**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of:                | *  | MB Docket No. 04-233         |
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**NOTICE OF INQUIRY**

**Adopted: June 7, 2004 Released: July 1, 2004**

**Comment Date: September 1, 2004**

**Reply Comment Date: October 1, 2004**

By the Commission: Chairman Powell and Commissioner Martin issuing
separate statements;

> Commissioner Copps approving in part, dissenting in part, and issuing
> a statement; Commissioner Adelstein approving in part, concurring in
> part, and issuing a statement.

# INTRODUCTION

1.  As with competition and diversity, localism has been a cornerstone
    of broadcast regulation for decades.[^1] Broadcasters, who are
    temporary trustees of the public's airwaves,[^2] must use the medium
    to serve the public interest, and the Commission has consistently
    interpreted this to mean that licensees must air programming that is
    responsive to the interests and needs of their communities of
    license. Even as the Commission deregulated many behavioral rules
    for broadcasters in the 1980s, it did not deviate from the notion
    that they must serve their local communities. Rather, the Commission
    at that time found that market forces, in an increasingly
    competitive environment, would encourage broadcasters to accomplish
    this goal, and that certain rules were no longer necessary. [^3]

2.  The concept of localism derives from Title III of the Communications
    Act, and is reflected in and supported by a number of current
    Commission policies and rules. Title III generally instructs the
    Commission to regulate broadcasting as the public interest,
    convenience, and necessity dictate, and section 307(b) explicitly
    requires the Commission to "make such distribution of licenses,
    frequencies, hours of operation, and of power among the several
    States and communities as to provide a fair, efficient, and
    equitable distribution of radio service to each of the same."[^4]
    Pursuant to this mandate, when the Commission allocates channels for
    a new broadcast service, its first priority is to provide general
    service to an area, but its next priority is for facilities to
    provide the first local service to a community.[^5] In carrying out
    the mandate of Section 307(b), the Commission has long recognized
    that "every community of appreciable size has a presumptive need for
    its own transmission service."[^6] Indeed, the Supreme Court has
    stated that "\[f\]airness to communities \[in distributing radio
    service\] is furthered by a recognition of local needs for a
    community radio mouthpiece."[^7]

3.  Once awarded a license, a broadcast station must place a specified
    signal contour over its community of license to ensure that local
    residents receive service.[^8] A station must maintain its main
    studio in or near its community of license to facilitate interaction
    between the station and the members of the local community it is
    licensed to serve.[^9] For similar reasons, a station "must equip
    the main studio with production and transmission facilities that
    meet the applicable standards, maintain continuous program
    transmission capability, and maintain a meaningful management and
    staff presence."[^10] The main studio also must house a public
    inspection file, the contents of which must include "a list of
    programs that have provided the station's most significant treatment
    of community issues during the preceding three month period."[^11]
    The purpose of this requirement is to provide both the public and
    the Commission with information needed to monitor a licensee's
    performance in meeting its public interest obligation of providing
    programming that is responsive to its community.[^12] In addition,
    as a general matter, when a broadcast station seeks to renew or
    transfer its license, it must give public notice to its community to
    ensure that members of the community have an opportunity to file a
    petition to deny if they object to the station's application for
    renewal or transfer of license.[^13]

4.  All of these rules, policies, and procedures reflect the
    Commission's overarching goal of establishing and maintaining a
    system of local broadcasting that is responsive to the unique
    interests and needs of individual communities. Various former rules
    and procedures also served this purpose, including the ascertainment
    process, the processing guidelines used to evaluate the programming
    performance of licensees at renewal, and the credit awarded for
    integration of local ownership and management under the Commission's
    prior comparative licensing scheme.[^14]

5.  During the recent review of our structural broadcast ownership
    rules, we heard concerns from the public that broadcast stations may
    be failing to meet the needs of their local communities. As we found
    in our recent broadcast ownership decision, there is a correlation
    between certain classes of broadcast station owners and certain
    characteristics of localism exhibited by those stations, such as the
    quantity of local news and public affairs programming.[^15] This
    *Notice of Inquiry*, however, will address behavioral rules that
    promote localism, regardless of identity of ownership. As stated by
    Senate Commerce Committee Chairman John McCain at a hearing last
    summer on localism and the public interest: "This Committee has
    spent considerable time examining and debating the role of ownership
    limitations to achieve public interest goals. . . . Today's hearing
    is to consider whether Congress should use *other* means to achieve
    these goals, such as putting 'teeth' in the public interest
    standard."[^16]

6.  As part of the Commission's effort to better understand whether
    broadcast stations are serving the needs and interests of their
    local communities, and whether any behavioral regulation is needed,
    Chairman Powell recently established a Localism Task Force to gather
    empirical data on broadcast localism, and to advise the Commission
    on concrete steps to promote this significant policy goal.[^17] In
    order to hear directly from the public about the localism efforts of
    broadcasters, the Task Force is charged with conducting a number of
    field hearings around the country. The Task Force has already held
    three of these events (Charlotte, North Carolina; San Antonio,
    Texas; and Rapid City, South Dakota), during which it heard from the
    public, with a wide variety of views, on the issue of whether and
    how broadcasters are serving the needs and interests of their
    communities. The Task Force will soon hear from the public in other
    areas of the country.

7.  Given the importance of localism, we initiate this proceeding to
    receive direct input from the public on how broadcasters are serving
    the interests and needs of their communities; whether we need to
    adopt new policies, practices, or rules designed directly to promote
    localism in broadcast television and radio; and what those policies,
    practices, or rules should be. For each of the public policy goals
    discussed below, we seek comment on the particular mechanism needed
    to ensure that licensees satisfy the stated goal. We seek comment on
    whether market forces will provide enough incentive for a broadcast
    station to satisfy a particular policy goal, or whether regulation
    is needed. Finally, we seek a similar range of comment on any other
    rules, policies or procedures, not specifically reviewed below, that
    might be relevant to our objectives.

# LOCALISM TOPICS FOR INQUIRY

## Background

8.  In 1999, the Commission issued a *Notice of Inquiry* concerning the
    public interest obligations of broadcast television licensees.[^18]
    The inquiry focused on the nature of television broadcasters' public
    interest obligations as they transitioned to digital television
    ("DTV"). Subsequent to the *DTV Public Interest NOI*, the Commission
    adopted two *Notices of Proposed Rulemaking*. One considered several
    concrete proposals to enhance television broadcasters' disclosures
    of their public interest activities;[^19] the other considered
    television broadcasters' obligations with respect to children's
    programming in the DTV environment.[^20] We requested in our recent
    DTV periodic review that parties update the record in all three of
    these earlier proceedings.[^21] With respect to the *DTV Public
    Interest NOI* proceeding, we encouraged parties to focus on "those
    issues relating to the application of public interest obligations to
    broadcasters that choose to multicast," and "whether our approach to
    multicast public interest obligations should vary with the scope of
    whatever final digital must-carry obligation the Commission
    adopts."[^22] In response to our request for updates in the three
    earlier proceedings, we have received a number of additional
    comments. We will incorporate relevant portions of the comments
    received in response to the *DTV Public Interest NOI* and associated
    *Notices* into the record of this proceeding, although in doing so
    we do not intend to delay the issues that are otherwise ripe for
    resolution in those earlier proceedings, and we intend to bring them
    to an appropriate conclusion promptly. We may also launch additional
    rulemaking proceedings as appropriate.

9.  [Communication with Communities]{.underline}. In the past, the
    Commission regulated the way in which broadcasters obtained input
    from their local communities regarding matters of local interest, in
    order to ensure that they air programming that responded to those
    interests. Through its "ascertainment" requirement, the Commission
    directed broadcasters to comply with detailed procedures for
    determining the problems, needs, and interests of their
    communities.[^23] In addition, the Commission required broadcasters
    to maintain programming logs, which broadcasters used to inform
    their communities about how they serve the public interest, for
    purposes of program planning, and to ensure compliance with program
    oversight by the Commission.[^24] In the 1980s, the Commission
    eliminated these rules, first for radio, and then for television,
    reasoning that market forces in conjunction with an issue-responsive
    programming obligation and the petition to deny process could be
    relied upon to ensure that broadcasters aired programming responsive
    to the needs and interests of their communities.[^25] The Commission
    indicated that it would no longer regulate how a broadcaster
    determined the needs and interests of its community, and would
    require a station only to maintain issues/programs lists of its most
    significant treatment of community issues, updated quarterly, in its
    public inspection file.[^26]

10. In the *DTV Public Interest NOI*, the Commission discussed the
    requests of certain groups that the agency regulate the way in which
    television broadcasters determine the needs and interests of their
    communities and report on how they fulfill those needs and
    interests.[^27] Based on the comments received, the Commission
    released the *Enhanced Disclosure NPRM*, which proposed to replace
    the issues/programs lists with a standardized form.[^28] The
    proposed form asks broadcasters to report on their efforts to
    identify the programming needs of various segments of their
    communities, and list their community-responsive programming by
    category.[^29] The *Enhanced Disclosure NPRM* also proposed that
    broadcasters make these forms, as well as the rest of their public
    inspection files, available on the Internet, and sought comment on a
    proposal to encourage stations to use their websites to conduct
    online discussions and facilitate interaction with the public.[^30]
    We received a number of comments, both supporting and opposing the
    proposals.

11. We ask generally, beyond the specific *Enhanced Disclosure NPRM* and
    *DTV Public Interest NOI*, whether there are other steps that the
    Commission could take to further broadcasters' communication with
    communities. For example, are there other ways in which broadcasters
    can determine the problems, needs, and interests of their
    communities? How effectively have market forces fulfilled the goal
    of ensuring that broadcasters air programming responsive to the
    needs and interests of their communities?

12. [Nature and Amount of Community-Responsive Programming]{.underline}.
    Sensitive to the First Amendment concerns inherent in any form of
    content regulation, the Commission has never attempted to define
    with exact precision the programming that a broadcaster should air
    to serve the needs and interests of its local community. From time
    to time, however, the Commission has attempted to describe the
    nature of community-responsive programming. For example, in 1960,
    the Commission identified, by way of guidelines rather than rules,
    the "major elements usually necessary to meet the public interest,
    needs and desires of the community in which the station is located,
    as developed by the industry, and recognized by the
    Commission."[^31] The Commission identified fourteen "major
    elements,"[^32] but made clear that these "are neither all-embracing
    nor constant," and "do not serve and have never been intended as a
    rigid mold or fixed formula for station operation."[^33] Later, the
    Commission streamlined renewal processing guidelines for
    broadcasters that aired specified amounts of specified programming.
    For example, the Commission authorized the staff to act, through
    delegated authority, on applications for renewal of radio and
    television stations that aired specified amounts of certain
    non-entertainment programming.[^34] Again, the Commission emphasized
    that its guidelines were "procedural rather than substantive. They
    do not identify a quantity -- much less a quality -- of programming
    below which no application will be granted and above which all
    applications will be granted."[^35] Failure to satisfy the
    guidelines, based on a composite broadcast week analysis, resulted
    in the referral of a licensee's renewal application to the full
    Commission for its consideration.[^36] As indicated above, in the
    1980s, the Commission eliminated the guidelines and looked to
    marketplace forces and issue-responsive programming obligations to
    ensure that broadcasters air community-responsive programming.[^37]

13. The Commission has previously noted that certain groups have
    complained that broadcasters do not air enough community-responsive
    programming.[^38] For example, the Commission cited a study
    indicating that, in the markets examined, 35% of television stations
    provided no local news, and 25% provided neither local news nor
    local public affairs programming.[^39] As a result, the Commission
    noted, certain groups have encouraged the Commission to adopt
    minimum, specific standards for community-responsive
    programming.[^40] For example, the Commission might encourage
    broadcasters, through some means, to air a certain level of public
    affairs programming and public service announcements, with an
    emphasis on local programming. The Commission noted, however, that
    some broadcasters in the past have objected to proposals that would
    make their programming obligations more specific.[^41] The
    Commission sought comment on this question.[^42]

14. We seek additional comment on the issue of how broadcasters
    currently are serving the needs of their communities and whether the
    Commission could or should take action to better ensure that
    broadcasters air programming to serve their communities' needs and
    interests. Does "local" programming best serve this goal? If so,
    what would qualify as "local" programming? Locally originated or
    locally produced programming? Or should locally oriented
    programming, meaning programming of particular interest to the local
    community, count regardless of its source? We have previously found
    that programming that addresses local concerns need not be produced
    or originated locally to qualify as "issue-responsive" in connection
    with a licensee's program service obligations.[^43] Should
    programming qualify only if it treats local issues in the
    traditional sense of news and public affairs, or should local
    programs of an entertainment nature -- such as the broadcast of a
    local high school sports event -- also count? What about programming
    in which local residents participate, such as academic contests
    between local schools that are not otherwise locally oriented?
    Difficulties associated with defining "local" programming present
    geographic questions as well.[^44] We also note that programming
    that is not specifically targeted to the local community may still
    serve the needs and interests of the community. A program, for
    example, that discusses teenage drinking generally may be highly
    relevant to a particular community even though it is not produced
    specifically for that community or tailored to its particular
    problems in this area. In addition, in determining if a station is
    serving its local community, should we focus solely on programming,
    or should we consider other efforts as well, such participation in
    local community activities or sponsoring fundraisers? Are there ways
    the Commission can facilitate the public's understanding of local
    programming opportunities?

15. Alternatively, should the Commission continue to rely on market
    forces and the issue-responsive programming requirement to encourage
    broadcast stations to air community-responsive programming? During
    the recent Congressional hearing on localism and the public
    interest, the general manager of a major-market television station
    reviewed his station's local news, local political, and local public
    affairs programming, and explained the reason that his station airs
    this programming: "Pardon me, but forget the government. We have to
    answer to our viewers. And we have to do that every day. When they
    have more than a hundred channels to choose from, and we want them
    to choose us, we think the best way to do that is to provide the
    best possible service."[^45] We seek comment on whether the
    incentives inherent in market forces are sufficient to encourage
    broadcasters to air community-responsive programming.

16. Is it appropriate to distinguish between radio and television
    stations in terms of policies or rules designed to promote localism?
    The development of cable and satellite television services, which
    largely provide national network programming, creates the incentive
    for television broadcast stations to distinguish themselves by
    providing local programming. Until the recent development of
    satellite radio services, such as those provided by XM Satellite
    Radio and Sirius Satellite Radio, which also air national
    programming,[^46] radio stations did not necessarily have similar
    incentives. Radio stations also now compete for listeners with
    Internet-delivered audio, including distant radio stations. Thus, to
    what extent do differences between radio and television remain in
    terms of their incentive to air community-responsive programming?
    Does a higher percentage of television stations than radio stations
    air substantial amounts of community-responsive programming? What
    effect will the transition to digital broadcasting, which will give
    broadcasters greater programming capacity by enabling them to
    multicast and air different programming streams simultaneously, have
    on the ability and incentive of broadcasters to air locally
    originated or oriented programming?

17. While radio and television stations must use the broadcast medium to
    serve the needs and interests of their local communities, we
    recognize that programming, whether produced in-house or purchased,
    costs money, and different types of programming likely have
    different costs and profit margins. For instance, the National
    Association of Broadcasters submitted a study in the broadcast
    ownership proceeding that identified the costs of producing local
    news for TV stations in midsize and small markets.[^47] Although the
    study discounted the profitability of producing local news, it also
    indicated that stations in these markets have 30-40% profit margins
    from such operations,[^48] and other information suggests that the
    vast majority of television stations make money airing local news,
    particularly those stations in larger markets.[^49] We seek comment
    on profitability of producing local news, and how it compares to the
    profitability of other types of television programming that local
    stations air today, such as first-run and off-net syndicated
    programming and locally produced programming other than news. What
    are the implications for the public of a government requirement that
    local television broadcasters produce certain types of programming
    such as local news? Should the profitability of providing news
    affect the Commission's decision-making in this regard? With respect
    to radio, we seek comment on the cost and profitability of various
    types of programming including local news and public affairs
    programming. Are the economics of local news on radio different than
    for television? We also seek comment and data on the number of radio
    and TV stations that provide local news, the number that purchase
    their news from another entity or that produce news in regional or
    national hubs, and the number of local news personnel employed by
    radio and TV stations. We further seek comment on trends over time.

18. In terms of general community-responsive programming, we also seek
    comment on the public service announcements, or PSAs, that broadcast
    stations air for their communities. What types of PSAs do broadcast
    stations air, and how often and at what time of day do they air
    them? To what extent do broadcast stations deny requests from
    community organizations to air PSAs, or require the organizations to
    buy matching time?

19. [Political Programming]{.underline}. One area in which broadcasters
    have concrete, defined programming obligations is political
    programming. Under section 312(a)(7) of the Act, the Commission is
    expressly empowered to revoke the license of a broadcast station
    that does not allow "reasonable access" to or the "purchase of
    reasonable amounts of time" on its facilities by a "legally
    qualified candidate for Federal elective office."[^50] In addition,
    under section 315, "\[i\]f any licensee shall permit any person who
    is a legally qualified candidate for public office to use a
    broadcasting station, he shall afford equal opportunities to all
    other such candidates for that office in the use of such
    broadcasting station."[^51] The Commission has offered
    interpretations of these requirements in the past.[^52]

20. The Commission has previously noted that some broadcasters have
    aired many hours of political programming, including conventions,
    debates, issue fora, and campaigns, and that several television
    networks have provided free airtime to candidates for President in
    recent elections.[^53] The Commission also, however, cited studies
    suggesting that many television broadcasters provided little or no
    political programming.[^54] The Commission observed that, as a
    result, certain groups had recommended that broadcast stations
    provide a limited amount of time for "candidate-centered discourse"
    shortly before an election,[^55] and that the Commission prohibit
    television broadcast stations from adopting blanket bans on the sale
    of airtime to state and local candidates.[^56]

21. At the recent Congressional hearing on localism and the public
    interest, one witness reported research results that suggested a
    decline in political programming. The research indicated that,
    during the 2000 election, the majority of the subject stations aired
    less than one minute of "candidate-centered discourse" per night
    before election events. During 2002, only 44% of the 10,000 news
    broadcasts studied contained any campaign coverage at all, and only
    14% of the campaign stories that were aired focused on local
    elections. The research also suggested that larger station group
    owners air less local campaign news than smaller and mid-sized
    station group owners.[^57]

22. Should the Commission require broadcasters to air a minimum amount
    of local or national political and civic discourse? How much program
    time in recent years has been devoted to local political coverage
    and to national political coverage? What steps can be taken to
    encourage voluntary efforts for political and civic discourse? We
    seek comment on the extent to which the Commission may take action
    in this area. Given that Congress has enacted specific requirements
    governing political programming, would it be appropriate or
    permissible for the Commission to take additional steps to enhance
    broadcasters' coverage of local political candidates and issues?
    Should the Commission consider coverage of local candidates and
    issues a "plus" at license renewal, without penalizing renewal
    applicants who have not broadcast such programming?

23. We also seek comment on whether there are ways our existing
    political programming rules could be revised or strengthened to
    facilitate political discourse. For example, is it necessary for us
    to change any aspect of our existing rules on advertising practices
    and rates for legally qualified candidates for public office to
    ensure that such practices and/or rates do not inhibit political
    discourse? Section 315(b) mandates that broadcast stations not
    charge a "legally qualified candidate for any public office . . .
    during the forty-five days preceding the date of a primary or
    primary runoff election and during the sixty days preceding the date
    of a general election or special election" more than "the lowest
    unit charge of the station for the same class and amount of time for
    the same time period."[^58] To enable legally qualified candidates
    to take advantage of their statutory rights, our rules impose on
    stations "an affirmative duty to disclose to candidates information
    about rates, terms, conditions and all value-enhancing discount
    privileges offered to commercial advertisers."[^59] How do stations
    define classes of time, and what factors are considered? Should the
    Commission further define classes of time? Are candidates
    encountering specific problems relating to rates, preemptions, or
    rebates, credits and make good practices? Although our rules do
    specify certain information that must be revealed to candidates, we
    offer stations "reasonable discretion in making the
    disclosure."[^60] Should we standardize the manner in which stations
    disclose information by creating a form of some kind? If so, what
    specific information should the form solicit? In addition, although
    our rules require stations to maintain a record of requests for
    broadcast time by candidates, and certain details relating to the
    disposition of the requests, such as when an ad aired and the rate
    charged,[^61] we do not otherwise require stations to disclose their
    advertising rates for candidates for public office to the general
    public. Would a change to require stations to publicize their
    advertising rates more prominently, such as on websites, facilitate
    candidate access and use of stations and therefore promote political
    discourse?

24. [Underserved Audiences]{.underline}. The fact that broadcasters must
    air programming that responds to the needs and interests of their
    communities requires that they take into account *all* significant
    groups within their communities. For example, in its *1960 En Banc
    Programming Inquiry*, the Commission explained that:

    the broadcaster should consider the tastes, needs and desires of the
    public he is licensed to serve in developing his programming and
    should exercise conscientious efforts not only to ascertain them but
    also to carry them out as well as he reasonably can. He should
    reasonably attempt to meet all such needs and interests on an
    equitable basis. Particular areas of interest and types of
    appropriate service may, of course, differ from community to
    community, and from time to time.[^62]

    The Commission has elaborated on this principle, underscoring the
    link between community-responsive programming and "the need for
    programming by groups that were not being adequately served by
    broadcasting."[^63] At the same time, the Commission has recognized
    that efforts to develop balanced programming does not necessarily
    require that a station attempt to provide service to all segments of
    the community in markets where multiple broadcast stations are
    available to satisfy the specialized needs of certain groups.[^64]

25. The Commission has previously noted the concerns of some that
    programming, particularly network programming, often is not
    culturally diverse enough to respond to the needs and interests of
    certain segments of a broadcaster's community.[^65] The Commission
    noted that DTV broadcasters could use the flexibility of digital
    technology to serve better the needs of all in their communities in
    any number of ways, perhaps by entering into channel leasing
    arrangements with programmers that intend to serve a previously
    underserved audience, by otherwise "narrowcasting" to such audiences
    on different programming streams, or even by taking advantage of
    enhanced audio capabilities to air different soundtracks in
    different languages simultaneously.[^66]

26. We seek comment on whether the Commission needs to consider
    additional ways, not unique to digital television, to ensure that
    broadcasters serve the needs and interests of all significant
    segments of their communities, consistent with applicable
    constitutional standards. We seek data and trends on the extent to
    which broadcast stations serve minority communities, including
    Spanish-speaking and other non-English-language communities, and
    specifically the extent to which the news operations of the
    broadcast stations serve these communities. We seek comment on the
    best way to promote coverage of issues of importance to minority
    communities. How do stations determine what programming serves
    minority communities?

27. [Disaster Warnings.]{.underline} A fundamental way in which
    broadcasters use the medium to serve their communities of license is
    to provide emergency information. The Commission's role in ensuring
    that broadcasters fulfill this obligation is set forth in section 1
    of the Act, which declares that the Congress created the Commission
    "for the purpose of promoting safety of life and property through
    the use of wire and radio communication."[^67] The Commission has
    adopted the Emergency Alert System, which "provides the President
    with the capability to provide immediate communications and
    information to the general public at the National, State and Local
    Area levels during periods of national emergency," and in addition
    "may be used to provide the heads of State and Local government, or
    their designated representatives, with a means of emergency
    communications with the public in their State or Local Area."[^68]
    The Commission also requires TV broadcast stations that provide
    emergency information beyond compliance with EAS standards to make
    the critical details of that information accessible to people with
    hearing and visual disabilities.[^69]

28. Given the critical and fundamental role of emergency information as
    a component of broadcasters' local public service obligations, we
    seek comment on their performance in this area. In this regard, we
    intend to launch a broad-ranging proceeding concerning EAS in the
    near future. Some of the questions likely to be raised are also
    relevant to this proceeding: Should the Commission require that
    broadcasters make their facilities available to local emergency
    managers? If so, what should be the nature and scope of any such
    requirement? Would there be adverse effects from imposing some
    uniform requirement on broadcasters rather than allowing them to
    continue to make voluntary arrangements with local officials? Beyond
    EAS, however, broadcast stations often voluntarily provide emergency
    information to their listeners and viewers. Are these voluntary
    arrangements sufficient or should the Commission impose some uniform
    requirement? If so, what should that requirement be? What would be
    the adverse impacts?

29. Finally, as digital technologies have evolved, the Commission has
    noted how broadcast stations can provide emergency information in
    innovative ways.[^70] For example, broadcast stations can use the
    technology to pinpoint specific households and neighborhoods at
    risk. How can digital technology be used to enhance warnings, and to
    what extent are broadcast stations currently making use of that
    technology?

## Network-Affiliation Rules

30. A number of Commission rules govern the relationships between
    television networks and their affiliated stations. The general goal
    of these rules is to ensure that local stations remain ultimately
    responsible for programming decisions, notwithstanding their
    affiliation with a national programming network. Under the "right to
    reject" rule, for example, the Commission will not license a station
    that has an agreement with a network that "prevents or hinders the
    station from: (1) \[r\]ejecting or refusing network programs which
    the station reasonably believes to be unsatisfactory or unsuitable
    or contrary to the public interest or (2) \[s\]ubstituting a program
    which, in the station's opinion, is of greater local or national
    importance."[^71] The "time option" rule states that the Commission
    will not license a station that has an agreement with a network that
    "provides for the optioning of the station's time to the network
    organization, or which has the same restraining effect as time
    optioning," meaning an agreement that "prevents or hinders the
    station from scheduling programs before the network agrees to
    utilize the time during which such programs are scheduled, or which
    requires the station to clear time already scheduled when the
    network organization seeks to utilize that time."[^72] By ensuring
    that stations themselves retain the power to make programming
    decisions, these rules are intended to promote localism.

31. In June of 2001, the Network Affiliated Stations Alliance (NASA)
    filed a motion for a declaratory ruling asking the Commission to
    "move forward promptly with a declaratory ruling as to specified
    affiliation agreement provisions whose lawfulness -- disputed by the
    networks and NASA -- turns on the proper interpretation of the
    Communications Act and FCC rules."[^73] The rules at issue govern
    network affiliation agreements (that is, they regulate actual
    contracts) as well as the conduct of the parties. Generally, these
    rules protect a local broadcaster's autonomy in making programming
    decisions for its station, and they are critical to an affiliate's
    ability to promote and preserve localism.

32. We are concerned by affiliates' claims that the networks are
    hindering the affiliates' ability to preempt network shows for local
    programming. We also are concerned about allegations that affiliates
    are hindered in their ability to refuse to broadcast network
    programming that is indecent or otherwise not suitable for an
    affiliate's local community. We also are concerned by allegations
    that networks are optioning time on the affiliates' digital signals,
    which may be inhibiting affiliates' investment in, for instance,
    using its digital signal to broadcast a second standard definition
    channel focused on local news and public affairs. Affiliates and
    networks alike deserve to know the proper interpretation of the
    rules that govern them. We therefore do not incorporate the motion
    into this docket, but rather intend to issue the requested
    declaratory ruling expeditiously.

## Payola and Sponsorship Identification, Voice-Tracking, and National Playlists

33. [Payola]{.underline}. The Commission has defined "payola" as "the
    unreported payment to, or acceptance by, employees of broadcast
    stations, program producers, and program suppliers of any money,
    services, or valuable consideration to achieve airplay for any
    programming."[^74] Sections 317 and 507 of the Act set forth the
    current statutory standards for payola.[^75] As the Commission has
    paraphrased, "\[s\]ection 507 of the Communications Act requires
    those persons who have paid, accepted, or agreed to pay or accept
    ... payments to report that fact to the station licensee before the
    involved matter is broadcast. In turn, section 317 of the Act
    requires the licensee to announce that the matter contained in the
    program is paid for, and to disclose the identity of the person
    furnishing the money or other valuable consideration."[^76] Section
    73.1212 of the Commission's rules set forth our sponsorship
    identification rules, which implement the requirements of section
    317, and are designed to alert listeners and viewers of a broadcast
    station to the fact that they are hearing or viewing programming for
    which the station has received valuable consideration by ensuring
    that the station discloses that fact.[^77] When payola causes
    stations to broadcast programming based on their financial interests
    at the expense of community responsiveness, the practice is
    inconsistent with localism.

34. Commenters such as the Future of Music Coalition in the broadcast
    ownership proceeding have suggested that "standard business
    practices employed by many broadcasters, record labels, and
    independent radio promoters result in . . . a *de facto* form of
    payola."[^78] As explained by the Future of Music Coalition, the
    practice involves "independent promoters" acting as a liaison
    between the radio stations and the record labels, so that the labels
    do not pay the stations in violation of current law.[^79] In the
    typical case, a promoter pays radio stations for the exclusive right
    to promote music to them, and charges record labels an upfront fee
    to market songs to radio stations, as well as additional fees for
    songs that stations add to their playlists that the promoter
    recommended.[^80] In other words, record labels pay promoters to
    market their music, and for music that stations actually play, and
    promoters pay stations to promote music to them. The Future of Music
    Coalition contends that promoters subsequently are able to influence
    the songs that are included on the stations' playlists. They further
    contend that because stations tend to play mostly records that the
    promoter has suggested, artists and record labels often must pay
    promoters when they wish to be considered for airplay on the
    stations.[^81] It has also been suggested that radio stations that
    have consolidated with concert promoters may tie airplay to concert
    performances, by refusing to give airplay to artists who do not
    appear at concerts sponsored by the stations.[^82] These types of
    practices ultimately influence who chooses what the public hears on
    radio and what they actually hear.

35. As indicated, payola-type practices are inconsistent with localism
    when they cause radio stations to air programming based on their
    financial stakes at the expense of their communities' needs and
    interests. The Future of Music Coalition has provided survey
    evidence to suggest that a majority of the public supports
    regulation of payola-type practices.[^83] What are the various types
    of payola practices today, and how frequently do they occur? Do
    these practices comply with the disclosure requirements of the Act
    and our sponsorship identification regulations? Are the existing
    rules in any way deficient in addressing the current practices?
    Should we improve our enforcement process by making it easier to
    file and act on complaints? How can we otherwise improve our
    enforcement process? Does the Commission currently have the
    authority to regulate in this area, pursuant to its general Title
    III public interest authority over broadcasters? If so, how should
    it exercise that authority? Are the Commission's current disclosure
    requirements sufficient to ensure that listeners understand the
    nature of the programming they hear? Do radio stations seek payment
    for back announcing -- that is, announcing songs and artist
    information after a song is played? If so, does this practice
    violate our sponsorship identification rules?

36. [Other Sponsorship Identification]{.underline}. Section 73.1212(a)
    of the Commission's rules states: "When a broadcast station
    transmits any matter for which money, service or other valuable
    consideration is either directly or indirectly paid or promised to,
    or charged or accepted by such station, the station, at the time of
    the broadcast, shall announce: (1) That such matter is sponsored,
    paid for, or furnished, either in whole or in part, and (2) By whom
    or on whose behalf such consideration was supplied. . . ."[^84]
    Section 73.1212(d) of our rules applies more particular sponsorship
    identification requirements to "any political broadcast matter or
    any broadcast matter involving the discussion of a controversial
    issue of public importance."[^85] As the Commission stated in
    *United States Postal Service*, the sponsorship identification
    requirement is "based on the principle that the public has the right
    to know whether the broadcast material has been paid for and by
    whom."[^86] Thus, the rules require that "the audience be clearly
    informed that it is hearing and viewing matter which has been paid
    for when such is the case, and that the person paying for the
    broadcast of the matter be clearly identified."[^87] The Commission
    has on a number of occasions reiterated the importance and breadth
    of the sponsorship identification requirement.[^88] Thus, although
    we seek comment on the adequacy of our existing sponsorship
    identification rules, we emphasize that these rules remain in effect
    and we will enforce them when faced with documented complaints that
    they were violated.

37. In addition to the practices in radio described above, recent
    reports also indicate that some television stations have aired
    interviews with guests who pay for their appearances. According to
    press reports, for example, a Florida television station has aired
    interviews with guests who pay for their appearance on a local
    morning show that includes the station's news channel insignia at
    the bottom of the screen.[^89] The television station discloses the
    payment at the end of the program in small type that runs for a
    matter of seconds.[^90] There are reports that some other television
    stations air interviews with guests who pay for their
    appearances.[^91] These practices have caused Senator John McCain to
    question whether the Commission's sponsorship rules are adequate,
    and/or whether legislative action is necessary.[^92] How prevalent
    are these types of practices? To what extent do these practices
    cause stations to air programming to serve their financial interest
    at the expense of community responsiveness? Do the disclosures about
    payment comply with our existing sponsorship identification rules?
    Are viewers nonetheless deceived by these practices? If so, what can
    and should the Commission do to eliminate the practices? Given that
    disclosures may appear for less than a second on a split screen in
    small type, should the Commission extend the scope of its
    sponsorship identification rules for political advertisements, which
    require that a sponsor "be identified with letters equal to or
    greater than four percent of the vertical picture height" and "air
    for not less than four seconds," to all paid programming?[^93] More
    generally, what percentage of programming is paid promotional
    programming, in the form of infomercials? In order to inform the
    public better about the extent of paid promotional time, should the
    Commission require broadcast stations to maintain in their public
    inspection files logs of all such time that exceed a certain
    threshold, such as, for example, five minutes?

38. [Voice-Tracking]{.underline}. Other matters argued to impact
    localism negatively have been called to our attention. For example,
    "voice-tracking" refers to the practice of importing "popular
    out-of-town personalities from bigger markets to smaller ones,
    customizing their programs to make it sound as if the DJs are
    actually local residents."[^94] By centralizing talent and creating
    name recognition, the practice would appear to enable radio stations
    both to decrease costs and increase ratings and thus revenue.
    However, according to the American Federation of Television and
    Radio Artists (AFTRA), "when a media company uses voice-tracking as
    a strategy to eliminate live broadcasts and local employees
    altogether, the connection to the local community can be hurt."[^95]
    The Commission does not have rules that directly address this
    practice.[^96] What steps are necessary to preserve localism? What
    is our statutory authority to adopt such regulations, and what
    particular practices should be defined as inconsistent with a
    broadcaster's programming obligations?

39. [National Playlists]{.underline}. Another localism concern \--
    raised by the Future of Music Coalition in its comments in the
    *Biennial Ownership* proceeding \-- is the effect of "national"
    playlists developed by large corporate radio owners on the access of
    local talent to air time.[^97] Absent such access, local artists, it
    is argued, are stifled and localism suffers. We seek comment on the
    prevalence of national playlists and their effect on localism. To
    what extent does the use of such playlists prevent local stations
    from making independent decisions about airplay, and thereby
    diminish the diversity and types of music heard on the radio, such
    as music performed by local artists? What steps if any does the
    Commission need to take in this area to protect localism?

## License Renewals

40. The periodic license renewal process is perhaps the most significant
    mechanism available to the Commission and the public to review the
    performance of broadcasters and to ensure that licensees have served
    their local communities. In the past, licenses were granted for a
    relatively short period -- three years -- and the Commission played
    an active role in evaluating licensee performance during the prior
    license term. Applicants were required to submit substantial amounts
    of programming and other data -- including details of ascertainment
    efforts and commercial time figures -- with their renewal
    application and the Commission reviewed this information using
    specific processing guidelines. Furthermore, competing applications
    could be filed against a renewal application. Where such
    applications were filed, the Commission undertook a comparative
    analysis to determine which licensee, the incumbent or the
    challenger, would provide the best service to the public.

41. Much has changed since this renewal regimen was put in place. As
    noted above, the Commission itself deregulated the renewal process
    substantially in the 1980s, turning from active review to a more
    passive role based on petitions to deny and license
    certifications.[^98] Congress, in the Telecommunications Act of
    1996, eliminated the comparative renewal process and extended the
    maximum license term for broadcasters to eight years. It also
    revised the standard used by the Commission to evaluate renewal
    applications, narrowing the range of conduct the Commission could
    consider in acting upon a renewal application. Section 309(k)(1)
    instructs the Commission to grant an application for renewal if its
    finds that "(A) the station has served the public interest,
    convenience, and necessity; (B) there have been no serious
    violations by the licensee of this Act or the rules and regulations
    of the Commission; and (C) there have been no other violations by
    the licensee of this Act or the rules and regulations of the
    Commission which, taken together, would constitute a pattern of
    abuse."[^99] Section 309(k)(2) authorizes the Commission, if an
    applicant for renewal does not meet these standards, to deny its
    application, or condition it, including reducing the license
    term.[^100] Section 309(k)(4) explicitly states: "In making the
    determinations specified in paragraph (1) or (2), the Commission
    shall not consider whether the public interest, convenience, or
    necessity might be served by the grant of a license to a person
    other than the renewal applicant."[^101] Only if the Commission
    denies a renewal application because it fails to meet the statutory
    standard may it accept applications for the license from other
    applicants.[^102]

42. These developments have caused some to suggest that we do not
    examine thoroughly enough whether a licensee has served the public
    interest.[^103] Are new procedures needed to strengthen our license
    renewal process to ensure that the station at issue has served in
    the past, and will continue to serve in the future, the needs of its
    community of license? Given the fundamental importance of the issues
    and programs lists and other contents of the public file in terms of
    documenting how broadcast stations serve their communities, should
    the Commission conduct audits of these files? How can we make the
    license renewal process more effective, and what are the benefits
    and burdens of any proposals for change? Although the Act has long
    required us to find that a station serves the public interest in
    order to renew its license, what boundaries are there on the scope
    of our evaluation? How do the 1996 Act amendments limit our
    authority? Are there means by which we can better involve the
    station's community in this determination? Is the interval between
    renewals too long to permit an effective and timely review of
    stations' performance? If license terms of eight years are retained,
    should some form of mid-term review -- as we now conduct for EEO
    compliance -- be used?[^104]

## Additional Spectrum Allocations

43. In order to enhance the availability of community-responsive
    programming, the Commission has created new broadcasting services,
    such as the low-power FM (LPFM) service. The Commission authorized
    this service in 2000.[^105] LPFM stations are small noncommercial
    stations that may broadcast at a maximum power of 100 watts, which
    corresponds to a coverage area of approximately a 3.5 mile radius
    from the transmitter.[^106] During the first two years that licenses
    were available for application eligibility for licenses was limited
    to local entities.[^107] In addition, in the case of mutually
    exclusive applications for LPFM stations, the Commission will grant
    the license to the applicant with the greatest number of points.
    Applicants that have had an established community presence for two
    years preceding their application[^108] and those that pledge "to
    originate locally at least eight hours of programming per day"[^109]
    earn points in this comparative evaluation. The Commission designed
    these requirements to enhance the localism of the service.

44. In 2000, Congress passed the Government of the District of Columbia
    Appropriations Act -- FY 2001, which required the Commission to
    prescribe additional channel spacing requirements for LPFM stations,
    and thus provide existing FM stations greater interference
    protections.[^110] This effectively limited the number of LPFM
    stations that can fit within the FM band plan. Congress instructed
    the Commission to conduct an experimental program, however, to
    evaluate whether LPFM stations would interfere with existing FM
    stations if the LPFM stations were not subject to the additional
    channel spacing requirements. The Commission selected an independent
    third-party, the Mitre Corporation, to conduct the field tests.
    Mitre Corporation submitted a report to the Commission, on which we
    sought public comment.[^111] The Commission is required to submit a
    report to Congress, including its "recommendations to the Congress
    to reduce or eliminate the minimum separations for third-adjacent
    channels." The Commission staff recently submitted the required
    report, and, based on the Mitre Corporation study, recommended that
    Congress "modify the statute to eliminate the third-adjacent channel
    distant separation requirements for LPFM stations."[^112] At last
    summer's hearing on Capitol Hill regarding localism and the public
    interest, Chairman McCain noted that the Mitre Corporation report
    concluded that reducing the spacing requirements would cause
    "virtually no interference" to existing FM stations, and as a
    result, "we should take another look at low power FM as a means of
    providing the public with a locally-oriented alternative to huge
    national radio networks."[^113] Chairman McCain has thus praised the
    staff's recommendation to Congress to remove the third-adjacent
    channel spacing requirements.

45. The Commission has recently taken several steps to promote LPFM. We
    have opened filing windows for settlement agreements, minor change
    amendments, and channel change amendments to break conflicts between
    LPFM applications; for the settlement windows, we waived certain
    processing rules to allow mutually exclusive applicants to use all
    available frequencies to resolve conflicts and gain station
    licenses. To date, the Commission has granted over 1000 LPFM
    applications. We seek comment on what additional steps we could or
    should take to promote LPFM further. In particular, we seek comment
    on how best to harmonize our licensing processes for FM translators
    and LPFM stations to enhance localism. FM translators were
    originally envisioned as a "fill-in" service for full-power FM
    stations; they "provide a means whereby the signals of FM broadcast
    stations may be retransmitted to areas in which direct reception of
    such FM broadcast stations is unsatisfactory due to distance or
    intervening terrain barriers."[^114] The Commission permits
    noncommercial FM translators operating in the bands reserved for
    noncommercial FM stations to be fed programming by satellite from
    commonly owned stations, with the result that their associated
    stations may be many miles away.[^115] FM translators are not
    permitted to originate programming themselves, except for emergency
    warnings of imminent danger and announcements, limited to thirty
    seconds per hour, seeking or acknowledging financial support.[^116]
    LPFM stations, by contrast, often originate local programming.[^117]
    As noncommercial stations themselves, LPFM stations compete with
    noncommercial FM translators for the same spectrum. Both translator
    and LPFM applications are required to protect translator and LPFM
    authorizations. Both also must protect prior filed translator and
    LPFM applications. What effect do these policies have on localism?
    How do our policies for translators affect the availability of
    spectrum for LPFM, and should we change any of our rules to give a
    preference to entities with a local presence and/or local
    programming?[^118] If so, how? We also note that the Commission
    received approximately 13,300 non-reserved band FM translator
    filings in a window it opened approximately one year ago, and these
    applications propose service in many areas where LPFM stations could
    be located under current rules.[^119] The pendency and processing of
    these applications may significantly restrict any additional
    opportunities for LPFM stations that Congress might otherwise create
    if it elected to follow the Commission's recent recommendation,
    based on the Mitre Corporation report, that the separate
    requirements for LPFM stations be changed. Recognizing that both
    LPFM stations and translators provide valuable service, what
    licensing rule changes should the Commission adopt to resolve
    competing demands by stations in these two services for the same
    limited spectrum?

# CONCLUSION

46. We initiate this proceeding to begin a dialogue with the public on
    how the Commission can best ensure that broadcasters fulfill their
    obligations to serve their communities of license through particular
    rules or policies. Although we have identified above particular
    subjects of interest to us, we welcome comment on any ideas relevant
    to that end.

# ADMINISTRATIVE MATTERS

47. [*Ex Parte* Rules]{.underline}. Pursuant to section 1.1204(b)(1) of
    the Commission's rules, 47 C.F.R. § 1.1204(b)(1), this is an exempt
    proceeding. *Ex parte* presentations are permitted, and need not be
    disclosed.

48. [Comments and Reply Comments]{.underline}. Pursuant to sections
    1.415 and 1.419 of the Commission's rules, 47 C.F.R. §§ 1.415,
    1.419, interested parties must file comments on or before
    **September 1, 2004**, and reply comments on or before **October 1,
    2004**. Comments may be filed using the Commission's Electronic
    Comment Filing System (ECFS) or by filing paper copies. *See
    Electronic Filing of Documents in Rulemaking Proceedings*, 63 Fed.
    Reg. 24121 (1998). To request materials in accessible formats for
    people with disabilities (Braille, large print, electronic files,
    audio format), send an e-mail to
    [[fcc504@fcc.gov]{.underline}](mailto:fcc504@fcc.gov) or call the
    Consumer & Governmental Affairs Bureau at 202-418-0531 (voice),
    202-418-7365 (tty).

49. Comments filed through the ECFS can be sent as an electronic file
    via the Internet to <http://www.fcc.gov/e-file/ecfs.html>.
    Generally, only one copy of an electronic submission must be filed.
    In completing the transmittal screen, commenters should include
    their full name, 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
    for e-mail comments, commenters should send an e-mail to
    <ecfs@fcc.gov>, and should include the following words in the body
    of the message, "get form \<your e-mail address\>." A sample form
    and directions will be sent in reply.

50. Parties who choose to file by paper must file an original and four
    copies of each filing. Filings can be sent by hand or messenger
    delivery, by commercial overnight courier, or by first-class or
    overnight U.S. Postal Service (although we continue to experience
    delays in receiving U.S. Postal Service mail). The Commission's
    contractor, Vistronix, Inc., 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 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 mail,
    Express Mail, and Priority Mail, should be addressed to 445 12^th^
    Street, SW, Washington, DC 20554. All filings must be addressed to
    the Commission's Secretary, Office of the Secretary, Federal
    Communications Commission.

51. [Additional Information]{.underline}. For additional information on
    this proceeding, contact Ben Bartolome, <ben.bartolome@fcc.gov>, of
    the Media Bureau, Policy Division, (202) 418-2120.

# ORDERING CLAUSE

52. Accordingly, **IT IS ORDERED** that, pursuant to the authority
    contained in sections 4(i), 303(g), 303(r), and 403 of the
    Communications Act, 47 U.S.C. §§ 154(i), 303, and 403 , this Notice
    of Inquiry **IS ADOPTED**.

    FEDERAL COMMUNICATIONS COMMISSION

    Marlene H. Dortch

    Secretary

**STATEMENT OF**

**CHAIRMAN MICHAEL K. POWELL**

*Re: Broadcast Localism, Notice of Inquiry*

Fostering localism is one of this Commission's core missions and one of
three policy goals, along with diversity and competition, which have
driven much of our radio and television broadcast regulation during the
last 70 years. Today's Notice of Inquiry is another step in that long
legacy and will serve as a primary information gathering source for the
work of the Commission's Localism Task Force. Along with several public
hearings, three of which have been conducted, to date, the Task Force
will take the information filed in this NOI and the results of its own
studies designed to measure localism in broadcasting to advise the
Commission on steps it can take and, if warranted, will make legislative
recommendations to Congress that would strengthen localism in
broadcasting.

Over the last several years, the Commission's review of the media
marketplace has clearly demonstrated that the broadcast community, at
large, has made great strides in serving the needs of their local
communities. Indeed, long gone are the days in which the three local
broadcast stations in any given community offered a scant five minutes
of local news. Today, local newscasts have become the staple of any
successful local broadcast television station, demonstrating that
serving the needs and wants of your local community does not just
fulfill their public obligations, but also simply make good business
sense.

This, too, has been seen as new media outlets---from new broadcast
stations to cable and satellite television and radio programming to the
Internet---increasingly offer our citizens more access to locally
produced content and content of interest to local communities throughout
the country. That said, even as audiences continue to fragment across an
increasingly diverse and competitive media marketplace, and at a time in
which they have access to more local content than at any time in our
nation's history, the public still looks first to the broadcast industry
to serve its localism needs. It is this fact that makes our work in this
area so important. So as I urge broadcasters to fully inform the
Commission of the laudable steps they take in serving the interests of
their local communities, I urge that they join us in recognizing that
there is always room for improvement.

**STATEMENT OF**

**COMMISSIONER KEVIN J. MARTIN**

*Re: Broadcast Localism, Notice of Inquiry (June 7, 2004)*

I support this Notice of Inquiry into the manner and extent to which
broadcasters are serving their local communities. I write separately to
address an issue critical to a broadcaster's ability to serve its local
community: an affiliate's right to reject network programming. Three
years ago, the Network Affiliated Stations Alliance filed a motion for
declaratory ruling asking us to clarify that our rules protect an
affiliate's ability to refuse to air network programming when, for
instance, the licensee believes it is unsuitable for the local
community, or when another program is of greater local importance. Since
that time, I have been calling on the Commission to resolve this and
other questions contained in that motion. This Commission states in this
Notice today that we "intend to issue the requested declaratory ruling
expeditiously." I hope we resolve this issue soon.

**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

**APPROVING IN PART AND DISSENTING IN PART**

*Re: Broadcast Localism, Notice of Inquiry*

From the earliest days of broadcasting, we have obligated licensees to
serve the needs and interests of their local communities. The principle
of localism is at the heart of the public interest. I support the
Commission's renewed interest in promoting localism, although we should
have examined these issues ***prior*** to loosening our media
concentration protections, not after those rules were gutted. While I am
comfortable with parts of today's NOI, I must nevertheless dissent to
those sections that concern issues that have already been raised in
other long outstanding proceedings or that are otherwise ripe for
decision by the Commission, or at this late juncture, overripe. There
are issues here where we should be acting, not asking more questions,
and putting them off will raise questions in some minds about our
seriousness of intent to resolve such matters.

During the hearings and forums on media ownership that Commissioner
Adelstein and I attended across the country, we heard time and again
from citizens about the detrimental impact that consolidation has
already had on localism and diversity and we heard their fears about
where still more concentration will lead. I would have heeded the calls
from millions of Americans and considered these important localism
issues before we voted last June to allow media conglomerates to get
even bigger. Localism is one of the fundamental goals of our ownership
rules and of the public interest. I believe that it is impossible to
divorce localism from ownership. What if we get to the end of this new
proceeding and determine that localism is ***not*** served by ever
greater media concentration? With the consolidation genie out of the
bottle, it will be too late then to stem the tide.

This NOI properly seeks information that will serve the Commission's
localism task force as it writes its report and recommendations. It also
raises a number of questions in areas that merit attention in our effort
to increase localism and to implement the statutes. These include
questions on low power FM, payola, and sponsorship identification. In
the meantime, as we proceed with this inquiry to determine if we need to
change our disclosure and other rules, we should also look at more
immediate steps including investigating credible allegations of paid
consideration that might form the basis for an enforcement action under
our current rules. We have ignored this problem for too long.

Notwithstanding my support for an inquiry into ways to promote localism,
I must dissent in part from this NOI. We have headed down this path of
questions several times before. We started having a discussion on the
public interest obligations of broadcasters several years ago. While
focused primarily on public interest obligations during the digital
transition, these proceedings raised questions more generally about how
broadcasters are serving, or could better serve, their local
communities. The Commission issued a formal Notice of Inquiry in
December 1999, followed by two very specific Notices of Proposed
Rulemaking the following year. And then these proceedings languished.
Over a year ago, we managed to get the record refreshed with a
commitment to resolve the issues promptly. We should have resolved them
long ago. The public interest discussion was further expanded to include
radio via a Notice of Proposed Rulemaking issued a few months ago.
Today's NOI raises numerous issues that have already been raised in
previous proceedings and other issues that could be resolved by the
Commission without seeking comment in an NOI.

A few cases in point:

-   [Enhancing political and civic discourse]{.underline}: The NOI seeks
    comment on ways to enhance our country's political and civic
    dialogue. This is clearly an important topic, especially in an
    election year when so many critically-important issues confront our
    nation. But it is also a subject that was raised in our previous
    public interest proceedings. Here is an issue that demands action
    now rather than another round of initial questions and comments.
    Study upon study depicts a bleak and depressing picture. From 1996
    to 2000, coverage of even the Presidential race on the network
    evening news dropped by one-third. The average Presidential
    candidate sound bite in 2000 was 8 to 9 seconds. Local newscasts
    fared no better. In the 2002 election, over half of the evening
    local newscasts contained no campaign coverage at all. What coverage
    there is tends to focus inordinately on the latest tracking polls
    and handicapping the horse race rather than on the serious issues
    the nation needs to be discussing. And when you get down to the
    Congressional and local races, the situation is even more dismal. We
    also see less public affairs programming. One survey found less than
    one half of one percent of programming is devoted to local public
    affairs. We have studies. We have comments. We don't have action.

```{=html}
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-   [Community-responsive programming]{.underline}: Broadcast stations
    have an obligation to air programming responsive to the needs and
    interests of their communities of license. In today's NOI, the
    Commission asks whether the Commission should take action to better
    ensure that broadcasters air programming to serve their communities'
    needs and interests or whether the Commission should rely on market
    forces to encourage broadcast stations to air community-responsive
    programming. Yet, five years ago, the Commission sought comment on
    similar public interest requirements. Why keep asking the same
    questions when we should be acting?

-   [License Renewals]{.underline}: As one part of the effort to ensure
    that licensees are serving their local communities, we desperately
    need to establish an effective license renewal process under which
    the Commission would once again actually consider the manner in
    which a station has served the public interest when it comes time to
    renew its license. Many of the license renewal issues raised in this
    NOI merit attention, but I fail to understand why we need an NOI to
    ask whether we should actually examine a station's public file at
    license renewal time, whether we should conduct audits of these
    files, and whether we should better involve the station's community
    in the license renewal determination. If this Commission was serious
    about its public interest responsibilities, it could implement these
    steps immediately as part of the current license renewal review,
    rather than merely asking questions that will not result in any
    action until the next license renewal cycle that is eight long years
    away. One thing is certain: the current system of postcard renewal
    for licenses is not serving the public interest.

```{=html}
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-   [Communication with Communities]{.underline}: In the 1999 NOI, the
    Commission sought comment on how television broadcasters determine
    and meet the needs and interests of their communities. Based on the
    comments received in response to that NOI, the Commission progressed
    to an NPRM in 2000 seeking comment on proposals to promote
    broadcaster communications with communities of license. Now, four
    years later, the Commission launches yet another NOI seeking comment
    on these very same issues. As local stations come under the control
    of far-away media conglomerates, it is time to move forward and act
    on these proposals, rather than move backward from an NPRM to
    another NOI.

When the issue is how to hold Big Media accountable to the local
communities they serve, we are stuck at the starting gate. I recognize
that the NOI states that it is not intended to delay other proceedings,
but I fear this will be precisely what it does. The better part of good
government here is to move ahead and act on those matters where we
already have compiled a record or where the statute has long since told
us to be about our job of protecting the public interest. That would
benefit the public interest and, in the process, help the credibility of
this agency, too.

**STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN**

**APPROVING IN PART AND CONCURRING IN PART**

*Re: Broadcast Localism, Notice of Inquiry*

From the inception of radio and television broadcasting, they have been
unique, distinctly local forms of media. In return for the temporary,
exclusive right to use the public airwaves, broadcasters must serve the
public interest. The Commission by law must regulate broadcasting with
the foremost role of serving the public interest, convenience, and
necessity.

Localism is an integral part of serving the public interest. It requires
stations to be responsive to the particular needs and interests of their
communities. Every community has local news, local elections, local
government, local weather, local culture, and local talent. Localism
means providing opportunities for local self-expression. It means
reaching out, developing and promoting local performing artists,
musicians and other talent. It means dedicating the resources to
discover and address the unique needs of every segment of the community.
It means being alert and notifying the community of crisis situations.
It means being accessible, sending reporters and cameras out to all
parts of the community to cover not just the problems but the positives
as well. It means airing sufficient programming responsive to community
needs, and making programming decisions that truly serve and reflect the
makeup of the community. It means covering the issues and positions in
local elections, not just the horserace. And it means documenting all
these efforts in an accessible format so the local community can offer
feedback.

While today's action is only a Notice of Inquiry, many of its questions
pertain to areas for which more guidance from a thoughtful and
discerning public is appropriate. In some areas, however, I believe we
are more than ready to move directly to rulemaking proceedings, or to
complete pending ones. Today's item recognizes the prompt need to
resolve outstanding matters such as the enhanced public file disclosure
and children's digital television rulemakings, as well as the Network
Affiliated Stations Alliance petition, each pending for more than three
years. I trust we will bring those to resolution right away. With the
elections nearly upon us, for example, the public file item must be
finalized soon to help this cycle. And reaffirming an affiliate's right
to reject network programming is critical for preserving and promoting
localism. I concur to the extent that today's Notice overlaps with the
inquiry already conducted on digital television public interest
obligations, for which a rulemaking is long overdue.

But there is much in today's item that is new and appropriate for an
inquiry. I am particularly pleased that we address payola and
sponsorship identification. I have heard plenty of troubling accounts of
new and different forms of undisclosed direct or in-kind payments for
access to the public airwaves. Today, we seek specific information to
determine what actions the Commission should take to address modern-day
pay-for-play practices. This problem is not limited to any single
company or any one form. Nor is it simply a radio problem. Increasingly,
the television world is blurring the line delineating infomercial and
infotainment from genuine news and information. The effects of such
undisclosed paid-for programming run deep -- for artists and musicians,
labor groups, politicians, journalists, researchers, educators, and each
and every one of us who listens to the radio or watches television. The
public deserves to know who is trying to influence them. The Commission
has broad authority to do just that, and, if broadcasters aren't doing
it themselves, it's time we stood up to protect the integrity of the
public airwaves.

Our inquiry is also properly focused on the nature and extent of
disaster warnings, which can be especially crucial for people living in
rural media markets with fewer alternative outlets to receive emergency
information. And I am pleased that we address ways to promote localism
by creating additional broadcast outlets such as low-power FM service.

Given the overarching importance of localism, commenters should offer
any and all thoughts on steps the Commission can take to better promote
localism and further the public interest. We heard a great deal of input
already from the localism hearings held in Charlotte, North Carolina,
San Antonio, Texas, and Rapid City, South Dakota. As we strive to find
ways to ensure that broadcasters routinely reach out to and serve all
segments of their local communities, the Commission hearings have
afforded broadcasters a way to receive valuable direct input from
concerned citizens. But we need to understand the types of interactions
and outreach that occur regularly between broadcasters and community
representatives in each of our cities and towns.

Our country's system of local broadcasting stands as one of our greatest
achievements and should be cherished. Broadcasters who serve their
communities exceptionally well should be proud of their efforts. As
other types of media increasingly try to emulate the touch and feel of
broadcast localism, the Commission must do its part to ensure that all
broadcast licensees exhibit the deep and unwavering commitment to their
local communities that the public should be able to expect from its
trustees.

[^1]: *See, e.g., Deregulation of Radio*, 84 F.C.C.2d 968, 994 ¶ 58
    (1981) ("*Radio Deregulation Order*") ("The concept of localism was
    part and parcel of broadcast regulation virtually from its
    inception.").

[^2]: Broadcasters are considered to be temporary trustees of public
    spectrum because the Communications Act instructs the Commission to
    award licenses to use the airwaves expressly on the condition that
    licensees serve the public interest. *See* 47 U.S.C. § 309(a)
    (requiring the Commission to determine, in the case of applications
    for licenses, "whether the public interest, convenience, and
    necessity will be served by granting such application"). This model
    is often referred to, by commentators and the Commission itself, as
    one of public trusteeship. *See, e.g., Advanced Television Sys. &
    Their Impact upon the Existing Television Broadcast Serv*., 12 FCC
    Rcd 12809, 12829 ¶ (1997) (noting that, even as they transition to
    digital technology, "broadcasters will remain trustees of the
    public's airwaves").

[^3]: *See, e.g., Revision of Programming and Commercialization
    Policies, Ascertainment Requirements, and Program Log Requirements
    for Commercial Television Stations*, 98 F.C.C.2d 1075, 1091-92 ¶¶
    31-32 (1984) ("*Commercial TV Deregulation Order*").

[^4]: 47 U.S.C. § 307(b).

[^5]: *See* *Revision of FM Assignment Policies and Procedures*, 90
    F.C.C.2d 88, 92 ¶ 11 (1982) ("*FM Allocation Priorities Order*"),
    *on recon*., 56 Rad. Reg. 2d (P&F) 448 (1984); *Amendment of Section
    3.606 of the Commission's Rules* *and Regulations*, 41 F.C.C. 148,
    167 (1952) ("*TV Allocation Priorities Order*"). The Commission's
    first FM allocation priority is first-time aural service, followed
    by second full-time aural service and first local service; the
    latter two have "co-equal status." *See FM Allocation Priorities
    Order*, 90 F.C.C.2d at 92. The Commission's first television
    allocation priority is "\[t\]o provide at least one television
    service to all parts of the United States"; its second is "\[t\]o
    provide each community with at least one television broadcast
    station." *TV Allocation Priorities Order*, 41 F.C.C. at 167.
    Although AM stations are not allotted, where mutually exclusive AM
    applications are filed, they are first evaluated under similar
    section 307(b) criteria.

[^6]: *Pacific Broadcasting of Missouri LLC*, 18 FCC Rcd 2291 (2003)
    (quoting *Public Service Broadcasting of West Jordan, Inc*., 97
    F.C.C.2d 960, 962 (Rev. Bd. 1984)).

[^7]: *FCC v. Allentown Broadcasting Corp*., 349 U.S. 358, 362 (1955).

[^8]: *See* 47 C.F.R. §§ 73.24(i) (for AM), 73.315(a) (for FM),
    73.685(a) (for TV).

[^9]: *See id.* § 73.1125.

[^10]: *Amendment of Sections 73.1125 and 73.1130 of the Commission's
    Rules, the Main Studio and Program Origination Rules for Radio and
    Television Broadcast Stations*, 3 FCC Rcd 5024, 5026 ¶ 24 (1988).

[^11]: 47 C.F.R. §§ 73.3526(e)(11)(i) (commercial TV issues/program
    list), 73.3526(e)(12) (commercial AM and FM issues/program list).
    These lists must be retained until final action has been taken on
    the station's next renewal application. *Id.* §§ 73.3526(e)(1)(i),
    73.3526(e)(12).

[^12]: *See Standardized and Enhanced Disclosure Requirements for
    Television Broadcast Licensee Public Interest Obligations*, 15 FCC
    Rcd 19816, 19821 ¶ 13 (2000) ("*Enhanced Disclosure NPRM*"), citing
    *Commercial TV Deregulation Order*, 98 F.C.C.2d at 1076, 1107-11
    (explaining the purpose of issues/programs lists for commercial
    television).

[^13]: *See* 47 C.F.R. § 73.3580.

[^14]: *See Bechtel v. FCC*, 10 F.3d 875, 878 (D.C. Cir. 1993).

[^15]: *See generally* *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*,
    etc., 18 FCC Rcd 13620 (2003).

[^16]: Statement of Hon. John McCain, Chairman, U.S. Senate Commerce
    Committee, *available at*
    <http://commerce.senate.gov/hearings/testimony.cfm?id=874&wit_id=2447>
    (emphasis added).

[^17]: *See* Press Release, "FCC Chairman Powell Launches 'Localism in
    Broadcasting' Initiative," at 2-3 (rel. Aug. 20, 2003). Information
    and analysis developed by the task force may be placed in the record
    of this proceeding, as time and relevance direct.

[^18]: *See Public Interest Obligations of TV Broadcast Licensees*, 14
    FCC Rcd 21633 (1999) ("*DTV Public Interest NOI*").

[^19]: *See Enhanced Disclosure NPRM*, 15 FCC Rcd 19816, *supra*.

[^20]: *See* *Children's Television Obligations of Digital Television
    Broadcasters*, 15 FCC Rcd 22946 (2000).

[^21]: *Second Periodic Review of the Commission's Rules and Policies
    Affecting the Conversion to Digital Television*, etc., 18 FCC Rcd
    1279, 1317-20 ¶¶ 107-112 (2003) ("*Second DTV Periodic Review
    NPRM*").

[^22]: *Id*. at 1320 ¶ 112.

[^23]: *See generally Primer on Ascertainment of Community Problems by
    Broadcast Applicants*, etc., 27 F.C.C.2d 650 (1971).

[^24]: *See, e.g., Amendment of Section 3.663(a) (Now § 73.670), the
    Program Logging Rules for Television Broadcast Stations*, 5 F.C.C.2d
    185 (1966); *Revision of Programming Policies and Reporting
    Requirements Related to Public Broadcasting Licensees,* 87 F.C.C.2d
    716, 721 ¶ 12 (1981).

[^25]: *See* *Radio Deregulation Order*, 84 F.C.C.2d at 997-98 ¶¶ 66-69;
    *Commercial TV Deregulation Order*, 98 F.C.C.2d at 1099 ¶ 49.

[^26]: *See* *Radio Deregulation Order*, 84 F.C.C.2d at 1009-1010 ¶¶
    103-105; *Commercial TV Deregulation Order*, 98 F.C.C.2d at 1107-108
    ¶ 71. *See also* 47 C.F.R. §§ 73.3526(e)(11)(i) (commercial
    television issues/program lists), 73.3526(e)(12) (commercial radio
    issues/programs lists), 73.3527(e)(8) (noncommercial issues/programs
    lists).

[^27]: *See* 14 FCC Rcd at 21640-41 ¶ 15.

[^28]: *See* 15 FCC Rcd at 19819-22 ¶¶ 7-14.

[^29]: *See id*. at 19822-27 ¶¶ 15-20.

[^30]: *See id*. at 19827-31 ¶¶ 26-36.

[^31]: *Report & Statement of Policy Res: Commission En Banc Programming
    Inquiry*, 44 F.C.C. 2303, 2314 (1960) ("*1960 En Banc Programming
    Inquiry*").

[^32]: In the *1960 En Banc Programming Inquiry*, the Commission stated
    (*id*.):

    > The major elements usually necessary to meet the public interest,
    > needs, and desires of the community in which the station is
    > located, . . . have included: (1) opportunity for local
    > self-expression, (2) the development and use of local talent, (3)
    > programs for children, (4) religious programs, (5) educational
    > programs, (6) public affairs programs, (7) editorialization by
    > licensees, (8) political broadcasts, (9) agricultural programs,
    > (10) news programs, (11) weather and market reports, (12) sports
    > programs, (13) service to minority groups, \[and\] (14)
    > entertainment programs.

[^33]: *Id*.

[^34]: *See* *Amendment of Part 0 of the Commission's Rules,* etc*.* 43
    F.C.C.2d 638, 640 (1973). The guidelines called for AM stations to
    offer 8% non-entertainment programming, FM stations to offer 6%, and
    TV stations to offer 10%. Programming that qualified for these
    limits included news, public affairs, and other non-entertainment
    programming. *See Radio Deregulation Order*, 84 F.C.C.2d at 975 ¶
    20. Several years later, the Commission adopted more specific
    guidance for TV stations, and called on them to air at least "five
    percent total local programming, five percent informational (news
    plus public affairs) programming, ten percent total
    non-entertainment programming." *Amendment of Section 0.281 of the
    Commission's Rules: delegations of authority to the Chief, Broadcast
    Bureau*, 59 F.C.C.2d 491, 493 (1976) ("*TV Delegations*").
    Applications for renewal that did not meet these guidelines could
    not be acted on by a delegation of authority from the Commission,
    but rather had to be acted on by the Commission itself.

[^35]: *TV Delegations,* 59 F.C.C. 2d at 491 ¶ 2.

[^36]: A "composite week" consisted of seven days, defined by Public
    Notice by the Commission, and over which the Commission measured
    certain aspects of a broadcast station's programming. In granting a
    renewal, the Commission required a licensee to make certain
    representations regarding the non-entertainment and local
    programming that it would broadcast during a typical week during the
    license period. The basic measure of the extent to which those
    representations was fulfilled was the programming broadcast during
    the composite week. *See Formulation of Rules and Policies Relating
    to the Renewal of Broadcast Licenses*, 43 F.C.C.2d 1, 42-43 ¶¶
    117-19 (1973).

[^37]: *See, e.g., Commercial TV Deregulation Order*, 98 F.C.C.2d at
    1079-88 ¶¶ 7-24.

[^38]: *See* 14 FCC Rcd at 21642-43 ¶¶ 21-22.

[^39]: *See id*. at 21648 ¶ 36.

[^40]: *See id*. at 21642 ¶ 20.

[^41]: *See id*. at 21642 ¶ 21.

[^42]: *See id*. at 21642-43 ¶¶ 21-22.

[^43]: *See Revision of Programming and Commercialization Policies,
    Ascertainment Requirements, and Program Log Requirements for
    Commercial Television Stations,* 104 F.C.C.2d 357, at 366 ¶ 15
    (1986).

[^44]: For example, when the Commission established the Class A
    television service, it had to give effect to language in the Act
    that limited the low-power television stations that qualified for
    Class A status to those that, among other things, "broadcast an
    average of at least 3 hours per week of programming that was
    produced within the market area served by such station, or the
    market area served by a group of commonly controlled low-power
    stations that carry common local programming produced within the
    market area served by such group." 47 U.S.C. § 336(f)(2). The
    Commission originally proposed to define "market area" in terms of
    the station's Grade A protected service contour, but ultimately
    concluded to use a station's Grade B contour, after discounting
    other possibilities, such as the DMA. *See* *Establishment of a
    Class A Television Service*, 15 FCC Rcd 6355, 6363-64 ¶¶ 16-19
    (2000).

[^45]: Testimony of Dave Davis, General Manager, WPVI-DT, *available at*
    <http://commerce.senate.gov/hearings/testimony.cfm?id=874&wit_id=2425>.

[^46]: *See Sirius Satellite Radio, Inc.*, 16 FCC Rcd 16773, 16777 ¶ 11
    (2001) (restricting use of terrestrial repeaters that complement
    satellite digital radio service to "simultaneous retransmission of
    programming" from national service); *XM Radio Inc.*, 16 FCC Rcd
    16781, 16784-85 ¶ 11 (2001) (same).

[^47]: *See* Comments of the National Association of Broadcasters in MB
    Docket Nos. 02-277, *et al*., Attachment D (SmithGeiger LLC,
    *Newsroom Budgets in Midsize (51-100) and Small Markets (101-210)*
    (Dec. 2002)).

[^48]: *Id*. at 13.

[^49]: Vernon Stone, "News Operations at U.S. TV Stations," *available
    at* <http://www.missouri/edu/~jourvs/tvops.html>. Although this
    study provides data from 1994, and updated in 2000, it indicates,
    for example, that over 90% of television newsrooms of ABC, CBS, and
    NBC stations in the top 25 markets are profitable. *Id*. at Table 4.

[^50]: 47 U.S.C. § 312(a)(7).

[^51]: *Id*. § 315(a).

[^52]: *See, e.g., Codification of the Commission's Political
    Programming Policies*, 7 FCC Rcd 678 (1991) ("*1991 Political
    Programming Order*"); *Law of Political Broadcasting and
    Cablecasting: A Political Primer*, 100 F.C.C.2d 1476 (1984).

[^53]: *See* 14 FCC Rcd at 21647-48 ¶ 35.

[^54]: *See id*. at 21648 ¶ 36.

[^55]: *See id.* at 21648-49 ¶¶ 37-38 (explaining that one group
    recommended five minutes during the evening hours for thirty days
    before election, and that others had recommended twenty minutes in
    even-numbered years and fifteen minutes in odd-numbered years (when
    there are fewer elections) for thirty days before election).

[^56]: *Id*. at 21649 ¶ 38.

[^57]: Testimony of Dean Martin Kaplan, Director, Annenberg Norman Lear
    Center, Associate Dean USC Annenberg School for Communication,
    *available at*
    <http://commerce.senate.gov/hearings/testimony.cfm?id=874&wit_id=2426>.

[^58]: 47 U.S.C. § 315(b).

[^59]: 47 C.F.R. § 73.1942(b).

[^60]: *Id*.

[^61]: *Id*. at § 73.1943(a).

[^62]: *1960 En Banc Programming Inquiry*, 44 F.C.C. at 2314.

[^63]: *Radio Deregulation Order*, 84 F.C.C.2d at 995-96 ¶ 63. *See
    Stone v. FCC*, 466 F.2d 316 (D.C. Cir. 1972) (stating that licensees
    "may not flatly ignore a strongly expressed need" by a segment of
    their communities of license, such as minority groups).

[^64]: *See Radio Deregulation Order*, 84 F.C.C.2d at 997 ¶ 66 ("What is
    important is that broadcasters present programming relevant to
    public issues both of the community at large or, in the appropriate
    circumstances, relevant primarily to the more specialized interests
    of its own listenership. It is not necessary that each station
    attempt to provide service to all segments of the community where
    alternative radio sources are available.").

[^65]: *See* 14 FCC Rcd at 21647 ¶ 32.

[^66]: *Id*.

[^67]: 47 U.S.C. § 151.

[^68]: 47 C.F.R. § 11.1. Part 11 of the Commission's rules "describe the
    required technical standards and operational procedures of the EAS
    for AM, FM, and TV broadcast stations, cable systems, and other
    participating entities." *Id*.

[^69]: *Id*. at § 79.2.

[^70]: *DTV Public Interest NOI,* 14 FCC Rcd at 21642, Para 18.

[^71]: 47 C.F.R. § 73.658(e).

[^72]: *Id*. § 73.658(d).

[^73]: Motion for Declaratory Ruling (filed June 22, 2001). NASA alleged
    that the networks: (1) assert excessive control over affiliates'
    programming decisions; (2) assert excessive control over affiliates'
    digital spectrum; and (3) use their affiliation to interfere with or
    manipulate station sales in a manner inconsistent with section
    310(d) of the Act. *Id*. at 11. In response, the top four networks
    argued that: (1) NASA's request for a declaratory ruling is really a
    request for the Commission to amend the right to reject rule so as
    to give affiliates the "absolute" power to avoid their contractual
    obligations; (2) the evidence does not support NASA's argument that
    major networks have asserted excessive control over affiliates'
    programming decisions; (3) affiliates have sufficient operating cash
    flow and market strength to negotiate favorable financial terms with
    networks; and (4) the affiliation agreements contain language that
    expressly acknowledges that affiliate stations have a right to
    reject programming in accordance with Commission rules. *See, e.g.,*
    Fox Comments at 7-9, 11-14, 24-27; NBC Comments at 6-8, 12, 15-18;
    Viacom Comments (on behalf of CBS) at 21, 27; Walt Disney Comments
    (on behalf of ABC) at 8, 13, 15, 24-27.

[^74]: Public Notice, "Commission Warns Licensees About Payola and
    Undisclosed Promotion," 4 FCC Rcd 7708 (1988) ("Payola Public
    Notice").

[^75]: 47 U.S.C. §§ 317, 508.

[^76]: "Payola Public Notice," 4 FCC Rcd at 7708.

[^77]: 47 C.F.R. § 73.1212.

[^78]: Future of Music Coalition, *Radio Deregulation: Has It Served
    Citizens and Musicians?* at 79 (2002) ("*FMC Radio Deregulation*").

[^79]: *See id*. *See also* Joseph E. Magri, *Internet Radio and the
    Future of Music*, Los Angeles Lawyer (May, 2003) ("In order to
    obtain airplay, however, record labels participate in a pay-for-play
    system in which they pay so-called independent promoters to
    influence radio airplay . . . .").

[^80]: The following is another description of the payola-type practice:

    > Essentially all songs on FM commercial radio have indirectly been
    > paid for by record labels. Millions of dollars each year are
    > funneled through independent radio promoters, also known as
    > "indies," who then transfer the money over to radio stations who
    > add news songs to playlists. . . . The biggest gripe about this
    > practice . . . is that "instead of radio playing what people want
    > to hear, they're playing music that's backed by the deepest
    > pockets."
    >
    > To demonstrate how the record labels and artists are injured by
    > payola, a typical indie lobbies a radio station to become their
    > exclusive promoter. This exclusive relationship does not come
    > cheap. The up-front fee generally costs record labels between
    > \$100,000 and \$400,000, depending on the size of the market. The
    > independent promoter is "the only person who is allowed to filter
    > all the stuff that comes in from all the sources and then present
    > it to the radio station." For every song added to a playlist, the
    > indie then sends weekly invoices to record companies detailing
    > which songs were added and essentially, how much it will cost the
    > record company for adding the particular songs. An added song
    > could range from \$800 to \$5,000 in the largest markets. For
    > record companies to even launch a rock song on popular stations
    > today, it would cost the company, and indirectly the artist, over
    > \$250,000. If the song is successful and manages to reach both
    > rock and Top 40 markets, the indie costs could reach more than \$1
    > million. The indie promoter, often referred to as the middleman,
    > "sidestep\[s\] the federal anti-payola law by paying broadcasters
    > annual fees they say are not tied to airplay of specific songs."

    Sarah Greene, *Clear Channel v. Competition Act of 2002: Is There a
    Clear end in Sight?*, 12 DePaul-LCA J. Art & Ent. L. 387, 415-16
    (2002) (citations omitted).

[^81]: *See FMC Radio Deregulation Study*, *supra* note Error: Reference
    source not found, at 79.

[^82]: *See, e.g.*, Chuck Philips, *Music Industry to Call for a Federal
    Probe of Radio Payola*, L.A. Times, May 23, 2002, at C1.

[^83]: *See id*. at 80-81.

[^84]: 47 C.F.R. § 73.1212(a).

[^85]: *Id*. § 73.1212(d).

[^86]: 41 RR 2d 877, 878 (1977), *citing Sponsorship Identification*, 40
    FCC 2 (1950).

[^87]: Public Notice, "Application of Sponsorship Identification Rules
    to Political Broadcast, Teaser Announcements, Governmental Entities
    and Other Organizations," 66 FCC 2d 302 (1977).

[^88]: Letter from David H. Solomon, Chief, Enforcement Bureau, to
    Thomas W. Dean, NORML Foundation, 16 FCC Rcd 1421, 1423 (EB 2000).

[^89]: Howard Kurtz, *Florida TV Station Cashes In on Interview
    "Guests,"* Wash. Post, Oct. 16, 2003, at C 1. The Washington Post
    has likened the local morning show to network morning shows, such as
    NBC's "Today." *Id. See also* Editorial, *Pay for Play*, Wash. Post,
    Oct. 17, 2003 at A28. Media General, which owns the Florida
    television station, contends that the program is more like "Live
    With Regis and Kelly." Editorial, *Entertainment, Not Journalism*,
    Wash. Post, Oct. 22, 2003 at A28.

[^90]: Kurtz, *supra* note Error: Reference source not found.

[^91]: *See, e.g., All Things Considered* (NPR broadcast, Dec. 2, 2003)
    (referencing the Tampa, FL station described in the text and a
    Jackson, MS station that are alleged to "have represented paid-for
    infomercials as if they were part of news or public affairs
    programs.")

[^92]: Letter from Hon. John McCain, Chairman, U.S. Senate Committee on
    Commerce, Science, and Transportation, to Hon. Michael K. Powell,
    Chairman, FCC 1 (Nov. 3, 2003).

[^93]: 47 C.F.R. § 73.1212(a)(2)(ii).

[^94]: Anna Wilde Mathews, *From A Distance: A Giant Radio Chain Is
    Perfecting the Art of Seeming Local*, Wall St. J. Feb. 25, 2002, at
    A1 ("*From A Distance*").

[^95]: Tom Carpenter, AFTRA, *Pitfalls of voice tracking: Does Clear
    Channel practice serve the public interest?*, Broadcasting & Cable,
    Sept. 9, 2002.

[^96]: The Florida Attorney General, however, investigated whether Clear
    Channel portrayed national call-in contests as local. Although Clear
    Channel admitted no law violation, it paid the state \$80,000 and
    agreed not to "make any representation or omission that would cause
    a reasonable person to believe" that contests involving many
    stations across the station were in fact limited to local stations.
    *See* *From A Distance*, at A1. In the context of licensee-conducted
    contests, the Commission has rules that require the disclosure of
    the material terms. *See* 47 C.F.R. § 73.1216.

[^97]: *See* Future of Music Coalition, *Radio Deregulation: Has it
    Served Citizens and Musicians?*, at 79-80 (2002) (the Future of
    Music Coalition filed a copy of this study in MB Docket No. 02-277
    on November 20, 2002).

[^98]: *See* 47 C.F.R. §§ 73.3580 (local public notice of filing of
    broadcast applications), 73.3584 (procedure for filing petitions to
    deny).

[^99]: 47 U.S.C. § 309(k)(1).

[^100]: *See id*. § 309(k)(2).

[^101]: *Id*. § 309(k)4).

[^102]: *See* *id*. § 309(k)(3).

[^103]: *See, e.g*., Testimony of Commissioner Michael J. Copps, Before
    the Senate Committee on Commerce, Science, and Transportation (July
    23, 2002), *available at*
    http://www.fcc.gov/commissioners/copps/statements2003.html.

[^104]: *See* 47 U.S.C. § 334(b) (mid-term review for television
    broadcast stations); 47 C.F.R. § 73.2080(f)(2) (mid-term review for
    radio and television broadcast stations).

[^105]: *See* *Creation of Low Power Radio Service*, 15 FCC Rcd 2205
    (1999).

[^106]: *See id*. at 2211 ¶ 13.

[^107]: *See* 47 C.F.R. § 73.853(b).

[^108]: *See id*. § 73.872(b)(1).

[^109]: *Id*. § 73.872(b)(3).

[^110]: *See* D.C. Appropriations -- FY 2001, Pub. L. No. 106-553, §
    632, 114 Stat. 2762, 2762-A-111 (2000).

[^111]: *See* Public Notice, "Comment Sought on the Mitre Corporation's
    Technical Report, 'Experimental Measurements of the
    Third-Adjacent-Channel Impacts of Low-Power FM Stations,'" DA
    03-2277 (July 11, 2003). We have extended the comment deadline until
    October 14, 2003. *See The Mitre Corporation's Technical Report*,
    "*Experimental Measurements of the Third-Adjacent-Channel Impacts of
    Low-Power FM Stations,"* MM Docket No. 99-25, Order, DA 03-2767 (MB
    rel. Aug. 29, 2003).

[^112]: Report to Congress on the Low Power FM Interference Testing
    Program, Pub. L. No. 10-553 (rel. Feb. 19, 2004), *available at*
    <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-244128A1.pdf>.

[^113]: Testimony of Hon. John McCain, Chairman, U.S. Senate Commerce
    Committee,

    *available at*
    <http://commerce.senate.gov/hearings/testimony.cfm?id=874&wit_id=2447>.

[^114]: 47 C.F.R. § 74.1231(a).

[^115]: *Id*. § 74.1231(b). FM channels 201-220 are those reserved for
    noncommercial use.

[^116]: *Id*. § 74.1231(g).

[^117]: Although our rules do not require all LPFM stations to originate
    local programming, the mechanism we use to resolve mutually
    exclusive LPFM applications awards a point to applicants that
    "pledge to originate locally at least eight hours of programming per
    day." *Id*. § 74.872(b)(3).

[^118]: As indicated, as between mutually exclusive LPFM applications,
    we award a point to applicants that pledge to originate local
    programming. *Id*.

[^119]: LPFM stations, and all noncommercial stations, are permitted to
    operate in both the reserved and non-reserved bands.