**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+---+------------------------------+
| In the Matter of                 | * | MB Docket No. 06-121         |
|                                  | * |                              |
| 2006 Quadrennial Regulatory      | ) | MB Docket No. 02-277         |
| Review -- Review of the          | * |                              |
| Commission's Broadcast Ownership | * | MM Docket No. 01-235         |
| Rules and Other Rules Adopted    |   |                              |
| Pursuant to Section 202 of the   | * | MM Docket No. 01-317         |
| Telecommunications Act of 1996   | * |                              |
|                                  | ) | MM Docket No. 00-244         |
| 2002 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   | ) |                              |
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| Cross-Ownership of Broadcast     | * |                              |
| Stations and Newspapers          |   |                              |
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| Rules and Policies Concerning    | * |                              |
| Multiple Ownership of Radio      | ) |                              |
| Broadcast Stations in Local      | * |                              |
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+----------------------------------+---+------------------------------+

**FURTHER NOTICE OF PROPOSED RULE MAKING**

**Adopted: June 21, 2006 Released: July 24, 2006**

**Comment Date: September 22, 2006**

**Reply Comment Date: November 21, 2006**

By the Commission: Chairman Martin and Commissioners Tate and McDowell
issuing separate statements; Commissioners Copps and Adelstein
concurring in part, dissenting in part and issuing separate statements.

Table of Contents

Paragraph \#

I. Introduction 1

II\. Discussion 4

A. Local TV Ownership Rule 11

1\. Revisions Adopted in the *2002 Biennial Review Order* 11

2\. Remand Issues 15

3\. Request for Comment 18

B. Local Radio Ownership Rule 20

1\. Revisions Adopted in the *2002 Biennial Review Order* 20

2\. Remand Issues 21

3\. Request for Comment 22

C. Cross-Media Limits 23

1\. Revisions Adopted in the *2002 Biennial Review Order* 23

2\. Remand Issues 28

3\. Request for Comment 32

D. Dual Network Rule 33

E. UHF Discount 34

III\. Petitions for Reconsideration 36

IV\. PROCEDURAL MATTERS 37

A. Comment Information 37

B. Regulatory Flexibility Act 38

C. Paperwork Reduction Act 39

D. Ex Parte Information 40

V. ordering clauses 42

APPENDIX A-Pleadings Filed in Reconsideration Proceeding

APPENDIX B-Supplemental Initial Regulatory Flexibility Analysis

# Introduction

1.  With this *Further Notice of Proposed Rulemaking* ("*Further
    Notice*"), we seek comment on how to address the issues raised by
    the opinion of the U.S. Court of Appeals for the Third Circuit in
    *Prometheus v. FCC*[^1] and on whether the media ownership rules are
    "necessary in the public interest as the result of competition."[^2]
    On June 2, 2003, the Commission adopted a Report and Order in its
    third biennial review of its broadcast ownership rules (the "*2002
    Biennial Review Order*"). The *2002 Biennial Review Order* addressed
    all six of the Commission's broadcast ownership rules: the national
    television multiple ownership rule,[^3] the local television
    multiple ownership rule,[^4] the radio/television cross-ownership
    rule,[^5] the dual network rule,[^6] the local radio ownership
    rule,[^7] and the newspaper/broadcast cross-ownership rule.[^8] The
    2002 biennial ownership review was conducted pursuant to Section
    202(h) of the Telecommunications Act of 1996, which requires the
    Commission to periodically review its media ownership rules to
    determine "whether any of such rules are necessary in the public
    interest as the result of competition" and to "repeal or modify any
    regulation it determines to be no longer in the public
    interest."[^9] Section 202(h) requires that the next quadrennial
    review of the media ownership rules commence this year. Accordingly,
    we initiate a comprehensive review of the media ownership rules in
    this *Further Notice*. In the *2002 Biennial Review Order,* the
    Commission concluded that neither the newspaper/broadcast
    cross-ownership rule nor the radio/television cross-ownership rule
    remained necessary in the public interest. Accordingly, it replaced
    those rules with new cross-ownership regulations called the Cross
    Media Limits ("CML"). The Commission also revised its market
    definition and the way it counts stations for purposes of the local
    radio ownership rule, revised the local television multiple
    ownership rule, modified the national television ownership cap, and
    retained the dual network rule.

2.  Several parties sought appellate review of various aspects of the
    *2002 Biennial Review Order*; others filed petitions for
    reconsideration. The court challenges were consolidated into a
    single proceeding, and on June 23, 2004, the U.S. Court of Appeals
    for the Third Circuit issued its decision on review of the *2002
    Biennial Review Order*, affirming some Commission decisions and
    remanding others for further Commission justification or
    modification.[^10] On June 13, 2005, the U.S. Supreme Court denied
    petitions for certiorari which had sought review of *Prometheus*.

3.  In this *Further Notice*, we discuss each rule that was remanded
    individually[^11] and invite comment on how we should address the
    issues remanded by the court in the *Prometheus* decision. We
    encourage commenters to buttress their arguments with current
    empirical evidence and sound economic theory.

# Discussion

4.  In the *2002 Biennial Review Order,* the Commission determined that
    its long-standing goals of competition, diversity, and localism
    would continue to guide its actions in regulating media
    ownership.[^12] These policy objectives also will guide our actions
    on remand. In addition to the other requests for comment discussed
    below, we ask that commenters address whether our goals would be
    better addressed by employing an alternative regulatory scheme or
    set of rules.

5.  The *Prometheus* court noted that the Commission deferred
    consideration of certain proposals for advancing ownership by
    minorities. The court stated that "the Commission's rulemaking
    process in response to our remand order should address these
    proposals at the same time."[^13] We therefore seek comment on the
    proposals to foster minority ownership advanced by MMTC in its
    filings in the 2002 biennial review proceeding, including those that
    were listed in the *2002 Biennial Review Order* and referenced by
    the court.[^14] Are any of these proposals effective and practical
    ways to increase minority ownership? If so, how could they best be
    implemented? Do we have the statutory authority to adopt them? Are
    there any constitutional impediments to adoption? Are there any
    other alternatives that we should consider that would be more
    effective and/or would avoid any statutory or constitutional
    impediments?[^15]

6.  More generally, we urge commenters to explain the effects, if any,
    that their ownership rule proposals will have on ownership of
    broadcast outlets by minorities, women and small businesses. We also
    urge commenters to discuss the potential effects, if any, of the
    broadcast ownership rules currently in effect, and any changes
    proposed in this proceeding on: advertising markets, the ability of
    independent stations to compete, the availability of family-friendly
    and children's programming, the amount of indecent and/or violent
    content broadcast over-the-air, and the availability of independent
    programming.

7.  The Commission has a long-standing policy to foster broadcast
    "localism," which it has defined as the airing of "programming that
    is responsive to the needs and interests of their communities of
    license."[^16] In its 2002 Biennial Review, the Commission invited
    comment on the extent to which its broadcast ownership rules were
    necessary to foster localism.[^17] Subsequently, the Commission
    established its Localism Task Force ("Task Force") to study the
    issue of localism and advise the Commission on whether any new rules
    or policies were required to promote it.[^18] The Task Force
    conducted a series of public hearings around the country, including
    in Monterey, CA, Rapid City, SD, Charlotte, NC, and San Antonio, TX,
    in which numerous members of the public and others representing
    interested parties expressed their views. In addition, the
    Commission issued a *Notice of Inquiry* ("*NOI*") seeking comment
    from the public on how broadcasters are serving the interests and
    needs of their communities; whether the Commission needs to adopt
    new policies, practices, or rules designed to promote localism in
    broadcast television and radio; and what those policies, practices,
    or rules should be.[^19] The *NOI* also asked, in the alternative,
    whether the Commission should continue to rely on market forces and
    the existing issue-responsive programming rules to encourage
    broadcasters to meet their obligations.[^20]

8.  The record compiled in the localism docket, MB Docket No. 04-233, is
    extensive. The four hearings included 52 formal presentations and
    remarks from community and broadcaster representatives, as well as
    elected and appointed officials from state and federal government.
    The proceedings also included testimony from 52 witnesses and from
    278 additional participants during the "open microphone" sessions.
    In response to the *NOI*, the Commission as of June 2006 has
    received more than 82,000 written comments from broadcasters,
    broadcast industry organizations, public interest groups, and
    members of the public. Many broadcast entities submitted information
    with their comments outlining the process that each follows to
    determine the needs and interests of people within their respective
    communities of license. Licensee commenters also provided detailed
    data concerning the amount, nature, and variety of the programming
    that each airs to meet those needs and problems. A number of public
    interest organizations submitted with their comments studies of
    various aspects of the nature and quality of localism broadcast
    programming.

9.  The Media Bureau will compile a summary of the comments in the
    localism proceeding and submit it into this docket. The Commission
    will consider the evidence received in MB Docket No. 04-233 as it
    moves forward with this rulemaking.

10. Finally, we note that the media marketplace continues to evolve. We
    seek comment on the impact of new technologies and providers such as
    digital video recorders, video-on-demand, and the availability of
    television programming and music on the Internet on media
    consumption and ownership issues.

## Local TV Ownership Rule

### Revisions Adopted in the *2002 Biennial Review Order*

11. The Commission's local TV ownership rule, as currently in effect,
    provides that an entity may own two television stations in the same
    designated market area ("DMA") if (1) the Grade B contours of the
    stations do not overlap; or (2) at least one of the stations in the
    combination is not ranked among the top four stations in terms of
    audience share, *and* at least eight independently owned and
    operating commercial or non-commercial full-power broadcast
    television stations would remain in the DMA after the combination.
    To determine the number of voices remaining after the merger, the
    Commission counts those broadcast television stations whose Grade B
    signal contours overlap with the Grade B signal contour of at least
    one of the stations that would be commonly owned.[^21]

12. In *Sinclair Broadcast Group, Inc. v. FCC*, the U.S. Court of
    Appeals for the District of Columbia Circuit found that the
    Commission had not justified its exclusion of non-broadcast media
    from its count of independent owners for the eight-voice threshold
    under the local TV ownership rule.[^22] After analyzing the rule in
    the *2002 Biennial Review Order*, the Commission determined that
    non-broadcast media compete with broadcast television stations[^23]
    and contribute to viewpoint diversity in local markets and that the
    local TV ownership rule could not be justified because it did not
    account for these contributions.[^24] Given the "abundance of
    viewpoint diversity" in most local markets, the Commission decided
    that the existing rule was not necessary to promote viewpoint
    diversity.[^25] Moreover, the Commission found that the restrictions
    did not foster, and might even hamper, its goals of localism and
    program diversity.[^26] The Commission cited evidence that owners of
    more than one station in a market are better able to preserve, or
    even raise, their level of local news and public affairs programming
    due to the increased efficiencies that multiple ownership
    affords.[^27] The Commission concluded, however, that restrictions
    on local television ownership were necessary to promote
    competition.[^28]

13. The Commission revised the local TV ownership rule to permit an
    entity to own up to two television stations in markets with 17 or
    fewer television stations, and up to three television stations in
    markets with 18 or more television stations.[^29] These numerical
    limits on television station ownership were intended to ensure that
    there would be at least six equal-sized owners of television
    broadcast outlets in most markets.[^30] The Commission retained the
    prohibition on combinations involving more than one station ranked
    among the top four in the market, thus prohibiting combinations in
    markets with four or fewer television stations.[^31] For purposes of
    setting its numerical limits, the Commission defined firm size in
    terms of the number of licenses held, rather than some other measure
    such as market share, because of the fluidity of market share in the
    markets in which television broadcast stations compete.[^32] The
    Commission added that as a broadcast station requires a license, the
    number of licenses that a firm controls is the measure of its
    capacity to deliver programming.[^33] The Commission also eliminated
    consideration of overlapping Grade B contours,[^34] and decided to
    look instead only at whether a station is assigned by Nielsen to a
    DMA.[^35] All full-power commercial and non-commercial television
    stations within the DMA would be counted for purposes of applying
    the rule.[^36]

14. The *2002 Biennial Review Order* also modified the Commission's
    criteria for waiver of the local TV ownership rule.[^37] Although
    the Commission stated that it would continue to allow entities to
    seek a waiver if at least one of the stations in the proposed
    combination is failed, failing, or unbuilt,[^38] it removed the
    requirement that the waiver applicant demonstrate that there is no
    buyer outside the market willing to purchase the station at a
    reasonable price.[^39]

### Remand Issues

15. On review, the *Prometheus* court upheld the Commission's
    determination that "broadcast media are not the only media outlets
    contributing to viewpoint diversity in local markets."[^40] In light
    of its decision to remand the Commission's numerical limits, the
    court found that it need not decide "the degree to which
    non-broadcast media compensate for lost viewpoint diversity to
    justify the modified \[local TV\] rule."[^41] The court nonetheless
    noted that "it seems that the degree to which the Commission can
    rely on cable or the Internet to mitigate the threat that local
    station consolidations pose to viewpoint diversity is limited."[^42]
    In addition, in light of evidence in the record, including evidence
    that "commonly owned television stations are more likely to carry
    local news than other stations" and studies showing that
    "consolidation generally improved audience ratings," the court
    rejected petitioners' contention "that the Commission's finding of
    localism benefits from consolidation was unsupported."[^43] The
    court also upheld the Commission's decision to retain the top
    four-ranked station restriction, stating that it "must uphold an
    agency's line-drawing decision when it is supported by evidence in
    the record."[^44] It found "ample evidence in the record" to support
    the Commission's reliance on a "cushion" of audience share
    percentage points between the fourth and fifth-ranked stations in
    most markets to restrict combinations among the top four-ranked
    stations "as opposed to the top three or some other number."[^45]

16. The court, however, remanded the numerical limits of the new rule
    for further justification. As explained above, the limits were based
    on a benchmark of six equal-sized competitors. The size of an owner
    was tied to the number of stations owned, rather than the audience
    shares of those stations. The court held that the Commission had
    unreasonably failed to consider the audience shares of stations in
    setting its numerical limits, finding that "\[n\]o evidence supports
    the Commission's equal market share assumption, and no reasonable
    explanation underlies its decision to disregard actual market
    share."[^46] Further, although the court recognized that the
    Commission did not intend the numerical limits to be a mechanical
    application of the *DOJ/FTC Merger Guidelines*, it concluded that
    the rule was unreasonable because it would allow levels of
    concentration exceeding the 1800 HHI benchmark relied upon by the
    Commission in setting its numerical limits, a result which it called
    "a glaring inconsistency between rationale and result."[^47]

17. The court also remanded for further consideration the Commission's
    elimination of the requirement to demonstrate that no out-of-market
    buyer is reasonably available when seeking a failed, failing, or
    unbuilt television station waiver. The Court found that ". . . in
    repealing the rule without any discussion of the effect of its
    decision on minority television station ownership," the Commission
    "entirely failed to consider an important aspect of the
    problem."[^48] The court also noted that the Commission deferred
    consideration of certain proposals for advancing broadcast ownership
    by minority and disadvantaged businesses and for promoting diversity
    in broadcasting for a future Notice of Proposed Rulemaking.[^49] The
    court stated that "the Commission's rulemaking process in response
    to our remand order should address these proposals at the same
    time."[^50]

### Request for Comment

18. We invite comment on all of the issues remanded by the *Prometheus*
    court regarding the local TV ownership rule. Should the limits on
    the number of stations that can be commonly owned adopted in the
    *2002 Biennial Review Order* be revised, or is there additional
    evidence or analysis upon which the Commission can rely to further
    justify the limits it adopted? How should we address the court's
    concern that the revised numerical limits allow concentration to
    exceed the 1800 HHI benchmark relied upon by the Commission in
    setting the limits? Is there additional evidence to support the
    Commission's decision to treat capacity as an important factor in
    measuring the competitive structure of television markets? Is there
    evidence to support fluidity of television station market shares?
    Should the limits vary depending on the size of the market? How
    would any changes impact the need for the top four-ranked
    restriction? We urge commenters to consider and discuss whether
    their proposals with respect to the local TV ownership rule also
    would be consistent with the *Sinclair* decision.

19. We also invite comment on the court's remand of the elimination of
    the requirement that waiver applicants demonstrate that there is no
    reasonably available out-of-market buyer. Should we reinstate this
    requirement? Is it unduly burdensome? Are there less burdensome
    means of ensuring that unnecessary concentration of ownership does
    not occur? Has the requirement had an effect on minority and/or
    female ownership of broadcast stations?

## Local Radio Ownership Rule

### Revisions Adopted in the *2002 Biennial Review Order* 

20. In the *2002 Biennial Review Order*, the Commission retained the
    local radio numerical limits and the AM/FM service caps that
    Congress adopted in the 1996 Act.[^51] Under these limits, an entity
    may own, operate, or control (1) up to eight commercial radio
    stations, not more than five of which are in the same service
    (*i.e*., AM or FM), in a radio market with 45 or more radio
    stations; (2) up to seven commercial radio stations, not more than
    four of which are in the same service, in a radio market with
    between 30 and 44 (inclusive) radio stations; (3) up to six
    commercial radio stations, not more than four of which are in the
    same service, in a radio market with between 15 and 29 (inclusive)
    radio stations; and (4) up to five commercial radio stations, not
    more than three of which are in the same service, in a radio market
    with 14 or fewer radio stations, except that an entity may not own,
    operate, or control more than 50 percent of the stations in such a
    market.[^52] The Commission determined that its contour-overlap
    methodology for defining radio markets and counting stations in the
    market was flawed as a means to protect competition in local radio
    markets.[^53] The Commission therefore modified the definition of a
    local radio market by replacing the contour-overlap approach with an
    Arbitron Metro market definition, where Arbitron markets exist.[^54]
    The Commission initiated a rulemaking proceeding, MB Docket No.
    03-130, to seek comment on how to define local radio markets in
    geographic areas that are not defined by Arbitron.[^55] In addition,
    the Commission decided to include non-commercial stations when
    determining the number of radio stations in a market for purposes of
    the ownership rules.[^56] The Commission also decided to attribute
    certain radio station Joint Sales Agreements ("JSA").[^57]
    Recognizing that there could be some existing combinations of
    broadcast stations that would exceed the revised ownership limits,
    the Commission grandfathered existing combinations of radio
    stations, existing combinations of television stations, and existing
    combinations of radio/television stations.[^58]

### Remand Issues

21. The *Prometheus* court concluded that the Commission's decision "to
    replace contour-overlap methodology with Arbitron radio metro
    markets was 'in the public interest' within the meaning of §202(h)"
    and that the decision was "a rational exercise of rulemaking
    authority."[^59] The court also upheld the Commission's attribution
    of JSAs.[^60] The court further held that the Commission had
    justified its decisions to count noncommercial stations in defining
    the size of a market and to restrict the transfer of grandfathered
    combinations except to certain eligible entities.[^61] Although it
    affirmed the Commission's rationale that numerical limits help guard
    against consolidation and foster opportunities for new entrants and
    therefore upheld the use of numerical limits, the court remanded the
    Commission's decision to retain the existing specific local radio
    ownership limits. The court held that the limits were unsupported by
    the Commission's rationale that they ensure five equal-sized
    competitors in most markets.[^62] The court held that the Commission
    had failed to justify five as the appropriate benchmark and did not
    reconcile that benchmark with the *DOJ/FTC Merger Guidelines* it had
    used to derive the local TV ownership limits. The court also stated
    that the Commission had failed to show that the limits ensured that
    five equal-sized competitors have emerged or would emerge under the
    numerical limits.[^63] The court further faulted the Commission for
    not explaining why it could not take "actual market share" into
    account when deriving the numerical limits. Finally, the court held
    that the Commission did not support its decision to retain the AM
    subcaps.[^64]

### Request for Comment

22. We invite comment on the issues remanded by the *Prometheus* court
    with respect to the local radio ownership limits. In order to
    address the court's concerns, should the numerical limits be
    revised, or is there additional evidence that could be used to
    further justify the limits? If the Commission should revise the
    limits, what revisions are appropriate? Should we create additional
    tiers? How should the Commission address the court's concern that
    the limits adopted do not account for actual market share? Should
    the rule still seek to ensure a specific number of competitors in a
    market, and, if so, what is the appropriate benchmark for that
    number? Finally, should we retain the AM/FM subcaps? Lastly, we seek
    comment on whether the local radio ownership rule currently in
    effect is necessary in the public interest as a result of
    competition.

## Cross-Media Limits

### Revisions Adopted in the *2002 Biennial Review Order*

23. In the *2002 Biennial Review Order*, the Commission concluded that
    neither the newspaper/broadcast cross-ownership rule nor the
    radio/television cross-ownership rule was necessary in the public
    interest as the result of competition.[^65] The Commission replaced
    these rules with a single set of cross-media limits, as discussed
    below.

24. The newspaper/broadcast cross-ownership rule prohibits common
    ownership of a full-service broadcast station and a daily newspaper
    if the broadcast station's service contour completely encompasses
    the newspaper's city of publication.[^66] In the *2002 Biennial
    Review Order,* the Commission concluded that this rule, which does
    not account for either market size or the availability of other
    media outlets that may serve a market, was not necessary to promote
    competition, diversity, or localism.[^67] The Commission held that,
    because newspapers and broadcast stations do not compete in the same
    economic market, elimination of the ban could not harm
    competition.[^68] The Commission found that efficiencies resulting
    from common ownership of a newspaper and a television station can
    actually promote localism, because newspaper-owned television
    stations tend to produce local news and public affairs programming
    in greater quantity and of a higher quality than non-newspaper-owned
    stations.[^69] Furthermore, the Commission determined that the
    blanket ban on cross-ownership was not needed to promote viewpoint
    diversity given that (1) a vast array of media outlets is available
    in many markets today, (2) the Commission's revised local
    cross-media ownership rules will protect diversity sufficiently, and
    (3) common ownership efficiencies can facilitate the broadcasting of
    higher quality programming.[^70]

25. Similarly, the Commission found that the existing radio/television
    cross-ownership rule could not be justified under Section
    202(h).[^71] As with the newspaper/broadcast cross-ownership rule,
    the Commission found that the radio/television cross-ownership rule
    was not necessary to promote competition, localism, or diversity
    because radio and television compete in distinct product markets;
    the efficiencies of common ownership can enhance localism and
    diversity; the multitude of media outlets in most local markets
    renders the rule obsolete; the Commission's revised intra-service
    ownership rules (*i.e*., the local TV and local radio rules) afford
    sufficient protection with regard to competition; and the new CML
    were targeted more precisely at specific types of markets in which
    particular combinations could harm diversity.[^72]

26. To determine the availability of media outlets in markets of various
    sizes, the Commission developed a Diversity Index (the "DI"), which
    it used to analyze and measure the availability of outlets that
    contribute to viewpoint diversity in local media markets.[^73] The
    DI, which was modeled after the HHI used in economic and antitrust
    analyses, measured the availability of various media outlets and
    assigned a weight to each type of outlet based on its relative use
    by consumers.[^74] The Commission stated that the DI would not be
    used to measure viewpoint diversity in particular local markets.
    Rather, it was used to evaluate in the aggregate the contributions
    to diversity of various media outlets in order to determine which
    size markets are most at risk for viewpoint concentration.[^75]

27. Reasoning that small markets are at greater risk for diversity
    concentration, the Commission's CML were tiered according to the
    size of the market. The Commission prohibited newspaper/broadcast
    and radio/television cross-ownership in markets with three or fewer
    television stations.[^76] In markets with between four and eight
    stations, the Commission held that an entity may own a combination
    that includes a newspaper and either (a) one television station and
    up to 50 percent of the radio stations that may be commonly owned
    under the applicable radio cap, or (b) up to 100 percent of the
    radio stations allowed under the applicable radio cap.[^77] In
    markets with nine or more television stations, cross-media
    combinations would be permitted without limit, so long as they
    comply with the applicable local television and local radio
    caps.[^78] In the *2002 Biennial Review Order,* the Commission held
    that parties may seek a waiver of these limits if they can
    demonstrate that an otherwise impermissible combination would
    enhance the quality and quantity of broadcast news available in
    their market.[^79]

### Remand Issues

28. The *Prometheus* court affirmed the Commission's decision to
    eliminate the newspaper/broadcast cross-ownership rule,[^80] holding
    that "reasoned analysis supports the Commission's determination that
    the blanket ban on newspaper/broadcast cross-ownership was no longer
    in the public interest."[^81] The court rejected attacks on the
    "Commission's conclusion that the newspaper/broadcast
    cross-ownership ban undermined localism."[^82] The court upheld the
    Commission's determination that the prohibition was not necessary to
    protect diversity, agreeing that the Commission reasonably concluded
    that it did not have enough confidence in the proposition that
    commonly owned outlets have a uniform bias to warrant sustaining the
    prohibition[^83] and that "it was acceptable for the Commission to
    find that cable and the Internet contribute to viewpoint diversity"
    in local markets.[^84] The court found the Commission did not
    violate Section 202(h) by concluding that (1) repealing the
    cross-ownership ban was necessary to promote competition and
    localism, and (2) retaining some limits was necessary to ensure
    diversity. The court also held that the Commission's continued
    regulation of cross-ownership was constitutionally sound.[^85]

29. The court concluded, however, that the specific limits selected by
    the Commission were not supported by reasoned analysis, and remanded
    the CML to the Commission for further justification or modification.
    The court stated that it did not object to the Commission's reliance
    on the HHI as a starting point for measuring diversity, but found
    that the Commission placed too much weight on the Internet in its
    DI, irrationally assigned outlets of the same media type equal
    market shares, and inconsistently derived the CML from its DI
    results.[^86]

30. With regard to the Commission's inclusion and weighting of the
    Internet in the DI, the court held that the Commission's "decision
    to count the Internet as a source of viewpoint diversity, while
    discounting cable, was not rational."[^87] The court also
    distinguished several sources of information available via the
    Internet from "media outlets," stating that the media "provides (to
    different degrees depending on the outlet) accuracy and depth in
    local news in a way that an individual posting in a chat room on a
    particular issue of local concern does not."[^88] The court also
    contrasted certain Internet sites with media outlets by stating that
    media have "an aggregator function" as well as a "distillation
    function (making a judgment as to what is interesting, important,
    entertaining, etc.)," while the websites of, for example, political
    candidates or local governments do not aggregate or distill
    information.[^89]

31. The court also remanded for further consideration the Commission's
    decision to assign all outlets within the same media type equal
    market shares in constructing the DI. The court held that the
    "assumption of equal market shares is inconsistent with the
    Commission's overall approach to its DI, and also makes unrealistic
    assumptions about media outlets' relative contributions to viewpoint
    diversity in local markets."[^90] The court determined that the
    Commission's efforts to justify this approach were not
    persuasive.[^91] The court rejected the Commission's rationale that
    actual-use data are not relevant in predicting future behavior,
    noting that the Commission employed actual-use data in assigning
    relative weight to different types of media, even as it used equal
    market shares, rather than actual market shares, for outlets within
    a media type. The court also rejected the Commission's assertion
    that consumer preferences for particular media outlets are more
    fluid than their preferences for different types of media because
    the outlet's format or content can be easily changed, stating that
    the Commission provided no evidence to show that media outlets
    actually or regularly undergo a content change. Lastly, the court
    rejected the Commission's claim that relying on actual audience
    share data would require it to make a constitutionally problematic
    categorization of programming as news or "non-news" because the
    Commission obtained actual-use data by asking respondents where they
    got their local news.[^92] Finally, the court held the Commission
    did not rationally derive its CML from the DI, because the CML would
    allow certain broadcast combinations where the increases in the DI
    scores were generally higher than for other combinations that are
    not allowed.[^93]

### Request for Comment

32. We invite comment on all of the issues remanded by the *Prometheus*
    court regarding cross-ownership. Many of these issues relate to
    the DI. In light of the court's extensive and detailed criticism of
    the DI, we tentatively conclude that the DI is an inaccurate tool
    for measuring diversity. Moreover, we recognize that some aspects of
    diversity may be difficult to quantify. To the extent that we will
    not use the DI to justify changes to the existing cross-ownership
    rules, we seek comment on how we should approach cross-ownership
    limits. Should limits vary depending upon the characteristics of
    local markets? If so, what characteristics should be considered, and
    how should they be factored into any limits? We seek comment on the
    newspaper/broadcast cross-ownership rule and the radio/television
    cross-ownership rule. Are there aspects of television and radio
    broadcast operations that make cross-ownership with a newspaper
    different for each of these media? If so, should limits on
    newspaper/radio combinations be different from limits on
    newspaper/television combinations? Lastly, are the
    newspaper/broadcast cross-ownership rule and the radio/television
    cross-ownership rule necessary in the public interest as a result of
    competition?

## Dual Network Rule

33. The Commission's dual network rule provides "A television broadcast
    station may affiliate with a person or entity that maintains two or
    more networks of television broadcast stations unless such dual or
    multiple networks are composed of two or more persons or entities
    that, on February 8, 1996, were 'networks' as defined in Section
    73.3613(a)(1) of the Commission's regulations (that is, ABC, CBS,
    Fox, and NBC)."[^94] Thus, the rule permits common ownership of
    multiple broadcast networks, but prohibits a merger between or among
    the "top four" networks. In the *2002 Biennial Review Order*, the
    Commission determined that the dual network rule was necessary in
    the public interest to promote competition and localism and retained
    the rule.[^95] The Petitioners in *Prometheus* did not appeal the
    Commission's retention of the rule. We seek comment on whether the
    dual network rule remains necessary in the public interest as a
    result of competition.

## UHF Discount

34. In *Prometheus*, the Third Circuit held that challenges to the
    Commission's national television ownership rule were moot following
    Congressional action that set the national cap at 39 percent.[^96]
    In so doing, the court also addressed the Commission's UHF discount
    rule, which we have used in calculating a UHF station's audience
    reach under the national TV cap.[^97] The court stated that the UHF
    discount rule "is insulated from this and future periodic review
    requirements" and yet also noted that the "Commission is now
    considering its authority going forward to modify or eliminate the
    discount and recently took public comment on the issue."[^98] The
    court then concluded that that Commission may decide the scope of
    our authority to modify or eliminate the UHF discount outside of the
    Section 202(h) mandate.[^99]

35. We seek comment on whether the court's holding on the UHF discount
    rule was ambiguous. We seek comment on whether the Commission should
    retain, modify, or eliminate the UHF discount. Commenters who urge
    us to modify or eliminate the UHF discount rule should discuss the
    basis for our authority to take such action.

#  Petitions for Reconsideration

36. A number of parties filed petitions for reconsideration of the *2002
    Biennial Review Order.* These petitions, opposing pleadings, and
    replies are listed in Appendix A attached hereto. The petitions have
    already been the subject of public notice and comment during their
    own pleading cycle. Parties who wish to refresh the record
    concerning the petitions may do so in their comments filed in
    response to this *Further Notice.*

#  PROCEDURAL MATTERS 

## Comment Information

37. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47
    CFR §§ 1.415, 1.419, interested parties may file comments and reply
    comments on or before the dates indicated on the first page of this
    document. Comments may be filed using: (1) the Commission's
    Electronic Comment Filing System (ECFS), (2) the Federal
    Government's eRulemaking Portal, or (3) by filing paper copies. *See
    Electronic Filing of Documents in Rulemaking Proceedings*, 63 FR
    24121 (1998).

-   Electronic Filers: Comments may be filed electronically using the
    Internet by accessing the ECFS: <http://www.fcc.gov/cgb/ecfs/> or
    the Federal eRulemaking Portal:
    [http://www.regulations.gov](http://www.regulations.gov/). Filers
    should follow the instructions provided on the website for
    submitting comments.

    -   For ECFS filers, if multiple docket or rulemaking numbers appear
        in the caption of this proceeding, filers must transmit one
        electronic copy of the comments for each docket or rulemaking
        number referenced in the caption. In completing the transmittal
        screen, filers should include their full name, U.S. Postal
        Service mailing address, and the applicable docket or rulemaking
        number. Parties may also submit an electronic comment by
        Internet e-mail. To get filing instructions, filers should send
        an e-mail to <ecfs@fcc.gov>, and include the following words in
        the body of the message, "get form." A sample form and
        directions will be sent in response.

```{=html}
<!-- -->
```
-   Paper Filers: Parties who choose to file by paper must file an
    original and four copies of each filing. If more than one docket or
    rulemaking number appears in the caption of this proceeding, filers
    must submit two additional copies for each additional docket or
    rulemaking number.

> Filings can be sent by hand or messenger delivery, by commercial
> overnight courier, or by first-class or overnight U.S. Postal Service
> mail (although we continue to experience delays in receiving U.S.
> Postal Service mail). All filings must be addressed to the
> Commission's Secretary, Office of the Secretary, Federal
> Communications Commission.

-   The Commission's contractor will receive hand-delivered or
    messenger-delivered paper filings for the Commission's Secretary at
    236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The
    filing hours at this location are 8:00 a.m. to 7:00 p.m. All hand
    deliveries must be held together with rubber bands or fasteners. Any
    envelopes must be disposed of [before]{.underline} entering the
    building.

-   Commercial overnight mail (other than U.S. Postal Service Express
    Mail and Priority Mail) must be sent to 9300 East Hampton Drive,
    Capitol Heights, MD 20743.

-   U.S. Postal Service first-class, Express, and Priority mail should
    be addressed to 445 12^th^ Street, SW, Washington DC 20554.

> People with Disabilities: Contact the FCC to request materials in
> accessible formats (Braille, large print, electronic files, audio
> format, etc.) by e-mail at <FCC504@fcc.gov> or call the Consumer &
> Governmental Affairs Bureau at 202-418-0531 (voice), 202-418-7365
> (TTY).

## Regulatory Flexibility Act

38. As required by the Regulatory Flexibility Act,[^100] the Commission
    prepared an Initial Regulatory Flexibility Analysis (IRFA) in the
    initial *Notice of Proposed Rulemaking* in this proceeding.[^101] We
    have now prepared a Supplemental IRFA, which is set forth in
    Appendix B. Written public comments are requested on the
    Supplemental IRFA. These comments must be filed in accordance with
    the same filing deadlines for comments on the *Further Notice of
    Proposed Rulemaking*, and should have a separate and distinct
    heading designating them as responses to the Supplemental IRFA.

## Paperwork Reduction Act

39. This document does not contain proposed information collection(s)
    subject to the Paperwork Reduction Act of 1995 (PRA), Public Law
    104-13. In addition, therefore, it does not contain any proposed new
    or modified "information collection burden for small business
    concerns with fewer than 25 employees," pursuant to the Small
    Business Paperwork Relief Act of 2002, Public Law 107-198, *see* 44
    U.S.C. § 3506(c)(4). However, depending on the rules adopted as a
    result of this *Further Notice of Proposed Rule Making*, the *Report
    and Order* (*R&O*) ultimately adopted in this proceeding may contain
    information collections. The Commission will provide a period for
    public comment on any PRA burdens contained in the R&O and will
    submit such burdens to the Office of Management and Budget for
    approval when the R&O is adopted and released.

## Ex Parte Information

40. This is a permit-but-disclose notice and comment rulemaking
    proceeding. Ex parte presentations are permitted, except during the
    Sunshine Agenda period, provided that they are disclosed as provided
    in the Commission's Rules.[^102]

41. *Contact Information*. The Media Bureau contact for this proceeding
    is Mania Baghdadi at (202) 418-7200. Press inquiries should be
    directed to Rebecca Fisher at (202) 418-2330, TTY: (202) 418-7365
    or (888) 835-5322.

# ordering clauses 

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

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

44. IT IS FURTHER ORDERED that MB Docket No. 03-130 SHALL BE severed
    from this proceeding.

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

> FEDERAL COMMUNICATIONS COMMISSION
>
> Marlene H. Dortch
>
> Secretary

**Appendix A**

**Pleadings Filed in Reconsideration proceeding**

[PETITIONS FOR RECONSIDERATION]{.underline}

Amherst Alliance and the Virginia Center for the Public Policy

ARSO Radio Corporation

Bennco, Inc.

Capitol Broadcasting Company, Inc.

Center for the Creative Community and the Association of Independent
Video and Filmmakers

Consumer Federation of America and Consumers Union

Cumulus Media, Inc.

Diversity and Competition Supporters (filed by Minority Media and
Telecommunications Council on

> behalf of American Hispanic Owned Radio Association; Civil Rights
> Forum on Communications Policy; League of United Latin American
> Citizens; Minority Business Enterprise Legal Defense and Education
> Fund; National Asian American Telecommunications Association; National
> Association of Latino Independent Producers; National Coalition of
> Hispanic Organizations; National Council of La Raza; National Hispanic
> Media Coalition; National Indian Telecommunications Institute;
> National Urban League; Native American Public Telecommunications,
> Inc.; PRLDEF-Institute for Puerto Rican Policy; UNITY: Journalists of
> Color, Inc.; Women's Institute for Freedom of the Press)\*

Duff, Ackerman & Goodrich, LLC

Entercom Communications Corporation

Free Press

Future of Music Coalition

Galaxy Communications, L.P.

Great Scott Broadcasting

LIN Television Corporation and Raycom Media, Inc.

Main Street Broadcasting Company, Inc.

Mid-West Family Broadcasting

Monterey Licenses, LLC

Mt. Wilson FM Broadcasters, Inc.

National Association of Black Owned Broadcasters, Inc. and the
Rainbow/PUSH Coalition, Inc.

National Organization for Women

Nexstar Broadcasting Group, LLC

Office of Communication of the United Church of Christ, Inc.; Black
Citizens for a Fair Media;

> Philadelphia Lesbian and Gay Task Force; and Women's Institute for
> Freedom of the Press

Saga Communications, Inc.

Treasure and Space Coast Radio

WJZD, Inc.

WTCM Radio, Inc.

\* withdrew Petition for Reconsideration on April 7, 2004

[COMMENTS TO PETITIONS FOR RECONSIDERATION]{.underline}

Bonneville International Corporation

Diversity and Competition Supporters

MBC Grand Broadcasting, Inc.

National Association of Broadcasters

Newspaper Association of America

Paxson Communications Corporation

Office of Communication of the United Church of Christ, Inc.; Black
Citizens for a Fair Media;

> Philadelphia Lesbian and Gay Task Force; and Women's Institute for
> Freedom of the Press

University of Southern California/KUSC(FM)

Viacom, Inc.

Vinson & Elkins LLP

[REPLIES TO PETITIONS FOR RECONSIDERATION]{.underline}

Cumulus Media, Inc.

Diversity and Competition Supporters

Entercom Communications Corporation

Mt. Wilson FM Broadcasters, Inc.

National Association of Broadcasters

Sinclair Broadcast Group, Inc.

**APPENDIX B**

**Supplemental Initial Regulatory Flexibility Analysis**

46. As required by the Regulatory Flexibility Act (RFA),[^103] the
    Commission incorporated an Initial Regulatory Flexibility Analysis
    (IRFA) in the Notice of Proposed Rulemaking (*NPRM*) in MB Docket
    No. 02-277.[^104] Additionally, the Commission has prepared this
    Supplemental Initial Regulatory Flexibility Analysis (Supplemental
    IRFA) of the possible significant economic impact on small entities
    of the proposals in this *Further Notice of Proposed* *Rulemaking*
    (*Further Notice*). Written public comments are requested on this
    Supplemental IRFA. Comments must be identified as responses to the
    Supplemental IRFA and must be filed by the deadlines for comments on
    the *Further Notice*. The Commission will send a copy of the
    *Further Notice*, including this Supplemental IRFA, to the Chief
    Counsel for Advocacy of the Small Business Administration
    (SBA).[^105] In addition, the *Further Notice* and the Supplemental
    IRFA (or summaries thereof) will be published in the Federal
    Register.[^106]

## A. Need for, and Objectives of, the Proposed Rules {#a.-need-for-and-objectives-of-the-proposed-rules .unnumbered}

47. The *Further Notice* invites comment on how to address the issues
    raised by the opinion of the U.S. Court of Appeals for the Third
    Circuit in *Prometheus Radio Project v. FCC*,[^107] and, pursuant to
    Section 202(h) of the Telecommunications Act of 1996, on whether the
    media ownership rules are "necessary in the public interest as the
    result of competition."[^108] In the *Prometheus Remand Order,* the
    court affirmed some Commission decisions and remanded others for
    further Commission justification or modification.[^109] We issue
    this Supplemental IRFA due to the passage of time since the release
    of the *NPRM* in this proceeding and in order to invite comment on
    the effect on small entities of the proposals in this *Further
    Notice*. We particularly solicit comment from all small business
    entities, including minority-owned and women-owned small businesses.
    We especially solicit comment on whether, and if so, how, the
    particular interests of these small businesses may be affected by
    the rules.

48. The *Further Notice* discusses the local TV ownership rule, the
    local radio ownership rule, Cross-Media Limits and the Dual Network
    rule; details the issues raised in the *Prometheus Order* regarding
    the Commission's decision with respect to each of these rules; and
    invites comment on how to address those issues.

## B. Legal Basis {#b.-legal-basis .unnumbered}

49. This *Further Notice* is adopted pursuant to sections 1, 2(a), 4(i),
    303, 307, 309, 310, of the Communications Act of 1934, as amended,
    47 U.S.C. §§ 151, 152(a), 154(i), 303, 307, 309, 310, and Section
    202(h) of the Telecommunications Act of 1996.

## C. Description and Estimate of the Number of Small Entities To Which the Proposed Rules Will Apply {#c.-description-and-estimate-of-the-number-of-small-entities-to-which-the-proposed-rules-will-apply .unnumbered}

50. The RFA directs agencies to provide a description of, and, where
    feasible, an estimate of the number of small entities that may be
    affected by the proposed rules, if adopted.[^110] The RFA defines
    the term "small entity" as having the same meaning as the terms
    "small business," "small organization," and "small governmental
    entity" under Section 3 of the Small Business Act.[^111] In
    addition, the term "small business" has the same meaning as the term
    "small business concern" under the Small Business Act.[^112] A small
    business concern is one which: (1) is independently owned and
    operated; (2) is not dominant in its field of operation; and (3)
    satisfies any additional criteria established by the SBA.[^113]

51. **Television Broadcasting.** In this context, the application of the
    statutory definition to television stations is of concern. The Small
    Business Administration defines a television broadcasting station
    that has no more than \$13 million in annual receipts as a small
    business. Business concerns included in this industry are those
    "primarily engaged in broadcasting images together with
    sound."[^114] According to Commission staff review of the BIA
    Financial Network, Inc. Media Access Pro Television Database as of
    June 6, 2005, about 852 (66 percent) of the 1,286 commercial
    television stations in the United States have revenues of \$12
    million or less. However, in assessing whether a business entity
    qualifies as small under the above definition, business control
    affiliations[^115] must be included. Our estimate, therefore, likely
    overstates the number of small entities that might be affected by
    any changes to the attribution rules, because the revenue figures on
    which this estimate is based do not include or aggregate revenues
    from affiliated companies.

52. An element of the definition of "small business" is that the entity
    not be dominant in its field of operation. The Commission is unable
    at this time and in this context to define or quantify the criteria
    that would establish whether a specific television station is
    dominant in its market of operation. Accordingly, the foregoing
    estimate of small businesses to which the rules may apply does not
    exclude any television stations from the definition of a small
    business on this basis and is therefore over-inclusive to that
    extent. An additional element of the definition of "small business"
    is that the entity must be independently owned and operated. It is
    difficult at times to assess these criteria in the context of media
    entities, and our estimates of small businesses to which they apply
    may be over-inclusive to this extent.

53. **Radio Broadcasting.** The Small Business Administration defines a
    radio broadcasting entity that has \$6.5 million or less in annual
    receipts as a small business.[^116] Business concerns included in
    this industry are those "primarily engaged in broadcasting aural
    programs by radio to the public."[^117] According to Commission
    staff review of the BIA Financial Network, Inc. Media Access Radio
    Analyzer Database as of June 6, 2005, about 10,425 (95 percent) of
    11,000 commercial radio stations in the United States have revenues
    of \$6 million or less. We note, however, that in assessing whether
    a business entity qualifies as small under the above definition,
    business control affiliations[^118] must be included. Our estimate,
    therefore, likely overstates the number of small entities that might
    be affected by any changes to the ownership rules, because the
    revenue figures on which this estimate is based do not include or
    aggregate revenues from affiliated companies.

54. In this context, the application of the statutory definition to
    radio stations is of concern. An element of the definition of "small
    business" is that the entity not be dominant in its field of
    operation. We are unable at this time and in this context to define
    or quantify the criteria that would establish whether a specific
    radio station is dominant in its field of operation. Accordingly,
    the foregoing estimate of small businesses to which the rules may
    apply does not exclude any radio station from the definition of a
    small business on this basis and is therefore over-inclusive to that
    extent. An additional element of the definition of "small business"
    is that the entity must be independently owned and operated. We note
    that it is difficult at times to assess these criteria in the
    context of media entities, and our estimates of small businesses to
    which they apply may be over-inclusive to this extent.

55. **Daily Newspapers**. The SBA has developed a small business size
    standard for the census category of Newspaper Publishers; that size
    standard is 500 or fewer employees.[^119] Census Bureau data for
    2002 show that there were 5,159 firms in this category that operated
    for the entire year.[^120] Of this total, 5,065 firms had employment
    of 499 or fewer employees, and an additional 42 firms had employment
    of 500 to 999 employees. Therefore, we estimate that the majority of
    Newspaper Publishers are small entities that might be affected by
    our action.

## D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements {#d.-description-of-projected-reporting-recordkeeping-and-other-compliance-requirements .unnumbered}

56. Depending on the rules adopted as a result of this Notice of
    Proposed Rule Making, the Report and Order (R&O) ultimately adopted
    in this proceeding may contain new or modified information
    collections. We anticipate that none of the changes would result in
    an increase to the reporting and recordkeeping requirements of
    broadcast stations, newspapers, or applicants for licenses. As noted
    above, we invite small business entities to comment in response to
    the *Further Notice*.

## E. Steps Taken to Minimize Significant Impact on Small Entities, and Significant Alternatives Considered  {#e.-steps-taken-to-minimize-significant-impact-on-small-entities-and-significant-alternatives-considered .unnumbered}

57. The RFA requires an agency to describe any significant alternatives
    that it has considered in reaching its proposed approach, which may
    include the following four alternatives (among others): (1) the
    establishment of differing compliance or reporting requirements or
    timetables that take into account the resources available to small
    entities; (2) the clarification, consolidation, or simplification of
    compliance or reporting requirements under the rule for small
    entities; (3) the use of performance, rather than design, standards;
    and (4) an exemption from coverage of the rule, or any part thereof,
    for small entities.[^121]

58. We are directed under law to describe any alternatives we consider,
    including alternatives not explicitly listed above.[^122] This
    *Further Notice* initiates the next quadrennial review of the media
    ownership rules and seeks public comment on the issues raised by the
    Prometheus Remand Order. Thus, it invites comment on how to address
    the court's decisions in the Prometheus Remand Order with respect to
    the local TV ownership rule, the local radio ownership rule, and the
    cross-media limits. In addition, the Further Notice asks for comment
    on whether the dual network rule remains necessary in the public
    interest as a result of competition.[^123] The *Further Notice* also
    seeks comment on the minority ownership proposals made by Minority
    Media and Telecommunications Council in comments in the 2002
    biennial ownership proceeding.[^124] Parties' discussions of
    alternatives that are in their submitted comments will be fully
    considered. We especially encourage small entity comment.

**F. Federal Rules that May Duplicate, Overlap, or Conflict With the
Proposed Rules**

None.

**STATEMENT OF**

**CHAIRMAN KEVIN J. MARTIN**

*Re: 2006 Quadrennial Regulatory Review -- Review of the Commission's
Broadcast Ownership Rules and Other Rule Adopted Pursuant to Section 202
of the Telecommunications Act of 1996; 2002 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;
Cross-Ownership of Broadcast Stations and Newspapers; Rules and Policies
Concerning Multiple Ownership of Radio Broadcast Stations in Local
Markets; Definition of Radio Markets* (MB Docket Nos. 06-121, 02-277,
and MM Docket Nos. 01-235, 01-317 and 00-244).

Today, the Commission opens a process to review its media ownership
rules, a topic of vital importance to our democracy. We begin this
dialog in a neutral and even-handed fashion. The action responds to the
Third Circuit's decision in *Prometheus Radio Project v. FCC*.

It has been nearly three years since the Third Circuit stayed the
Commission's previous rules[^125] and nearly two years since the Third
Circuit instructed the Commission to respond to the court with further
justification or amended rules.[^126]

As we embark upon this comprehensive review, the Commission should take
into account the competitive realities of the media marketplace while
also ensuring the promotion of the important goals of localism and
diversity. As the item indicates, the Commission will look carefully at
the relationship between media ownership and localism as it moves
forward with this rulemaking. To that end, the Commission will
incorporate into this proceeding the efforts undertaken on this issue
since the last examination of our media ownership rules.

Public input is integral to this process. The Commission has adopted an
extended comment period of 120 days. Over the next several months, the
Commission will hold half a dozen public hearings around the country on
the topic of media ownership to more fully involve the American people.
I look forward to hearing from the American people on a variety of
subjects at these hearings such as the impact of the Commission's rules
on localism, campaigns and community event coverage, minority ownership,
and various types of programming like children's and family-friendly
programming and independent and religious programming. The Commission
also is creating a new webpage on this topic that will further
contribute to making this an open and transparent process.

Finally, the Commission will initiate studies to address unanswered
questions about the impact of media ownership. We will seek the
resources necessary for comprehensive studies. They will be on a variety
of topics that will incorporate issues including how the public gets its
news and information, competition across media platforms, marketplace
changes since we last reviewed our ownership rules, localism,
independent and diverse programming and the production of children's and
family-friendly programming.

I look forward to working with my colleagues on each of these efforts
and on these issues of great importance to the industry and the
listening and viewing public.

**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS,**

**CONCURRING IN PART, DISSENTING IN PART**

Re: *2006 Quadrennial Regulatory Review & 2002 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, Cross-Ownership of Broadcast Stations and Newspapers, Rules and
Policies Concerning Multiple Ownership of Radio Broadcast Stations in
Local Markets Definition of Radio Markets* (MB Docket Nos. 06-121,
02-277, MM Docket Nos. 01-235, 01-317, 00-244)

One thing we can probably all agree on is the need to start this
proceeding. It has been two years since the Third Circuit sent back to
us the misguided handiwork of the previous Commission. We owe the court
a response to its instruction to revisit this proceeding and to do it
right this time. Additionally, Congress instructed us to review all our
media ownership rules in a quadrennial review, which by statute must
commence this year---another reason why we should proceed. Meanwhile,
the rush to consolidation continues. Since we last voted on this issue
three years ago, there have been more than 3300 TV and radio stations
that have had their assignment and transfer grants approved. So even
under the old rules, consolidation grows, localism suffers and diversity
dwindles. For these reasons, I agree that we need to start this
proceeding now.

But in Washington, things aren't always what they seem. In fact, this
innocuous-looking document initiates the single most important public
policy debate that the FCC will tackle this year. Don't let its slimness
fool you. It means that this Commission has begun to decide on behalf of
the American people the future of our media. It means deciding whether
or not to accelerate media concentration, step up the loss of local news
and change forever the critical role independent newspapers perform for
our Country.

It's tempting to see this debate as important only to giant media
moguls. Some companies want the government to make the decision to rush
into more media concentration behind closed doors in sequestered
Washington bureaucracies. But I believe that Americans need to know what
the FCC is doing and that we have a solemn obligation to encourage
public participation in the decision. It's important because if we make
the wrong decision our communities and our country will suffer. This
debate will have far reaching implications for the credibility of
information Americans get from the media---for the vitality of the civic
dialogue that determines the direction of our democracy---and for
whether TV and radio offer entertainment that is creative, uplifting and
local or degrading, banal and homogenized.

Let's review some history. We all know that in 2003 the FCC tried to
eliminate important safeguards that protected media diversity, localism
and competition. A majority of Commissioners approved *stunning*---there
is no other word for it---rules that would allow one corporation to own,
in a single community, up to three TV stations, eight radio stations,
the cable system, the only daily newspaper and the biggest Internet
provider. How can it be good for our Country to invest such sweeping
power in one media mogul or one giant corporation?

Three years ago the FCC tried to inflict this massive wave of further
consolidation onto an already highly concentrated media industry. The
majority of the Commission voted to do so without seeking adequate input
from the American people, without conducting adequate studies and
without even revealing to the country what the new rules would be before
forcing a vote. I pleaded with the majority to do more comprehensive
research, to ask the tough questions and to halt the blind rush to more
consolidation. My pleading fell on deaf ears. A public, transparent
process was not what was wanted. Instead, our far-reaching review of
critical media concentration protections was run as a classic
inside-the-Beltway process with too little outreach from the Commission
and too little opportunity for public participation.

The Commission's stealth process three years ago and the ownership rules
that resulted from it galvanized Americans all across this country. In
response, millions of Americans from right and left, Republican and
Democrat, concerned parents, creative artists, religious leaders,
independent businesses, civil rights activists and labor organizations
united to protest the Commission's actions. Senators and members of
Congress from both parties and from all parts of the country called for
those rules to be overturned. Commissioner Adelstein and I traveled the
country attending hearings on this issue. On media consolidation, there
are no red or blue states---there is only an all-American, grassroots
issue about what government proposes to do to the people's airwaves. The
Senate voted twice to overturn the rules and the House, it was clear to
all, would have done so if permitted to vote. In time, the court held
that the FCC's ownership rules were legally and procedurally flawed,
sending them back to the FCC to begin again, which brings us to today.

All of that is wrapped up in this little document. Don't underestimate
it. We have a choice to make. Will we repeat the mistakes of the past?
Or will we work for a process and an outcome that respect the millions
of Americans that care deeply about their communities' media and what
their kids watch, hear and read? We'll soon know what choice the FCC
makes. We'll undoubtedly have some hearings and some research this
time---I think at least that part of the lesson has been learned. But
Americans know the difference between a fig leaf and a real commitment.

If you see hearings in your hometown, instead of a just a few
preselected cities, you'll know. If you see FCC Commissioners come to
listen to your point of view personally, instead of expecting you to
hire a \$500 an hour lobbyist to get heard, you'll know. If the FCC
contracts for independent, well-funded studies and seeks public comment
on those studies, instead of buying a few-half hearted, time-crunched
papers that slide into the record without comment, you'll know. And,
critically, if the FCC shows you the specific rules that will reshape
the American media before forcing a vote, instead of rushing from this
short document to a final vote, you'll know.

You should expect your government to do more this time. We ought to be
able to work together and do better. I hope we can. The answer will
become apparent in the months ahead. The process we are launching will
have to be watched and validated every step of the way.

To be successful in this effort, we will need to work really hard, get
around the country, look at various markets, collect the data and reach
out to build an adequate record. Good, sustainable rules are the result
of an open public process, a serious attempt to gather all the relevant
data and a commitment to transparency. Bad rules and legal vulnerability
result from an opaque regulatory process and inadequate data.

-   ***[Public Process]{.underline}:*** This time we need to include the
    people in our process instead of trying to exclude them. We need to
    hear from anybody who has a stake in how this is resolved. And
    everyone has an interest and a stake. I asked for some dozen themed
    hearing around the country, so we could examine the impact of media
    consolidation on such topics as minorities, senior citizens,
    religious broadcasters, family-friendly programming, jobs,
    independent programming, those with disabilities, campaign coverage
    and payola. We couldn't get agreement on these. But we will monitor
    closely any hearings that are held under Commission auspices and if
    they fall short of true openness and inclusiveness, I will do my
    part to make that known. Good hearings must include all sides of the
    debate and be held in diverse communities around the country. Last
    time, I learned fifty times more about what is going on in various
    media markets at grassroots hearings and town hall meetings than I
    ever could have learned by isolating myself in my office inside the
    Beltway and reading formal comments. And citizens have a right to
    expect direct access to decision-makers at the FCC. When a
    regulatory agency is charged by the law with important public policy
    matters, it has the obligation to reach out, explain and solicit
    citizen input. A handful of generalized FCC hearings are not
    themselves enough. I hope citizens in hundreds of communities across
    this country will gather to discuss the future of the media. These
    issues deserve to be discussed in every community because they are
    going to affect every community. For my part, I stand ready to
    attend as many of these community hearings as I can.

-   ***[Research and Data]{.underline}:*** This time, we also need
    better research and a willingness to ask the tough questions. We
    need independent studies on the impact of media concentration in a
    variety of markets so that the FCC can base its decisions on a more
    solid foundation. Last time a number of in-house studies were
    undertaken, but they didn't ask most of the questions that needed to
    be asked and both their methodologies and conclusions received
    widespread criticism. We are talking here about understanding a
    mega-billion dollar industry, and a few studies done on the cheap
    just are not going to tell us what we need to know. What we need
    instead are independent researchers to produce some real data on
    important questions like the impact on independence when newspapers
    and broadcasters are owned by the same conglomerate, the impact of
    increasing consolidation on minorities and the correlation between
    media concentration and broadcast indecency. These are only a few of
    the questions we need to understand before we vote. I, for one,
    would be reluctant to vote on final rules unless and until we have
    the information and analysis needed to inform our votes.

-   ***[Transparency]{.underline}:*** This time, we need a transparent
    process that ensures we understand the full implications of our
    decisions---both the intended consequences and the unintended ones.
    Such a process makes inevitably for better policy. It also makes for
    better buy-in from the people. And it would enhance the
    sustainability of Commission decisions in court. A transparent
    process is especially critical for issues of this magnitude when the
    Notice asks broad, general questions. Let's remember the beating the
    Commission took in court for failing to inform the American people
    of its proposals last time before we were required to vote. I am
    deeply disappointed that this Notice does not contain a specific,
    up-front commitment to share proposed media concentration rules with
    the American people in advance of a final vote. I do not see how we
    can be transparent and comply with the dictates of the Third Circuit
    without letting the American people know about and comment on any
    new standards of measurement that we adopt in developing our
    ultimate decision. I frankly fear that in the absence of a Further
    Notice and lacking a commitment to a comprehensive final Order
    incorporating all of the ownership rules, an attempt could be made
    to split off one or two rules and ram them through the Commission.
    This must not be allowed to happen and I dissent in part because
    such protections for the people are lacking in today's proposal.

Finally, there are two other aspects of this item that should give us
all pause. I am disappointed that localism is not front-and-center in
this proceeding. For decades the Commission has interpreted the
Communications Act to require broadcasters to be responsive to local
concerns and to represent a diversity of views and opinions. Localism
and media ownership are inextricably linked. Ownership interests have a
duty to air programming responsive to the needs and interests of their
communities. But if we really want our local stations to be accountable
to our local community, why should citizens who want to dial up local
station owners have to call from one end of the Country to another? Is
it really good for our Country for distant powers in New York or Los
Angeles to dictate so much of what we see, hear and read in our
hometown? These are important questions that go right to the heart of
this proceeding. But you won't find them asked here. Instead, the
Commission goes to great lengths to isolate our stalled localism
proceeding from today's media ownership proceeding. The most this Notice
does is commit our staff to compiling a summary of the dated record we
have in our localism docket. Though there is bipartisan support for
completing our localism proceeding before revving up media ownership,
the Commission will apparently choose to leave localism stuck at the
starting gate.

I am also disappointed that this item fails to commit to specific
efforts to advance ownership by minorities. The Third Circuit took the
Commission's earlier decision to the woodshed for sidelining proposals
to advance minority ownership. Despite this, all we can muster up here
are a few questions about this glaring challenge. Why won't we commit to
studying the state of minority media ownership in this country and the
impact that consolidation has had? Are we afraid of what the facts might
show? It is no excuse to argue that many of the nation's broadcast
licenses were given away decades ago when women and people of color were
unlikely to obtain them. Those sins of omission need to be excised and
new strategies to encourage diversity in ownership and jobs and
programming need to be put in place. While people of color make up over
30 percent of our population, they own only 4.2 percent of the nation's
radio stations and 1.5 percent of the nation's TV stations! More recent
statistics suggest that even these numbers are in free fall. I believe
the ownership of our media should look more like the diversity of our
people. But if all the Commission does is ask a few pat questions and
then sweep this issue under the rug one more time, we are not laying the
groundwork for progress.

Let me conclude with a challenge to our nation's media to take up this
issue, highlight it, give it the attention it merits, inform the debate
and spark a national conversation on these issues all across this broad
land of ours. With relatively few exceptions, the media---big media
especially---failed the test last time, and failed it badly. I hope that
was not because some very important media enterprises have financial
interests riding on the outcome of the ownership proceeding. Major media
companies are at pains to assure us their newsgathering operations are
independent of their corporate interests. Here is an excellent
opportunity to test that proposition. Because ignoring the issue of
media concentration is not going to make it go away.

Launching this proceeding is the easy part. Now comes the hard work. So
much hangs in the balance. If we are serious about it and do not treat
this proceeding as business-as-usual, if we approach these issues with
receptivity on all sides to hard facts and compelling evidence and if we
reach out---really reach out---to people all across this land, I believe
the Commission can arrive at a decision that will withstand judicial and
Congressional scrutiny and more importantly, the scrutiny of the
American people. I for one am ready to roll up my sleeves and work with
my colleagues to get the job done and done right this time. The American
people have a right to expect more from this Commission than they got
from the previous one.

**STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN**

**CONCURRING IN PART, DISSENTING IN PART**

*Re: 2006 Quadrennial Review & 2002 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,
Cross-Ownership of Broadcast Stations and Newspapers, Rules and Policies
Concerning Multiple Ownership of Radio Broadcast Stations in Local
Markets Definitions of Radio Markets,* Notice of Proposed Rule Making

We are required by law and by the Third Circuit Court of Appeals to
launch this proceeding. It is entirely necessary that we do so. Congress
requires a quadrennial review of all of our media ownership rules, and
we must respond to the Third Circuit remand of our 2003 ownership
decision. Appropriately, this broad inquiry responds to both
requirements.

Unfortunately, the manner in which the Commission is launching this
critical proceeding is totally inadequate. It is like submitting a
high-school term paper for a Ph.D. thesis. This Commission failed in
2003, and if we don't change course, we will fail again.

The large media companies wanted, and today they get, a blank check to
permit further media consolidation. The Notice is so open-ended that it
will permit the majority of the Commission to allow giant media
companies to get even bigger at the time, place and manner of their
choosing. That is the reason I have refused to support launching this
proceeding until now, and it is why I am dissenting from the bulk of
this Notice. This Notice is thin gruel to those hoping for a meaty
discussion of media ownership issues.

In particular, this item lacks commitment to three basic building blocks
of a successful rulemaking on media ownership -- an issue that affects
the daily lives of every single American. First, the process does not
commit to giving the public an opportunity to comment on specific
proposals ***before*** any changes to the rules are finalized. Second,
it does not commit to completing the localism proceeding and rulemaking
***before*** changing the ownership rules. Finally, it does not commit
to making any final decision in a comprehensive manner. Given the
history of this proceeding, these failings are astonishing.

Our ill-fated June, 2003, decision was rejected by Congress, the courts
and the public. The United States Senate voted on a bipartisan basis to
reject the bulk of Order and have us start from scratch. The court found
that the Commission fell "short of its obligation to justify its
decisions to retain, repeal, or modify its media ownership regulations
with reasoned analysis."[^127] Three million citizens, from right to
left and virtually everyone in between, weighed in to oppose our
decision. It is my sincere hope that we can avoid failing the test
again, but doing better will require a commitment to openness and the
democratic process that is largely absent from today's Notice.

It is all the more inexcusable in the wake of the unprecedented
rejection of the Commission's 2003 decision that we launch such a
shallow process today. The Third Circuit gave us explicit suggestions on
how to meet the challenge, which we ignore today at our own peril. In
its opinion, the court specifically decided to remand, in part, to give
the Commission "an opportunity to cure its questionable notice."[^128]
In clear and certain terms, the court said "it is advisable that any new
"metric" for measuring diversity and competition in a market be made
subject to public notice and comment ***before*** it is incorporated
into a final rule."[^129]

I believe success or failure of this proceeding will depend to a large
extent on the Commission's willingness to listen to American people.
Consequently, I am deeply troubled by the majority's refusal to provide
assurance that the public will have an opportunity to comment on
specific proposals before new rules are finalized. The Court, common
sense and simple fairness all demand that we allow public comment on the
specific rules that are likely to change the media landscape for
generations to come.

If the Commission had released its proposals in 2003 for further public
comment, as I advocated at that time, we could have avoided many of the
problems that led to the Court's rejection of our rules. This time, we
have no excuse. This time, we have been warned. We cannot slip rule
changes through quietly, based on a vague notice, to avoid controversy.
It is too late for that. Our process for deciding these rules should be
open and transparent. The goal of this proceeding should be to do the
job right -- not "pull a fast one" on the American people.

Second, it would be unacceptable to finalize any decisions regarding
media ownership until we ***complete*** our localism proceeding, which
began in 2003 in direct response to the millions of Americans who
expressed outrage at the Commission's relaxation of media ownership
rules. Then-Chairman Michael Powell said the Commission "heard the voice
of public concern about the media loud and clear. Localism is at the
core of these concerns."[^130] Unanimously, the Commission launched the
localism proceeding because we had failed to use the structural media
ownership rules to address the public's concerns.

Now, three years later, the localism proceeding has languished in the
bowels of the Commission. We have failed to complete the field hearings
we promised the American people. We have failed to complete important
research studies on the extent to which there is sufficient coverage of
local civic affairs, music and programming on radio and television. We
have failed to produce final rules on any aspect of localism, including
minimum public interest standards or license renewal processing
guidelines. Simply put, we have failed to protect the interests of the
American people.

Third, the rules are intended to work together, regulating the ownership
of media assets in all urban, suburban and rural markets in the United
States. On this point, I am profoundly disappointed that there is no
commitment to handle any final rule changes in a comprehensive manner.
It is especially discouraging that this Notice does not specifically
seek comment on how all the media ownership rules work together, in
tandem. . If the Commission decides to allow further consolidation in
one field, such as newspaper/broadcast cross-ownership, we need to know
at the same time how we might move on, for example, the duopoly rule. To
split them, and operate in a vacuum, is to willfully ignore our
responsibility to regulate the number of outlets a single owner can
control in any given community. Moreover, the courts have asked us to
ensure the consistency of our rules, and we cannot do so without a
comprehensive final order. Any attempt to modify the rules individually
may be good politics, but it would be poor public policy and a great
disservice to the American people.

There are many other infirmities in this Notice. Given the circuit
court's admonishment that there must be a "rational connection between
the facts found and the choice made,"[^131] there is an urgent need for
the Commission to complete research papers and reports, which provide
professional and objective information about current market conditions,
trends and future expectations of the radio, television and newspaper
sectors. The urgent need for this research is much more pronounced in
light of the compelling public interest in promoting diversity and
localism the media marketplace.

There are many key issues that deserve their own separate hearing,
including the impact of media consolidation on minorities, children, the
elderly, Americans with disabilities, and those who live in rural areas.
We should also hold hearings on the potential effects of rule changes on
indecency and family-friendly fare, religious broadcasting, independent
programming, coverage of campaign and community events, music and the
creative arts and the growth of the Internet, to name a few.

It was my hope that by issuing this Notice today the Commission would
seriously endeavor to review the media ownership rules, in accordance
with the statutory mandate to promote diversity, localism and
competition. Instead, we seem to be repeating past mistakes.
Regrettably, this Notice contains major flaws that could set the stage
for another destructive rollback of consumer protection rules.

The task ahead requires transparency, leadership, bipartisanship,
consensus building, thoughtful deliberation, and genuine participation
by the American people. Fortunately, there is still time to get it
right. I remain hopeful the Commission will change course and conduct a
process that fulfills our legal responsibilities and reflects the best
interests of the public. The American people deserve nothing less.

**STATEMENT OF**

**COMMISSIONER DEBORAH TAYLOR TATE**

*Re: 2006 Quadrennial Regulatory Review and 2002 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, et al.,* MB Docket Nos. 06-121 and 02-277, MM Docket Nos. 01-235,
01-317 and 00-244.

With today's *Further Notice of Proposed Rulemaking* (*Further Notice*),
we invite the public to comment on how to address the issues raised by
the U.S. Court of Appeals for the Third Circuit in the *Prometheus*
decision and concurrently initiate the next quadrennial review of the
media ownership rules as required by Section 202(h) of the
Telecommunications Act of 1996.

The future is under construction right now, and we need to be addressing
issues like this one in order to create an environment that allows
markets to work while still protecting the interests of consumers. My
recent trip to China drove home how interconnected today's media world
really is. As China prepares for the 2008 Olympic Games, I now realize
how Americans will have the instantaneous experience of these games from
a world away not just from the American media but from the global media.
As we move forward, we must realize that the world is indeed
interconnected and that American companies must be able to compete in
order to continue to be global leaders in the media marketplace.

Moreover, I believe that it is critical that we, as policymakers, do not
lose touch with how communications technology, and the decisions we make
in this arena, may serve to improve, enhance, educate, and maybe even
inspire the lives of all Americans. Media ownership will affect issues
as diverse as the quality and quantity of children's television, the
diversity of opinions in our nation's political discourse, or how we get
important information in the event of an emergency. I look forward to
the public's input on the issues presented by this *Further Notice*. In
particular, I hope that we can help consumers understand the importance
of the issues we are discussing and give them an opportunity to make
their voices heard. I am committed to working with my FCC colleagues to
ensure that our actions further competition, localism, and diversity in
the global media marketplace.

**STATEMENT OF**

**COMMISSIONER ROBERT M. MCDOWELL**

*Re: 2006 Quadrennial Regulatory Review and 2002 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, et al.,* MB Docket Nos. 06-121 and 02-277, MM Docket Nos. 01-235,
01-317 and 00-244

With this Further Notice, we embark on the Commission's next
comprehensive review of the broadcast ownership rules. Our rules must
take into account the dramatic changes that have occurred in the media
landscape since the Commission adopted them. At the same time, we must
ensure that the rules continue to promote the long-standing values of
competition, diversity and localism that lie at the foundation of our
nation's broadcasting system.

I hope that our review will result in a reasoned framework that answers
the legal and evidentiary issues posed to us by the Third Circuit in the
*Prometheus* decision and resolves the regulatory uncertainty that
followed the appeal of the Commission's 2002 order through the courts.
The questions asked in the Further Notice provide a solid start to our
inquiry.

As our experience with the 2002 biennial review revealed, the debate
over broadcast ownership is a debate about the vitality of our democracy
and the appropriate balance among competitive efficiencies, diversity of
voices and local focus. The debate elicits the opinions and passions of
people from all walks of life from all over the country. I am eager to
learn more about the issues from the perspectives of all of the
interested parties, be they broadcasters, consumers, academics, artists
or others.

I thank Donna Gregg and the Media Bureau staff for their hard work on
this important proceeding. I support the Further Notice and commend the
Chairman on his strong leadership in this area.

[^1]: *See 2002 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*, 18 FCC Rcd
    13620, 13711-47 (2003) ("*2002 Biennial Review Order*"), *aff'd in
    part and remanded in part*, *Prometheus Radio Project, et al. v.
    F.C.C.*, 373 F.3d 372 (2004) ("*Prometheus*"), *stay modified on
    rehearing*, No. 03-3388 (3d Cir. Sept. 3, 2004) ("*Prometheus
    Rehearing Order*"), *cert. denied,* 73 U.S.L.W. 3466 (U.S. June 13,
    2005) (Nos. 04-1020, 04-1033, 04-1036, 04-1045, 04-1168, and
    04-1177).

[^2]: *See* Telecommunications Act of 1996, Pub. L. No. 104-104, 110
    Stat. 56, § 202(h) (1996) ("1996 Act"); Consolidated Appropriations
    Act, 2004, Pub. L. No. 108-199, § 629, 118 Stat. 3 (2004)
    ("Appropriations Act") (amending Sections 202(c) and 202(h) of the
    1996 Act).

[^3]: 47 C.F.R. § 73.3555(d) (2005).

[^4]: 47 C.F.R. § 73.3555(b) (2005) (allowing the combination of two
    television stations in the same Designated Market Area ("DMA"), as
    determined by Nielsen Media Research or any successor entity,
    provided: (1) the Grade B contours of the stations do not overlap;
    or (2) (a) at least one of the stations is not among the four
    highest-ranked stations in the market, and (b) at least eight
    independently owned and operating full power commercial and
    noncommercial television stations would remain in that market after
    the combination).

[^5]: 47 C.F.R. § 73.3555(c) (2005) (allowing common ownership of one or
    two TV stations and up to six radio stations in any market in which
    at least 20 independent "voices" would remain post-combination; two
    TV stations and up to four radio stations in a market in which at
    least ten independent "voices" would remain post-combination; and
    one TV and one radio station notwithstanding the number of
    independent "voices" in the market. If permitted under the local
    radio ownership rules, where an entity may own two commercial TV
    stations and six commercial radio stations, it may own one
    commercial TV station and seven commercial radio stations. For this
    rule, a "voice" includes independently owned and operating
    same-market, commercial and noncommercial broadcast TV stations,
    radio stations, independently owned daily newspapers, and cable
    systems (all cable systems within the DMA are counted as a single
    voice).

[^6]: 47 C.F.R. § 73.658(g) (permitting a television broadcast station
    to affiliate with a network that maintains more than one broadcast
    network, unless the dual or multiple networks are created by a
    combination between ABC, CBS, Fox, or NBC).

[^7]: 47 C.F.R. § 73.3555(a) (2005). The local radio ownership rule was
    the subject of a separate proceeding which was incorporated into the
    2002 Biennial Review. *Rules and Policies Concerning Multiple
    Ownership of Radio Broadcast Stations in Local Markets,* 16 FCC Rcd
    19861 (2001) (*"Local Radio Ownership NPRM"*); *Definition of Radio
    Markets*, 15 FCC Rcd 25077 (2000) ("*Definition of Radio Markets
    NPRM*").

[^8]: 47 C.F.R. § 73.3555(c) (2005) (prohibiting common ownership of a
    daily newspaper and a broadcast station in the same market). The
    newspaper/broadcast cross-ownership rule was the subject of a
    separate proceeding which was incorporated into the 2002 Biennial
    Review. *See Cross-Ownership of Broadcast Stations and Newspapers*,
    16 FCC Rcd 17283 (2001) (*"Newspaper/Broadcast Cross-Ownership
    NPRM"*).

[^9]: 1996 Act, § 202(h); Appropriations Act, § 629.

[^10]: *Prometheus*, 373 F.3d 372. The court had earlier stayed the
    effectiveness of the Commission's decision pending review. *See
    Prometheus Radio Project, et al. v. FCC*, No. 03-3388 (3rd Cir.
    Sept. 3, 2003) (*per curiam*). In *Prometheus*, the court continued
    the stay pending its review of the Commission's action on remand. On
    September 3, 2004, in response to the Commission's petition for
    rehearing, the court allowed certain revisions to its local radio
    ownership rules -- "specifically, using Arbitron Metro markets to
    define local markets, including noncommercial stations in
    determining the size of a market, attributing stations whose
    advertising is brokered under a Joint Sales Agreement to a brokering
    station's permissible ownership totals, and imposing a transfer
    restriction (collectively, the "Approved Changes")" -- to go into
    effect, but continued its stay of the other revisions. *Prometheus
    Radio Project, et al. v. FCC*, No. 03-3388 (3d Cir. Sept. 3, 2004)
    (*"Prometheus Rehearing Order"*). Accordingly, except for the
    Approved Changes, the ownership rules that were in effect prior to
    the *2002 Biennial Review Order* remain in effect.

[^11]: The national television ownership limit and the dual network rule
    were not remanded to the Commission. Petitioners did not appeal the
    Commission's decision regarding the dual network rule. The court
    held that challenges to the Commission's decision to raise the
    national TV ownership limit to 45 percent were moot because Congress
    subsequently directed the Commission by statute to set the cap at 39
    percent and stated that the quadrennial review requirement does not
    apply to this limitation. *Prometheus,* 373 F.3d at 396. Because of
    this statutory directive, we do not address the national television
    ownership limit in this *Further Notice*.

[^12]: *2002 Biennial Review Order*, 18 FCC Rcd at 13627 para. 17. *See
    also, Prometheus*, 373 F.3d at 446-47.

[^13]: *Prometheus,* 373 F.3d at 421 n.59.

[^14]: *2002 Biennial Review Order,* 18 FCC Rcd at 13634, 13636 paras.
    46, 50. *See also, e.g.,* MMTC Jan. 2, 2003 Comments, MMTC Feb. 3,
    2003 Reply Comments.

[^15]: For example, the Advisory Committee on Diversity for
    Communications in the Digital Age has submitted recommendations
    regarding policies and practices intended to enhance the ability of
    minorities and women to participate in telecommunications and
    related industries. *See* Letter from Julia Johnson, Chairperson,
    Federal Advisory Committee on Diversity in the Digital Age to Kevin
    J. Martin, Chairman, FCC (June 8, 2006) (filed in MB Docket 02-277).

[^16]: *Broadcast Localism (MM Docket No. 04-233)*, Notice of Inquiry,
    19 FCC Rcd 12425 (2004) (the "*Broadcast Localism* *NOI*"), para. 1.

[^17]: *2002 Biennial Review Order,* 18 FCC Rcd at 136643 para. 73*.*

[^18]: Public Notice, "FCC Chairman Powell Launches 'Localism in
    Broadcasting' Initiative" (rel. Aug. 20, 2003).

[^19]: *Broadcast Localism NOI*, 19 FCC Rcd at 12425.

[^20]: *Id*. at 12427-28, para. 7.

[^21]: *See 2002 Biennial Review Order*, 18 FCC Rcd at 13668 para. 132
    and cites therein.

[^22]: *Sinclair Broadcast Group, Inc. v. FCC*, 284 F.3d 148, 163-65
    (D.C. Cir. 2002) ("*Sinclair*").

[^23]: The Commission's competition analysis focused not on competition
    for advertising, but on competition for viewers in the "delivered
    video programming market," which includes television broadcast
    stations as well as multichannel video programming distributors
    ("MVPDs"). *2002 Biennial Review Order*, 18 FCC Rcd at 13671-74
    paras. 141-46.

[^24]: *Id.* at 13668 para. 133*.*

[^25]: *Id.* at 13686 para. 171.

[^26]: *Id.* at 13668 para. 133*.*

[^27]: *Id.* at 13685 para. 169.

[^28]: *Id.* at 13668 para. 133.

[^29]: *Id.* at 13668 para. 134.

[^30]: *Id.* at 13693 paras*.* 192-93. The Commission's decision to set
    limits that would result in six firms was partly based upon the
    horizontal merger guidelines used by the Department of Justice
    ("DOJ") and Federal Trade Commission ("FTC") in antitrust analysis.
    *Id.* (citing *Horizontal* *Merger* *Guidelines issued by the U.S.
    Department of Justice and the Federal Trade Commission*, 57 Fed.
    Reg. 41552 (dated Apr. 2, 1992, revised, Apr. 8, 1997) ("*DOJ/FTC
    Merger Guidelines*")). Under these guidelines, markets with
    Herfindahl-Hirschmann Index ("HHI") levels between 1000 and 1800 are
    considered moderately concentrated. The HHI score of a market with
    six equal-sized competitors is below the *DOJ/FTC Merger Guidelines*
    1800 threshold for highly concentrated markets. *Id.*

[^31]: *2002 Biennial Review Order,* 18 FCC Rcd at 13668 para. 134. As
    under the existing rule, the revised rule provided that a station's
    rank would be based on the station's most recent all-day audience
    share, as measured by Nielsen or any comparable professional and
    accepted rating service, at the time an application for transfer or
    assignment of license is filed. *Id*. at 13692 para. 186.

[^32]: *Id.* at 13694 para. 193.

[^33]: *Id.*

[^34]: *Id.* at 13692 para. 187. Combinations in existence as of the
    time of the *2002 Biennial Review Order* were grandfathered. *2002
    Biennial Review Order,* 18 FCC Rcd at 13807-08 paras. 482-84.

[^35]: *Id.* at 13692 para. 186-87 n.399.

[^36]: *Id.* at 13691-92 para. 186. Satellite stations, which retransmit
    all or a substantial part of the programming of a commonly-owned
    parent station, are exempted from the rule. *Id*. at 13710 para.
    233.

[^37]: *Id.* at 13708 para. 225 (eliminating requirement to show that no
    out-of-market buyer is available for failed, failing and unbuilt
    station waivers); *Id*. at 13710 para. 231 (stating that the
    Commission also would consider waivers of the local TV ownership
    rule where the stations at issue are in the same DMA, but are not
    available over-the-air or via MVPDs in any of the same geographic
    areas); *Id.* at 13708-10 paras. 227-30 (in markets with 11 or fewer
    stations, parties can seek a waiver of the top four-ranked
    restriction by making certain showings).

[^38]: *2002 Biennial Review Order,* 18 FCC Rcd at 13708 para. 225.
    *See* 47 C.F.R. 73.3555 Note 7 (setting forth the criteria that must
    be met in order for a station to qualify as "failed, failing, or
    unbuilt").

[^39]: *2002 Biennial Review Order*, 18 FCC Rcd at 13708 para. 225.

[^40]: *Prometheus,* 373 F.3d at 414.

[^41]: *Id.* at 415.

[^42]: *Id.* at 415.

[^43]: *Id.* at 415.

[^44]: *Id.* at 417-18 (citing *Sinclair,* 284 F.3d at 162; *AT&T Corp.
    v. FCC,* 220 F.3d 607, 627 (D.C. Cir. 2000).

[^45]: *Id.* at 417-18.

[^46]: *Id.* at 418-19.

[^47]: *Id.* at 419-20.

[^48]: *Id.* at 421.

[^49]: *Prometheus,* 373 F.3d at 421 n.59. In the *2002 Biennial Review
    Order*, the Commission stated that it would commence a separate
    proceeding to examine proposals to advance broadcast ownership
    opportunities for minorities and women. *2002 Biennial Review
    Order*, 18 FCC Rcd at 13634, 13636 paras. 46, 50.

[^50]: *Prometheus,* 373 F.3d at 421 n.59.

[^51]: *2002 Biennial Review Order,* 18 FCC Rcd at 13712, 13733-34
    paras. 239, 294. The Commission maintained the AM and FM ownership
    limits due to technical and marketplace disparities between the two
    services. *Id.,*18 FCC Rcd at 13733-34 para. 294.

[^52]: *See* 1996 Act § 202(b); 47 C.F.R. § 73.3555(a).

[^53]: *2002 Biennial Review Order*, 18 FCC Rcd at 13712, 13724-28
    paras. 239, 273-81.

[^54]: *Id.* at 13712, 13724-28 paras. 239, 273-81.

[^55]: *Id.* at 13729, 13870-73 paras. 282-83, 657-70. For areas not
    covered by Arbitron Metros, the Commission adopted a modified
    contour-overlap methodology pending the outcome of the rulemaking.
    This interim contour-based rule excludes from a market radio
    stations that have transmitter sites farther than 92 kilometers (58
    miles) away from the perimeter of the overlapping area that defines
    the radio market. The interim rule does not count as in the market
    any commonly owned stations that are not counted against an owner in
    a market for purposes of applying the local radio ownership rule.
    *Id.* at 13717-28, 13729-30 paras. 250-54, 284-86. The issues raised
    in the non-Arbitron market proceeding will be addressed separately.

[^56]: *Id.* at 13713 para. 239. The Commission held that its prior
    exclusion of these stations failed to account for their competitive
    impact on a radio market. *Id.* at 13730 para. 287. The Commission
    found that although they do not compete in the radio advertising
    market, noncommercial stations exert competitive pressure in the
    radio listening and radio program production markets. *Id*. at 13734
    para. 295.

[^57]: *Id.* at 13742-46 paras. 316-25.

[^58]: *2002 Biennial Review Order*, 18 FCC Rcd at 13807-09 paras.
    482-86.

[^59]: *Prometheus,* 373 F.3d at 425.

[^60]: *Id.* at 429-30.

[^61]: *Id.* at 421-30. Although the Commission did not require owners
    to divest their interests in stations, it held that parties would
    have to comply with the ownership rules at the time a transfer of
    control or assignment application is filed, unless the entity
    acquiring control of the combination was an "eligible entity," which
    was defined as an entity that would qualify as a small business
    consistent with Small Business Administration ("SBA") standards for
    its industry grouping. *2002 Biennial Review Order*, 18 FCC Rcd at
    13809-12 paras. 487-90.

[^62]: *Prometheus,* 373 F.3d at 432-34 (Because the Commission "has in
    the past extolled the value of audience share data for measuring
    diversity and competition in local markets," its "reliance on the
    fiction of equal-sized competitors, as opposed to measuring their
    actual competitive power, is even more suspect in the context of the
    local radio rule.").

[^63]: The court noted that the Commission\'s decision to rely on a five
    firm theory for purposes of the local radio ownership rule conflicts
    with the *DOJ/FTC Merger Guidelines*, under which a market with five
    equal-sized competitors is considered "highly concentrated." The
    court held this conflict "suspect" because, elsewhere in the *2002
    Biennial Review Order*, the Commission had relied on the *DOJ/FTC
    Merger Guidelines* to derive its local TV ownership limits. The
    court directed the Commission to address this apparent discrepancy
    on remand. *Prometheus,* 373 F.3d at 433. In addition, the
    Commission had cited game theory articles to support its finding
    that a market that has five or more relatively equal-sized firms can
    achieve a level of market performance comparable to a fragmented,
    structurally competitive market. The court directed the Commission
    to respond to the argument that these game theory articles do not
    rule out market structures other than equal-sized competitors (such
    as one large firm and many small ones) as equally competitive
    markets. *Id*. at 432-33.

[^64]: *Id.* at 434-35.

[^65]: *2002 Biennial Review Order,* 18 FCC Rcd at 13747 para. 327.

[^66]: The service contour for AM radio stations is the 2mV/m contour;
    the service contour for FM radio stations is the 1mV/m contour; and
    the service contour for TV stations is the Grade A contour. The
    previous definition of a daily newspaper was one that was published
    at least four times a week in English. *See 2002 Biennial Review
    Order*, 18 FCC Rcd at 13747 para. 328; *Id. at* n. 717. In the *2002
    Biennial Review Order*, the Commission revised this definition to
    include non-English newspapers published in the primary language of
    the market. *Id.* at 13799-800 paras. 457-58.

[^67]: *Id.* at 13747-48 paras. 328-30.

[^68]: *Id.* at 13748-49 paras. 331-32.

[^69]: *Id.* at 13753-60 paras. 342-54.

[^70]: *Id.* at 13760-62 paras. 355-59.

[^71]: *Id.* at 13768 para. 371.

[^72]: *Id.* at 13775 para. 390.

[^73]: *Id.* at 13775-76 para. 391.

[^74]: *Id.* at 13776-79 paras. 393-400.

[^75]: *Id.* at 13776 para. 392.

[^76]: *Id.* at 13797-801 paras. 452-61. The revised rules do not,
    however, bar a broadcast station from starting a new newspaper in
    its market. *Id.* at 13799 para. 456. For purposes of counting the
    number of stations in a market under the cross media limits, the
    Commission counts both commercial and noncommercial full power
    television stations assigned to the DMA. *Id.* at 13798 para. 454.

[^77]: *Id.* at 13803 para. 466.

[^78]: *Id.* at 13804 paras. 472-73.

[^79]: *Id.* at 13806-07 para. 481.

[^80]: *Prometheus,* 373 F.3d at 398-400.

[^81]: *Id.* at 398.

[^82]: *Id*. at 399.

[^83]: *Id*. at 399-400.

[^84]: *Id.*

[^85]: *Prometheus,* 373 F.3d at 400-02 (citing [*FCC v. Nat'l Citizens
    Comm. for Broad.,* 436 U.S. 775, 801-02
    (1978)](http://www.westlaw.com/Find/Default.wl?rs=++++1.0&vr=2.0&DB=708&FindType=Y&SerialNum=1978114254)
    [(](http://www.westlaw.com/Find/Default.wl?rs=++++1.0&vr=2.0&FindType=Y&SerialNum=1978114254)"*NCCB*"[)).](http://www.westlaw.com/Find/Default.wl?rs=++++1.0&vr=2.0&FindType=Y&SerialNum=1978114254)

[^86]: *Id.* at 402-03

[^87]: *Id.* at 405.

[^88]: *Id.* at 407.

[^89]: *Id.* at 407-08.

[^90]: *Id.* at 408.

[^91]: *Id.* at 402-12.

[^92]: *Id.* at 408-09.

[^93]: *Id.* at 409-11.

[^94]: 47 C.F.R. § 73.658(g).

[^95]: *2002 Biennial Review Order,* 18 FCC Rcd at 13850 para. 599.

[^96]: *Prometheus,* 373 F.3d at 395-97. As noted above, the court held
    that challenges to the Commission's the national TV ownership rule
    were moot because Congress subsequently directed the Commission by
    statute to set the cap at 39 percent. *See* Appropriations Act, §
    629.

[^97]: 47 C.F.R. § 73.3555(d)(2)(i).

[^98]: *Prometheus,* 373 F.3d at 397 (citing the FCC Public Notice
    published at 69 Fed. Reg. 9216-17 (Feb. 27, 2004)).

[^99]: *Id*.

[^100]: *See* 5 U.S.C. § 603.

[^101]: *2002 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, Cross-Ownership
    of Broadcast Stations and Newspapers, Rules and Policies Concerning
    Multiple Ownership of Broadcast Stations in Local Markets,
    Definition of Radio Markets,* 17 FCC Rcd 18503, 18558 App. A (2002).

[^102]: *See generally* 47 C.F.R. §§ 1.1202, 1.1203, 1.1206(a).

[^103]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. §§ 601-612, has
    been amended by the Contract With America Advancement Act of 1996,
    Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the
    CWAAA is the Small Business Regulatory Enforcement Fairness Act of
    1996 (SBREFA).

[^104]: *2002 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, Cross-Ownership
    of Broadcast Stations and Newspapers, Rules and Policies Concerning
    Multiple Ownership of Broadcast Stations in Local Markets,
    Definition of Radio Markets,* 17 FCC Rcd 18503, 18558 App. A (2002).

[^105]: *See* 5 U.S.C. § 603(a).

[^106]: *See id*.

[^107]: *Prometheus Radio Project, et al. v. F.C.C.*, 373 F.3d 372
    (2004) ("*Prometheus*"), *stay modified on rehearing*, No. 03-3388
    (3d Cir. Sept. 3, 2004) ("*Prometheus Rehearing Order*"), *cert.
    denied,* 73 U.S.L.W. 3466 (U.S. June 13, 2005) (Nos. 04-1020,
    04-1033, 04-1036, 04-1045, 04-1168 and 04-1177).

[^108]: *See* Telecommunications Act of 1996, Pub. L. No. 104-104, 110
    Stat. 56, § 202(h) (1996) ("1996 Act"); Consolidated Appropriations
    Act, 2004, Pub. L. No. 108-199, § 629, 118 Stat. 3 (2004)
    ("Appropriations Act") (amending Sections 202(c) and 202(h) of the
    1996 Act). Section 202(h) requires the Commission to periodically
    review its media ownership rules to determine "whether any of such
    rules are necessary in the public interest as the result of
    competition" and to "repeal or modify any regulation it determines
    to be no longer in the public interest."

[^109]: *See Prometheus Rehearing Order*. Accordingly, except for
    revisions to the local radio ownership rule, the preexisting
    ownership rules remain in effect. *See Further Notice, supra*, at
    para. 2 and n.10.

[^110]: 5 U.S.C. § 603(b)(3).

[^111]: *Id*. § 601(3) (incorporating by reference the definition of
    "small business concern" in 15 U.S.C. § 632). Pursuant to the RFA,
    the statutory definition of a small business applies, "unless an
    agency, after consultation with the Office of Advocacy of the SBA
    and after opportunity for public comment, establishes one or more
    definitions of the term where appropriate to the activities of the
    agency and publishes the definition(s) in the Federal Register."

[^112]: *Id.*

[^113]: 15 U.S.C. § 632.

[^114]: OMB, North American Industry Classification System: United
    States, 1997, at 508-09 (1997) (NAICS Code 51320 which was changed
    to 51520 in October 2002). This category description continues,
    "These establishments also produce or transmit visual programming to
    affiliated broadcast television stations, which in turn broadcast
    the programs to the public on a predetermined schedule. Programming
    may originate in their own studio, from an affiliated network, or
    from external sources." Separate census categories pertain to
    businesses primarily engaged in produced programming. *See* *id.* at
    502-505, NAICS code 512110. Motion Picture and Video Production;
    Code 512120, Motion Picture and Video Distribution, code 512191, 19
    FCC Rcd 15238 (2004). Teleproduction and Other Post-Production
    Services, and code 512199, Other Motion Picture and Video
    Industries.

[^115]: "\[Business concerns\] are affiliates of each other when one
    business concern controls or has the power to control the other or a
    third party or parties controls or has the power to control both."
    13 C.F.R. § 121.103(a)(1).

[^116]: *See* NAICS code 515112.

[^117]: *Id.*

[^118]: "\[Business concerns\] are affiliates of each other when one
    business concern controls or has the power to control the other or a
    third party or parties controls or has the power to control both."
    13 C.F.R. § 121.103(a)(1).

[^119]: 13 C.F.R. § 121.201; NAICS code 511110.

[^120]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, "Establishment and Firm Size (Including Legal Form of
    Organization)," Table 5, NAICS code 511110 (issued Nov. 2005).

[^121]: 5 U.S.C. § 603(c).

[^122]: [5 U.S.C. §
    603(b)](http://web2.westlaw.com/find/default.wl?DB=1000546&DocName=5USCAS603&FindType=L&AP=&mt=Westlaw&fn=_top&sv=Full&vr=2.0&rs=WLW5.06).

[^123]: The Petitioners in *Prometheus* did not appeal the Commission's
    retention of the rule

[^124]: *See Further* *Notice* at paragraph 5. In the *2002 Biennial
    Review Order*, the Commission said that it would commence a separate
    proceeding specifically aimed at increasing ownership opportunities
    in the media industry for minorities and females. *2002 Biennial
    Review Order*, 18 FCC Rcd 13634, 13636 paras. 46, 50.

[^125]: *Prometheus Radio Project v. FCC*, No. 03-3388, 2003 WL 22052896
    (3d Cir. Sept. 3, 2003).

[^126]: *Prometheus Radio Project, et al. v. F.C.C.*, 373 F.3d 372
    (2004).

[^127]: *Prometheus Radio Project v. FCC*, 373 F. 3d 373, 436 (3^rd^
    Cir. 2004), *cert. denied*, 73 U.S.L.W. (U.S. June 13, 2005).

[^128]: *Id.* at 411

[^129]: *Id.* at 412 (emphasis added).

[^130]: FCC Press Release, "FCC Chairman Powell Launches Localism in
    Broadcasting Initiative, August 20, 2003.
    <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-238057A1.pdf>

[^131]: *Prometheus*, 373 F. 3d at 390 (quoting *Burlington Truck Ones,
    Inc v. U.S*., 371 U.S. 156, 168 (1962)).