In 1984 the Commission
     combined Parts 74 A (Experimental TV), 74 B (Experimental Facility)
     and 74 C (Developmental Broadcast Stations) into the present
     subpart, 74 A (Experimental Broadcast Stations) without changing
     the ownership limits. The rule currently reads:

> §74.134 **Multiple ownership**. No persons (including all persons
> under common control) shall control, directly or indirectly, two or
> more experimental broadcast stations unless a showing is made that the
> program of research requires a licensing of two or more separate
> stations.
>
> **2. Comments**

111. Only one comment was filed. NAB recommends repeal of this rule
     stating that broadcast auxiliary facilities are facing regulatory
     change and dislocation and, accordingly, there is now ever greater
     need for responsible use of experimental stations to develop
     solutions to these problems. While supporting elimination of what
     it characterizes as "this arbitrary restriction,"[^287] it urges
     the Commission to ensure that such stations not endanger the
     interference-free service provided by other broadcasters.[^288]

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3.  **Discussion**

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112. The rules authorizing experimental broadcast facilities seek to
     encourage experimentation and innovation in the provision of
     broadcast service to the public. A license for an experimental
     broadcast station will be issued for the purposes of carrying on
     research and experimentation for the development and advancement of
     new broadcast technology, equipment, systems or services which are
     more extensive or require other modes of transmission than can be
     accomplished by using a licensed broadcast station under an
     experimental authorization ((§74.102) Uses of experimental
     broadcast stations.). Most of the related rules are intended to
     prevent interference to existing services.

113. Experimental broadcast licenses are also subject to a broad variety
     of operating and reporting requirements, as well as a requirement
     that prohibits their commercial use. The licensee of an
     experimental broadcast station may make no charges nor ask for any
     payment, directly or indirectly, for the production or transmission
     of any programming or information used for experimental broadcast
     purposes (§74.182(b). Nor may it transmit program material unless
     it is necessary to the experiments being conducted, and no regular
     program service may be broadcast unless specifically authorized
     (§74.182(a)). These commercial restrictions prevent entities from
     exploiting an experimental broadcast station for commercial
     purposes while functioning under the guise of an experimental
     authorization. The supplementary statement to be filed with an
     application for a construction permit (§74.112), supplementary
     reports filed with an application for renewal of license (§74.113),
     and the requirement to make a satisfactory showing of compliance
     with the general requirements of the Communications Act of 1934, as
     amended, to satisfy the licensing requirement (§74.131), allow for
     the oversight necessary to protect the goals of competition and
     diversity.

114. We find that elimination of the rule will have no adverse impact on
     our diversity and competition goals. Repeal of this multiple
     ownership rule would not affect the Commission\'s ability to ensure
     that experimental stations are used solely for their avowed
     purposes, which is separately covered under §74.102. Neither would
     it imply that any petitioner will necessarily be able to control
     multiple frequencies, since a license of an experimental broadcast
     station will not authorize the exclusive use of any frequency,
     under §74.131. The multiple ownership rule for experimental
     broadcast stations appears to have been originally adopted to limit
     the opportunities for the commercial use of experimental
     stations.[^289] We believe that the current requirement that such
     stations operate for research purposes and the proscriptions on the
     broadcast of a regular program service and the imposition of
     charges for the transmission of programming or information on
     experimental broadcast stations are sufficient to assure that, even
     absent the multiple ownership rule, licensees do not, under the
     guise of experimentation, obtain sufficient experimental stations
     to create, *sub rosa*, commercial broadcast services. These
     stations operate for research purposes and, thus, do not compete in
     the marketplace for programming or advertising and existing rules
     will provides safeguards against abuse in the absence of the
     experimental station multiple ownership rule. There existing no
     competitive bar to the elimination of the multiple ownership rule
     applicable to them, we believe that the multiple ownership rule
     governing experimental broadcast stations may no longer be in the
     public interest. We will issue an NPRM proposing elimination of the
     rule.

######### Constitutional Issues

115. Commenters raised Constitutional arguments with respect to two of
     our rules. The newspaper/broadcast cross-ownership rule is objected
     to by several commenters on the grounds that it violates the First
     Amendment.[^290] Additionally, both that rule and the dual network
     rule are said to discriminate. In the case of the
     newspaper/broadcast cross-ownership rule, the discrimination is
     alleged to be between newspaper owners and other media
     owners.[^291] The dual network rule is claimed to discriminate
     against broadcast networks as opposed to cable networks as it
     allows mergers between broadcast and cable networks but not between
     broadcast networks themselves.[^292]

116. As an initial matter, our newspaper/broadcast cross-ownership rule
     has already been sustained by the Supreme Court.[^293] Beyond that,
     it is well-established that a content-neutral regulation, such as
     the subject rule, will be sustained against claims that it violates
     the First Amendment if:1) it advances important governmental
     interests unrelated to the suppression of free speech; and 2) does
     not burden substantially more speech than necessary to further
     those interests (the "O'Brien test").[^294]

117. As we noted previously, the Supreme Court has determined that the
     preservation of media diversity is a government interest that is
     not only important, but is of the highest order[^295] and is
     unrelated to the suppression of free speech. Therefore, the rule
     meets the first prong of the [O'Brien]{.underline} test. Even were
     one to conclude that it confines free speech of newspaper owners by
     limiting their ownership of co-located broadcast stations, that
     burden is the minimum necessary to accomplish the diversity goal.
     It does not prevent newspaper publishers from owning broadcast
     outlets. It does not prevent them from entering into joint venture
     agreements with broadcasters in their community. Rather, it simply
     precludes them from owning \-- and therefore having ultimate
     editorial control over \-- broadcast and newspaper outlets in the
     same community due to the impact of such common ownership on,
     especially, local viewpoint diversity. Accordingly, we believe that
     the newspaper/broadcast cross-ownership rule, to the extent it
     burdens free speech at all, does so to the minimum extent
     necessary. It therefore passes the constitutional test for such
     rules.

118. As to commenters' claims of discrimination, the Supreme Court has
     repeatedly held that "a classification neither involving
     fundamental rights nor proceeding along suspect lines . . . cannot
     run afoul of the Equal Protection Clause if there is a rational
     relationship between disparity of treatment and some legitimate
     governmental purpose."[^296] As we noted above, protecting media
     diversity has been determined by the Supreme Court to be a
     governmental interest of the "highest order."[^297] We believe that
     the classifications inherent in both the newspaper/broadcast and
     cable/television cross-ownership restrictions are, under current
     conditions, necessary to promote that governmental interest and,
     therefore, do not violate the rights of any party to equal
     protection of the law.

######### Conclusion

119. In this, the first of our biennial reviews of our broadcast
     ownership rules, we conclude that some regulations are no longer in
     the public interest in their current forms as a result of
     competition.[^298] We are, therefore, proposing to modify or
     eliminate these rules in Notices we will issue. We also conclude,
     however, that, for now, the other ownership rules considered in
     this proceeding warrant retention. We will, of course, revisit our
     ownership rules biennially, as directed by the 1996 Act. Our future
     biennial reviews will be informed by the impact of the substantial
     changes we made to our television "duopoly" and "one-to-a-market"
     rules this past August.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

STATEMENT OF CHAIRMAN WILLIAM E. KENNARD

In the Matter of 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

In Section 202(h) of the Telecommunications Act of 1996, Congress
directed the Commission to evaluate its ownership rules every two years.
In this first review, we developed a comprehensive record and undertook
a careful review of these vitally important rules, as required by
Congress.

This Biennial Review Report balances the public interest in diversity of
ownership with the demands of a changing marketplace and the broadcast
industries\' need to realize economic efficiencies and remain
competitive. We reviewed our rules to determine whether competition, not
simply an increase in programming options available to viewers, render
our current rules unnecessary. I write separately to emphasize that the
proposed modifications to the dual network and newspaper/broadcast
cross-ownership rules, and the technical changes to our radio market
definition policies are appropriately careful, deliberate, and forward
looking.

## **Competition, Diversity, and Changes in the Media Marketplace**

In the course of our review, we recognized three critical facts.
*First*, the majority of Americans still get most of their news and
public affairs information from broadcast stations. Our structural
ownership restrictions, therefore, seek to promote critical First
Amendment principles because in a participatory democracy, it is vitally
important that we encourage the widest possible dissemination of this
information from diverse and antagonistic sources.[^299]

*Second*, the media marketplace has become increasingly dynamic, with an
expanding number of information outlets and media platforms. However,
although new technologies like the Internet and satellite delivery may
be fundamentally changing the communications landscape, they do not yet
command the time and attention of most consumers. The average American
still spends *seven hours per day* watching television, but only *eight
hours a month* on-line. In addition, even as programming choices expand,
owners of media outlets continue to dwindle. For example, after Congress
relaxed the radio ownership limits in 1996, the number of independent
owners in commercial radio markets decreased from 5,133 in March 1996,
to 4,004 in March 2000.[^300] In 85 of the 270 Arbitron radio markets,
two entities already control more than 80 percent of radio advertising
revenue; in 143 markets, two entities control more than 70 percent of
such revenue.[^301]

*Third*, over the last 18 months, the FCC has provided significant
regulatory relief to the broadcast industry and the industry is in the
process of responding to this new regulatory environment. Although the
marketplace is still in flux, we do know that the regulatory changes
have allowed broadcasters in large markets to respond to competitive
dynamics, without sacrificing our long-cherished diversity and
competition principles. The changes we propose today provide similar
advantages.

Commenters who oppose retention of our ownership rules emphasize the
substantial growth in media outlets and programming choices relative to
twenty years ago, but essentially ignore the countertrend toward
ownership consolidation in the broadcast and cable industries. This
asymmetry is problematic for two reasons. First, more choice does not
necessarily yield more competition in viewpoint. Indeed, economic theory
teaches that a monopolist may offer viewers more programming variety
than a more competitively structured market­­­­­.[^302] However, such an
industry structure yields only one point of view. Therefore, our
assessment of the nature and extent of competition in broadcast markets
necessarily must go beyond mere observations of the expanded programming
and format choices available to consumers.

Second, this approach ignores the common sense, real-world predicate
that undergirds our concern about viewpoint diversity: that who is in
control matters. Simply multiplying the number of "pipes" into the home
(i.e., moving from a 3-network world to a 500-channel world) does little
to promote independent viewpoints if all the pipes are controlled by a
very few. Instead, it may provide consumers with the proverbial
"Hobson's choice" in terms of independent viewpoints. [^303]

I am not convinced by the record in this proceeding that a single
individual or corporation who serves as the only conduit for news and
public affairs information in a community would have sufficient
incentive to act against its self-interest in maximizing profits and
maintaining a favorable corporate image and provide the same level of
independent viewpoints as would competitively and independently-run
outlets. Our ownership rules significantly increase the likelihood that
consumers will receive independent viewpoints on issues of public
importance.

## **Proposed Changes to Broadcast Ownership Rules**

I support the careful, but forward looking rule changes we propose in
this Report.[^304] First, the dual network rule continues to promote
viewpoint diversity and should not be eliminated as it applies to the
four major networks. I am persuaded that there may be powerful arguments
for modifying the rule to allow common ownership of an emerging and
established network. For that reason, I support a Notice that examines
the diversity costs and efficiency benefits of such a rule change.

Similarly, the newspaper/broadcast cross-ownership rule well serves our
public interest goals. However, there may be certain circumstances in
which, given the specifics of the market and of the newspaper and
broadcast outlet involved, sufficient diversity and competition would
remain even if a newspaper and broadcast station were commonly owned.
For example, a combination between a single radio station in a large
market and a small, suburban newspaper might raise fewer concerns than
other potential combinations.

I also fully support the decision to commence a proceeding to examine
the way we define a radio "market" and the way we count the number of
stations in a market for the purpose of our local ownership rules. In
Section 202(b)(1) of the Telecommunications Act of 1996, Congress
directed the Commission to expand the limit on how many stations a party
could own in a market. Congress specified a sliding scale of numerical
limits depending on the size of the market that, for example, would
allow a party to own *up to* 8 commercial radio stations in a market
with 45 stations, *up to* 7 stations in a market with 30-44 stations,
and so on.[^305] None of these standards contemplate (or approach) a
duopoly or monopoly in local markets, and I am unwilling to ascribe such
an intent to Congress.

Some parties have argued that the Commission has no remaining authority
to consider these issues. However, when Congress raised the ceilings on
local radio ownership, it did not eliminate the requirement that the
Commission find that license transfers and assignments serve the public
interest, convenience and necessity, pursuant to Section 310(d) of the
Communications Act. Absent such action, our statutory responsibility is
to continue to ascertain that such transactions comply with the public
interest prior to granting license transfers or assignments.

In addition, Congress did not directly address the market definition
aspects of the Commission's rules in the 1996 Act. Although the
Commission has used one method of defining markets and counting the
number of stations in a market since 1992, the potential of this
methodology to produce unanticipated and anti-competitive results in
particular cases did not become apparent until the methodology was used
in conjunction with the increased ownership limits adopted pursuant to
the 1996 Act.

We should not shy away from beginning a proceeding to resolve these
important and controversial questions, on the record, after opportunity
for public comment. The public interest would not be served by anything
less.

**SEPARATE STATEMENT OF COMMISSIONER SUSAN NESS**

**Re: 1998 Biennial Review -- Review of the Commission's Broadcast
Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the
Telecommunications Act of 1996**

I write separately regarding the Commission's review of the
newspaper/broadcast cross-ownership rule[^306] to explain why I support
commencing a rulemaking proceeding to modify but not eliminate that
rule. I also write separately regarding the Commission's decision to
commence a rulemaking to revise the methodology for calculating both the
total number of radio stations in a market and the number of stations
owned by a party, to underscore that any modifications must be applied
prospectively only.

## ***Newspaper/Broadcast Cross-ownership Rule*** {#newspaperbroadcast-cross-ownership-rule .unnumbered}

The question presented to the Commission in this biennial review is
whether any rule is "necessary in the public interest as the result of
competition" and, if not, whether the Commission "shall repeal or
modify" that rule.[^307] The rule was crafted in 1975 to achieve the
noble goal of ensuring that local markets enjoy not just competition for
advertising dollars but also diversity of viewpoints -- a diversity that
can come only from a healthy number of independently-owned outlets. In
its decision adopting the rule, the Commission sought to promote "the
widest possible dissemination of information from diverse and
antagonistic sources,"[^308] which the Supreme Court had found "is
essential to the welfare of the public."[^309] The Commission's rules,
therefore, were designed to ensure that the public had access to a
critical threshold of local viewpoint diversity. The Commission
recognized that, at that time, broadcast services -- especially
television \-- and newspapers were the dominant sources of local news
and information.[^310]

There have been sweeping changes in the media marketplace since the rule
was adopted in 1975. Back then, there were only three commercial
broadcast networks; today, there are six or seven. In 1975, many UHF
stations were just initiating broadcast service and they were limited in
number; today, the number of UHF television stations has nearly tripled.
In the early 1970s, FM radio was a relatively new service; today, there
are approximately 6,000 FM radio stations in operation. When the rule
was adopted, the big boom in cable television franchising had not yet
begun; today, cable television passes more than 97% of households, of
which approximately two-thirds subscribe. At the time the Commission
adopted the rule, DBS had not yet been launched; today, DBS is
ubiquitously available, with more than 10 million subscribers. The rule
was adopted decades before the Internet would become available for
public use; today, the Internet is rapidly capturing the American
imagination and consumer's free time. Given such profound changes, it is
not only timely, but essential for the Commission to revisit the
newspaper/broadcast cross-ownership rule to ensure that it reflects
contemporary marketplace realities, preserving local viewpoint diversity
while still tailoring the rule to be restrictive only where necessary.

Ironically, the rule's underlying purpose of preserving diversity and
competition in local markets may be undermined in some situations by the
rule's current structure. For example, radio stations that do not have
their own local news organizations are prohibited from being co-owned
with daily newspapers, thus reducing the potential number of news
outlets in a given community. Similarly, independent UHF television
stations might provide more local news and information, if they could
realize efficiencies from co-ownership with a local newspaper.
Struggling daily newspapers might stand a better chance of contributing
to public discourse and the dissemination of local news and information
if they were allowed to combine with local broadcast licensees, thereby
maintaining viewpoint diversity. At the very least, the Commission
should consider changes to the rule that would address these potentially
counter-productive effects.

At the same time, the rule has performed a necessary function in
maintaining a critical threshold of local viewpoint diversity. The
Commission has recognized that broadcast services, particularly
television, and newspapers still are the dominant sources of local news
and information in any given market.[^311] Particularly in small markets
with a single daily newspaper and less than a handful of broadcast
stations, the combination of newspaper and broadcast assets might well
severely and significantly reduce viewpoint diversity. And keep in mind
that most cable and DBS services do not independently provide local news
and information so vital to an informed public. Thus, they may not yet
be adequate substitutes for broadcast stations or newspapers. Therefore,
the rule has served and, in my opinion, continues to serve an important
function in maintaining local viewpoint diversity and competition.

I do not believe that the rapidly changing media landscape, on the one
hand, and the preservation of viewpoint diversity, on the other, present
a binary choice between eliminating the rule or maintaining the status
quo. Rather, I believe that the Commission should carefully and
methodically consider modifying the rule to make it more relevant to
contemporary circumstances. For example, commenters ask whether the same
rule apply to a top-ten market like New York City or Chicago, with
dozens of independent media voices, and to a small city with only one
daily newspaper and a few TV stations. Should radio licensees face the
same newspaper cross-ownership restrictions as television licensees, or
are these two media sufficiently distinguishable to apply the newspaper
broadcast cross-ownership ban differently to each? Should the rule, in
its current or modified form, be consistently applied to all merging
combinations of newspapers and broadcast stations under a similar
timeframe? Some commenters suggested that the rule could apply to
varying degrees depending on market size by, for example, counting
newspapers as a "voice" and allowing newspaper and broadcast
cross-ownership where a certain number of independent voices remained in
a market.[^312]

While the record reflects a continued need to restrict
newspaper/broadcast cross-ownership in some fashion, I believe that the
questions concerning the possible modifications to the rule deserve a
full airing and spirited debate. I have not made up my mind regarding
the merits of any of these proposals; my only conclusion at this point
is that an absolute ban is not necessary to achieve the purpose of the
rule. It is time for the Commission to engage in a robust debate on the
most appropriate ways to modify the rule to best serve the public in
this information age.

# ***Radio Market Definition*** {#radio-market-definition .unnumbered}

I have long supported revising our rules to correct our convoluted
definition of radio markets and look forward to reviewing comments filed
in the rulemaking proceeding we will initiate shortly. I believe,
however, that any changes the Commission might make should be
prospective only and should not undermine the legitimate investment
expectations of parties who hold combinations lawfully assembled under
our current rules. Whatever definition we adopt should also remain
consistent with the intent of Congress under the Telecommunications Act
of 1996 in relaxing the radio ownership restrictions.

**DISSENTING STATEMENT OF**

**COMMISSIONER HAROLD FURCHTGOTT-ROTH**

**In the Matter of 1998 Biennial Regulatory Review: Review of the
Commission\'s Broadcast Ownership Rules and Other Rules Adopted**

**Pursuant to Section 202 of the Communications Act**

I respectfully dissent from the Commission's decision to retain the
national television ownership and cable/television cross-ownership rules
and from its refusal to even consider repeal of the newspaper/broadcast
cross-ownership rule.[^313] For the reasons that follow, I believe that
the Commission's rationale for refusing to repeal or modify these rules
is fatally flawed. In my view, these rules simply should be
repealed.[^314]

## ***The Commission's Rationale For Refusing To Repeal Or Modify The Regulations Is Fatally Flawed***

The Commission claims that it should not take any action on the national
television ownership and crossownership rules chiefly because it needs
to assess the effects of last year's relaxation of local broadcast
ownership rules. *See* *Biennial Review Report ("Report")* at para. 4,
25-26, 93, 109. This rationale for refusing to deregulate suffers from
fatal flaws. As discussed below, this reasoning fails to respond to the
actual question posed by the statute; is weak as a factual and logical
matter; and constitutes, at least with respect to nationally applicable
rules, an unexplained departure from past policy assessments of such
rules.

## *A. The Commission Fails To Apply The Statutory Test For Repeal or Modification* {#a.-the-commission-fails-to-apply-the-statutory-test-for-repeal-or-modification .unnumbered}

The main problem with the Commission's argument -- that it needs to
study the effects of last August's limited local deregulation \-- is
that it is utterly nonresponsive to the statute. Under section 202(h),
the Commission's job is to explain why changes in competition have not
rendered broadcast ownership rules superfluous in promoting the public
interest. *See* 47 U.S.C. section 202(h) (Commission "shall determine
whether any of \[its broadcast ownership\] rules are necessary in the
public interest as the result of competition"). This Report does not
fulfill that obligation.

As I explained in the Notice of Inquiry, a helpful analytical approach
for answering the statutory question posed by section 202(h) would be to
consider:

\(i\) the original purpose of the particular rule in question; (ii) the
means by which the rule was meant to further that purpose; (iii) the
state of competition in the relevant market at the time the rule was
promulgated; (iv) the current state of competition as compared to that
which existed at the time of the rule\'s adoption; (v) and, finally, how
any changes in competitive market conditions between the time the rule
was promulgated and the present might obviate, remedy, or otherwise
eliminate the concerns that originally motivated the adoption of the
rule.

Separate Statement of Commissioner Harold W. Furchtgott-Roth, *Notice of
Inquiry, 1998 Biennial Regulatory Review*, 13 FCC Rcd 11,276 (1998).

In its analysis of whether to repeal or modify the national cap or
crossownership rules, however, the Commission *never* analyzes the
continued utility of the rules "as the result of competition*,*" as the
statute requires. Instead of considering the effect of competition on
the need for the rules, the Commission myopically discusses the effect
of regulatory action on the rules -- namely, the impact of its 1999
local broadcast rulemaking. *See* *Report* at paras. 25-29 (concluding
that national television ownership rule should be retained because
effects of local changes should be observed and last increase in cap
resulted in acquisitions that need to be studied as well); paras. 95-102
(concluding that cable/television crossownership rule should be retained
because it furthers policies of competition and diversity and prevents
discrimination against competitors).

This discussion fails to broach \-- much less answer in a persuasive way
\-- the question asked by the statute. Section 202(h) says nothing about
basing decisions regarding deregulation on past regulatory action.
Rather, it requires us to consider changes in the market landscape in
deciding whether to keep the rules. That the Commission simply has not
done. And the analysis that it does provide gets the statute exactly
backwards; the question is not "what are the effects of the rule on
competition?", *see, e.g.,* *id.* at para. 94, but "what are the effects
of competition on the continued need for the rule?." This latter
question is never asked or answered in the discussion of the decision to
retain any of these rules.

Finally, and for the record, I feel compelled to note that the Report
that the Commission actually voted to adopt on May 26, 2000, did not
include any findings of facts on the state of competition in the
services relevant to the national cap. *Cf.* Report at para. 28 & nn.
80-82. Thus, not only did the Commission fail to ask and answer the
statutory question, it did not discuss competition *at all*. The Report
likewise did not include the (x-ray thin) "public interest" analysis of
the lifting of the cap. *See id.* at para. 30. It gave only its "wait
and see" reason in connection with local deregulation and Congress' 1996
increase in the cap. These are not just ministerial or non-substantive
changes. Rather, this material provides an entirely new rationale and
makes new findings of fact to support the decision to keep the cap.

This language was added more than two weeks after the Commission
formally voted to adopt the Report and publicly announced its
action.[^315] Not coincidentally, these revisions immediately followed
one prominent broadcasting company's public announcement of its intent
to appeal the national cap decision.[^316] Putting aside the related
issue whether a majority of the Commission can agree to make these sorts
of changes before an adopted document is officially released, I question
here which Report it is that the Commission actually voted to adopt.

For we cast only one set of votes, and it was on the first Report, which
we then publicly announced as adopted. There was no withdrawal of those
votes or a revote on the materially revised version. If the first
document represents the officially adopted Report of the Commission,
then the original analysis, absent the findings of facts on competition
and explication of the public interest, controls. And if the second,
materially retooled document is the official one, then the Report issued
today violates the statutory deadline[^317] and thus may well be invalid
for that procedural reason alone.[^318] In the end, however, the
Commission cannot have it both ways: it must either claim the benefit
(such as it is) of the new rationale and findings of fact, or it must
confess error in transgressing the statutory deadline.

For the foregoing reasons, I do not think the Commission adequately
justifies the decision to retain the rules in their present form. *See
Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto Ins. Co.*, 463 U.S.
29, 43 (1983) (agency acts in arbitrary and capricious fashion if it
"has relied in factors which Congress has not intended it to consider
\[or\] entirely failed to consider an important aspect of the problem").
The to-ing and fro-ing on why to keep the cap and post-adoption
backfilling of the Report well illustrate the capricious,
results-oriented nature of the Commission's decisionmaking.

## *B. The Commission's Rationale For Retaining The Ownership Rules Is Weak* {#b.-the-commissions-rationale-for-retaining-the-ownership-rules-is-weak .unnumbered}

##  {#section .unnumbered}

Apart from failing to address the inquiry required by the statute, the
Commission's "wait and see" reasoning suffers from several factual and
logical infirmities.

*First*, although the Commission and most commentators generally
anticipated a flood of applications under the newly revised local
broadcast rules, the fact is that the Mass Media Bureau has received
very few such applications. Specifically, since the rules went into
effect, broadcast interests have filed a total of 101 television station
assignment or transfer applications. Of those 100 applications, however,
only 42 were duopoly requests and 19 of those requests involved the
purchase of television stations already programmed by the buyer pursuant
to local marketing or time brokerage agreements. Thus, the Commission
has received just 23 applications to create new television duopolies --
even assuming that every application is granted, this is hardly the sort
of seismic change in the broadcast landscape that requires extensive
study. As for radio and television cross-ownership requests,
broadcasters have filed about 30 of those; this is likewise not a surge
towards consolidation.[^319] Simply put, the reality is that there is
very little of an "effect" to be assessed here, which deprives the
Commission's rationale of much persuasive force.

*Second,* even if the amount of filings under the newly loosened rules
had been numerous, I fail to see why we could not have satisfactorily
reviewed their impact in this Report. Far from being unavailable, the
information necessary to evaluate consolidation ensuing from the new
rules is uniquely in the Commission's possession. We need only have
pulled the filings described above in order to find facts about that
consolidation. Surely we have had enough time to perform such an
assessment: this Report is being issued well into the second year since
the release of the Notice of Inquiry.

*Third*, if one accepts the assertion that the Commission lacks
sufficient information to assess the effect of the new local rules, that
rationale applies with equal force to the other ownership rules included
in the Report. Today the Commission decides to change some of those
other rules, for example, the dual network rule or the experimental
license rule. But the Commission never explains why it lacks sufficient
information on the effect of the 1999 changes in order to modify the
national cap and cross-ownership rules but why it has enough such
information to go forward with these others. This flat inconsistency
suggests, to me at least, that the argument from "lack of information"
is pretextual.

Finally, even assuming that I am wrong about all of the foregoing, there
remains the question of the relevance of changes in *local* rules to
*national* rules such as the broadcast cap. As the Commission itself has
often recognized, local information is not pertinent to a discussion of
nationally applicable rules. *See, e.g., Amendment of Multiple Ownership
Rules*, 100 FCC 2d 17, 37 (1984) (noting irrelevance of national rules
to diversity in local markets). If this is so, as Commission precedent
has it, then I fail to see how local deregulation rationally could bear
on our decisions with respect to national deregulation.

The Commission's reason for maintaining the subject rules boils down to
this: it feels that it has deregulated enough for the time being and
simply does not want to go any further. This rationale is wholly
unsatisfying to those regulated entities whose rulemaking happened to
come second in time. They possess a statutory right to regulatory review
and, if warranted by the effect of competition on regulation,
deregulatory action. To say that other, tangentially-related
deregulation occurred first, and therefore they can not have any
regulatory relief, is a sorely inadequate response.

C. The Commission Departs Without Explanation From Prior Findings
Regarding The Necessity of National Ownership Limits and The State of
Competition In The Broadcast Industry

The Commission's refusal to modify the national broadcast ownership cap
in even in the smallest way contradicts its prior conclusions about the
utility of national ownership limits. Specifically, in an Order
repealing the former "Seven Stations rule," the Commission found that
"as a policy matter, the total elimination of presumptive national
ownership rule\[s\] would benefit the public interest." *Amendment of
the Commission's Rules Relating to Multiple Ownership*, 100 FCC 2d 74 at
para. 50 (1984).

The Commission based this conclusion on the fact that, while competition
and diversity are traditional broadcast policy goals, national ownership
rules are "irrelevant" to viewpoint diversity and "unnecessary" to
prevent competitive harm. *Amendment of the Commission's Rules Relating
to Multiple Ownership*, 100 FCC 2d 17 at paras. 63, 73. The "more
correct focus for addressing viewpoint diversity and economic
competition concerns is the number and variety of information and
advertising in local markets." *Id.* at para. 10. In addition, multiple
ownership of broadcast stations can "foster news gathering,
editorializing and public affairs programming, and the development of
independent programming by regional or national *ad hoc* networks."
*Id.* at para. 82.

Moreover, in the Order deregulating local broadcast markets, the
Commission expressly recognized the dramatic shifts in the competitive
position of the industry as a general matter. *See* *Review of the
Commission's Regulations Governing Television Broadcasting, Television
Satellite Stations Review of Policy and Rules*, 14 FCC Rcd 12,903 at
para. 1 (1999) ("The new rules we adopt today reflect a recognition of
the growth in the number of and variety of media outlets in local
markets, as well as the significant efficiencies and public service
benefits that can be obtained from joint ownership."). But here the
Commission refuses even to engage in that analysis. Having found enough
evidence of increased competition and market changes in the industry to
warrant deregulation of local broadcast markets, the Commission will be
hard pressed to explain why those findings do not carry over to the
national context. This differing approach is especially hard to justify
when, as the Commission has found, diversity and competition concerns
are foremost in the local, not the national, context.

These flat inconsistencies with respect to the Commission's assessment
of nationally applicable broadcast ownership rules and the competitive
nature of the broadcast industry leave us open to legitimate charges of
arbitrary decisionmaking. *See generally Sangre de Cristo
Communications, Inc., v. FCC*, 139 F.3d 953, 958 (D.C.Cir. 1998) (agency
cannot inexplicably act inconsistently with prior decisions). Although
the Commission has a duty to explain this disparate treatment, *cf.
Radio and Television News Directors Association v. FCC*, 184 F.3d 872,
886 (1999) (where there is "agency precedent for declining to use the
FCC's power to redress a\[n\] \[alleged\] market failure in provision of
\[broadcast services\]. . . the agency must offer clear, cogent
explanations for treating the two cases differently"), it has not even
attempted to do so.

## ***II. The Rules Impose Heavy Burdens On Speech In Potential Contravention of the First Amendment*** {#ii.-the-rules-impose-heavy-burdens-on-speech-in-potential-contravention-of-the-first-amendment .unnumbered}

There is a final reason to be wary of these rules: they impose a direct
and substantial burden on speech and thus run the risk of violating the
First Amendment.

To be sure, the Supreme Court in the past has affirmed the
constitutionality of some of these rules. *See, e.g, FCC v. National
Citizens Committee for Broadcasting*, 436 U.S. 775 (1978)(rejecting
First Amendment challenge to newspaper/broadcast crossownership rule).
At the same time, however, the Court has observed that balancing First
Amendment interests in the broadcast context is not a static enterprise:
"\[B\]ecause the \[\] industry is dynamic in terms of technological
change; solutions adequate a decade ago are not necessarily so now, and
those acceptable today may well be outmoded 10 years hence." *Columbia
Broad. Sys., Inc. v. Democratic National Comm'n*, 412 U.S. 94, 102
(1972).

I believe that the ownership limits now have become constitutionally
"outmoded," as the Court itself suggested might happen. If rules
restricting ownership of broadcast stations were ever a justifiable
infringement of speech, it was because of the relative dominance of that
medium in the communications industry. *See, e.g., FCC v. Pottsville
Broadcasting Co.*, 309 U.S. 134, 137 (1940) (ownership rules justified
by "a widespread fear that in the absence of governmental control the
public interest might be subordinated to monopolistic domination"); *see
also Red Lion Broadcasting Co. v. FCC*, 395 U.S. 367 (1969) (justifying
"less rigorous standard of First Amendment scrutiny" on basis of
"spectrum scarcity").

The facts underlying this justification are simply no longer true,
however, as the Commission has repeatedly recognized. *See* 1985
Fairness Report, 102 FCC 2d 145, 198-221 (1985); *Syracuse Peace
Council*, 2 FCC Rcd 5043, 5053 (1985). Today, broadcasters face such a
fierce array of competitors -- from cable operators, cable overbuilders,
cable networks, internet service providers, wireless video systems, and
direct satellite systems -- that their previously supposed ability to
influence the content and control the flow of information is greatly
diffused. *See* Joint Statement of Commissioners Powell and
Furchtgott-Roth, *In re Personal Attack and Political Editorial Rules,*
FCC Gen. Docket No. 83-484, at 5 and n. 15 (citing statistics on boom in
communications outlets). Moreover, the number of broadcasters alone has
grown exponentially since the time the rule was adopted.[^320] In sum,
over time, as alternative means of communication and even other
broadcasters have proliferated in the marketplace, the burdens imposed
on broadcasters by these restrictions have increased dramatically
relative to the benefits that they produce.

For these reasons, I think that the lenient standard of review for
regulation of broadcast speech formally announced in *Red Lion* rests
today on a shaky empirical foundation. As I noted in the Notice of
Inquiry, such an assertion is not only an appropriate one for this
Commission to make, but in fact has been affirmatively invited by the
Supreme Court:

> \[T\]he Supreme Court has clearly indicated that it might revisit its
> constitutional jurisprudence in this area if the FCC \"signal\[ed\] .
> . . that technological developments have advanced so far that some
> revision of the system of broadcast regulation may be required.\" *FCC
> v. League of Women Voters*, 468 U.S. 364, 377 n.11 (1984); *see also*
> *Telecommunications Research and Action Center*, 801 F.2d at 509 n.5
> (explaining that, in *League of Women Voters*, \"the \[Supreme\] Court
> . . . suggested that the advent of cable and satellite technologies
> may soon render the scarcity doctrine obsolete.\"). \[And\] \[t\]he
> D.C. Circuit recently ventured to say that the Court\'s \"suggestion\"
> in *League of Women Voters* \"may impose an implicit obligation on the
> Commission to review the spectrum scarcity rationale.\" *Tribune Co.
> v. FCC*, 133 F.3d 61, 68 (1998).

Separate Statement of Commissioner Harold W. Furchtgott-Roth, *Notice of
Inquiry, 1998 Biennial Regulatory Review*, 13 FCC Rcd 11,276 (1998)
(footnote omitted); *see also RTNDA v. FCC*, 184 F.3d at 887 n. 19
(noting that Supreme Court in *Red Lion* "recognized that changed
circumstances might be salient in future cases" and that "since *Red
Lion*" the Court has "increasingly focused on the editorial discretion
of broadcasters indicating that while the *Red Lion* framework may still
be good law, its application . . . may require updating").

While I personally have come to the conclusion that technology has
advanced to the point where revision of broadcast regulation is now
warranted, if not overdue, I note that the Commission itself has
*already* come to this conclusion. Specifically, the Commission has
found that "\[t\]he scarcity rationale developed in the *Red Lion*
decision and successive cases no longer justifies a different standard
of First Amendment review for the electronic press." *Syracuse Peace
Council*, 2 FCC Rcd. 5043 at para. 65. In my view, the administrative
basis for challenging this constitutional framework has been well laid,
and the issue is ripe for review.

> \* \* \*

In this first biennial review of broadcast ownership regulations, many
of which are over fifty years old, this Commission can ultimately find
only one, obscure rule to be repealed. To my mind, however, it is simply
untenable to assert, in the face of the record before us on competitive
change since the adoption of ownership regulations, that retention of
the vast majority is warranted. This Report, which regrettably turns
section 202(h) on its head by asking how the rules promote diversity and
competition instead of asking how the forces of competition itself
produce those results and thus obviate the need for the rules, disserves
the concept of regulatory reform embodied in section 202(h). This is not
an effort at meaningful reform, but agency retrenchment in the face of a
deregulatory provision. I therefore concur only in part and dissent in
part.

SEPARATE STATEMENT OF

COMMISSIONER MICHAEL K. POWELL

*Re: 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.*

The majority of the rules we review today are old. The National
Ownership Cap rule was first adopted in 1941. The
Newspaper/Broadcast[^321] and Cable/Television Cross-Ownership[^322]
rules were adopted in the 1970s. Though some of these rules have been
modified slightly over the years, their predicates have remained the
same, namely, that networks and stations enjoy tremendous market power
that can lead to anticompetitive effects. Moreover, the goals of our
structural rules also remain largely unchanged: (1) to guard against
ill-effects in advertising and programming markets, (2) to promote
diversity in programming, and (3) to promote locally-originated content.

Time does not stand still, however, and the highly concentrated video
entertainment, news and information markets of the past, with their
attendant limited programming offerings, have changed dramatically.
Congress' recognition of this dramatically changed and changing
landscape stands behind the Biennial Review process where we are charged
to "determine whether any of such rules are necessary in the public
interest as a result of competition."[^323] My dissatisfaction with the
present review is its stubborn refusal to fully consider the competitive
landscape today and validate that these structural rules still serve
their stated purposes---particularly in light of significant evidence
that the rules are unnecessary to protect competition (and may even be
causing competitive harm) and that diversity and localism are prospering
as a consequence of new venues and greater capacity available to
consumers. For these reasons, I concur in part and dissent in part from
this *Order*.

I. GENERAL CRITIQUE OF STRUCTURAL BROADCAST REGULATIONS

Before turning to my critique of particular rules, I first will sketch
the breadth of change that should compel a more fulsome review of the
rules than is represented by this Biennial Review. Second, I will
generally outline the government's stated interest in these rules and
challenge some of their underpinnings in light of the dramatically
altered video landscape.

## *[The Video Marketplace: Take the Mask off the Old Lone Ranger]{.underline}* {#the-video-marketplace-take-the-mask-off-the-old-lone-ranger .unnumbered}

"Return with us now to those thrilling days of yesteryear."[^324] A time
when there were three television networks that dominated the land (NBC,
CBS and ABC). A time when there were only six television stations. A
time before cable television, before direct broadcast satellite (DBS),
before VCRs, before the Internet. It was a time of highly concentrated
video markets in which only one medium---television---reigned. It was a
time of nascent video advertising markets, and of very limited program
sources. In this era, there were few around to curtail the power of
these rustlers. There was only one Lone Ranger to discipline the
dominance of the "Network Gang of Three." But "who was that masked man?"
"A fiery horse with the speed of light, a cloud of dust and a hearty
'Hi-Yo Silver.'" The FCC!

Today, over fifty years after *The Lone Ranger* television show filled
the bubbled screens of our black and white sets, the Lone Ranger rides
again in an episode entitled *The 1998 Biennial Regulatory Review of the
Commission's Broadcast Ownership Rules.* So much has changed since the
days that Tootsie Roll, "America's favorite candy," and General Mills
brought to Americans the Ranger and his companion Tonto. Yet, the
nostalgic FCC Ranger cannot bring itself to take full cognizance of this
change and face whether it is time to retire the mask and let other
forces do the job. Instead, we continue to sprint ahead kicking these
rules forward, while being chased by a growing multitude (of new media,
of economic change, of logic).

By any measure, the market, and thus the foundation of the FCC's
structural ownership rules, has changed dramatically in ways that should
lessen the dangers we purport to address that are associated with market
dominance. The actor Clayton Moore starred in *The Lone Ranger*
television series from 1949 to 1956. Mr. Moore passed away just last
year, and in his name I couch my argument for a more thorough
examination. Simply put, there is *MORE*, more of everything:

> *MORE Broadcast Networ*ks: In the 1940s and 1950s there were only
> three networks (NBC, CBS and ABC). Today, those three are joined by
> Fox, WB, UPN, and PAX to yield seven networks competing for
> programming and advertising dollars.
>
> *MORE Broadcast Stations*: Most households live in a television market
> served by eleven or more local stations. In 1946 there were only six
> stations nationwide.[^325] Today there are over 1,600.[^326]
>
> *MORE Video Outlets*: Today approximately 81 percent of all Americans
> subscribe to either cable, DBS, or another multi-channel service
> provider, rather than receive their signal free and over the
> air.[^327] That is, the invention and ubiquitous deployment of cable
> and DBS services have given advertisers, programmers and Americans
> substantial alternatives to broadcast. These systems offer viewers a
> plethora of options unimagined when many of the rules reviewed in the
> *Order* were adopted. The average cable subscriber has 54 channels
> available to him.[^328] The average DBS subscriber has hundreds of
> channels available to her.[^329] Additionally, 50% of Americans have
> access to the Internet.[^330] Moreover, the ubiquity of VCRs, DVD
> players and other video medium offer consumers additional
> entertainment, news and information sources. And, more recently the
> Internet is adding yet another. Most importantly, there is no end in
> sight to this trend.
>
> *MORE Programming*: There are more sources of programming than any
> time in history. There are 170 cable networks and seven broadcast
> networks.[^331] The programs are also more diverse than in the "golden
> age of television," when Americans sat around watching the same basic
> shows. It was inconceivable in days of old that there would be
> channels dedicated to news 24 hours a day like CNN or Fox News. Or,
> that there would be channels dedicated not only to sports, like ESPN,
> but single sports like the Golf Channel. Or, that hundreds of movie
> channels would be available on their televisions, many on demand, with
> hundreds more titles in their local video store. Even on pure
> broadcast stations, there are more sports, movies, drama, and national
> and local news than at any time previously.

With so much more in the market, one can expect to find more competition
and more diversity. Advertisers have many more choices to display their
products. And, consumers have many more options to choose from as
sources for entertainment, information, and news. If, as I believe, the
good and plenty of outlets and programming is fertile ground for a
healthy marketplace, there is clear reason to question why such forces
(where consumers and producers interact) will not produce competitive
prices, competitive opportunities for programming, and robust options
for viewers. Yet, the Commission continues to place unsupportable faith
in the concept that such things can only happen by government fiat and
not by the natural forces of the market.

## *[To Question the Rules is not to Question the Venerable Goals of Broadcast Regulation]{.underline}* {#to-question-the-rules-is-not-to-question-the-venerable-goals-of-broadcast-regulation .unnumbered}

The goals of our broadcasting rules are laudable. They seek: (1) to
constrain undue economic power, (2) to promote diversity and (3) to
promote locally originated programming. There may have been a time in
which such objectives could not be achieved without regulatory
intervention (though I question it). But, surely these values are not
incompatible with market forces, or market failures in the classic
sense. Thus, one does not abandon these objectives by calling on the
Commission to consider if the rules are necessary at all or in their
present form, particularly in the face of substantial evidence that they
are unsupported by the facts, and that they may actually in some
instances harm producers, suppliers and consumers. For an outstanding
overview of the current market conditions and public harms being caused
by some of our structural rules, I would direct the reader to *Old Rules
and New Rivals: An Examination of Broadcast Television Regulation and
Competition*,[^332] by Michael L. Katz, which is included in the record
of this proceeding.

*[Broadcast Economic Power in the Video Market]{.underline}*

Video producers make money by inducing viewers to watch their products.
If one follows the broadcast model, the product is free to viewers and
revenue is generated through advertising. The game here is to get the
most eyeballs you can, regardless of the type of program. Where one can
charge for subscribers, as can cable, DBS and MMDS, you can make money
both through advertising and by inducing viewers to pay for programming.

If the video market was highly concentrated, leaving few avenues to
reach audiences, that unquestionably could result in harm. For instance,
as is assumed by many of our broadcast structural rules, if a
broadcaster enjoyed undue market power it could theoretically raise
advertising rates to non-competitive, monopolistic levels, thereby
harming advertisers. Similarly, if broadcasters (individually or
collectively) could monopolize audiences they could harm suppliers of
programming by demanding uneconomically low program prices.

Yet, again, if one notes the dramatic change in the market (which the
majority only does superficially) one can see how questionable many of
the suppositions are that undergird our ownership rules. For example,
television networks have lost a substantial share of the national
viewing audience. Between 1952 and 1991, the prime time ratings of the
three major networks fell from 75 to 37.5, and by 1998 had fallen
another 25 percent to 28.3 percent.[^333] Are today's broadcast shares
large enough to allow broadcasters to unilaterally raise advertising
rates without constraint? This is just one question that deserves review
if we wish to continue to justify ownership restraints on our fear of
the impact on advertising markets.[^334]

Additionally, there has been an explosion of media outlets to which both
advertisers and programmers may turn, lessening the ability and
incentives of broadcasters to unilaterally dictate rates. With regard to
cable service, 67 percent of all Americans subscribe to this medium and
nearly 97 percent have cable available.[^335] Another 12.5 percent
subscribe to DBS, which is virtually available to 100% of Americans
within the continental U.S.[^336] Consequently, advertisers now have
other options from which to choose in reaching a national audience. In
the vernacular of antitrust, there are substitutes. If a network or
station owner attempted to extract monopoly rents, advertisers would
have other options for reaching consumers. Moreover, other medium may
prove more attractive to advertisers who can more carefully tailor their
messages to particular demographics on media like cable or DBS. At a
minimum, there is reason to question the blind assumption that
advertisers would be harmed without the protections of our ownership
rules, given the increased availability of other outlets.

The proliferation of other distribution outlets has also constrained
broadcast program purchasers from depressing the prices program
suppliers get. In fact, with more outlets, high quality programming can
"shop" for the highest rents. This explains the trend we see toward
cable and DBS capturing marquee programming such as sporting events, top
movies and increasingly major news, history, public affairs, and arts
programming. Indeed, contrary to what should be predicted if network
concentration were substantial, programmers are able to command a
premium for shows like *E.R.,*[^337] NFL Football,[^338] and NHL
Hockey.[^339] In short, it is hard to defend the assumption that
broadcasters have sufficient market power to command monopoly rents for
advertisements or to deflate prices for programming. Surely, one sees no
evidence to justify a standing structural rule, rather than rely on
antitrust enforcement.

*[Diversity in the Market]{.underline}*

Diversity is also an admirable goal, yet, it is an elusive concept. It
has come to mean many things. Limiting ownership concentration does one
obvious thing; it increases or maintains the number of different owners.
Limiting ownership and allowing more owners has three primary diversity
effects: For one, there are more broadcast properties and more ownership
opportunities available for more people. Protecting opportunity is one
way of promoting minority and female ownership. This is sometimes called
"source diversity."[^340] I will not discuss this point in this
statement. Second, more owners might mean more from which to choose.
Viewers will be able to see the different programming choices of
different owners, and it is hoped that these programs will vary in
content and style. This is what we often call "program diversity." The
third point is a subtle variation on the second. Proponents often urge
rules to promote not just different program genres or styles to capture
viewer interest, but different "viewpoints." That is, by the fact that
owners are different people or institutions, one might expect to see
different perspectives that are "antagonistic" to those of other
programmers. Let me first make some general observations about the
number of distinct program choices available to consumers.

It is said, "beauty is in the eye of the beholder."[^341] The same could
be said for television. It is difficult and perhaps constitutionally
impermissible for government to impose its conception of worthiness or
beauty on viewers.[^342] Yet, it is understandable to craft rules that
promote the widest swath of programming choice to match the infinite
variety of interests of the American consumer. Whether your taste runs
to WWF wrestling (perhaps the most popular programming on television
today), the symphony, sports, comedy, news, drama, feature film,
cartoons, music videos, history, public affairs, or shopping, the video
marketplace has more of it, in more colors and flavors, than ever
before.

To make my point I highlight a powerful and persistent trend in
programming---movement from broadcasting to narrowcasting. In the early
period of television, broadcasting was the primary means of receiving
video content (excluding the movie theatre). Broadcast is a medium that
provides one signal to many people. That is its central virtue, but also
its central limitation. Because it can only serve up one program at any
given moment in time, it has to find a program that appeals to the
broadest possible audience. This is particularly the case since
broadcasting is solely advertiser supported. Thus, almost by its nature,
broadcast has trouble being diverse---that is, serving a more narrow,
particularized community of interest is difficult, both in technical
terms (the signal goes everywhere) and in economic terms (to remain
viable a station must maximize eyeballs, *i.e*, aggregate interests).
When broadcasting dominated video programming the challenges of program
diversity were quite acute.

Cable, and later DBS, brought to the marketplace a new medium that had
characteristics that clearly enhanced program diversity and choice. A
cable system offers subscribers multiple channels. A subscriber that
hungers for sports might watch a channel dedicated to that genre
(*e.g*., ESPN, Fox Sports). A history buff the same (*e.g*, History
Channel). A movie fanatic the same (*e.g*., HBO, Showtime, Cinemax). A
news and public affairs junkie the same (*e.g.,* CNN, MSNBC, Fox News,
C-Span), and WWF fans can watch all day and night to their hearts
content. A system operator can offer this diverse programming
economically because he draws both from advertising and subscription
revenue. Subscription fees also allow a program producer to gauge a
viewer's preference. Programs that are strongly desired are more
valuable and thus more can be charged. (This is why there are tiers and
programming packages offered.) Additionally, the technical nature of the
system allows for this variety. Because cable is not hindered by
interference problems, like broadcasters, the system can be upgraded
continually to increase capacity and thus provide more channels.[^343]
The importance of cable, DBS and other systems is not just to increase
video competition. These mediums also have ushered in greater diversity,
for they can program to distinct parochial interest on a daily basis in
a manner that is challenging for broadcasting. The ability to program to
a wider variety of interests is what, in part, accounts for the fact
that the majority of Americans (nearly 80 percent) subscribe to some
multichannel service.

Of late, the trend toward tailored programming is getting finer with the
advent of digitalization and the Internet. Perhaps the penultimate
expression of diversity is the ability to program for a single
individual's unique interest. The video landscape is moving in this
direction. On the Internet one clearly sees the trend: "My Yahoo" and
"My AOL" for example. Products like WebTV, AOL TV, Geocast, and
<Excite@Home>, all promise to enhance traditional television product
with personalized, tailored content. These trends show clearly that the
breadth of unique and different programming has exploded and is growing
exponentially. Under the weight of such trends, I cannot begin to see
how one can claim the loss or fear of loss of diverse programs and
choices for consumers.

###  {#section-1 .unnumbered}

###   {#section-2 .unnumbered}

###  {#section-3 .unnumbered}

### *[Viewpoint Diversity]{.underline}* {#viewpoint-diversity .unnumbered}

The strongest proponents of diversity in programming will insist that it
is not multiple, different choices that matter, but "viewpoint
diversity." Given the facts of the marketplace, I believe this to really
be the crux of the government's purported diversity interest. The goal
is not simply to provide choices that appeal to diverse interests. The
proponents want shows that are "antagonistic to each other."[^344] The
first problem with this conception is that it is unclear that a market
that produces programming that serves the interests of a broad and
varied audience does not also represent a sufficient number of
"viewpoints" from which consumers can choose.

Secondly, I question what the concept means for the vast majority of
programs consumers watch. Is NBC's *Friends* antagonistic to WB's
*Dawson's Creek?* Is ABC's *Who Wants to be a Millionaire* antagonistic
to CBS' *Touched by an Angel*? Or, is ABC's *Monday Night Football*
antagonistic to Fox's *Football Sunday*? It's hard to see the relevance
of this concept. Perhaps, the viewpoint interest is reserved for public
affairs and news programs, where issues might be presented and debated.
But, here, too, one questions its meaning. Local news programs rarely
editorialize, or pick political candidates, or take stands on major
issues such as abortion or gun control. The reason is simple enough:
because consumers do not pay to watch, broadcasters make money by
reaching the largest possible audience. They rarely take the kind of
risks that might endear them to some in the viewing area and raise the
ire of others. They are not in the "antagonizing" business. Moreover, I
am not sure why we are certain "antagonistic" programs do not sell. I
see plenty of evidence of opinionated programming: *Crossfire*, *Face
the Nation*, *Hardball*, *Larry King Live*, and why not *Jerry
Springer*, for examples. Are we to believe all of this would vanish
absent our structural ownership rules?

I also fail to see how ownership restrictions in themselves do much to
promote the goal of antagonism. Different owners may have different
perspectives, but they probably have more in common as commercial
interests than not, for each must compete for maximum audience share to
remain profitable. Moreover, the ownership class may include different
people, but it is hard to see how that ensures that they are different
in their viewpoints. We do not and could not possibly insist there be
Republican owners and Democratic owners, pro-gun and anti-gun owners,
etc. I would suggest some amount of "antagonism" sells. Controversy and
conflict are the stuff of good story. If different viewpoints are to be
found, I think they will be the products of the commercial market much
more than by our rules and our adherence to the high-brow ideal we used
to defend them.

### *[Localism]{.underline}* {#localism .unnumbered}

Finally, I would like to say a brief word about localism, which is often
subtly distinguished from diversity in general. The principle is that
the government favors locally originated programming because that is the
programming most likely to serve the interests of those viewers and
listeners in the community of the licensed station. The majority of
stations are affiliated with a national network. Because the
broadcasting business seeks to maximize viewers, there has always been
concern that a powerful network would force local stations to carry
their national program, theoretically to the detriment of local viewers
and local interests. For decades, the Commission has pursued rules
intended to ensure networks do not dominate local stations and their
programming preferences.[^345]

One central failing of regulations intended to promote localism is that
they assume that such programming would not flower if networks and
stations were too large. One is hard pressed, however, to see why, in a
healthy marketplace, if the public values local programming, producers
would not supply it. If a local audience desires a program, and is
willing to watch the program, that program will attract advertising
dollars and thus a station or network will have an incentive to produce
and provide that show. Indeed, since most consumers purchase advertised
product in their local towns and communities, advertisers---even
national ones with local franchises---would favor programs that appeal
to local audiences.

I remain struck how often we simply assume that such programming will
vanish if we do not require it. Of course, if consumers do not want
certain kinds of local programming and it is not provided as a
consequence, there is no justification for the government to compel it.
Where government attempts to promote the messages and images that it
prefers, even where consumers themselves do not, we are no longer in
America and the First Amendment has been abandoned.[^346]

II\. CRITIQUE OF THE BIENNIAL REVIEW

I will now turn and address the specifics of today's *Order*. The
Commission has taken steps today to modify some of its broadcast
ownership rules in an attempt to make our regulations more consistent
with current marketplace conditions. While I support these steps, I
believe they are too limited in scope and reflect a continuing
reluctance to examine in a meaningful way the legacy of our broadcast
regulations. As a result, I concur in part and dissent in part to the
*Order* released today. I will address the rules to which I dissent or
concur below.

Before doing so, I wish to state my approach to the Biennial Review of
structural ownership rules. Since our charge is to examine whether a
rule continues to serve the public interest in light of competition, I
feel it imperative to always fully examine the state of the video
market---market share, number of competitors, competitive effects, ease
of entry and inefficiencies---and challenge the continued validity of
prophylactic ownership rules in light of this examination.[^347] I
believe the clear bent of the biennial review process set out by
Congress is deregulatory, in recognition of the pace of dramatic change
in the marketplace and the understanding that healthy markets can
adequately advance the government's interests in competition and
diversity. Thus, contrary to the approach of the majority, I start with
the proposition that the rules are no longer necessary and demand that
the Commission justify their continued validity. Against that backdrop,
I turn to today's decision.

[National Television Ownership Rule and UHF Discount]{.underline}

I respectfully dissent from the majority's conclusion that, based on the
record before us, the national ownership cap still serves the public
interest. The *Order* contains no meaningful examination of the market
or the state of competition, a glaring omission given Section 202(h)'s
directive to consider whether competition obviates the need for such
rules. This is particularly disturbing, since serious questions have
been raised (but not adequately addressed) as to whether this rule is
substantially related to the stated government interests of protecting
local competition and promoting local diversity, and evidence has been
presented that the rule may actually cause harm to the public
interest.[^348]

In the Notice of Proposed Rulemaking, we asked for comment on the effect
of the rule on competition in the national advertising and program
production markets. We also asked about the effect of the rule on
existing television networks and the formation of new networks. These
points of inquiry go to issues of competition in the national markets.
One would expect to see an examination of market concentration,
advertising and programming price effects, etc. The *Order*, however,
lacks any meaningful discussion of either of the national markets or the
formation of new networks. If it had, it would have noted the
substantial change that has occurred offering greater competitive
discipline and substantially increased diversity. *See* Section I,
*supra*.

Instead, the *Order* validates the rule on two other grounds: It states
that (1) additional time is needed to assess the impact of the local
ownership rule changes made last August;[^349] and (2) expresses concern
about the growing number of large group owners and the potential for
disruptive restructuring. None of these articulated reasons address the
national programming or advertising markets, or the rules' impact on new
or existing networks.

Indeed, the justifications appear to focus almost exclusively on
competition and diversity at the *local* level.[^350] It is not
intuitive why national ownership restrictions have any meaningful impact
on local competition or local diversity. We have very detailed rules
limiting the number of stations one may own in a given local market.
Thus, no matter how many stations one owns nationally, he cannot
increase concentration in the local market, by operation of our local
ownership rules. Indeed, these rules were modified less than a year ago
to reflect our present views on local competition and diversity.
Consequently, I fail to see the relationship between the national cap
and the stated government interest in local competition and diversity.
Further, the *Order* does not offer a meaningful explanation. I would
note that on many previous occasions the Commission has itself squarely
expressed doubt about the linkage between the national cap and its
stated goals.[^351]

Not only are the stated rationales for retaining the rule in its current
form not persuasive, but the *Order* lacks any meaningful discussion of
the potential harms posed by the rule. For example, the study completed
by Professor Michael Katz raises the possibility of some non-trivial
harms associated with this rule. The study finds that the rule: (1)
limits economies of scale associated with common ownership, thus raising
costs and reducing incentives to invest in over the air television; (2)
blocks the expansion of particularly well-run station groups; and (3)
limits the ability of broadcast networks to own stations, an arrangement
that would improve coordination and lower the risks associated with
investing in high-quality, innovative programming.[^352] These harms are
not small concerns to an industry in the midst of remaking itself in
digital form and for whom every day the number of competitors increases
while total viewership declines.

These concerns are also strikingly similar to those raised by the
Commission in its decision to modify the Dual Network Rule. In the
Notice of Proposed Rulemaking in that proceeding, also issued today, the
Commission reviews with some specificity the current economies of the
network broadcasting market. As noted in the *NPRM*, networks are in the
business of producing mass audiences, and the size of that audience is
facing continuing erosion from cable and DBS. The *NPRM* finds that in
order for networks to be economically viable they must be "larger rather
than smaller as measured in terms of affiliated stations and the viewers
produced and sold to advertisers."[^353] In the dual network context,
the Commission finds that contract negotiations between program
producers and networks are extremely complex and, as a result, the costs
of these contracts are high. Integration allows for lower costs and
better allocation of risks.[^354] The NPRM also points to the amount of
integration that has occurred in this market after the repeal of our
financial interest and syndicated exclusivity rules (fin/syn) as
reflective of the difficulty in negotiating contracts.[^355]

I would argue that these same economic costs and efficiencies accrue to
a network's affiliate relationships as well. Contract negotiations
between networks and affiliates are also complex and the costs high. And
as in the case of the fin/syn rules, I would point to the number of
networks that are either closing in or at the cap as evidence of the
difficulty and costs associated with contracting with affiliates.[^356]
For those companies that are at the cap, these costs are a direct result
of our rules. But the *Order* not only fails to analyze these costs, but
also whether the costs associated with the rule are justified on the
basis of our interest in preserving competition in the national
programming or advertising markets, or even competition or diversity at
the local level.

The *Order* also states that a change in the cap may well influence the
bargaining positions between broadcast television networks and their
affiliates, and that we should proceed cautiously, particularly given
the restructuring that may be taking place concurrently on the local
level. However, we do not have evidence of a massive restructuring
taking place at the local level. Only 42 applications for duopolies in
local markets have been filed since we modified our local ownership
rules, and 19 of those reflect purchases of television stations that the
buyer already programs through local marketing or time brokerage
agreements. And, while I am sensitive to the shifts currently taking
place in the network/affiliate relationship, I am unconvinced that these
concerns necessarily implicate issues of diversity and competition at
the local level. Protecting one group of station owners over another for
its own sake is not a valid function of government. Nonetheless, I would
have liked to hear much more about the impact on local stations and how
that impact undermines the public interest in an NPRM that would more
comprehensively examine the 35 percent audience reach cap.

In short, the Commission's decision is deficient in several ways. It
fails to fully examine the video market and consider the changes in that
market. It merely assumes a valid link between a national limit and
local competition and diversity, despite fairly substantial evidence to
the contrary. And, it fails to consider the public interest harms that
may flow from the rule. I believe there is more than enough on the
record of this proceeding to call into question whether the public is
being served by the 35 percent audience reach cap, and I would have
supported a Notice to examine more thoroughly the possibility of its
modification or repeal. Further, I support the Commission's decision not
to amend the UHF discount. Any action on the discount should be
considered in conjunction with a thorough analysis of the cap.

[Newspaper/Broadcast Cross-Ownership Rule]{.underline}

I also must respectfully dissent from the majority's conclusion that the
newspaper/broadcast cross-ownership rule continues to serve the public
interest. While I welcome the decision to issue an *NPRM* to look at the
impact of the rule in particular circumstances, I am disappointed that
the Commission appears unwilling to engage in a broader debate about the
continuing validity of this 25-year-old rule, which has never been
modified. This rule raises significant First Amendment concerns, and, as
a result, requires rigorous analysis in support of its continuing
validity. To my mind, the *Order* falls short of that bar, and I cannot
conclude that the rule continues to serve the public interest as a
result of competition.

As I predicted in my separate statement to the *NOI*, the pivotal issues
in this entire proceeding evolve around the issue of diversity. Nowhere
is this more the case than in the analysis surrounding the
newspaper/broadcast cross-ownership rule. With respect to this rule, the
Commission relies heavily on its goal of promoting "viewpoint
diversity," which looks specifically at the amount of "local"
programming in a market. While the *Order* considers the effect of the
rule on competition, it limits its discussion to whether meaningful
efficiencies derive from existing combinations. A more thorough
competitive analysis would also discuss, for example, the relationship
between the advertising markets for broadcasting and newspapers and the
substitutability of the television and newspaper products. If they are
the same products, then the Commission should justify its decision to
permit television duopolies but not newspaper/television combinations in
local markets. If they are different products, then the Commission
should justify why it will continue to apply a complete ban on
cross-ownership between the mediums, based simply on their character.

The heart of the newspaper/broadcast cross-ownership rule is the
Commission's belief that these two mediums are the only two suited to
providing content oriented toward the local community.[^357] This
*Order* retains that thesis by rejecting the proposition that the
explosion in alternate sources of programming obviates the need for the
rule. It finds that: (1) "new outlets" (DBS/MMDS) are not substitutes
for newspapers or broadcasters on the local level; and (2) that cable is
a poor substitute because it is not required by law to provide locally
originated content, even though some systems do. By contrast, the
*Order* places faith in broadcasting, because broadcasters are required,
pursuant to their public interest obligations, to provide programming
responsive to the needs of the local community, and newspapers, even
though they are not required to, typically cover local issues. From
these observations, the *Order* concludes that broadcast television and
newspapers continue to be the dominant source of local news and public
affairs information in any given market. Let me address each of these
two propositions.

As configured today, it is true that most satellite and wireless based
video providers offer primarily national programming. The central reason
for this is technical. Satellite technology has had difficulty beaming
unique programming into local communities from hundreds of miles in
space. The technology is changing, however, and with spot beam
technology DBS providers are pursuing localized carriage. Indeed, they
fought aggressively to modify the Satellite Home Viewer Act to allow
them to carry local broadcast signals, feeling that it was a competitive
disadvantage not to have local content.[^358] Some companies appear to
be pursuing a satellite service that would include multiple channels of
tailored 24 hour local programming, including weather, sports, traffic,
arts and community affairs. Thus, as competition increases in providing
national programming content (broadcast, cable, DBS, MMDS, Internet)
carriers will naturally push into local content to differentiate their
offerings. It is clear, in my view, that content as an important
competitive offering. So, while I would concede that these services
provide limited local programming today, it is clear that video
competition is driving them to provide localized content and they should
not be dismissed as viable alternatives out of hand.

The majority's rejection of cable as a viable medium for local content
is more baffling. The fact is that many cable systems are offering local
programming, perhaps for more concentrated periods than broadcast
television. News Channel 8 in our own area offers just one example.
Cablevision's New York Metro service offering local news, weather,
traffic, sports and community affairs is another. Most cable systems
offer community PEG channels. Many systems offer local high school
sports, such as the Home Team Sports channel. HTS is apparently valuable
enough to consumers that it costs extra to have access to it. Moreover,
cable systems are operated locally, just as stations are, and I see no
real impediment to them offering local services if their community
wishes to have them. In fact, local cable systems are regulated by local
franchises that often extract local community services as a condition of
receiving a local franchise. Broadcast stations have no local regulatory
oversight. Despite all of this, the Commission turns a blind eye,
refusing to survey the breadth of local cable programming and dismissing
the argument by holding that because federal law does not mandate local
content, we cannot count on such systems providing it.

The Commission, however, repeats the same error I note in Section I. It
seems unwilling to recognize that localism sells. There are a bevy of
commercial motivations for offering such fare: advertisers want to
target groups with similar demographics and interests. National
programmers want to differentiate their products. Multichannel systems
want to increase the value of subscription fees. I find it a bit
remarkable we will not look to or credit competitive content, where
there is not a regulation compelling it, when reviewing the market to
see if competition has obviated the need for a regulation! Moreover, the
*Order* refuses to consider local content in cable systems, because it
is not required, but in direct contradiction is unobstructed in
crediting regulation-free local newspaper coverage because that medium
"typically" covers local issues. This is unquestionably arbitrary
analysis.

In defending this rule, the Commission again trumpets the value of
"antagonistic voices," or "viewpoint diversity." I question generally
some aspects of this governmental interest, which I discussed more fully
in Section I. I would only add a few points. For one, I do not see how
one can demonstrate that newspapers, by their very nature, are
antagonistic to broadcasters and, thus, their combination would
frustrate our stated goal. I have not observed or been shown any
particular give and take between these two mediums. I don\'t believe we
have even genuinely examined this proposition. Surely, one can
hypothesize that if a local paper and local station combined, there may
be some homogenization of news and information. But, one can equally
imagine that the combined resources may allow for greater and more
efficient coverage of local events that could not be covered by the two
individually. (There is some evidence of this where certain combinations
have been grandfathered). Second, I would note that a broadcast station
is the most likely candidate to take views antagonistic to another
station, since they directly compete for audience share. Yet, we allow a
single entity to own two broadcast stations in many markets, if enough
"voices" remain in the market. I do not see why newspaper/broadcast
combinations could not be regulated the same way.

Based on the above considerations, I cannot support the conclusion that
the newspaper/broadcast cross-ownership restrictions continue to serve
the public. I would support a proceeding that would look critically at
how the significant and far reaching changes in the video marketplace
since 1975 have eviscerated the need for what is an extremely
prohibitive regulation.

# *[The Cable/Broadcast Cross-Ownership Rule]{.underline}* {#the-cablebroadcast-cross-ownership-rule .unnumbered}

I also dissent from the *Order's* decision to retain the Cable/Broadcast
Cross-Ownership rule. The rule is 30 years old, and, as in the case of
the rules discussed above, I believe there have been sweeping and
pervasive changes in the local video programming market that warrant a
more critical analysis of the benefits associated with this rule than
has been undertaken in the context of the instant *NOI*. I believe that
many of the harms, such as channel positioning, asserted in the context
of this rule may be adequately addressed by other rules the Commission
regularly enforces. For example, I would observe that even if one were
concerned that cable might have an incentive in favoring its own local
station on its cable system, the "must carry" rules would largely deny
it the ability to do so.

Finally, I find it ironic that the majority is concerned that it will
lose an "antagonistic voice" if a local cable system is co-owned with a
broadcast station, but is unwilling to count that same voice as viable
in the broadcast/newspaper cross-ownership context. For all of the above
reasons, I would have supported a rulemaking to more adequately and
thoroughly examine whether this rule is still necessary to promote the
public's interest.

[The Dual Network Rule]{.underline}

I concur in the *Order's* conclusion that the Dual Network Rule as it
applies to UPN and the WB may no longer serve the public interest and
the decision to issue an *NPRM* to evaluate possible modifications to
the rule. While I would support an *NPRM* that would also consider
repeal of the current rule as it applies to the top four networks, I
believe that the record supports this more limited *NPRM* as an adequate
first step. I look forward, however, to continuing to review this rule
in our upcoming biennial reviews.

[Local Radio Ownership]{.underline}

I also concur in the decision today to retain the current local radio
ownership rules. However, I am unconvinced that the further proceeding
contemplated by the *Order* is warranted, nor do I believe, as a general
matter, that consolidation in the industry has threatened local
competition and diversity in a manner inconsistent with the intent of
Congress.

The *Order* contemplates a Notice of Proposed Rulemaking (NPRM) to
address several radio market issues. One issue is how to harmonize the
counting methods we use to determine both the size of the market and the
number of stations in the market that count toward the cap. To the
extent that this NPRM addresses what may be an arbitrary distinction
between counting methods, I support its issuance.

The NPRM will also ask whether the Commission should adopt a different
(and more restrictive) method for determining the relevant "market"
because our current definition may be "producing unintended results that
are contrary to Congress' intent." My single greatest problem with the
proposed action here is one of statutory interpretation. The effect of
its proposal would be to shrink markets and thereby substantially limit
the number of stations that one could own. When Congress adopted its
radio ownership provision, Commission regulations defined these markets
in a particular way. That way was the law of the land. The Arbitron
market definitions were in existence, but they were not used for
regulatory purposes, and Congress did not specifically incorporate them.
I believe that it is disingenuous to suggest at this late date that only
by changing the market definition to Arbitron can we effectuate what
Congress "really meant." I believe proper statutory interpretation would
lead one to conclude that Congress set its numerical limits against the
market definition that prevailed in regulation at the time, and not a
definition that had not been used for this purpose previously.[^359]
Moreover, if Congress did not mean to set the appropriate level of
concentration, or the acceptable level of diversity, what on earth are
the numerical market levels meant to do?

III\. CONCLUSION

In conclusion, I do not believe that the Commission has justified its
decision that the 35 percent audience reach cap, the newspaper/broadcast
cross-ownership rule or the cable/broadcast cross-ownership rule
continue to serve the public interest as a result of competition as
Section 202(h) requires. With respect to each of these rules, I would
have supported further proceedings to more thoroughly evaluate the
pervasive changes that have occurred in the video marketplace, and
whether these rules continue to achieve the goals for which they were
intended. I think such an analysis is critical in light of the
challenges facing the broadcasting industry, especially the reality that
the technical advances in digital capabilities will allow more and more
platforms to deliver video programming. This Commission must look
forward if it is to foster, and not stand in the way of, the digital
revolution that is occurring across all of the communications
industries. The approach taken by the Commission today, however,
continues to look to "the days of yesteryear," to justify its rules. It
is time to take the mask off this old Lone Ranger and look more deeply
into the face of change.

ADDENDUM

The purpose of this Addendum is to address material that was added by
the majority to the item after its adoption and after the preceding
statement was completed. Specifically, the facts in paragraph 28 and the
analysis contained in the last four sentences in paragraph 30 were
circulated two weeks after the item was adopted. As a procedural matter,
I am concerned that the changes, which I believe are substantive, have
been inappropriately added after the item's adoption on May 26, 2000 and
may change the adoption date of the item to no sooner than June 13,
2000, well past the statutory deadline.[^360] In any case, I will
respond to the newly added material below.

The majority now maintains that elimination [or]{.underline} relaxation
of the national cap rule would lead to "the consolidation of ownership
of all or most of the television stations in the country in the hands of
a few national networks."[^361] This apocalyptic pronouncement is
without foundation. As the *Order* itself points out, large numbers of
stations are currently owned by group owners and there is not even a
hypothesis proffered as to why such major commercial interests would
suddenly sell their full complement of stations to the networks.[^362]

While it may be a valid hypothesis that network-owned stations have an
incentive to clear the majority of their network programming, it is far
from clear that they would not also have economic incentives to program
local content that would attract both viewers and advertisers. Clearly,
competitive video service providers believe local content is key to the
success of their product.[^363] Moreover, every station, regardless of
ownership, is required to serve its local community, a point relied on
by the majority in distinguishing broadcasters from other providers of
programming,[^364] Thus, network-owned stations could not, arguably, run
national programming exclusively.

The majority also now for the first time says that we should be
concerned that there is a loss of an outlet for non-network programming
sources, but I am not sure that this concern comports with the facts. Do
the current network owned and operated stations have higher clearance
rates for network programming? Do they serve their local communities
with less local content than affiliated stations? Do national
programmers find themselves blocked from distributing their product
through stations owned and operated by the networks? Who knows? We
certainly have not bothered to look.

The majority is correct in noting that Congress chose not to eliminate
the cap, but only to liberalize it in the 1996 Telecom Act. But Congress
also clearly instructed the Commission to continually evaluate market
and competitive conditions to determine whether rules remain in the
public interest. Failing to have done so fully, it cannot glibly escape
its responsibility by deferring, without more, to a judgment Congress
made four years ago and one that Congress specifically directed us to
continually revisit.

**[STATEMENT OF COMMISSIONER GLORIA TRISTANI,]{.underline}**

**[DISSENTING IN PART]{.underline}**

In the Matter of 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

I dissent from the majority's conclusion that the dual network rule
should be modified to permit ABC, CBS, Fox, or NBC to combine with UPN
or WB. Such a modification is unsupported by the record and, if
ultimately adopted, would further erode the already tenuous level of
diversity available on the public airwaves.

Congress itself modified the dual network rule only four years ago, as
part of the Telecommunications Act of 1996. In describing the networks
covered by its amended rule, Congress expressly referred to "emerging
networks (WBTN, UPN)," a fact recently relied on by the Commission in
applying the rule to UPN in connection with the CBS-Viacom merger.[^365]
Thus, in 1996, Congress found that the state of competition warranted
continued application of the dual network rule to UPN and WB.
Admittedly, the Commission may change the rule adopted by Congress
pursuant to the biennial review provisions of the 1996 Act. But nothing
has occurred in the past four years that should lead us to question
Congress' judgment.

To the contrary, all of the arguments advanced by the majority as
justifying modification of the rule were as true, if not more true, in
1996 than they are today. First, the majority asserts that program
production and networking are complementary inputs that make vertical
integration desirable, and that a merger of one of the top four networks
with UPN or WB could be characterized as a merger of an established
broadcast network with an established program producer. Leaving aside
the factual inaccuracies of this argument (e.g., ABC and Fox are
affiliated with major production studios just like UPN and WB), this
characterization was equally true in 1996. Second, the majority argues
that the rule should be retained for the top four networks but repealed
for UPN and WB because the former are "established" broadcast networks,
while the latter are still "nascent." Again, however, even assuming that
UPN and WB are still "nascent" networks, they were far more nascent in
1996, when Congress specifically decided that they should fall within
the dual network rule's application.

It is not hard to anticipate the effect that modification of the rule
will have. It will reduce diversity on the public airwaves by reducing
the number of outlets available to independent program producers.
Independent programmers are already having a difficult time gaining
network carriage. For the new television season, a record 24 of 37 new
series are either owned or co-owned by the television networks which
will air them.[^366] Disney will own or co-own an interest in 3 out of 4
of ABC's new programs; CBS owns an interest in 6 of 7 new shows; NBC
owns an interest in 4 of 7 new shows; 20^th^ Century Fox will own or
co-own 5 of Fox's 9 new shows; Paramount will produce 2 of UPN's 4 new
series; Warner Brothers will own or co-own 4 of 6 new shows for
WB.[^367] Far from demonstrating that the rule has outlived its
usefulness, the marketplace shows that the rule may be needed more today
than ever.

The Order emphasizes the economic efficiencies that would accrue to
incumbent networks by modifying the rule. This I do not doubt. But we
have a higher duty than helping broadcasters maximize their private
gain. Our first duty is to manage the airwaves in a manner that promotes
the public's interest in competition and diversity. In the absence of
evidence that more than four independent networks are not economically
feasible, we should be cautious about changing our priorities.

[^1]: Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
    (1996). The context of Section 202(h) of the Telecom Act makes clear
    that the scope of the required ownership review relates to the
    Commission\'s broadcast ownership rules, both those adopted under
    Section 202 and our other broadcast ownership rules. In this regard,
    we note that Section 202 is entitled \"Broadcast Ownership,\" as is
    the corresponding section of the Conference Report. House Rep.
    104-458, 104th Cong., 2d Sess. 161 (1996). Also required by Section
    202(h) is the biennial review of rules adopted pursuant to Sections
    202(a)-(f) of the Telecom Act. These include rules pertaining to
    cable as well as broadcast cross-ownership.

[^2]: Section 11(a) of the Communications Act of 1934, as amended,
    similarly provides that under the statutorily required review, the
    Commission \"shall determine whether any such regulation is no
    longer necessary in the public interest as a result of meaningful
    economic competition\" and requires that the Commission \"shall
    repeal or modify any regulation it determines to be no longer
    necessary in the public interest.\" 47 USC § 161.

[^3]: Section 5003, Pub L. 106-113, 113 Stat. 1501 (1999), Making
    consolidated appropriations for the fiscal year ending September 30,
    2000, and for other purposes.

[^4]: Joint Explanatory Statement of the Committee of Conference on the
    "Intellectual Property and Communications Omnibus Reform Act of
    1999," at 59.

[^5]: [Notice of Inquiry]{.underline}, 13 FCC Rcd 11276 (1998)
    (\"NOI\").

[^6]: [NOI]{.underline}, [supra]{.underline} at 11279-80.

[^7]: [Report and Order]{.underline} in MM Docket Nos. 91-221 & 87-8, 14
    FCC Rcd 12903 (1999) (hereinafter \"TV Ownership Order\").

[^8]: The Conference Report accompanying the Telecom Act, states that
    the, \"conferees are aware that the Commission already has several
    broadcast deregulation proceedings underway. It is the intention of
    the conferees that the Commission continue with these proceedings
    and conclude them in a timely manner.\" H.R. Rep. 104-458, at 164.

[^9]: For a more extensive discussion of the Commission\'s competition
    and diversity goals [see]{.underline} [TV Ownership
    Order]{.underline}, [supra]{.underline} at 12910-12924.

[^10]: [Turner Broadcasting System, Inc. v. FCC]{.underline}, 520 U.S.
    180, 117 S.Ct. 1174 (1997)("Turner II"). (Citations omitted.)

[^11]: [Turner Broadcasting System v. FCC]{.underline}, 512 U.S. 622,
    662 (1997)("Turner I").

[^12]: [Revision of Radio Rules and Policies]{.underline}, 7 FCC Rcd
    2755 (1992), [recon. granted in part]{.underline}, 7 FCC Rcd 6387
    (1992), [further recon.]{.underline}, 9 FCC Rcd 7183 (1994).

[^13]: [Associated Press v. United States]{.underline}, 326 U.S. 1, 20
    (1945); [accord]{.underline} [Federal Communications Commission v.
    National Citizens Committee for Broadcasting]{.underline}, 436 U.S.
    775 (1978).

[^14]: [NOI]{.underline}, [supra]{.underline} at 11277-78.

[^15]: [See]{.underline} [TV Ownership Order]{.underline},
    [supra]{.underline} at 12911-12, n.29; [see also]{.underline} [TV
    Ownership Further Notice]{.underline}, 10 FCC Rcd 3524, 3549-50
    (1995).

[^16]: [See, e.g.]{.underline}, [United States v. Storer Broadcasting
    Company]{.underline}, 351 U.S. 192, 203 (1956); [FCC v. National
    Citizens Committee For Broadcasting]{.underline}, 346 U.S. 775,
    780-81,794 (1978).

[^17]: [Turner II]{.underline}, [supra]{.underline} at 190.

[^18]: [TV Ownership Order]{.underline}, [supra]{.underline} at 12913.

[^19]: S. Conf. Rep. 104-230, 104^th^ Cong. 2d Sess. 163 (1996).

[^20]: [U.S. Television Household Estimates]{.underline}, Nielsen Media
    Research, September 1999.

[^21]: FCC Press Release, [Broadcast Station Totals as of September 30,
    1999]{.underline}, (issued November 22, 1999).

[^22]: BIA Research Inc., MEDIA Access Pro Data Base, May 22, 2000.

[^23]: Nielsen Media Research, [Television Audience 1996]{.underline},
    1997.

[^24]: [Annual Assessment of the Status of Competition in the Market for
    the Delivery of Video Programming]{.underline}, CS Docket 99-230,
    ("[Sixth Cable Report]{.underline}"), 15 FCC Rcd 978, Appendix B
    (2000).

[^25]: [Broadcasting & Cable]{.underline}, April 24, 2000, at 62.

[^26]: [Id]{.underline}. at Table B-4.

[^27]: NCTA, [Cable Television developments, Fall 1998/Winter
    1999]{.underline}, at 28-136.

[^28]: [Sixth Cable Report]{.underline}, [supra]{.underline} at Table
    C-1.

[^29]: [Id]{.underline}. at p.8.

[^30]: FCC Press Release, [Broadcast Station Totals as of September, 30,
    1999]{.underline}, (issued November 22, 1999).

[^31]: These station counts include all in-market stations and selected
    out-of-market stations based on BIA's "Investing in Radio," 1999
    Market Report, 4^th^ Edition.

[^32]: Newspaper Association of America, [Facts About Newspapers
    1999]{.underline}, at 15.

[^33]: [Id]{.underline}. at 16, 27, 31.

[^34]: [Editor and Publisher Yearbook 1998]{.underline}, at II-1 to II
    124.

[^35]: 47 C.F.R. § 73.3555(e)(1).

[^36]: 47 C.F.R. § 73.3555(e)(2). The UHF discount is intended to
    recognize the deficiencies in over-the-air UHF reception vis-a-vis
    VHF reception. As a result, UHF stations are not "credited" with
    reaching their entire market but, instead, their coverage is
    "discounted" by 50 percent.

[^37]: 6 FR 2284-85 (Tuesday, May 6, 1941).

[^38]: 9 FR 5442 (Tuesday, May 23, 1944).

[^39]: [Amendment of Multiple Ownership Rules]{.underline}, 9 RR 1563
    (1953). See [Federal Communications Commission v. Sanders Brothers
    Radio Stations]{.underline}, 309 U.S. 470 (1940).

[^40]: [Amendment of Multiple Ownership Rules]{.underline}, 43 FCC 2797
    (1954).

[^41]: [Id]{.underline}. at 2801.

[^42]: [Id]{.underline}.

[^43]: [Amendment of Multiple Ownership Rules]{.underline}, (Gen. Docket
    83-1009) 100 FCC 2d 17 (1984).

[^44]: [See]{.underline} [id]{.underline}. at 24-46 for a discussion of
    the effects of eliminating the rule on viewpoint diversity and
    economic competition.

[^45]: [Id]{.underline}. at 18, 28.

[^46]: [Id]{.underline}. at 20.

[^47]: [Id]{.underline}. at 37.

[^48]: [Id]{.underline}. at 19.

[^49]: [Id]{.underline}. at 20. Regarding the possibility of competitive
    harm, the Commission noted the conclusions of the Department of
    Justice that \"elimination of the Seven Station Rule will raise
    little risk of adverse competitive effects in any market.\" The
    Department concluded that elimination of the rule would not increase
    concentration in the national network advertising market, because
    each network has already achieved access to almost every local
    market through its affiliation agreements. In the local spot market,
    the Department concluded that \"\[s\]ince spot advertising is sold
    in local geographic markets, and the rule does not address
    concentration in those markets, a rule change should not affect
    competition in spot advertising.\" [Id]{.underline}. at 38, 41. The
    Commission also noted that elimination of the rule may allow group
    owned television stations to exploit important efficiencies.
    [Id]{.underline}. at 44.

[^50]: [Id]{.underline}. at 18, 55.

[^51]: [Memorandum Opinion and Order in MM Docket No.
    83-1009]{.underline}, 100 FCC 2d 74 (1985).

[^52]: Defined as 25 percent of the national audience, calculated as a
    percentage of all Arbitron ADI television households.

[^53]: [Memorandum Opinion and Order]{.underline}, (Gen. Docket 83-1009)
    [supra]{.underline} at 98.

[^54]: [Id]{.underline}. at 89 and 91.

[^55]: [Id]{.underline}. at 87-88 n. 38.

[^56]: The UHF Comparability Task Force found that: \"Due to the
    physical nature of the UHF and VHF bands, delivery of television
    signals is inherently more difficult at UHF. It should be recognized
    that actual equality between these two services cannot be expected
    because the laws of physics dictate that UHF signal strength will
    decrease more rapidly with distance than does VHF signal strength.\"
    [Id]{.underline}. at 93.

[^57]: [Id]{.underline}. at 96-97.

[^58]: [Order]{.underline}, 11 FCC Rcd 12374 (1996).

[^59]: [NOI]{.underline}, [supra]{.underline} at 11281.

[^60]: [Id]{.underline}. at 11285.

[^61]: ABC Comments at 5, CBS Comments at 8, Fox and USA Broadcasting
    Comments at 13, and NBC Comments at 11.

[^62]: ABC Comments at 6, CBS Comments at 13, Fox and USA Broadcasting
    Comments at i-ii, and NBC Comments at 15-16.

[^63]: ABC Comments at 7, CBS Comments at 14-15, Fox and USA
    Broadcasting Comments at 16-19, NBC Comments at 15.

[^64]: Fox and USA Broadcasting Comments at i-ii, and NBC Comments at
    14-15.

[^65]: CBS Comments at iv.

[^66]: Paxson Communications Corporation\'s [Proposal to the FCC to
    Increase Broadcast Diversity]{.underline} (submitted July 24, 1998).

[^67]: Council Tree Communications Comments at 9.

[^68]: National Association of Broadcasters (NAB) Comments at 11-12;
    Network Affiliated Stations Alliance (NASA) at 6-15; Center for
    Media Education (CME), et. al. Comments at 2-17; Office of
    Communication, Inc., United Church of Christ, and Black Citizens for
    a Fair Media Comments at 4-6; American Federation of Television and
    Radio Artists (AFTRA) Comments at 3-6; and Gallium Communications,
    Inc. Comments at 2 and Reply Comments at 2-3.

[^69]: NAB Comments at 11.

[^70]: NASA Comments at 2, 5, 12 and 14.

[^71]: CME, et. al. Comments at 14-16.

[^72]: [Id]{.underline}. at 16. As examples, CME, [et al]{.underline}.
    point to situations in Florida and Pennsylvania where commonly owned
    affiliates of different networks air the same local newscasts.

[^73]: AFTRA Comments at 3.

[^74]: [Id]{.underline}. at 4-5.

[^75]: Gallium Communications, Inc. Comments at 2-3.

[^76]: We note, however, that on November 18, 1999, Fox Television
    Stations, Inc., filed an "Emergency Petition for Relief and
    Supplemental Comments" in this proceeding seeking, among other
    things, repeal of the national broadcast ownership rule. Also, on
    November 19, 1999, Viacom Inc. filed "Comments" in this proceeding
    seeking repeal of the same rule and, additionally, the dual network
    rule. The original deadline for filing comments in this proceeding
    was May 22, 1998, with June 22, 1998, being the reply comment
    deadline. These deadlines were later extended, pursuant to the
    request of the National Association of Broadcasters, to July 21,
    1998, and August 21, 1998, for comments and reply comments,
    respectively. [Order in MM Docket No. 98-35]{.underline}, DA 98-854
    (released May 7, 1998). The Fox and Viacom filings, having been
    submitted nearly 18 months subsequent to these deadlines will not be
    considered in this proceeding. Simply, to do so would provide a
    precedent for subjecting our biennial review proceedings to
    unceasing comment cycles, and would deprive other parties of an
    ability to respond to these new matters absent establishment of new
    pleading cycles. Accordingly, they will not be considered herein but
    will be included in the record of our 2000 biennial review of
    broadcast ownership issues.

[^77]: [See]{.underline} [TV Ownership Order]{.underline},
    [supra]{.underline}.

[^78]: These arguments are that eliminating or expanding the reach cap
    would increase the bargaining power of networks over their
    affiliates, reduce the number of viewpoints expressed nationally,
    increase concentration in the national advertising market, and
    enlarge the potential for monopsony power in the program production
    market.

[^79]: The current rule permits a group owner to acquire a VHF station
    in every market below DMA 47 (i.e., DMA 48 through DMA 210, a total
    of 163 stations) and still remain below the 35 percent audience
    reach cap. By holding UHF stations only, a group owner could acquire
    a station in every market below DMA 10 (i.e., DMA 11 through DMA
    210, a total of 200 stations) and still remain below the 35 percent
    audience reach cap.

[^80]: [Sixth Cable Report]{.underline}, [supra]{.underline} at 986;
    [Annual Assessment of the Status of Competition in the Market for
    the Delivery of Video Programming]{.underline}, CS Docket No. 94-48,
    ("First Cable Report"), 9 FCC Rcd 7442, 7514 (1994).

[^81]: [Sixth Cable Report]{.underline}, [supra]{.underline} at 1058.
    The eleven are: ABC/Disney, General Electric, CBS/Viacom, News
    Corp., Time Warner, Discovery, Rainbow Media Liberty Media, USA
    Networks, E.W. Scripps and Comcast.

[^82]: [Id]{.underline}. The four unaffiliated services among the top 50
    are C-SPAN and C-SPAN2 (both of which are almost wholly funded by
    the cable industry), WGN and The Weather Channel.

[^83]: [Review of the Commission\'s Regulations Governing Programming
    Practices of Broadcast Television Networks and
    Affiliates]{.underline}, 10 FCC Rcd 11951, 11960 (1995).

[^84]: NASA Comments at 2.

[^85]: [Id]{.underline}. at 5.

[^86]: ABC Comments at 18-23; NBC Comments at 16; Press Broadcasting and
    Greater Media Comments at 4-6; and CME, [et al]{.underline}.
    Comments at 17-19.

[^87]: NBC Comments at 16; ABC Comments at 19; Press Broadcasting and
    Greater Media Comments at 5; CME, [et al]{.underline}. Comments at
    17-18.

[^88]: ABC Comments at 19.

[^89]: Press Broadcasting and Greater Media Comments at 6.

[^90]: CME, [et al]{.underline}., Comments at 18.

[^91]: [Id]{.underline}. at 19.

[^92]: Fox and USA Broadcasting Comments at 19-22, NAB Comments at
    12-13, ALTV Comments at 2-30, Paxson Comments at 4-27, Telemundo
    Comments at 5-17, and Univision Comments at 2-16.

[^93]: Paxson Comments at 16-21, ALTV Comments at 27-29, and Telemundo
    Comments at 15.

[^94]: Fox and USA Broadcasting Comments at 21.

[^95]: [Id]{.underline}.

[^96]: NAB Comments at 12-13.

[^97]: ALTV Comments at 18.

[^98]: Univision Comments at 6.

[^99]: ABC Comments at 23.

[^100]: CME, [et al]{.underline}., Comments at 19.

[^101]: Paxson Comments at 21-27.

[^102]: [See]{.underline}, [e.g.]{.underline}, NBC Comments at 16, Press
    Broadcasting and Greater Media Comments at 5.

[^103]: Paxson Comments at 14, Fox and USA Broadcasting Comments at 22.

[^104]: NAB Comments at 13, Paxson Comments at 12-16.

[^105]: [See]{.underline} [Report and Order]{.underline} in MM Docket
    No. 94-123, 11 FCC Rcd 546, 583-86 (1995) (repealing the prime time
    access rule); [Report and Order]{.underline} in MM Docket No. 87-68,
    3 FCC Rcd 638 (1988), [clarified]{.underline} 4 FCC Rcd 2276 (1989)
    (eliminating the policy under which applications to initiate or
    improve VHF service were considered contrary to the public interest
    if they threatened adverse economic impact on existing or potential
    UHF stations).

[^106]: The Commission has previously recognized that the best indicator
    of the reach handicap is one that measures the actual coverage
    limitation inherent in the UHF signal. 100 FCC 2d at 93.

[^107]: Public Notice, "'Community Broadcasters Protection Act of 1999'
    Sets Deadline of December 31, 1999 for Full Service TV Stations to
    File Letters of Intent to Maximize Their DTV Facilities," DA 99-2739
    (released December 7, 1999).

[^108]: We previously stated that until the UHF discount was addressed
    in the proceedings where it was under review, any entity that
    acquired stations during the interim period between the revision of
    the national reach cap pursuant to the Telecom Act, and a Commission
    decision on the UHF discount, and which complied with the 35 percent
    reach cap only by virtue of the UHF discount, would be subject to
    our eventual decision on the discount. [Order]{.underline}, 11 FCC
    Rcd 12374, 12375 (1996). This has remained the case during the
    pendancy of the instant proceeding and we will continue to follow
    this policy until such time as the UHF discount is modified or
    eliminated.

[^109]: [Order]{.underline}, 11 FCC Rcd 12368 (1996).

[^110]: The Commission\'s duopoly policy was first articulated in
    [Genesee Radio Corp]{.underline}., 5 FCC 183 (1938).

[^111]: [See]{.underline} Federal Communications Commission, [Sixth
    Annual Report]{.underline} Fiscal Year 1940 (1941) at 68; and 6 FR
    2282 (Tuesday, May 6, 1941).

[^112]: [See]{.underline} [Report and Order in Docket
    14711]{.underline}, 45 FCC 1476 n. 1 (1964).

[^113]: [Id]{.underline}. at 1476. The Commission cited the end of the
    pioneering era of broadcasting, the large number of applicants for
    licenses, combined with the increasing importance of the editorial
    functions of radio stations, as justifications for the timing of the
    introduction of a numerical standard which was \"more restrictive in
    content and more extensive in application\" than the standard it
    replaced. [Id]{.underline}. at 1478.

[^114]: [Id]{.underline}. at 1477.

[^115]: [Id]{.underline}.

[^116]: [Associated Press v. United States]{.underline}, 326 U.S. 1, 10
    (1945).

[^117]: [First Report and Order in MM Docket No. 87-7]{.underline}, 4
    FCC Rcd 1723 (1989). The 1988 rule recognized that AM service has a
    larger audience reach than FM and therefore might have been
    discriminated against under the previous definition that used the
    same contour for both services.

[^118]: [Id]{.underline}. at 1726-27.

[^119]: [Revision of Radio Rules and Policies]{.underline},
    [supra]{.underline}.

[^120]: The Commission based the count of radio stations on the number
    of commercial radio stations meeting minimum audience survey
    reporting standards within an Arbitron designated radio metro
    market, or on overlapping principal community contours outside
    designated radio markets.

[^121]: [Memorandum Opinion and Order and Further Notice of Proposed
    Rule Making in MM Docket 91-140]{.underline}, 7 FCC Rcd 6387, at
    6388, 6393-6395 (1992). The Commission decided to count radio
    stations with reference to a contour overlap standard in all
    situations, not just those outside of Arbitron designated radio
    markets. Thus, the Commission defined the radio market "as that area
    encompassed by the principal community contours . . . of the
    mutually overlapping stations proposing to have common ownership.
    The number of stations in the market will be determined based on the
    principal community contours of all commercial stations whose
    principal community contours overlap or intersect the principal
    community contours of the commonly-owned and mutually overlapping
    stations."

[^122]: [Id]{.underline}. at 6388.

[^123]: Implementation of Sections 202(a) and 202(b)(1) of the
    Telecommunications Act of 1996 (Broadcast Radio Ownership), 11 FCC
    Rcd 12368 (1996).

[^124]: [Id]{.underline}. at 12370.

[^125]: [NOI]{.underline}, [supra]{.underline} at 11282.

[^126]: [Id]{.underline}. at 11283.

[^127]: [Id]{.underline}. at 11283.

[^128]: [Id]{.underline}. at 11283.

[^129]: [See, e.g.,]{.underline} American Federation of Television and
    Radio Artists Comments at 8, 10-12 (stating that it is essential
    that, at the very least, the current radio ownership restrictions
    remain in place); W. Russell DiBello Comments at 5 (urging FCC to
    return to the traditional \"Seven AM, Seven FM, One TV, One Group
    Per Market"); CBI Comments at 3, 6, 9 (urging Commission to return
    to 2AM/2FM radio duopoly in markets below Top-100 radio markets,
    with existing superduopolies required to divest); CME Comments at
    24-26 (stating that the local radio ownership rules should be
    strengthened); Gilliam Reply at 2-4 (urging the Commission to issue
    a statement supporting viewpoint diversity, and to issue a notice of
    proposed rulemaking to propose specific reductions in the local and
    national ownership limits, and states that until greater ownership
    diversity is achieved, the Commission should refuse to recommend any
    further lessening of the ownership rules); UCC/Black Citizens
    Comments at 5-6 (stating that further relaxation of the radio
    ownership rules is not warranted at this time).

[^130]: CME Comments at 25.

[^131]: ARD Comments at 3-4. ARD also asserts that its members have
    experienced salary ceilings in markets where a few stations have
    market dominance. ARD Comments at 12. Commenters such as ARD and
    Gilliam also argue that radio consolidations have created barriers
    to entry for minorities. ARD cites the decline in minority ownership
    from 3.1% to 2.8%, since passage of the Telecom Act. ARD Comments at
    3. Other commenters, however, disagree. Connoisseur comments at 7-8;
    Elyria-Lorain comments at 23-24; Freedom of Expression Foundation
    comments at 7-8; West Virginia comments at 25 (stating that \"while
    it may be true that the number of radio stations owned by minorities
    declined between 1995 and 1997, there is nothing to suggest that
    opportunities for minorities to acquire stations that might
    otherwise have existed were eliminated as a result of consolidation
    acquisitions\").

[^132]: CME Comments at 22-24; AFTRA also argues that such consolidation
    and economies of scale are inherently adverse to the public interest
    because they tend to homogenize news programming. AFTRA Comments at
    11.

[^133]: Greater Media, Inc. and Press Communications LLC Joint Comments
    at 5.

[^134]: ABC Comments at 28; Connoisseur Comments at 7; Cumulus Comments
    at 25; Elyria-Lorain Comments at 23; Freedom of Expression
    Foundation Comments at 7; West Virginia Comments at 24.

[^135]: CBS Comments at 35, 37, 38 and 42. Cf. Fuller-Jeffrey Comments
    at 4-5 (arguing that radio is at most a minor player in advertising
    industry).

[^136]: NAB Reply Comments at 9.

[^137]: Cumulus Comments at 20-21.

[^138]: A.H. Belo Comments at 9 and 10. CBS Comments at 43.

[^139]: Air Virginia Comments at 9 and Greater Media, Inc. and Press
    Communications, LLC. Joint Comments at 4-5.

[^140]: Americans for Radio Diversity Comments at 5.

[^141]: Gross Communications Corporation Comment at 9-10.

[^142]: John W. Barger Comments at 1-2.

[^143]: CBS Reply Comments at 8.

[^144]: ABC Comments at 29.

[^145]: Cumulus Reply Comments at 5-6.

[^146]: There are approximately 270 Arbitron radio markets. Revenue
    estimates are derived from BIA Database (November 1999).

[^147]: [United States of America v. Jacor Communications, Inc. and
    Citicasters, Inc.]{.underline} (C-1-96-757) (S.D. Ohio, Aug. 5,
    1996), Competitive Impact Statement at 4-5.

[^148]: [TV Ownership Order]{.underline}, [supra]{.underline} at 12919,
    citing Robert K. Ekelund, George S. Ford, and John D. Jackson, "Is
    Radio Advertising a Distrinct Local Market? An Empirical Analysis,"
    [14 Review of Industrial Organization]{.underline}, 239-256 (May
    1999).

[^149]: Fuller-Jeffrey Broadcasting Companies, Inc., Comments at 2-3.

[^150]: NAB Reply Comments at 4-6 and 8.

[^151]: Air Virginia Comments at 2-4.

[^152]: Americans for Radio Diversity Comments at 2-3.

[^153]: Center for Media Education Comments at 22-24.

[^154]: [Id]{.underline}. at 23.

[^155]: [Id]{.underline}. at 23-24.

[^156]: [Memorandum Opinion and Order and Further Notice of Proposed
    Rule Making]{.underline} in MM Docket No. 91-140, 7 FCC Rcd 6387
    (1992).

[^157]: [Order, In the Matter of Implementation of Sections 202(a) and
    202(b)(1) of the Telecommunications Act of 1996 (Broadcast Radio
    Ownership)]{.underline}, 11 FCC Rcd 12368, 12370 (1996).

[^158]: A transaction may create more than one radio market.

[^159]: [Memorandum Opinion and Order and Further Notice of Proposed
    Rule Making]{.underline} in MM Docket No. 91-140,
    [supra]{.underline} at 6395. Under our rules, a radio market is
    created by a proposed transaction. In addition, our rules define a
    market as a geographic area. The particular geographic area(s)
    created by proposed transactions often differs from the economic and
    business conception of the relevant geographic market.

[^160]: This example assumes that stations A and D are same-service
    stations, and that at least one other station, B or C, is also in
    the same service as station A. *See* 47 CFR §
    73.3555(a)(2)("\[o\]verlap between two stations in different
    services is permissible if neither of those two stations overlaps a
    third station in the same service").

[^161]:
    ###  For example, in a recent case in Wichita, Kansas, a 24-station market according to the commercial Arbitron rating service, the contour overlap approach counted 52 radio stations in the market, including several Oklahoma stations whose signals did not even reach Kansas.  {#for-example-in-a-recent-case-in-wichita-kansas-a-24-station-market-according-to-the-commercial-arbitron-rating-service-the-contour-overlap-approach-counted-52-radio-stations-in-the-market-including-several-oklahoma-stations-whose-signals-did-not-even-reach-kansas. .unnumbered}

[^162]: *See* [TV Ownership Order]{.underline}, [supra]{.underline} at
    12926.

[^163]: *See* [In re Application of Pine Bluff Radio, Inc]{.underline}.,
    14 FCC Rcd 6594 (1999). In [Pine Bluff]{.underline}, a station that
    was logically in a market in terms of listenership and advertiser
    support, and, in fact, was counted for purposes of determining the
    total number of stations in that market was not counted against a
    party's ownership cap in that market because its principal city
    contour did not overlap the principal community contours of all
    stations that defined the market. In the 1996 Act, Congress provided
    that in markets with 14 or fewer commercial radio stations a party
    may own up to five commercial radio stations, but "may not own,
    operate, or control more than 50 percent of the stations in such
    market." (*See* Section 202(b)(1)(D) of the Telecommunications Act
    of 1996.) Yet, in [Pine Bluff]{.underline}, application of our
    established policies led to one party owning three stations in what
    could reasonably be considered a four-station market. In [Pine
    Bluff]{.underline} we recognized that this may appear to be an
    anomalous result but pointed out that it was produced by a
    methodology that had been consistently utilized since 1992 and that
    subsequent events in the market had rendered harmless the impact of
    this anomaly in that case.

[^164]: ^ ?^ 1996 Act, Section 202(b)(1)(D) (emphasis added).

[^165]: A \"network\" is defined with reference to 47 C.F.R. §
    73.3613(a)(1) for this purpose. As of the date the Telecom Act was
    enacted, those networks were NBC, CBS, ABC and Fox.

[^166]: S. Rep. No. 230, 104th Cong., 2d Sess. at 163.

[^167]: 6 FR at 2282 (Tuesday, May 6, 1941).

[^168]: [Id]{.underline}. The dual network rule did not apply if the
    networks were not operated simultaneously or if there was no
    substantial overlap in the territories served by each network. The
    rule was directed at NBC, the only company then with two radio
    networks. The Commission found that operation of the \"Red\" and
    \"Blue\" networks gave NBC excessive control over its affiliates
    because their contracts did not specify whether a station was part
    of the \"Red\" or \"Blue\" Network. Further, the Commission
    concluded that operation of two networks gave NBC an unfair
    competitive advantage over other networks and protected it against
    future competition. Commission Order No. 37, [Report on Chain
    Broadcasting]{.underline} at 70-73. The Commission indefinitely
    suspended the rule in 1941 noting that voluntary separation of the
    Red and Blue networks would soon occur. FCC, Supplemental Report on
    Chain Broadcasting 14 (1941). After NBC sold its Blue network in
    1943, the prohibition was readopted. 8 Fed. Reg. 16,005 (1943).

[^169]: [Amendment of Part 3 of the Commission\'s Rules]{.underline}, 11
    FR 33 (Jan. 1, 1946).

[^170]: [Notice of Proposed Rule Making]{.underline}, 10 FCC Rcd 11951,
    11967 (1995).

[^171]: [Order]{.underline}, 11 FCC Rcd 12374 (1996).

[^172]: ABC Comments at 25, CBS Comments at 18-19, Paxson Reply Comments
    at 26-27, WB Reply Comments at 13-14.

[^173]: ABC Comments at 25, CBS Comments at 19, Paxson Reply Comments at
    25.

[^174]: ABC Comments at 25, CBS Comments at 19-20.

[^175]: CBS Comments at 23-28, Paxson Reply Comments at 27, WB Reply
    Comments at 13-14.

[^176]: CBS Comments at 26-28.

[^177]: ABC Comments at 25-26.

[^178]: Paxson Reply Comments at 27, WB Reply Comments at 13.

[^179]: CBS Comments at 21-22, Paxson Reply Comments at 25, WB Reply
    Comments at 14.

[^180]: CBS Comments at 23.

[^181]: [Id]{.underline}.

[^182]: Section 202(e) of the 1996 Act directed the Commission to adopt
    the current dual network. However, it did not preclude us from later
    changing it. Indeed, Section 202(h) of the 1996 Act directs the
    Commission to review the rules it adopted pursuant to Section 202 in
    its biennial reviews and to change them if they are determined no
    longer to be in the public interest.

[^183]: 47 C.F.R. § 73.3555(d).

[^184]: 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
    and Order in Docket 18110]{.underline}, 50 FCC 2d 1046 (1975),
    recon. 53 FCC 2d 589 (1975), [aff\'d sub nom.]{.underline} [FCC v.
    National Citizens Committee for Broadcasting]{.underline}, 436 U.S.
    775 (1978).

[^185]: 50 FCC 2d at 1074.

[^186]: [Id]{.underline}. at 1074.

[^187]: [Id]{.underline}. at 1079-1080.

[^188]: [Id]{.underline}. at 1075.

[^189]: The circumstances are: (1) where there is an inability to
    dispose of an interest in order to conform to the rules; (2) where
    the only sale possible is at an artificially depressed price; (3)
    where separate ownership and operation of the newspaper and the
    station cannot be supported in the locality; and (4) where, for
    whatever reason, the purposes of the rule would be disserved by
    divestiture. 50 FCC 2d at 1085.

[^190]: [Fox Television Stations Inc.]{.underline}, 8 FCC Rcd 5341, 5349
    (1993); [aff\'d sub nom.]{.underline} [Metropolitan Council of NAACP
    Branches v. FCC]{.underline}, 46 F.3d 1154 (D.C. Cir. 1995); [Field
    Communications Corp.]{.underline}, 65 FCC 2d 959 (1977); [Columbia
    Montour Broadcasting Co., Inc]{.underline}., 13 FCC Rcd 13007
    (1998).

[^191]: [FCC v. National Citizens Committee for
    Broadcasting]{.underline}, [supra]{.underline}.

[^192]: [Id]{.underline}. at 795.

[^193]: [Id]{.underline}. at 796.

[^194]: [Id]{.underline}. at 796-97, [citing]{.underline} 181
    U.S.App.D.C. at 24, 555 F.2d at 961.

[^195]: [Id]{.underline}. at 797, [citing]{.underline} [Second Report
    and Order in Docket 18110]{.underline}, 50 FCC 2d 1046, 1079-80
    (1975).

[^196]: [Id]{.underline}. at 802 n.20.

[^197]: [See, e.g.,]{.underline} Department of Justice and Related
    Agencies, Appropriations Act, 1993, Pub. L. No. 102-395, 106 Stat.
    1828 (1992). These appropriations restrictions on eliminating the
    rule were continued in effect through subsequent appropriations
    legislation and continuing resolutions that funded the agency until
    April 26, 1996, when a budget was enacted. [See]{.underline} Omnibus
    Consolidated Rescissions and Appropriations Act of 1996, Pub. L. No.
    104-134, 110 Stat. 1321 (1996).

[^198]: Departments of Commerce, Justice, and State, the Judiciary, and
    Related Agencies Appropriations Act, 1994, Pub. L. No. 103-121, 107
    Stat. 1153, 1167 (1993).

[^199]: Omnibus Consolidated Rescission and Appropriations Act of 1996,
    Pub. L. 104-134, 110 Stat. 1321 (1996).

[^200]: 141 Cong. Rec. E-1571 (August 1, 1995).

[^201]: [Capital Cities/ABC, Inc]{.underline}., 11 FCC Rcd 5841 (1996).

[^202]: [Notice of Inquiry]{.underline} in MM Docket No. 96-197, 11 FCC
    Rcd 13003 (1996).

[^203]: [NOI]{.underline}, [supra]{.underline} at 11288. During the
    pendency of the newspaper/radio waiver policy proceeding, the
    Newspaper Association of America filed a petition for rulemaking to
    eliminate the newspaper/broadcast cross-ownership rule.
    [See]{.underline} Newspaper Association of America, Petition for
    Rulemaking in the Matter of Amendment of Section 73.3555 of the
    Commission\'s Rules to Eliminate Restrictions on Newspaper/Broadcast
    Station Cross-Ownership (filed April 27, 1997). In our
    [NOI]{.underline} in the instant proceeding, we stated that we would
    incorporate NAA\'s petition in this proceeding, and invited comment
    on it. [Id]{.underline}. at 11286. Additionally, on August 23, 1999,
    NAA filed an Emergency Petition for Relief. This petition, like
    NAA's prior Petition for Rulemaking, argues in favor of repeal of
    the newspaper/broadcast cross-ownership rule, although in this
    pleading NAA's arguments are based in part on the Commission's
    action in the [TV Ownership Order]{.underline}. As with the
    pleadings filed by Fox and Viacom, [see]{.underline}
    [supra]{.underline} n. 76, this pleading will be treated as a
    late-filed comment and not considered in this proceeding. Rather, we
    will include these comments in the record of the 2000 biennial
    review.

[^204]: [Id]{.underline}. at 11288.

[^205]: [Id]{.underline}. at 11288-89.

[^206]: [Id]{.underline}. at 11288-89.

[^207]: [Id]{.underline}. at 11289-90.

[^208]: [See, e.g.,]{.underline} Lee Enterprises Comments at 3-4; NAA
    Comments at 17.

[^209]: [See, e.g.,]{.underline} ABC Comments at 26-27; ALTV Comments at
    36; Lee Enterprises Comments at 4; NAA Comments at 17; Gregory Sidak
    Comments at 8-11.

[^210]: Elyria/Lorain Comments at 16-17; Freedom of Expression Comments
    at 22-23; Hearst Comments at 31; Gregory Sidak Comments at 45-61;
    Media Institute Comments at 11-13; NAA Comments at 83-84; Tribune
    Comments at 14-15; West Virginia Radio Comments at 14 (all First
    Amendment grounds). [See also]{.underline} Cox/Media General
    Comments at 25-29 (equal protection grounds).

[^211]: A.H. Belo Comments at 11-13; Chronicle Comments at 16; Chronicle
    Reply Comments at 2. [See also]{.underline} Hearst Reply Comments at
    6-8; Hearst/Argyle Reply Comments at 2-5; NAB Reply Comments at
    9-12. Stated another way, the rule discourages optimal performance
    and stifles new voices. ALTV Reply Comments at 25-26; NAB Comments
    at 9-10 (noting that combinations could save distressed newspapers
    and therefore facilitate diversity); Tribune Comments at 60-65.

[^212]: Chronicle Comments at 25-27; Hearst Reply Comments at 5-6.

[^213]: Hearst Comments at 16-20. [Cf.]{.underline} Lee Enterprises
    Comments at 3-5 (explaining unlikelihood that combination would
    consolidate viewpoints because reporters and viewers would object);
    NAB Comments at 7-8 (observing that most grandfathered combinations
    have kept operations separate because unprofitable to combine);
    Schermer Reply Comments at 1-4 (stating that consumers will obtain
    news from other sources if combination denigrated journalistic
    integrity).

[^214]: Hearst Comments at 18-19; NAA Petition at 36.

[^215]: Elyria/Lorain Comments at 19-20 (Commission should allow
    newspaper/radio combinations if two independent voices would
    remain); Freedom of Expression Comments at 25-26 (two voices);
    Gannett Comments at 38 (thirty voices); West Virginia Radio Comments
    at 21-22 (two voices).

[^216]: CME Comments at 26-28.

[^217]: CME Comments at 26-28; OCC/UCC Comments at 6-7.

[^218]: Independent Free Papers Comments at 2-4.

[^219]: CME Comments at 26-28.

[^220]: Independent Free Papers Comments at 2-4.

[^221]: [­Id]{.underline}. at 3-4.

[^222]: [See, e.g.,]{.underline} CME Comments at 26-28; Independent Free
    Papers Comments at 1. [See also]{.underline} Black Citizens for a
    Fair Media Comments in MM Docket No. 96-197 at 18-19.

[^223]: [Further Notice of Proposed Rule Making in MM Docket Nos. 92-221
    and 87-8]{.underline}, 10 FCC Rcd 3524, 3559 (1995)(hereinafter "[TV
    Further Ownership Notice]{.underline}").

[^224]: 47 U.S.C. §§ 531, 532.

[^225]: [TV Further Ownership Notice]{.underline}, [supra]{.underline}
    at 3557.

[^226]: [Id]{.underline}. at 3555-57. The Commission has distinguished
    broadcast television from radio as having more visual impact and
    serving more people as a primary source of news. [See,
    e.g.,]{.underline} [TV Further Ownership Notice]{.underline},
    [supra]{.underline}. at 3557-3558. Almost 70% of American adults
    surveyed indicated that they use television as their primary source
    of news. The Roper Organization, "America's Watching: Public
    Attitudes Toward Television, 1997," (New York, 1998).

[^227]: Independent Free Papers Comments at 5 (noting that in 1975,
    there were 1,756 daily newspapers in the United States, and in 1997,
    there were 1,520).

[^228]: [See]{.underline} [Fox Television Stations Inc]{.underline}., 8
    FCC Rcd 5341(1993), [aff'd sub nom]{.underline}. [Metropolitan
    Council of NAACP Branches v. FCC]{.underline}, 46 F.3d 1154 (D.C.
    Cir. 1995).

[^229]: National Association of Broadcasters Internet website at:
    http:www.nab.org/irc/Virtual/faqs.asp (citing National Bureau of
    Advertising, "TVB Basics -- Cyber Edition which cites Nielsen Media
    Research).

[^230]: For example, the Washington Post advertises a monthly
    subscription for \$2.65 a week or, approximately, \$10.60 per month,
    while Internet service can be obtained for free (supported by
    advertising) or by monthly subscription for approximately \$15-20.
    DirecTV can cost from approximately \$20 per month to over \$80 per
    month, depending on the package of programming ordered.

[^231]: [TV Further Ownership Notice]{.underline}, [supra]{.underline}.
    at 3549-3550. \"Outlet\" diversity refers to \"a variety of delivery
    services ([e.g.]{.underline}, broadcast stations) that select and
    present programming directly to the public\"; \"source\" diversity
    refers to \"a variety of program producers and owners.\" 10 FCC Rcd.
    at 3549-3550.

[^232]: [Id]{.underline}. at 3550-3551.

[^233]: 50 FCC 2d at 1079-1080.

[^234]: [Stockholders of Renaissance Communications
    Corporation]{.underline}, 13 FCC Rcd 4717 (1998).

[^235]: [Id]{.underline}. at 4718.

[^236]: We note particularly the withdrawal of the waiver opponent's
    opposition to the joint operation as long as Tribune continues to
    operate the newspaper and television station separately and the fact
    that we have found the joint operation does not so compromise our
    diversity and competition interests as to outweigh the substantial
    equitable considerations favoring the grant of an interim waiver.

[^237]: 47 CFR § 76.501(a).

[^238]: Amendment of Part 74, Subpart K, of the Commission\'s Rules and
    Regulations Relative to Community Antenna Television Systems, and
    Inquiry into the Development of Communications Technology and
    Services to Formulate Regulatory Policy and Rulemaking and/or
    Legislative Proposals, Docket No. 18397, [Second Report and
    Order]{.underline}, 23 FCC 2d 816 (1970), [recon]{.underline}., 39
    FCC 2d 377 (1973).

[^239]: [Second Report and Order]{.underline}, [supra]{.underline}. at
    819-820.

[^240]: [Id]{.underline}. at 820.

[^241]: [Id]{.underline}. at 821.

[^242]: Amendment of Part 74, Subpart K, of the Commission\'s Rules and
    Regulations Relative to Community Antenna Television Systems; and
    Inquiry into the Development of Communications Technology and
    Services to Formulate Regulatory Policy and Rulemaking and/or
    Legislative Proposals, [Memorandum Opinion and Order]{.underline},
    39 FCC 2d 377, 391 (1973).

[^243]: Pub. L. No. 98-549, 98 Stat 2779 (1984).

[^244]: Section 613(a)(1) stated: \"It shall be unlawful for any person
    to be a cable operator if such person, directly or through 1 or more
    affiliates, owns or controls, the licensee of a television broadcast
    station and the predicted grade B contour of such station covers any
    portion of the community served by such operator\'s cable system.\"
    The Commission found no need to modify Section 76.501(a) of its
    Rules as a result of this codification. [Report and
    Order]{.underline} in MM Docket No. 84-1296, 58 RR 2d 1, 14 (1985).

[^245]: 47 USC § 533(a)(1).

[^246]: H.R. Conf. Rep. No. 458, 104th Cong., 2d Sess. 165 (1996).

[^247]: We defined this power in this context as the ability of the
    cable/television combination to artificially restrict the price paid
    for programming. [NOI]{.underline}, [supra]{.underline} at 11292-93.

[^248]: The seven commenters are ABC, ALTV, CME, NASA, NAB, OCC/UCC, and
    Univision.

[^249]: The five commenters are Ameritech, NBC, NCTA, Time Warner, and
    Warner Brothers.

[^250]: [See, e.g.,]{.underline} NCTA Comments at 5-12.

[^251]: [See, e.g.,]{.underline} Time Warner Comments at 6-7; Time
    Warner Reply Comments at 7.

[^252]: NCTA Comments at 5-6.

[^253]: [Id]{.underline}. at 8.

[^254]: [Id]{.underline}. at 10; Time Warner Comments at 18. [See
    also]{.underline} NBC Comments at 17-18 (contending that rule was
    motivated by concern that cable operator might not carry programming
    of non-affiliated broadcast station, but must-carry rules address
    this and have been affirmed by Supreme Court).

[^255]: NCTA Comments at 12-13; Time Warner Comments at 16.

[^256]: NCTA Reply Comments at 8.

[^257]: Ameritech Comments at 23; Warner Brothers Reply Comments at 4,
    8. Additionally, we note that on January 27, 2000, the WB Television
    Network filed "Supplemental Comments" and a "Request for Leave to
    File." The Supplemental Comments argued for elimination of cable/TV
    cross-ownership rule. We will treat this filing in accord with our
    treatment of the late-filed Fox and Viacom comments, as set forth
    above.

[^258]: ABC Comments at 29-30; NAB Comments at 15; NAB Comments at 15;
    NASA Comments at 15.

[^259]: NASA Comments at 18.

[^260]: ALTV Comments at 38; NASA Comments at 18-20; OCC/UCC Comments at
    8; Univision Comments at 6-14.

[^261]: NASA Comments at 19.

[^262]: CME Comments at 28-29; NASA Comments at 16; OCC/UCC Comments at
    8. CME also contends that a cable/TV combination would have an
    incentive to discontinue the programming of local news altogether on
    the cable system in order to avoid competition with its broadcast
    affiliate. CME Comments at 28-29.

[^263]: As discussed below, the record was unclear on whether the rule
    continues to serve the public interest as a result of competition in
    the advertising and program production markets.

[^264]: 13 FCC Rcd. at 18.

[^265]: [Sixth Cable Report]{.underline}, [supra]{.underline} at 1044.

[^266]: ALTV Comments at 38; NAB Comments at 16; Univision Comments at
    8-9.

[^267]: ALTV Comments at 38; NASA Comments at 18; UCC Comments at 8;
    Univision Comments at 10-11, 14.

[^268]: ALTV Comments at 38; NASA Comments at 18; Univision Comments at
    12.

[^269]: 47 U.S.C. § 614(b)(6).

[^270]: Univision reports that the controversy remains protracted
    because although the Cable Services Bureau recently resolved the
    controversy in Univision\'s favor, the cable system has filed a
    petition for review by the full Commission. Univision Comments at
    10-11. In its *Order on Reconsideration* (*see* *WXTV License
    Partnership, G.P.*, 15 FCC Rcd 3308 (2000)), the Commission granted
    reconsideration as to four of the twenty-one cable systems involved
    but agreed with the Cable Services Bureau that channel positioning
    violations had occurred with regard to the other seventeen cable
    systems and that a forfeiture proceeding should commence. A *Notice
    of Apparent Liability* for \$127,500 was released concurrently with
    the *Order on Reconsideration (Notice of Apparent Liability*,
    *Cablevision Systems Corporation,* 15 FCC Rcd 3269 (2000)).

[^271]: [Id]{.underline}. at 12-13.

[^272]: [Id]{.underline}. at 14-15.

[^273]: NASA Comments at 19.

[^274]: Univision Comments at 11. NCTA, however, contends that there is
    no evidence that a combined cable/television station operation would
    diminish competition in the local market or that it could skew the
    market in a manner that adversely affects advertising rates. NCTA
    Comments at 7.

[^275]: [Notice of Proposed Rule Making]{.underline} in CS Docket No.
    98-120, 13 FCC Rcd 15092 (1998).

[^276]: ALTV Comments at 39.

[^277]: [TV Further Ownership Notice]{.underline}, [supra]{.underline}.
    at 3556-3557.

[^278]: [Id]{.underline}. at 3557.

[^279]: [TV Ownership Order]{.underline}, [supra]{.underline} at
    12917-18.

[^280]: [TV Further Ownership Notice]{.underline}, 10 FCC Rcd at
    3557-3558.

[^281]: [Id]{.underline}. at 3555 (citing The Roper Organization,
    \"America\'s Watching: Public Attitudes Towards Television, 1997\"
    (New York, 1997)).

[^282]: In the [TV Ownership Order]{.underline} we concluded that cable
    would not count as an independent local voice for the duopoly rule
    because there was an absence of factual data in the record
    indicating that cable is a substitute for broadcast television. [TV
    Ownership Order]{.underline}, [supra]{.underline} at 12935.

[^283]: [See, e.g.,]{.underline} NCTA Comments at 12-14.

[^284]: NCTA Comments at 13-14.

[^285]: CME Comments at 29.

[^286]: An exception is allowed when a showing is made that the program
    of research requires the licensing of two or more separate stations.

[^287]: NAB Comments at 16.

[^288]: [Id]{.underline}. at 16.

[^289]: The early history of the Federal Radio Commission and, later,
    the Federal Communications Commission with regard to commercial use
    of experimental stations demonstrates an ambivalence with regard to
    such use of these stations. The FRC initially permitted commercial
    use but, in 1933, prohibited any further commercial use of such
    stations. The FCC also initially prohibited their commercial use,
    then, in 1935, permitted some commercial use, and, still later
    (1936) again prohibited their commercial use. Rules for experimental
    stations adopted in the late 1930s, were intended to prevent
    commercial operations from predominating and interfering with
    experimentation. Our current rules prohibit the licensee of an
    experimental broadcast station from making charges or asking for
    payment, directly or indirectly, for the production or transmission
    of any programming or information used for experimental broadcast
    purposes. ([See]{.underline} 47 CFR § 74.182.)

[^290]: [See]{.underline} n. 210, [supra]{.underline}.

[^291]: Cox/Media General Comments at 25-29.

[^292]: CBS Comments at 21-22; Paxson Reply Comments at 25; WB Reply
    Comments at 14.

[^293]: [FCC v. National Citizens Committee for
    Broadcasting]{.underline}, 436 U.S. 775 (1978).

[^294]: [Turner II]{.underline}, 520 U.S. at 189, [citing]{.underline}
    [U.S. v. O'Brien]{.underline}, 391 U.S. 367, 377 (1968).

[^295]: [Turner I]{.underline}, 512 U.S. at 663; [Turner
    II]{.underline}, 520 U.S. at 190.

[^296]: [Central State University v. American Association of University
    Professors, Central State University]{.underline}, (*per curiam*),
    526 U.S. 124. 119 S.Ct. 1162, 1163 (1999), [citing]{.underline}
    [Heller v. Doe]{.underline}, 509 U.S. 312, 319-321, (1993), [FCC v.
    Beach Communications, Inc]{.underline}., 508 U.S. 307, 313-314
    (1993), [Nordlinger v. Hahn]{.underline}, 505 U.S. 1, 11 (1992). We
    do not concede that a fundamental right is involved in the instant
    matter. It is well established that there is no unabridgeable First
    Amendment right to a broadcast license. [See, e.g]{.underline}.,
    [FCC v. National Citizens Committee for Broadcasting]{.underline},
    436 U.S. 775, 798-802 (1978); [Columbia Broadcasting System v.
    Democratic National Committee]{.underline}, 412 U.S. 94, 101 (1973);
    [United States v. Weiner]{.underline}, 701 F.Supp. 14 (U.S.D.C.
    Mass., 1988).

[^297]: [Turner I]{.underline}, 512 U.S. at 663; [Turner
    II]{.underline}, 520 U.S. at 190.

[^298]: These are: the dual network rule and the limitation on the
    multiple ownership of experimental broadcast stations. We will also
    adopt a *Notice* to explore the manner in which we define radio
    markets and determine both the number of stations in a radio market
    and the number of radio stations owned by a party in such a market.

[^299]: *See Associated Press v. United States* 326 U.S. 1, 10
    (1945)(noting that 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").

[^300]: BIA Master Access Database, adjusted to include completed (not
    pending) mergers and attributing ownership of LMAs to owners
    entering into the LMA rather than to the station licensee.

[^301]: *Id.*

[^302]: The modern economics literature on program choice carefully
    examines the special circumstances where *fewer* broadcasters *may*
    broaden the variety of programming. For example, a monopoly
    television station that is totally advertiser-supported will tend to
    avoid duplicated programs and may provide a wider range of program
    types compared to a market with multiple, competing stations. For a
    survey, see Bruce M. Owen and Steven S. Wildman, *Video Economics*
    (Cambridge, Mass.: Harvard University Press, 1992), Chapters 3 and
    4.

[^303]: The notion that program diversity and viewpoint diversity are
    essentially the same would turn 50 years of policymaking on its
    head. For example, more than twenty years ago, the Supreme Court
    upheld the Commission's prohibition of cross-ownership on the basis
    that one could not expect viewpoint diversity from commonly-owned
    entities to mirror that from antagonistically run entities. *FCC v.
    National Citizens Committee for Broadcasting* 436 U.S. 775, 797
    (1978).

[^304]: I also support our decision to retain the national television
    ownership rule and the cable/television cross-ownership rule.
    Contrary to the suggestion of the dissenting Commissioners, there is
    nothing procedurally inappropriate in making revisions, substantive
    or non-substantive, to the biennial review report after adoption in
    order to further elucidate the rationale for the decision to retain
    the national ownership rule. Such revisions are permissible when all
    non-dissenting Commissioners concur in the revisions. **Here, all
    the Commissioners who supported the relevant sections agreed to the
    post-adoption edits.** Post-adoption edits are not uncommon**.**
    Furthermore, the Commission made the determination required by
    Section 202(h) of the Telecom Act by the statutory deadline, and the
    post-adoption edits did not alter that determination.

[^305]: Pub. L. No. 104-104, 110 Stat. 56 (1996). *See* Order, In the
    Matter of Implementation of Sections 202(a) and 202(b)(1) of the
    Telecommunications Act of 1996, 11 FCC Rcd 12368, 12370 (1996).

[^306]: 47 C.F.R. § 73.3555(d) (the "rule").

[^307]: Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat.
    56, § 202(h) (1996).

[^308]: *Multiple Ownership of Standard, FM and Television Broadcast
    Stations, Second Report and Order*, 50 F.C.C.2d 1046, 1048 (1975),
    *aff'd sub nom.* *FCC* v. *National Citizens Committee for
    Broadcasting*, 436 U.S. 775 (1978).

[^309]: *Associated Press* v. *United States*[,]{.underline} 326 U.S. 1,
    20 (1945).

[^310]: *See, e.g.,* *Second Report and Order*, 50 F.C.C.2d at 1065.

[^311]: *Further Notice of Proposed Rule Making in Television
    Ownership*, 10 FCC Rcd. 3524, 3555-57 (1995).

[^312]: *See, e.g.*, Elyria/Lorain Comments at 19-20; Freedom of
    Expression Comments at 25-26; Gannett Comments at 38; West Virginia
    Radio Comments at 21-22; Newspaper Association of America, Emergency
    Petition, August 23, 1999.

[^313]: Specifically, I do not believe, for the reasons persuasively
    given by Commissioner Powell, that the Commission has carried its
    burden of showing that competition has not eroded the very
    foundation of the newspaper/broadcast rule. I thus cannot sign on to
    the Commission's "general conclusion that the rule should be
    retained." *Report* at para. 95.

[^314]: I agree, however, that the experimental license limit should be
    eliminated. I also concur in the decision to cut back on the reach
    of the dual network rule, but I would have gone further and asked
    whether the rule remains necessary at all. Finally, I concur in the
    rulemaking on the radio rules for the limited purpose of
    rationalizing our arguably arbitrary and capricious methodology of
    counting radio stations of section 202(h); my purpose is not, as the
    Report unfortunately suggests, to cut back by rulemaking on the
    concentration levels that Congress expressly set.

[^315]: *See*
    [www.fcc.gov/Bureaus/Mass_Media/News_Releases/](http://www.fcc.gov/Bureaus/Mass_Media/News_Releases/)2000/nrmm0028.htm
    (describing Report as "\[a\]ction by the Commission, May 26, 2000").
    Although the press release certainly does not represent a formal
    decision of the Commission, it does faithfully summarize the
    relevant content of the Report that was before the Commissioners at
    the time we cast our votes:

    > The Commission determined to retain the 35% aggregate national
    > television audience reach of a television group. It said the
    > effects of recent FCC changes to the local television \"duopoly\"
    > rule should be observed and assessed before making any alteration
    > to the national limit. It also said the trend, since the cap was
    > increased to 35% in 1996, of many group owners acquiring large
    > numbers of stations nationwide needs further observation before
    > making any changes in the cap.

    *Id.* at para. 10. This reasoning is based solely on the "wait and
    see" argument. Our press office, of course, had no way of knowing
    that the voted and adopted document from which it was working would
    change so substantially as to render its release inaccurate.

[^316]: *See* 20 Comm. Daily 105 (May 31, 2000), 2000 WL 4695422 ("Fox
    TV immediately said it will challenge national ownership cap in
    federal court. . . . Fox said it will appeal as soon as FCC issues
    final decision.").

[^317]: Section 5003, Pub. L. 106-113 Stat. 1501 (1999).

[^318]: *See* 5 U.S.C. section 706 (under the Administrative Procedure
    Act, "a reviewing court shall. . . hold unlawful and set aside
    agency action, findings or conclusions found to be . . . without
    observance of procedure required by law").

[^319]: This filing phenomenon (or the lack of one) is probably
    explained by the fact that the changes in the ownership rules were
    actually quite marginal and, in any event, the market had already
    ordered itself fairly efficiently under the Commission's previously
    liberal waiver process.

[^320]: The total number of broadcasters increased by more than 50%
    between 1975 and 1990, and independent broadcast stations increased
    by more than 400%. *See Broadcast Television in a Multichannel
    Marketplace*, FCC Office of Plans and Policy Working Paper No. 26, 6
    FCC Rcd 3996, 4011(1991); *see also* Michael L. Katz, *Old Rules and
    New Rivals: An Examination of Broadcast Television Regulation and
    Competition*, at 34 (Sept. 1999) (attachment to comments of Fox) (in
    1946 there were only six authorized television stations, and today
    there are over 1,200 such stations). During that period, the number
    of over-the-air broadcast stations available to the median household
    increased from six to ten stations. *See* FCC Working Paper, 6 FCC
    Rcd at 4011; *see also Assessment of the Status of Competition in
    Markets for the Delivery of Video Programming*, 13 FCC Rcd 1034,
    1090 (1998); Katz Paper at 39 ("In 1979, only 33 markets had seven
    or more television stations. Today, 114 markets -- more than half of
    all television markets -- have seven or more television stations.").

[^321]: Amendments of §§ 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 and Order in
    Docket 18110*, 50 FCC 2d 1046 (1975), *recon.,* 53 FCC 2d 589
    (1975), *aff'd sub nom. FCC v. National Citizens Committee for
    Broadcasting*, 436 U.S. 775 (1978).

[^322]: Amendment of Part 74, Subpart K, of the Commission's Rules and
    Regulations Relative to Community Antenna Television Systems, and
    Inquiry into the Development of Communications Technology and
    Services to Formulate Regulatory Policy and Rulemaking and/or
    Legislative Proposals, Docket No. 18397, *Second Report and Order*,
    23 FCC 2d 816 (1970), *recon.*, 39 FCC 2d 377 (1973).

[^323]: Telecommunications Act of 1996, Pub. L. No. 104, 110 Stat. 56
    (1996).

[^324]: This is the opening line of the television series *The Lone
    Ranger* which ran from 1949 to 1950, 1954-56. *See
    \<*<http://www.geocities.com/TelevisionCity/7286>\>.

[^325]: *See* Warren Publishing, Inc., Television & Cable Factbook:
    Services Volume No. 68, 2000 Ed., at I-45.

[^326]: According to the FCC\'s most recent broadcast station
    tabulation, there were 1,616 television stations (VHF, UHF, and
    educational) licensed on September 30, 2000. *See* Station Totals
    prepared by Mass Media Bureau, Audio Services Division (rel. Nov.
    22, 1999) at \<http://www.fcc.gov/mmb/asd/totals/bt990930.html\>.

[^327]: According to the FCC\'s sixth annual report on the competitive
    status of markets for the delivery of video programming, a total of
    80.9 million households subscribed to multichannel video programming
    services (i.e., cable and noncable MVPDs) as of June 1999, up 5.5%
    over the 76.6 million households subscribing to MVPDs in June 1998.
    This subscriber growth translates into a 3.2 percentage point
    increase in multichannel video programming subscribership to 81.4%
    as of June 1999, *i.e*., 99.4 million U.S. homes with at least one
    television divided by 80.9 million households subscribed to
    multichannel video programming services. *See* Annual Assessment of
    the Status of Competition in Markets for the Delivery of Video
    Programming, CS Docket No. 99-230, Sixth Annual Report \["*1999
    Report*"\], 15 FCC Rcd 978, ¶¶ 6, 19 (2000).

[^328]: The *1999 Report* noted 98.6% of all cable customers subscribed
    to systems with capacities of 30 channels or more, and 64.2% of all
    subscribers were served by systems with capacities of 54 or more
    channels in October 1999. *Id*, ¶ 23. In addition, 4.8% of all
    subscribers are reportedly served by systems with capacities of 91
    or more channels. *Id.*

[^329]: The 1999 Report noted DBS operators DirecTV and EchoStar offer
    up to 350 channels of video programming and serve more than ten
    million subscribers. Id., ¶ 69.

[^330]: It is currently estimated that roughly 50 percent of American
    homes possess a personal computer and nearly 50 percent have
    Internet access. *See, e.g.,* Consumer Electronics Manufacturer
    Association, U.S. *Consumer Electronic Industry Today*, 1999 Ed., at
    5 (\"Computers now are in almost half of all American households, 45
    percent, and some 60 percent of those homes have two machines in
    use.\"); Christine Doherty, *Online Market Is Hotting Up*, Sunday
    Business Post, May 14, 2000 (currently \"49 percent of Americans
    enjoy internet access from their homes\"); Business Wire*,
    Internet-Connected Households Soar to 60 Percent in 2000*, Mar. 28,
    2000 (consultancy notes \"majority of U.S. household, approximately
    60 percent, will have personal Internet access in the year 2000\").

[^331]: The 1999 Report noted a total of 171 basic, premium and
    pay-per-view cable networks. See 1999 Report, supra inote 6, ¶ 25.

[^332]: Michael L. Katz, *Old Rules and New Rivals: An Examination of
    Broadcast Television Regulation and Competition* ("*Old Rules and
    New Rivals*"), Sept. 1999.

[^333]: *Id.* at 11 (citing Paul Kagan Associates, *The Economics of TV
    programming and Syndication,* 1999 at 21-22).

[^334]: I would add that I have always questioned why the FCC should
    concern itself with advertising rates. We do not regulate
    advertising and the price impacts there do not have a secondary
    effect on viewers in a manner cognizable by the Communications Act.
    The antitrust statutes adequately address advertising concerns as
    they do generally for all markets.

[^335]: *1999 Report*, *supra.* Note 6, ¶¶ 19-20

[^336]: *Id.* ¶ 15.

[^337]: See id. ¶ 26. See also Kyle Pope, Network Makes \$850 Million
    Deal with Warner Bros., Wall St. J., Jan. 15, 1998, at B1 (NBC
    strikes \"a record \$850 million deal to keep the nation\'s
    top-rated show, ER); Peter Kaplan, NBC Pays Top Dollar to Keep No.
    1-Rated \"ER\" on Board, Wash. Times, Jan. 15, 1998, at B6 (same);
    Brian Lowry, NBC\'s Prescription for Success: Keep \"ER\" TV, L.A.
    Times, Jan. 15, 1998, at A1 (same).

[^338]: See, e.g., NFL Buyers, Sellers Could Butt Heads on Rates,
    Multichannel News, Jan. 26, 1998, at 28 (\"Fox Broadcasting, ABC,
    CBS and ESPN will shell out a combined \$17.6 billion across eight
    \[NFL\] seasons.\"); John M. Higgins, Cable Operators Blast ESPN for
    NFL Megabid, Broadcasting & Cable, Jan. 19, 1998, at 10 (Of \$17.6
    billion total, ESPN \"agreed to pay \$600 million per season for 18
    Sunday night games\"); MSOs Await Bill as ESPN Grabs NFL,
    Multichannel News, Jan. 19, 1998, at 1 (same).

[^339]: See Disney Offer Would Triple NHL\'s Current TV Deal, Palm Beach
    Post, Aug. 6, 1998, at 8C (Walt Disney Co. offered \"to pay the
    \[NHL\] almost \$600 million for exclusive U.S. broadcast rights for
    five years\". . .the deal \"would triple the amount Fox Sport and
    ESPN \[paid\] the league\" under the prior deal).

[^340]: Source diversity refers to "promoting a variety of program or
    information producers and owners." *In the matter of 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,* Notice of Inquiry, MM Docket 98-35,
    rel. Mar. 13, 1998, ¶ 6.

[^341]: Apparently, \"beauty is in the eye of the beholder\" is a
    misinterpretation of the following aphorism by Plato:

    > \"Remember how in that communion only, beholding beauty with the
    > eye of the mind, he will be enabled to bring forth, not images of
    > beauty, but realities (for he has hold not of an image but of a
    > reality), and bringing forth and nourishing true virtue to become
    > the friend of God and be immortal, if mortal man may.\"

    See Quoteland.com
    \<[http://www.quoteland.com](http://quoteland.com/)\>.

[^342]: *See United States v. Playboy Entertainment Group, Inc*., 529
    U.S. \_\_\_, 2000 WL 646196, at \*13 (2000) (Asserting that the
    Constitution exists to grant the people, rather than the Government,
    the ability to evaluate moral, artistic, and intellectual content.)

[^343]: Bear, Stearns & Co., Inc., Byte Fight!: Cable TV & Broadband
    Report (rel. Apr. 2000), at 59 (With hybrid fiber optic-coaxial
    upgrade, \"\[a\] cable operator with 750 MHz system can ultimately
    offer the equivalent of 240 channels (both analog and digital) while
    having 50 MHz, or the equivalent of 80-100 digital channels held in
    reserve.\" With eventual digitalization of cable plant, operator
    \"will be able to offer the *equivalent of 1,100-1,600 digital
    channels*\") (emphasis added).

[^344]: "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 . . .'" *Order*
    (quoting *Associated Press v. U.S.*, 326 U.S. 1, 20 (1945)).

[^345]: One example is the "right to reject rule." *See generally,* 47
    C.F.R. § 73.658.

[^346]: *See Playboy*, 2000 WL 646196, at \*13 (Stating that \"these
    judgments are for the individual to make, not for the Government to
    decree, even with the mandate or approval of the majority.\")

[^347]: I believe the guiding principles articulated in Commissioner
    Furchtgott-Roth's separate statement have merit.

[^348]: *See* *Old Rules and New Rivals*, *supra* note 11.

[^349]: *Review of the Commission's Regulations Governing Television
    Broadcasting; Television Satellite Stations Review of Policies and
    Rules*, 14 FCC Rcd 12903 (1999).

[^350]: The *Order* finds that applications for duopolies under our new
    local television ownership rule were only filed this past November
    and, as a result, they should monitor developments under this new
    rule prior to making any changes to the national television
    ownership reach cap.

[^351]: *See, e.g., Amendment of Multiple Ownership Rules*, 100 FCC 2d
    17, 37 (1984) (noting irrelevance of national rules to diversity in
    local markets). *See also Old Rules and New Rivals supra* note x, at
    61 *(*discussing Department of Justice opinion in 1983 that
    eliminating the national multiple ownership rules would raise little
    risk of adverse competitive effects in any market).

[^352]: *See Old Rules and New Rivals, supra.,* note 12, at ii-iv.

[^353]: Amendment of Section 73.658(g) of the Commission's Rules -- The
    Dual Network Rule, Notice of Proposed Rulemaking, FCC #00-213,
    Adopted Jun. 8, 2000, Rel. Jun. 20, 2000, at ¶ 12.

[^354]: *Id.*, at ¶ 18.

[^355]: *Id.*, at ¶ 15.

[^356]: CBS is currently at 40 percent audience reach, FOX at 35
    percent, PAX at 34 percent and Tribune at 29 percent. *See* *Special
    Report Top 25 Television Groups*, *Broadcasting and Cable,* Apr. 10,
    2000, at 72-98.

[^357]: *See* Amendment of §§ 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
    and Order in Docket 18110, 50 FCC 2d 1046, 1057-58 (1975).

[^358]: *See*, *e.g.*, *Audio Notes*, Audio Week, Nov. 15, 1999,
    *available in* 1999 WL 7563749 ("CEA Pres. Gary Shapiro . . . said
    CE companies 'have long believed that the ability of DBS subscribers
    to receive local network signals is critical to the success of the
    home satellite market.' "); *Capitol Hill*, Warren's Cable
    Regulation Monitor, Nov. 29, 1999, *available in* 1999 WL 6826333
    (DirecTV and EchoStar planned to provide local broadcast network
    channels to their customers as soon as President Clinton signed SHVA
    into law).

[^359]: "It is a commonplace of statutory construction that the specific
    governs the general*," Morales v. Trans World Airlines,* 504 U.S.
    374, 384-385 (1992) (citing, *Crawford Fitting Co. v. J.T. Gibbons,
    Inc.*, 482 U.S. 437, 445 (1987).

[^360]: Section 5003, Pub. L. 106-113 Stat. 1501 (1999). *See also*
    Dissenting Statement of Commissioner Harold W. Furchtgott-Roth.

[^361]: *See* *Order,¶* 30.

[^362]: The Commission's *Order* at the Appendix indicates that the top
    25 group owners own 527 of the over 1600 television stations
    operating today. The average number of stations owned by the top 25
    group owners is 21. NBC owns 13 stations, ABC owns 10, Fox owns 23
    and the newly merged Viacom/CBS owns 35, but is subject to
    divestiture conditions to come into compliance with the 35% cap.

[^363]: *See* p. 15, *infra.*

[^364]: *See* p. 14*, infra*.

[^365]: *See* Mem. Op. and Order, FCC 00-155 (rel. May 3, 2000) at para.
    10, *citing* 142 Cong. Rec. H1078-03, \*H1121.

[^366]: Joe Schlosser and Steve McClellan, "*Moneyphilia*," Broadcasting
    and Cable, May 22, 2000 at 17.

[^367]: *Id.*