**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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

**NOTICE OF PROPOSED RULE MAKING**

**Adopted: September 12, 2002 Released: September 23, 2002**

**Comment Date:** 60 days after Commission release of the Media
Ownership Working Group Studies

**Reply Comment Date:** 90 days after Commission release of the Media
Ownership Working Group Studies

By the Commission: Commissioner Copps concurring and issuing a
statement, Commissioner Martin

approving in part, concurring in part and issuing a statement.

**TABLE OF CONTENTS**

> para

[I. INTRODUCTION](#introduction) 1

[II. Legal Framework for Biennial Ownership
Review](#legal-framework-for-biennial-ownership-review) 9

[III. The modern media marketplace](#the-modern-media-marketplace) 23

[IV. Policy Goals](#policy-goals) 29

[A. Diversity](#diversity) 33

[B. Competition](#competition) 51

[C. Localism](#localism) 69

[V. local ownership rules](#local-ownership-rules) 72

[A. Local TV Multiple Ownership Rule](#local-tv-multiple-ownership-rule)
73

[1. The *Sinclair* Decision](#the-sinclair-decision) 76

[2. Diversity](#diversity-1) 78

[3. Competition](#competition-1) 84

[4. Localism](#localism-1) 95

[B. Radio/TV Cross-Ownership Rule](#radiotv-cross-ownership-rule) 98

[1. Viewpoint Diversity](#viewpoint-diversity) 102

[2. Localism](#localism-2) 103

[3. Competition](#competition-2) 104

[C. Alternative Means to Achieve
Goals](#alternative-means-to-achieve-goals) 106

[D. "Voice" or Other Test](#voice-or-other-test) 112

[1. Creating a New Metric](#creating-a-new-metric) 113

[2. Weighting the Voices](#weighting-the-voices) 115

[3. Accounting for Diversity and Competition Via MVPDs and the
Internet](#accounting-for-diversity-and-competition-via-mvpds-and-the-internet)
119

[VI. National Ownership Rules](#national-ownership-rules) 125

[A. National TV Ownership Rule](#national-tv-ownership-rule) 126

[1. Diversity](#diversity-2) 132

[2. Competition](#competition-3) 138

[3. Localism](#localism-3) 147

[4. Audience Measurement](#audience-measurement) 155

[B. Dual Network Rule](#dual-network-rule) 156

[1. Diversity](#diversity-3) 160

[2. Competition](#competition-4) 164

[3. Localism](#localism-4) 168

[VII. administrative matters](#administrative-matters) 169

[A. Procedural Provisions](#procedural-provisions) 169

[1. Notice and Comment Provisions](#notice-and-comment-provisions) 169

[2. Ex Parte Provisions](#ex-parte-provisions) 173

[B. Initial Regulatory Flexibility
Analysis](#initial-regulatory-flexibility-analysis) 179

[VIII. ordering clauses](#ordering-clauses) 180

# INTRODUCTION 

1.  This Notice of Proposed Rulemaking ("*Notice*") initiates a
    comprehensive review of the Commission's media ownership rules. The
    law governing our media ownership policies and the media market has
    undergone substantial changes since our ownership rules were
    adopted. As a result, this proceeding will include a careful
    analysis of our policy goals and the development and implementation
    of a regulatory framework that best serves to achieve those goals.

2.  The Commission has long regulated media ownership as a means of
    promoting diversity, competition, and localism in the media without
    regulating the content of broadcast speech. The Commission has
    adopted these regulations pursuant to sections 307, 308, 309(a), and
    310(d) of the Communications Act, which authorize the Commission to
    grant and renew broadcast station licenses in the public
    interest.[^1] The existing rules were adopted largely on a
    rule-by-rule basis and evolved incrementally over the years. During
    these evolutions, courts generally approved our rules as long as
    they were rationally related to achieving their stated purpose and
    our decisions complied with administrative procedure requirements.

3.  The Telecommunications Act of 1996 ("the Act")[^2] fundamentally
    changed broadcast[^3] ownership law. Section 202(h) of the 1996 Act
    directs the Commission to re-examine its broadcast ownership rules
    every two years and repeal or modify any regulation it determines to
    be no longer in the public interest. Recent court decisions have
    held that section 202(h) changes the way the Commission must
    evaluate its broadcast ownership rules. The courts have stated that
    section 202(h) carries with it a presumption in favor of repealing
    or modifying the ownership rules. The court decisions interpreting
    section 202(h) require a Commission decision to retain or modify its
    media ownership regulations, in its biennial review, to be based on
    a solid factual record and a consistent analytical framework.

4.  The regulatory structure best suited to promote the public interest
    is not static. Thus, the Commission's media ownership rules must be
    reassessed on an ongoing basis to ensure that they are grounded in
    the current realities of the media marketplace. It is only through
    this reevaluation that the Commission can be assured that its media
    ownership rules actually advance, rather than undermine, our policy
    goals. In this regard, we recognize that the marketplace has changed
    dramatically over the last few decades, with both greater
    competition and diversity, and increasing consolidation.

5.  In conducting this reassessment of our broadcast ownership
    regulatory framework, we must clearly define our objectives as we
    strive to promote the public interest. The Commission's ownership
    policies traditionally have focused on advancing three broadly
    defined goals: (1) diversity, (2) competition, and (3) localism.
    This proceeding will review these policy objectives in light of the
    current media marketplace and determine whether Commission
    intervention is necessary to achieve these objectives. In addition,
    we will consider whether there are additional objectives that the
    Commission should strive to achieve through our media ownership
    rules. One such goal may be increased innovation of media platforms
    and services. In defining these objectives, this proceeding will
    consider whether the Commission should prioritize these policy
    objectives and, if so, how. By determining the relative weight of
    each objective, the Commission will be well positioned to address
    those instances in which there is tension between our policy goals.

6.  This *Notice* initiates review of four ownership rules: the national
    television multiple ownership rule;[^4] the local television
    multiple ownership rule;[^5] the radio-television cross-ownership
    rule;[^6] and the dual network rule.[^7] The first two rules have
    been reviewed and remanded to the Commission by the U.S. Court of
    Appeals for the District of Columbia Circuit. We address the issues
    on remand in this proceeding.[^8]

7.  The Commission previously has initiated proceedings on the local
    radio ownership rule[^9] and the newspaper/broadcast cross-ownership
    rule.[^10] The local radio ownership rule sets forth the number of
    radio stations that an entity may own in a single radio market.[^11]
    The local radio ownership proceeding examines the effects of market
    consolidation, the proper definition of a radio market, and possible
    changes to our local radio ownership rules and policies to reflect
    the current radio marketplace. The newspaper/broadcast
    cross-ownership rule, which prohibits the common ownership of a
    daily newspaper and a broadcast station in the same market,[^12] is
    currently under review in the newspaper/broadcast cross-ownership
    proceeding. Comments filed in those proceedings will be incorporated
    in this proceeding. We seek additional comment on those rules to the
    extent necessary to address issues raised for the first time in this
    *Notice*.[^13]

8.  Our local ownership rules, which include the newspaper/broadcast
    cross-ownership rule,[^14] the local TV ownership rule,[^15] the
    radio/TV cross-ownership rule,[^16] and local radio ownership
    rule,[^17] are interrelated. Each is intended to foster competition
    and diversity in the local media marketplace. As a result, it is
    appropriate for the Commission to consider these rules collectively,
    as any change to one rule may affect the need for other rules to be
    retained, modified, or eliminated. In addition, by evaluating our
    local ownership rules collectively, we facilitate consistent
    analysis of policy questions that are common to multiple rules. For
    example, all of our local rules are predicated to some extent on
    assumptions about the types of media that Americans rely on for news
    and current affairs. We are better able to analyze and apply our
    findings in areas such as these by considering the rules
    collectively rather than separately. Assessing these rules
    collectively also avoids the problem in sequential decision making
    whereby early decisions can inadvertently predetermine \-- or
    preclude certain approaches in \-- later decisions.

# Legal Framework for Biennial Ownership Review

9.  Section 202(h) of the 1996 Act provides:

> The Commission shall review its rules adopted pursuant to this section
> and all of its ownership rules biennially as part of its regulatory
> reform review under section 11 of the Communications Act of 1934 and
> shall determine whether any of such rules are necessary in the public
> interest as the result of competition. The Commission shall repeal or
> modify any regulation it determines to be no longer in the public
> interest.[^18]

10. The 1996 Act repealed the prohibition on common ownership of cable
    and telephone systems,[^19] overrode the few remaining regulatory
    limits upon cable/network cross-ownership,[^20] eliminated the
    national and relaxed the local restrictions upon radio
    ownership,[^21] eased the "dual network" rule for television,[^22]
    and directed the Commission to eliminate the cap upon the number of
    television stations any one entity may own[^23] and to increase to
    35 from 25 the maximum percentage of American households a single TV
    broadcaster may reach.[^24] These enactments, together with section
    202(h), "set in motion a process to deregulate the structure of the
    broadcast and cable television industries" as both competition and
    diversity among media voices increase.[^25]

11. This is our third biennial review. As a result of the 1998 biennial
    review proceeding, the first review, the Commission relaxed the dual
    network rule,[^26] eliminated the experimental broadcast station
    multiple ownership rule,[^27] and initiated a proceeding with
    respect to the newspaper/broadcast cross-ownership rule.[^28] The
    Commission decided to retain the local radio ownership rule,[^29]
    the national TV ownership rule (including the UHF discount),[^30]
    and the cable/broadcast cross-ownership rule.[^31] Prior to
    completing the 1998 biennial review, the Commission had
    substantially relaxed the local TV ownership and radio/TV
    cross-ownership rules in the separate local television ownership
    proceeding.[^32] In the 2000 biennial review proceeding, a
    Commission-wide comprehensive proceeding, the Commission endorsed
    the results of the 1998 biennial review of its broadcast ownership
    rules.[^33]

12. [Court Decisions Reviewing 1998 Biennial Review.]{.underline} The
    Commission's decisions in the *1998 Biennial Report* relating to the
    cable/broadcast cross-ownership rule and the national TV ownership
    rule were challenged in the United States Court of Appeals for the
    District of Columbia Circuit.[^34] In *Fox Television*, the court
    vacated the cable/broadcast cross-ownership rule, and remanded the
    decision to retain the national TV ownership rule, holding that the
    Commission's decision to retain these rules was arbitrary and
    capricious and contrary to section 202(h) of the 1996 Act.[^35] The
    court stated that the Commission had "no valid reason to think the
    \[national TV ownership rule\] is necessary to safeguard
    competition"[^36] or "to advance diversity"[^37] and had given no
    reason to depart from the conclusion the Commission had reached in
    1984 that the rule was no longer necessary.[^38] The court observed
    that the Commission had provided no analysis of the state of
    competition in the television industry to justify its decision to
    retain the national TV ownership rule. In addition, the court
    faulted the Commission's decision to retain the national TV
    ownership rule while it observed the effects of changes in the local
    TV ownership rule. The court concluded that this "wait-and-see"
    approach could not be squared with section 202(h), which "carries
    with it a presumption in favor of repeal or modification of
    ownership rules."[^39]

13. In retaining the national TV ownership rule, the Commission, in
    part, reasoned that the rule was necessary to strengthen the
    bargaining power of the network affiliates, thereby promoting
    localism and diversity. Although the court in *Fox Television*
    rejected the networks' argument that this justification was
    inconsistent with the requirements of section 202(h), the court
    determined that the Commission's reliance on this justification was
    invalid because it did not have sufficient record support. In
    particular, the court held that the Commission had failed to justify
    its departure from the *1984 Multiple Ownership Order*, where the
    Commission said it "had no evidence indicating that stations which
    are not group-owned better respond to community needs, or expend
    proportionately more of their revenues on local programming."[^40]
    Nonetheless, the court held that the Commission could conceivably
    distinguish \-- as incorrect or inapplicable because of changed
    circumstances -- its views in the *1984 Multiple Ownership Order*.
    The court also noted that the Commission did advert to possible
    competitive problems in the national markets for advertising and
    program production, and that the intervenors, including the National
    Association of Broadcasters and National Affiliated Stations
    Alliance, made a plausible argument that the national television
    ownership rule furthers competition in the national television
    advertising market.[^41]

14. Based on these findings, the court remanded for further
    consideration the issue of whether to repeal or modify the national
    TV ownership rule, holding that "the probability that the Commission
    will be able to justify retaining the Rule is sufficiently high that
    vacatur of the Rule is not appropriate."[^42] The court also held
    that the Commission's decision to retain the national TV ownership
    rule did not violate the First Amendment, reaffirming that the
    review of broadcast regulations under First Amendment jurisprudence
    is more deferential than review of cable or print media
    regulations.[^43] The court also rejected the networks' claim that
    section 202(h) does not allow the Commission to regulate broadcast
    ownership in the interest of diversity alone. The court held that in
    the context of broadcast regulation, the public interest has
    historically embraced both diversity and localism, that protecting
    diversity is a permissible policy for the agency to seek to advance,
    and that nothing in section 202(h) indicated that Congress had
    departed from that approach.[^44] The court then held that whatever
    the virtues may be of a free market in television stations,
    "Congress may, in the regulation of broadcasting, constitutionally
    pursue values other than efficiency \-- including in particular
    diversity in programming, for which diversity of ownership is
    perhaps an aspirational but surely not an irrational proxy."[^45]

15. The court also, in *Fox Television,* vacated the cable/broadcast
    cross-ownership rule, finding that the Commission had failed to
    justify its retention of the rule as necessary to safeguard
    competition. In the *1998 Biennial Report,* the Commission attempted
    to justify the retention of the rule by arguing that a cable
    operator that also owns a broadcast station has the incentive to
    discriminate against other broadcasters by: (1) offering joint
    advertising sales and promotions, and (2) not carrying, or carrying
    on undesirable channels, broadcast signals of competing stations.
    The court found that the Commission had not shown a substantial
    enough probability of discrimination to deem reasonable a broad
    cross-ownership rule, especially in light of: (1) existing conduct
    rules, such as must-carry, ensuring access to cable systems, and (2)
    competition from DBS providers, which would make discrimination
    against competing broadcasters unprofitable. Further, the court
    found that the Commission had failed to justify its departure from a
    1992 Report and Order, [^46] in which it had concluded that the rule
    was not necessary to prevent carriage discrimination. The court also
    found that the Commission had failed to justify the rule based on
    its diversity concerns. Based on its assessment that there was
    little chance that the Commission would be able to justify retaining
    the cable/broadcast-cross-ownership rule, and that the disruption
    caused by vacatur would be insubstantial, the court vacated the
    rule.[^47]

16. With respect to the standard of review generally under section
    202(h), the court noted, in the context of discussing the
    cable/broadcast cross-ownership rule, that the Commission had
    applied too lax a standard and that "\[t\]he statute is clear that a
    regulation should be retained only insofar as it is necessary in,
    not merely consonant with, the public interest."[^48] The Commission
    petitioned for rehearing as to this issue, arguing that the court's
    interpretation of the statutory language would impose a higher
    standard in deciding whether to retain a rule than that which
    applied to the adoption of the rule in the first place. On
    rehearing, the court deleted the paragraph in its earlier opinion
    holding the Commission to a higher "necessary" standard in biennial
    review proceedings, finding that the cable/broadcast cross-ownership
    rule could not pass muster even under the more relaxed "consonance"
    standard and that determining the applicability of a stricter
    standard of review therefore was not necessary. The court decided to
    leave "unresolved precisely what section 202(h) means when it
    instructs the Commission first to determine whether a rule is
    'necessary in the public interest' but then to 'repeal or modify'
    the rule if it is simply 'no longer in the public interest.'"[^49]

17. In *Sinclair Broadcast Group, Inc. v. FCC*,[^50] the court reviewed
    the Commission's decision relaxing the local TV ownership rule.[^51]
    That rule allows the combination of two television stations in the
    same market if: (1) the Grade B contours of the stations do not
    overlap, or (2) (a) one of the stations is not among the four
    highest-ranked stations in the market, and (b) at least eight
    independently owned and operating full power commercial and
    non-commercial television stations, or "voices," would remain in
    that market after the combination.[^52] Under the rule, voices are
    defined to include only broadcast television stations in the
    market.[^53] In *Sinclair*, the court held that the Commission
    "adequately explained how the \[local TV ownership rule\] furthers
    diversity at the local level and is necessary in the 'public
    interest' under § 202(h) of the 1996 Act."[^54] The court also
    upheld the local TV ownership rule against a First Amendment
    challenge, applying the "rational-basis" standard of review.[^55]
    The court held that there was a rational relationship between the
    *Local TV Ownership Report and Order* and our diversity and
    competition goals. The court noted that choosing the number eight
    and defining voices "are quintessentially matters of line drawing
    invoking the Commission's expertise in projecting market results,"
    and did not decide the issue of whether eight is the appropriate
    numerical limit. The court invalidated, however, the Commission's
    definition of voices under the rule because it did not adequately
    explain its decision to include only broadcast television stations
    as voices. The court pointed out that the definition was
    inconsistent with the definition of voices for the radio/TV
    cross-ownership rule,[^56] which also considers major newspapers and
    cable television to be voices. The court observed that "\[o\]n
    remand, the Commission conceivably may determine to adjust not only
    the definition of 'voices' but also the numerical limit."[^57]

18. We seek comment on the statutory language of section 202(h) of the
    1996 Act and the court's interpretations of that language in *Fox
    Television* and *Sinclair.* We specifically invite comment on the
    standard we should apply in determining whether to modify, repeal,
    or retain our rules under section 202(h) of the 1996 Act. For
    example, does the phrase, "necessary in the public interest," mean
    we must repeal a rule unless we find it to be indispensable? Or does
    the phrase mean that we can retain a rule if we would be justified
    under the current circumstances in adopting it in the first instance
    because the record shows that it serves the public interest? Or is
    the standard somewhere in between? The Commission argued in its
    rehearing petition in *Fox Television* that "necessary in the public
    interest," when viewed in the context of the rest of the 1934 and
    1996 Acts, means "in the public interest," or useful or
    appropriate.[^58] The very next sentence of the statute uses the
    term "no longer in the public interest," thus appearing to equate a
    rule's being "necessary in the public interest" with its being "in
    the public interest." The Commission argued that other provisions of
    the Communications Act contain similar language using the terms,
    "necessary," "required," and "necessity," but those provisions have
    been construed to require the Commission to demonstrate that the
    rules we adopt advance legitimate regulatory objectives, not that
    they are necessary in the sense of being indispensable. Others might
    argue, however, that "necessary in the public interest" connotes
    that a rule must be essential or indispensable in order for us to
    retain it.[^59] What light do the statutory context and other case
    law cast on the meaning of the term? We invite comment on any other
    factors we should consider with respect to the meaning of the
    statutory term "necessary in the public interest" as it bears on our
    review of the ownership rules at issue in this proceeding.

19. In both *Fox Television* and *Sinclair,* the court, noting that
    \"Section 202(h) carries with it a presumption in favor of repealing
    or modifying the ownership rules,\"[^60] faulted the Commission's
    justification of its rules as lacking supporting factual
    evidence.[^61] Accordingly, with respect to the rules under
    consideration, we strongly encourage commenters to provide empirical
    evidence to buttress their assertions. Our Media Ownership Working
    Group is engaged in a number of studies that are intended to inform
    the 2002 biennial review. These studies, which will be released
    separately for comment, concern the following subjects: (1)
    inter-media substitutability among local media outlets from the
    perspective of local advertisers; (2) the effect of broadcast media
    concentration on the level of non-advertising content produced and
    consumed; (3) the status of broadcast television in the multichannel
    marketplace; (4) a comparison of local news quantity and quality on
    network-owned stations and network affiliates; (5) past consumer
    substitution patterns across various media; (6) the effect of common
    ownership of same-market newspapers and television stations on news
    coverage; (7) a survey of American consumers regarding outlets used
    for news and current affairs; (8) an examination of program
    diversity on prime time network television between 1966 and
    2002; (9) a survey of changes in the availability of media outlets
    over time in ten select cities; and (10) the effect of local radio
    market concentration on program diversity and advertising prices.
    Given the importance of this data to the proceeding, and in order to
    streamline the review process, comments will be due 60 days after
    Commission release of the studies; reply comments will be due 90
    days after release of the studies. We intend to use the evidence
    collected in the studies, as well as the comments, to guide and
    support our decisions in this proceeding.

20. [The First Amendment.]{.underline} Any media ownership rules we
    ultimately adopt in this proceeding must be consistent not only with
    the legal standard of section 202(h), but also with the First
    Amendment rights of the affected media companies and of consumers.
    The *Fox Television* and *Sinclair* cases recently applied the
    rational-basis standard to broadcast ownership rules.[^62] The court
    held in *Fox Television* that the Commission's decision to retain
    the national TV ownership rule did not violate the First
    Amendment,[^63] and it held in *Sinclair* that the local TV
    ownership rule complies with the First Amendment.[^64] The court
    reaffirmed in both cases that the rational-basis standard of First
    Amendment scrutiny is applicable to broadcast television rather than
    the higher intermediate scrutiny applicable to cable operators or
    the strict scrutiny applicable to print media.[^65] As the court
    noted in *Sinclair*, there is no unabridgeable First Amendment right
    to hold a broadcast license when a would-be broadcaster does not
    satisfy the public interest by meeting the Commission criteria for
    licensing, including ownership limitations.[^66]

21. In general, ownership limits on cable operators have been subject to
    the *O'Brien*,[^67] or intermediate scrutiny, test.[^68] Under this
    standard, government regulation of speech will be upheld only
    if: (1) it furthers an important or substantial governmental
    interest; (2) the government interest is unrelated to the
    suppression of free expression; and (3) the incidental restriction
    on alleged First Amendment freedoms is no greater than is essential
    to the furtherance of that interest.[^69] The Supreme Court has
    determined that "promoting the widespread dissemination of
    information from a multiplicity of sources"[^70] is a government
    interest that is not only important, but is of the "highest
    order"[^71] and is unrelated to the suppression of free speech.[^72]

22. Courts have consistently applied the rational-basis test when faced
    with First Amendment challenges to Commission ownership restrictions
    on broadcast media. This is true even when the ownership regulation
    effectively limits what a non-broadcast media firm, such as a
    newspaper or a cable company, can own.[^73] In other words, when the
    rule prevents a newspaper from owning an in-market radio station,
    the courts do not apply the strict scrutiny test applicable to
    newspapers as newspapers, but rather the rational-basis test used
    for evaluating broadcast regulations. We will explore a variety of
    options for a new media ownership framework. We seek comment on the
    standard of review that would apply to these options.

# The modern media marketplace

23. Section 202(h) requires the Commission to consider whether any of
    its ownership rules are "necessary in the public interest *as a
    result of competition.*" As noted, the *Fox Television* court
    faulted the Commission for failing to provide any analysis of the
    state of competition in the television industry to justify its
    retention of the national TV ownership rule.[^74] Therefore, our
    evaluation of the broadcast ownership rules must take into account
    the current status of competition in the media marketplace.
    Throughout this proceeding, we seek comment on how changes and
    developments in the media marketplace affect our analysis and
    decision making. For example, in Section IV we explore the
    definition of the product market and seek comment on whether the
    proliferation of programming outlets and services requires the
    Commission to redefine the product market to include media other
    than broadcasting. The data below provides a brief overview of the
    number of outlets and potential competitors in the video, audio, and
    newspaper industries. We seek comment on the significance of this
    data to our biennial review of the ownership rules as well as any
    other competitive data that would be useful to our analysis.

24. [Video]{.underline}. There are currently over 106 million TV
    households in the U.S.[^75] served by a variety of video outlets.
    Over-the-air outlets include: 1,331 commercial TV stations (752 UHF,
    579 VHF); 381 non-commercial, educational TV stations (254 UHF, 127
    VHF); 554 Class A TV stations (451 UHF, 103 VHF);[^76] and, over
    2,100 other low-power TV stations.[^77] Over sixty percent of
    commercial TV stations are affiliated with one of the top four
    networks (ABC, CBS, Fox and NBC). Another 19 percent are affiliated
    with the smaller national networks: United Paramount (UPN), Warner
    Brothers (WB), and Paxson Network.[^78] The remaining commercial
    stations are affiliated with other smaller networks or are
    independents.

25. Cable TV is available to the vast majority of TV households in the
    U.S.[^79] There are 69 million households that subscribe to
    cable.[^80] There are over 230 national cable programming networks
    and more than 50 regional networks.[^81] Many cable systems offer
    access channels for public affairs, educational and governmental
    ("PEG") programming and a few offer local cable news, educational
    and public affairs programming. Direct broadcast satellite ("DBS")
    is available nationwide and has over 18 million subscribers.[^82] In
    addition to the national cable programming networks, DBS offers
    regional sports networks. DBS may also retransmit the signals of
    local and network affiliate television stations to subscribers in
    their local markets. DBS is also required to reserve not less than 4
    percent of its channel capacity exclusively for noncommercial
    programming of an educational or informational nature. Other
    Multi-channel Video Program Distributors ("MVPDs") include:
    satellite master antenna systems (SMATV), with 1.5 million
    subscribers; home satellite dishes, which serve about 1 million
    homes; and multipoint distribution service (MDS), with about 700,000
    subscribers.[^83]

26. [Audio.]{.underline} Over 13,260 radio stations are currently on the
    air (4,811 AM, 6,147 commercial FM and 2,303 educational FM).[^84]
    The average radio market has 23 commercial stations. Of the 285
    Arbitron radio markets, almost one-half of the markets are served by
    more than 20 stations and 90% of the markets are served by more than
    10 stations.[^85] In addition to broadcast radio, audio music, talk,
    and news channels are provided by many cable and DBS operators. Two
    Digital Audio Radio Service ("DARS") systems with over 140,000
    subscribers offer almost 100 audio channels nationwide using
    satellite transmission.[^86] Even more audio channels are available
    through Internet streaming.

27. [Newspapers.]{.underline} In 2001, there were 1,468 daily newspapers
    in the U.S. The total circulation for those newspapers was about 56
    million.[^87] There were also about 7,700 weekly newspapers with a
    combined circulation of about 71 million.[^88] Sunday newspaper
    circulation collectively reaches over 59 million per week.[^89] Many
    of these newspapers are available over the Internet.

28. [Internet and other media.]{.underline} Almost 60% of the U.S.
    population has Internet access at home.[^90] Over 40 million
    residential Web users have accessed streaming video.[^91] Also,
    about 90% of households have at least one VCR and more than one-half
    of those own at least two VCRs.[^92] Over 14 million homes have DVD
    players.[^93] Personal Video Recorders ("PVR") sales have reached
    500,000 since they were introduced two years ago.[^94]

# Policy Goals 

29. Each of the rules under review in this proceeding seeks to further
    one or more of three important public interest goals \-- diversity,
    competition and localism. The Commission long has embraced these
    values as the foundation of its ownership rules and policies. In
    this proceeding the Commission seeks to: (1) define more precisely
    the Commission's policy goals; (2) determine how to best promote
    these goals in today's media market consistent with our statutory
    mandate; (3) establish the best measure for diversity, competition,
    and localism; and (4) establish a balancing test to prioritize the
    goals if tension exists between them.

30. The courts have recognized the Commission's legitimate interest in
    promoting these policy goals through ownership limits.[^95] Media
    ownership may be limited in order to promote the First Amendment
    interests of consumers of the electronic media and to promote
    diversity and competition.[^96] The Court has upheld the
    Commission's predominant reliance on the diversity rationale to
    support its newspaper/broadcast cross-ownership policies.[^97] In
    *Sinclair,* the Court of Appeals noted that ownership limits
    encourage diversity in the ownership of broadcast stations, which
    can in turn encourage a diversity of viewpoints in the material
    presented over the airwaves. The court added that diversity of
    ownership as a means to achieving viewpoint diversity has been found
    to serve a legitimate government interest, and has, in the past,
    been upheld under rational basis review.[^98] The interests that
    government may promote through content neutral rules also include
    competition -- both the promotion of competition and the prevention
    of anti-competitive practices and results.

31. Section 202(h) requires the Commission to determine whether its
    ownership rules remain necessary in the public interest as a result
    of competition. Therefore, we must first determine whether the
    marketplace provides a sufficient level of competition to protect
    and advance our policy goals. If not, we must determine whether the
    existing rules or revisions to those rules are required to protect
    and advance diversity, competition, and localism in the media
    marketplace.

32. The following paragraphs briefly discuss the Commission's policy
    goals and invite comment on each. We welcome the submission of any
    relevant empirical studies for quantifying benefits and harms, as
    well as comments based on well-established economic theory and
    empirical evidence. In that regard, we are especially interested in
    receiving comments that provide not only the theoretical
    justifications for adopting a particular regulatory framework, but
    also empirical data on the effect that competition and consolidation
    in the media industry have on our policy goals.

## Diversity

33. Diversity is one of the guiding principles of the Commission's
    multiple ownership rules. It advances the values of the First
    Amendment, which, as the Supreme Court stated, "rests on the
    assumption that the widest possible dissemination of information
    from diverse and antagonistic sources is essential to the welfare of
    the public."[^99] The Commission has elaborated on the Supreme
    Court's view, positing that "the greater the diversity of ownership
    in a particular area, the less chance there is that a single person
    or group can have an inordinate effect, in a political, editorial,
    or similar programming sense, on public opinion at the regional
    level."[^100]

34. The Commission has considered four aspects of diversity: viewpoint
    diversity, outlet diversity, source diversity, and program
    diversity.[^101] Viewpoint diversity ensures that the public has
    access to "a wide range of diverse and antagonistic opinions and
    interpretations."[^102] It attempts to increase the diversity of
    viewpoints ultimately received by the public by providing
    opportunities for varied groups, entities and individuals to
    participate in the different phases of the broadcast industry.[^103]
    Outlet diversity is the control of media outlets by a variety of
    independent owners. Source diversity ensures that the public has
    access to information and programming from multiple content
    providers,[^104] while program diversity refers to a variety of
    programming formats and content. Each of these components of
    diversity is described below.

35. [Viewpoint Diversity]{.underline}. Viewpoint diversity has been the
    touchstone of the Commission's ownership rules and policies. We
    remain fully committed to preserving citizens' access to a diversity
    of viewpoints through the media.[^105] The Supreme Court has stated
    that \"it has long been a basic tenet of national communications
    policy that the widest possible dissemination of information from
    diverse and antagonistic sources is essential to the welfare of the
    public.\"[^106] The diversity of viewpoints, by promoting an
    informed citizenry, is essential to a well-functioning
    democracy.[^107] The principal means by which the Commission has
    fostered diversity of viewpoints is through the imposition of
    ownership restrictions.[^108] In *Sinclair*, the Court of Appeals
    noted that ownership limits encourage diversity in the ownership of
    broadcast stations, which can in turn encourage a diversity of
    viewpoints in the material presented over the airwaves. The court
    added that diversity of ownership as a means to achieving viewpoint
    diversity has been found to serve a legitimate government interest,
    and has, in the past, been upheld under rational-basis review.[^109]

36. [Outlet Diversity]{.underline}. The control of media outlets by a
    variety of independent owners is referred to as "outlet diversity."
    Outlet diversity ensures that the public has access to multiple,
    independently-owned distribution channels (*e.g.*, radio, broadcast
    television, and newspapers) from which it can access information and
    programming. We have long assumed that diffusing ownership of
    outlets promotes a wide array of viewpoints. Thus outlet diversity
    was a key mechanism for promoting viewpoint diversity. In attempting
    to foster viewpoint diversity through structural regulation, our
    content-neutral method does not seek to evaluate the substance of
    any station's editorial decisions. Indeed, a major benefit of
    content-neutral structural regulation is that we avoid making
    inescapably subjective judgments about editorial decisions,
    viewpoints and content. Rather, we attempt only to preserve a
    sufficient number of independently owned outlets to increase the
    likelihood that independent viewpoints will be available in local
    markets. The Supreme Court has upheld the Commission's judgment that
    diversification of ownership enhances the possibility of achieving
    greater diversity of viewpoints.[^110]

37. [Source Diversity]{.underline}. A related concept is "source
    diversity," which refers to the availability of content to consumers
    from a variety of content producers. Source diversity ensures that
    the public has access to information and programming from multiple
    content providers and producers. A wide array of content producers
    can contribute both to viewpoint diversity (particularly where the
    content is news and public affairs programming) and program
    diversity. A number of government efforts, both past and present,
    have been aimed at promoting source diversity on mass media
    distribution platforms. Our efforts centered initially on broadcast
    television,[^111] but have broadened in scope more recently to focus
    on MVPDs such as cable operators and DBS service.[^112]

38. [Program Diversity]{.underline}. Program diversity refers to a
    variety of programming formats and content. Examples of program
    categories include formats such as dramas, situation comedies,
    reality television shows, and newsmagazines, as well as content,
    such as health, nature, foreign language/ethnic, and cooking. In
    1960, when broadcast television was a more dominant mass
    communications medium in this country, we sought to promote program
    diversity through direct means.[^113]

39. More than twenty years later, the Commission has indicated that
    markets may serve Americans' demand for diverse programming more
    effectively than government regulation.[^114] In the *Dual Network
    Order*, the Commission allowed common ownership of a major broadcast
    network and an emerging broadcast network in part because "if two
    networks are owned by a single entity, the entity has an incentive
    to attract an array of viewers with differing interests to produce
    the largest combined audience for the overall enterprise. This
    allows for the major network to pursue programming suitable to mass
    tastes, with the smaller network programming to minority and niche
    tastes."[^115]

40. [Diversity Issues for Comment]{.underline}. We seek comment on
    several aspects of diversity, including how the specific terms
    should be defined. The airing of news and public affairs programming
    has traditionally been the focus of viewpoint diversity. We seek
    comment on whether we should consider non-traditional news
    programming as contributing to viewpoint diversity. For example, do
    "magazine shows" such as Sixty Minutes and "talk shows" such as
    Hardball contribute to viewpoint diversity as much as (or less or
    more than) straightforward news broadcasts?

41. Viewpoint diversity has been a central policy objective of the
    Commission's ownership rules. We seek comment on whether viewpoint
    diversity should continue to be a primary goal of the Commission's
    decision-making. The Commission has not viewed source and outlet
    diversity as policy goals in and of themselves, but as proxies for
    viewpoint diversity.[^116] Should the Commission continue to use
    source and outlet diversity as proxies to protect and advance
    viewpoint diversity? Or should each type of diversity be an explicit
    goal of the Commission's policymaking? Parties advocating that
    source and/or outlet diversity should be a goal of Commission
    ownership policies should address how priorities would be set among
    these types of diversity.

42. Once we define our diversity goal, we must then ask whether the
    marketplace will protect and advance diversity without regulatory
    requirements. As set forth in Section III, the current media
    marketplace appears robust in terms of the aggregate number of media
    outlets. Consumers generally have access to news, public affairs,
    and entertainment programming from a variety of media outlets --
    broadcast, cable, satellite, newspapers and the Internet. What has
    been the effect of this proliferation of new media outlets on the
    Commission's diversity goals? What effects, if any, do these outlets
    have on our objective of promoting diversity and the means by which
    we can best achieve those goals? How should these or other outlets
    be considered for the purposes of analyzing viewpoint diversity? Are
    there unique attributes of broadcasting that should lead us to
    define and measure diversity without reference to other media?
    Commenters should provide empirical data on consumer
    substitutability among the various media outlets or programs.

43. In considering these questions, we are particularly interested in
    the actual experience of the media industry. Has consolidation in
    local markets led to less or greater diversity? Commenters are
    encouraged to submit empirical data and analysis demonstrating both
    the change (either decrease or increase) in diversity levels and the
    causal link, as opposed to mere correlation, between those changes
    and greater consolidation in local markets. Evidence comparing the
    levels of diversity in local communities with different levels of
    media concentration would be especially useful.

44. If the market alone does not satisfy the Commission's goal of
    protecting and advancing viewpoint diversity, we must then consider
    the appropriate regulatory framework for achieving that goal.
    Traditionally, the Commission has focused on the number of
    independent owners on the theory that a larger number of owners
    would help provide greater viewpoint diversity. Commission policy
    presumes that multiple owners are more likely to provide \"divergent
    viewpoints on controversial issues,\" which the Commission has
    stated is \"essential to democracy."[^117] We invite comment as to
    this policy. Although courts have affirmed the Commission's ability
    to limit ownership in pursuit of a diversity of viewpoints,[^118]
    they recently have required that we demonstrate a close connection
    between the ownership rules and diversity.[^119] Therefore, we must
    examine whether ownership limits are in fact necessary to promote
    diversity in the media. If we are to maintain ownership limits
    predicated on preserving diversity, we must inquire into whether our
    traditional theory of diffused ownership policy is in fact more
    likely to preserve diversity than a policy that relies on market
    forces or other measures to foster diversity.

45. If the Commission continues to rely on an independent voice test as
    a measure for ensuring the appropriate level of diversity, what
    media outlets or programming services should be included in the
    independent voice test? For example, should we include cable or DBS?
    Should commonly-owned media outlets be considered a single media
    "voice" in evaluating diversity? Should cable television count as
    one voice because the cable operator exercises editorial control
    over the content that is distributed over that platform? Or should
    the Commission look to the number of independent programming
    entities as separate and distinct voices?

46. What other measures of diversity, quantitative or qualitative,
    should we consider, and what tools do we have to measure diversity
    with a reasonable degree of accuracy? Are audience demographics an
    appropriate measure of diversity? Is competition an appropriate
    proxy for diversity, such that the presence of a competitive local
    market will assuage our concerns about diversity? Should we take
    ratings figures or other measures of consumer usage into account in
    measuring diversity, and if so, how? In considering the various
    potential ways to measure diversity, we seek comment on how their
    use comports with the values and principles embodied in the First
    Amendment.

47. We also must consider the appropriate geographic area over which to
    measure diversity. Although radio ownership restrictions are limited
    to the local market, television ownership is restricted both on the
    local level and nationally. Does the appropriate geographic area for
    measuring diversity differ based on whether the programming is local
    or national in nature? Should the appropriate geographic area for
    measuring diversity be the same as the relevant geographic market
    for competition purposes?

48. We also seek comment on whether the level of diversity that the
    public enjoys varies among different demographic or income groups.
    Although access to broadcasting services is available to all
    individuals in a community with the appropriate receiving equipment,
    access to other forms of media typically requires the user to incur
    a recurring charge, generally in the form of a subscription fee.
    Does this or any other differences between broadcasting and other
    media reduce the level of diversity that certain demographic or
    income groups enjoy? Does the fact that 86% of American households
    pay for television impact this analysis? What is the extent of any
    disparity in access to diversity, and how should we factor in that
    disparity in our diversity analysis?

49. Would one or more kinds of diversity be better promoted by
    alternatives to structural regulation, such as behavioral
    requirements? We invite comment on whether we should promulgate
    behavioral regulations. What, if any, behavioral requirements should
    be imposed and how should they be administered? How is diversity
    served, if at all, by existing behavioral rules such as those that
    require broadcasters to provide political candidates access to their
    facilities under certain conditions,[^120] or those that require
    cable systems to set aside channel capacity for certain uses
    (*e.g.*, PEG, leased access)?[^121] What kind of programs and
    content contribute to viewpoint diversity?

50. In addition to seeking to foster the policy goals discussed above,
    the Commission has historically used the ownership rules to foster
    ownership by diverse groups, such as minorities, women and small
    businesses.[^122] In the context of this comprehensive review of our
    ownership rules, we invite comment on whether we should consider
    such diverse ownership as a goal in this proceeding. If so, how
    should we accommodate or seek to foster that goal? In addition, we
    invite comment as to our legal authority to adopt measures to foster
    that goal.[^123]

## Competition 

51. Competition is the second principle underlying the Commission's
    local ownership rules and policies. In this proceeding, we seek
    to: (1) define the Commission's competition policy goal; (2)
    determine whether the market alone can achieve that goal; and if
    not, (3) establish the appropriate regulatory framework to protect
    and advance a competitive media market.

52. We must first consider the Commission's underlying policy objectives
    in examining competition. The Commission has relied on the principle
    that competitive markets best serve the public because such markets
    generally result in lower prices, higher output, more choices for
    buyers, and more technological progress than markets that are less
    competitive.[^124] In general, the intensity of competition in a
    given market is directly related to the number of independent firms
    that compete for the patronage of consumers. We seek comment on how
    the Commission should define our competition policy goal. In
    addition to the diversity component of our public interest analysis,
    should the Commission specifically analyze the competitive nature of
    the market? Or should we rely on the diversity component of our
    analysis such that a certain level of diversity would alleviate our
    competition concerns? Additionally, as discussed below, we seek
    comment on the various types of competition (*i.e.*, competition for
    viewers/listeners or advertisers) and the appropriate standards and
    measures to be used.

53. Once we define our competition policy goal, we must then determine
    whether the market will protect and advance competition without
    regulatory requirements. As set forth in Section III, the current
    media market appears robust in terms of the aggregate number of
    outlets. Today, broadcasters operate in an increasingly crowded and
    dynamic media market. During the past twenty years, the broadcast
    television industry has faced increasing competition both from
    additional television stations and from other video delivery
    systems. The number of full-power television stations has increased
    68% since 1980, from 1,000 to almost 1,700,[^125] and the number of
    broadcast networks has grown from three to seven. During that same
    period, there has been an enormous increase in the supply of
    non-broadcast video programming available to Americans. Cable
    television and DBS carry dozens, and often hundreds, of channels and
    have taken significant market share from broadcast TV
    stations.[^126] Furthermore, Americans have demonstrated an
    increased willingness to pay for information and programming. Cable
    television and other MVPDs, including DBS, have reached an 86.4%
    penetration rate in American homes.

54. What has been the effect of this proliferation of new media outlets
    on the Commission's competition goals? What effects, if any, do
    these outlets have on our objective to promote competition and the
    means by which we can best achieve this goal? How should these and
    other outlets be considered for the purposes of analyzing
    competition? Are there unique attributes of broadcasting that should
    lead us to define and measure competition without reference to other
    media?

55. If the market alone does not satisfy the Commission's goal of
    protecting and advancing competition, we must then consider the
    appropriate regulatory framework for achieving that goal. The
    Commission has traditionally relied on structural ownership rules,
    which focus on the number of independent owners, on the theory that
    a larger number of owners would enhance competition. While our local
    ownership rules were based largely on preserving viewpoint
    diversity, the Commission also found that these rules would serve
    the public interest by preventing broadcasters from "dominat\[ing\]
    television and radio markets and wielding power to the detriment of
    small owners, advertisers, and the public interest."[^127] Are
    structural ownership limits the best means to promote competition in
    the media? If we are to maintain ownership limits predicated on
    preserving competition, is our traditional theory of diffused
    ownership policy more likely to preserve competition than a policy
    that relies on market forces or other measures to foster
    competition?

56. If we determine that a competition analysis is necessary, we must
    define the relevant product and geographic markets in which
    broadcast TV and radio stations compete, as well as the market share
    of the participants within the relevant market, and then weigh the
    benefits of consolidation against the harms to consumers. For
    example, although ownership consolidation can produce efficiencies
    that result in stronger stations and improved services to the
    public, excessive concentration may reduce competition for
    viewers/listeners and lessen incentives to innovate and improve
    services to the public.

57. We must first determine the relevant product markets. Generally,
    broadcast stations compete to attract viewers/listeners and
    advertising dollars, and they compete as buyers of programming. In
    past examinations of our ownership rules, we have focused on the
    program delivery market, the advertising market, and the program
    production market. These individual product markets vary in
    significance depending upon the particular rule under examination.
    In addition, these product markets are interrelated, since
    advertising revenue is often used to finance program acquisition,
    which in turn helps to attract viewers/listeners, which then enables
    media owners to charge advertisers. We have not, however, resolved
    the issue of the relative weights we should accord each of these
    product markets for purposes of our competition analysis.[^128] We
    seek comment on whether our competition analysis should focus on
    competition for advertising revenue, competition for
    viewers/listeners, a combination of the two, competition for
    programming, or some other factor.

58. We first address the delivered programming market. Viewers/listeners
    seeking delivered programming may choose among various providers,
    including broadcasters, cable systems, DBS, and DARS.
    Viewers/listeners, however, may also obtain programming from videos,
    DVDs, CDs, and the Internet. Viewers/listeners may also attend movie
    theaters, stage theaters, and music concerts. While the Commission
    previously concluded that delivered video programming could be a
    relevant market, we seek comment on whether the relevant market
    should be broader. The answer depends on the degree of
    substitutability between delivered programming and these other
    options. Do viewers/listeners consider these other options to be
    good substitutes for delivered programming? Commenters are
    encouraged to produce studies and empirical data to support their
    views regarding the relevant product market. If delivered
    programming is the relevant product market, should we measure market
    concentration by using the number of separately owned outlets, or
    some other metric? If the relevant product market is broader than
    delivered programming, how should we measure market concentration?

59. Next, we address the advertising market. As the steward of the
    Communications Act, the Commission is charged with evaluating the
    potential benefits and harms to the viewing and listening public,
    not to advertisers.[^129] We first seek comment on whether our
    authority under the Communications Act justifies our basing
    broadcast ownership regulation on the level of competition in the
    advertising market. We also seek comment on whether, as a policy
    matter, the Commission should be concerned with advertising rates,
    or whether competition concerns in advertising markets are more
    appropriately governed by the antitrust agencies. What precisely are
    the harms viewers and listeners would suffer if advertising prices
    were to rise as a result of more concentrated media markets, and
    what empirical evidence of these harms is available?

60. The vast majority of American households now pay for information and
    programming by subscribing to cable television or satellite
    services. Does this change in consumer viewing habits suggest that
    the advertising market may not be the best product market to analyze
    because we do not capture this factor as part of the competitive
    analysis? For instance, people who subscribe to DBS often watch
    non-broadcast channels. By reducing viewership of local broadcast
    channels, non-broadcast channels may reduce advertising revenues
    flowing to local television stations. How can we capture the impact
    of a rule change on viewers if we are using a product definition
    (*e.g,.* advertising) that does not account for these
    viewers/listeners. A recent study indicated that Internet users
    spend approximately 25% less time watching television stations than
    non-Internet users.[^130] This phenomenon suggests that the Internet
    may compete with television for viewers, which could reduce
    advertising revenues for both broadcast and non-broadcast channels.
    Competitive developments such as these are not reflected in past
    Commission evaluations of the advertising market, yet they may have
    a meaningful effect on broadcasters' ability to compete in today's
    media market. We seek comment on how trends such as these should
    impact our analysis. In light of market developments, would a direct
    analysis of competition for viewers/listeners be a more appropriate
    means for advancing our competition goal? If so, how should we
    measure entities' market power? Commenters are encouraged to produce
    studies and empirical data to support or refute claims.

61. If the Commission determines that competition in advertising markets
    is an important component of our competitive analysis, we must then
    determine the relevant advertising product market. Historically, the
    Commission has focused only on broadcast advertising.[^131] We seek
    comment on whether, in today's marketplace, we should broaden the
    relevant advertising product market to include other media
    advertising.

62. To what extent do non-broadcast media compete with broadcasters for
    advertising dollars? For example, the cable television industry has
    undergone consolidation at both the national and local level. In
    addition to competing for audience share,[^132] cable television now
    appears to be a more formidable competitor to broadcasters for
    national and local advertising. In 1980, broadcast TV captured
    virtually all of the national and local TV ad market (over 99%),
    whereas cable had less than one percent. In 2000, broadcast TV share
    declined to 70% of national TV ad revenue and about 80% of local TV
    ad revenue, and cable increased to 30% and 20%, respectively.[^133]
    How do these and other developments in the media advertising market
    affect our decision-making? Parties are asked to provide empirical
    data on the substitutability for advertisers among all media outlets
    and to comment on how this data should impact how we would define
    the relevant advertising product markets. How should the differences
    between local, regional, and national advertising markets factor
    into our analysis?

63. We also seek comment on the extent, if any, to which our competition
    analysis should consider the programming purchasing market.
    Broadcasters, broadcast networks, cable networks, cable operators,
    DBS networks, and DBS operators create, purchase, or barter for
    programming. Would relaxation or elimination of the broadcast
    ownership rules enable broadcasters to exercise monopsony power in
    the purchase of programming, or is there sufficient competition from
    other program buyers (*e.g.,* cable and DBS) or from other
    distribution streams (*e.g.*, Internet or international) to prevent
    the exercise of such power?

64. Our competition analysis must also define the geographic market for
    delivered programming and advertising. The geographic extent of the
    market, the area where buyers can purchase a particular product or
    service from sellers, is sometimes difficult to determine, since
    different media outlets serve different geographic areas. What are
    the implications of these different geographic market definitions
    for our competition analysis? Would the appropriate geographic
    market be different if we focused on viewership/listenership rather
    than advertising?

65. [Innovation.]{.underline} Change permeates virtually every aspect of
    the organization of media markets and the operation of media
    companies. In both broadcast and cable industries, analog
    transmission technologies are giving way to digital transmission
    technologies that will greatly increase operators' ability to offer
    new, more and better services. In addition to broadcast and cable,
    consumers also have access to multi-channel video and audio
    programming from DBS and the Internet and multi-channel audio
    programming from DARS. Each of these distribution technologies are
    expanding the number of program choices and developing program
    content for increasingly specialized audiences. All of these changes
    reflect innovation, *i.e.*, the development of new products or
    services or new, less costly ways of producing or delivering
    existing services.

66. Innovation reflects developments in technology that affect the
    modern media marketplace. Innovation brings significant benefits to
    consumers through the creation of new media products and services,
    but it can destabilize established business practices and customer
    relationships. Markets in which innovation is a prominent attribute
    differ from traditional markets, largely because the focal point of
    competitive rivalry is shifted more toward innovation, which may
    fundamentally alter the behavior of firms competing in the market.
    In traditional markets (where product differentiation is not
    extensive), firms compete for customers primarily based on price and
    terms of sale of an existing (substitutable) product or service. By
    contrast, competitors in markets where innovation is an important
    force face a more dynamic and uncertain market. Innovation
    competition involves intense "competition for the market" such that
    a successful innovation may result in the sudden economic
    obsolescence of an existing product or technology (and sometimes the
    demise of the firms that produce it). Innovation competition tends
    to produce market leaders that dominate a market for a period of
    time until supplanted by another innovation introduced by the market
    leader or a competitor.[^134]

67. We seek comment on this analysis. To what extent does innovation
    competition characterize rivalry in contemporary delivered
    programming, broadcast advertising, and program production markets?
    In which media markets does price competition seem to predominate
    over innovation competition? If innovation competition is pervasive
    in media markets today, how should our ownership rules be modified
    to encourage rivalry focused on innovation?

68. Congress has directed the Commission to make the introduction of new
    technologies and services a priority.[^135] We seek comment on
    whether innovation is a valid policy goal in the consideration of
    the competitive effects of our ownership rules. In this regard, we
    invite comment on how our media ownership policies and rules affect
    the incentives to innovate among broadcasters and other media market
    competitors. For example, how do our broadcast ownership rules
    affect innovation in the form of digital television, digital cable,
    Internet access, and other new technologies? Do our ownership rules
    hinder continued innovation? Should the Commission actively seek to
    promote innovation through its ownership rules, or merely avoid
    interfering with firms' ability to innovate? If the former, what
    changes to the ownership rules, if any, would promote innovation?

## Localism

69. The Commission has historically pursued policies aimed at
    encouraging localism. One statutory basis of the Commission's
    promotion of localism in broadcasting is Section 307 of the 1934
    Act, which dates from the Radio Act of 1927 and, in its present
    form, states: "In considering applications for licenses, and
    modifications and renewals thereof, when and insofar as there is
    demand for the same, the Commission shall 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."[^136]
    Another is the Congressional Findings and Policy in connection with
    the Cable Television Consumer Protection and Competition Act of
    1992, which include the finding that \"\[a\] primary objective and
    benefit of our nation\'s system of regulation of broadcast
    television is the local origination of programming.\"[^137] We
    invite comment on the goal of localism as we have defined it and
    whether we should define it more narrowly or more broadly.

70. From the earliest days of broadcasting, federal regulation has
    sought to foster the provision of programming that meets local
    communities\' needs and interests.[^138] Thus, the Commission has
    licensed stations to serve local communities, pursuant to section
    307(b) of the 1934 Act, and it has obligated them to serve the needs
    and interests of their communities.[^139] Stations may fulfill this
    obligation by presenting local news and public affairs programming
    and by selecting programming based on the particular needs and
    interests of the station's community. Further, as the *Fox
    Television* court recognized, one of the Commission's purposes in
    retaining the national TV ownership rule was "to preserve the power
    of affiliates in bargaining with their networks and thereby allow
    the affiliates to serve their local communities better."[^140]

71. Localism remains an important attribute of the broadcast media
    industry. We request comment whether, and to what extent, it is
    related to ownership limits. For example, do ownership limits tend
    to ensure an adequate supply of local information intended to meet
    local needs and interests? Is such news, public affairs, and other
    programming likely to be available in the current marketplace
    without ownership limits? To what extent do consumers' access to
    local news and information on non-broadcast media (*e.g.,*
    newspapers, cable television, DBS, and the Internet) impact this
    analysis? How much local news and information is available on a
    typical cable system and on the Internet, other than news that
    originates on broadcast stations?[^141] Would some combination of
    market mechanisms and ownership limits, rather than one or the
    other, best promote localism? Are consolidation and efficiency
    innovations likely to reduce the level of local programming or
    reduce the amount of programming that is locally produced?

# local ownership rules 

72. In this section, we discuss and invite comment on possible changes
    to our multiple ownership rules concerning local broadcasting (the
    local TV multiple ownership rule and the radio/TV cross-ownership
    rule). We also invite suggestions of how we could achieve our goals
    of diversity, competition, and localism by means other than
    broadcast ownership rules. The options include case-by- case
    determinations of multiple ownership and a single ownership rule
    that would apply to all media outlets. We invite comment on how best
    to define a "voice" or other measurement of viewpoint diversity in
    our local rules. In this latter regard we focus especially on
    relatively new media such as DBS and the Internet, which have become
    powerful forces in recent years but are not reflected in our current
    rules.

## Local TV Multiple Ownership Rule 

73. The local TV ownership rule allows an entity to own two television
    stations in the same DMA, provided: (1) the Grade B contours of the
    stations do not overlap; or (2) (a) at least one of the stations is
    not ranked among the four highest-ranked stations in the DMA,
    and (b) at least eight independently owned and operating commercial
    or non-commercial full-power broadcast television stations would
    remain in the DMA after the proposed combination ("top four
    ranked/eight voices test").[^142] In counting the number of
    independently owned and operating full-power stations that count as
    voices under the rule, only those stations whose Grade B signal
    contours overlap with the Grade B contour of at least one of the
    stations in the proposed combination are counted.[^143]

74. The Commission adopted a rule prohibiting common ownership of two TV
    stations with intersecting Grade B contours in 1964.[^144] The rule
    was based in part on the Commission's earlier "diversification of
    service" rationale, which suggests that the Commission believed its
    diversity concerns were better promoted by a greater number rather
    than a lesser number of separately owned outlets.[^145] In 1996,
    Congress directed the Commission to "conduct a rulemaking proceeding
    to determine whether to retain, modify, or eliminate its limitations
    on the number of television stations that a person or entity may
    own, operate, or control, or have a cognizable interest in, within
    the same television market."[^146] The Commission revised the rule
    to its current form in 1999, citing as reasons growth in the number
    and variety of local media outlets and the efficiencies and public
    service benefits that can be obtained from joint ownership.[^147]
    Additionally, the Commission sought to "facilitate further
    development of competition in the video marketplace and to
    strengthen the potential of broadcasters to serve the public
    interest."[^148] The Commission made relatively minor changes to the
    rule on reconsideration.[^149] In its remand of the Commission's
    1999 Order, the court found the Commission's explanation of its
    decision to include only broadcast television stations as voices
    insufficient, although it concluded that the Commission had
    adequately explained how the local TV ownership rule "furthers
    diversity at the local level and is necessary in the 'public
    interest' under § 202(h) of the 1996 Act."[^150]

75. Below we ask for comment whether the local TV ownership rule is
    necessary in the public interest as the result of competition. Does
    it continue to serve its original purposes of furthering diversity
    and facilitating competition in the marketplace? Does the rule
    promote the other goals we set forth above, including all the
    various forms of diversity, competition, and localism? If the rule
    serves some of our purposes and disserves others, does the balance
    of its effects argue for keeping, revising, or abolishing the rule?
    In the following paragraphs, we explore these questions in more
    detail.

### The *Sinclair* Decision

76. The voice test that applies to the current local TV ownership rule
    includes only TV stations. As discussed above, in *Sinclair*, the
    court invalidated the definition of voices because the Commission
    had not adequately explained its decision to exclude other media.
    The court noted that the Commission's decision was inconsistent with
    the definition of voices for the radio/TV cross-ownership rule,
    which also considers daily newspapers, radio stations, and incumbent
    cable operators to be voices. The court noted that, having found for
    purposes of TV/radio cross-ownership that counting other media
    voices more accurately reflects the actual level of diversity and
    competition in the market, the Commission had not explained why such
    diversity and competition should not also be reflected in its
    definition of voices for the local TV ownership rule. The court
    noted that on remand, the Commission may adjust not only the
    definition of voices, but also the numerical limit, given that there
    is a relationship between the definition of voices and the choice of
    a numerical limit.[^151]

77. We invite comment on how to apply a voice test for a local TV
    ownership rule, if we decide to apply one. Should we continue to
    count only independently owned and operating full power commercial
    and non-commercial television stations, or should we expand the
    media included in the definition of a voice? For example, should we
    include radio stations, daily newspapers, cable systems, DBS and
    DARS, the Internet, and perhaps other media? To what extent do
    consumers view these other media as sources of local news and
    information? In addition, we invite comment as to what numerical or
    other limit we should set for the number of voices. In current
    marketplace conditions, what number of voices would preserve our
    competition and diversity goals? Finally, we invite comment as to
    whether any definition of "voices" we adopt for the local TV
    ownership rule should be used in other rules, or whether there is
    adequate justification for distinguishing between voices relevant to
    one rule and those relevant to another.

###  Diversity

78. The rule barring ownership of two TV stations in the same market was
    intended to preserve viewpoint diversity and promote competition in
    local markets.[^152] With respect to viewpoint diversity, the
    prohibition against common ownership of two top-four-ranked stations
    in the same market was intended to avoid combinations of two
    stations offering separate local newscasts.[^153] The Commission's
    analysis indicated that the top-four-ranked stations in each market
    generally had a local newscast, while lower-ranked stations
    frequently did not. The Commission reasoned that permitting
    combinations between these two categories of stations, but not among
    the top four-ranked stations, would better preserve the possibility
    for different viewpoints in local news presentation, "which is at
    the heart of our diversity goal."[^154]

#### Nature of viewpoints on local television

79. We seek evidence on the extent to which local television stations
    express viewpoints in local newscasts and, if so, whether, and to
    what extent, those newscasts provide diverse points of view. What
    are a station's incentives regarding the expression of a viewpoint,
    both explicitly through editorializing and implicitly through
    decisions on whether and how to cover particular events? It is our
    understanding that TV stations have largely abandoned editorials
    because they fear that viewers who disagree with the viewpoint
    expressed will temporarily or permanently elect to watch another
    channel. Is this accurate? If so, what is the effect of this change?
    News organizations argue that they have a strong economic incentive
    to keep their news coverage and reporting as balanced and unbiased
    as possible.[^155] On the other hand, it appears that news
    periodicals and other print media may have defined and distinct
    viewpoints. If so, are different viewpoints explained or represented
    in their news reporting? What effects have national, regional, and
    local cable news had on the expression of viewpoints in local
    markets? We seek comment on these issues, including whether local TV
    ownership regulations are necessary to foster viewpoint diversity.

80. We have already suggested that market incentives may preserve
    program diversity as effectively as more diffused ownership
    structures.[^156] We seek comment on whether owners of broadcast
    stations have similar incentives with respect to diverse viewpoints.
    Our understanding is that, when both television stations in a
    duopoly carry local news, the newscast typically is produced by a
    single set of personnel using one set of facilities. Are there
    different economic incentives among stand-alone stations, duopolies,
    or "triopolies" to produce, in a single newscast, a diversity of
    viewpoints? What other evidence or economic theories would shed
    light on the "viewpoint" incentives of commonly-owned local
    broadcast outlets? Are different viewpoints produced by one editor
    the equivalent for diversity purposes of different viewpoints
    produced by multiple editors?

#### Connection between ownership and viewpoint

81. In the *1984 Multiple Ownership Order*, the Commission cited
    evidence that at least some TV station owners allowed local
    management to make news reporting decisions.[^157] In addition,
    according to testimony before Congress by the President and Chief
    Operating Officer of Viacom, Inc., CBS' TV stations determine
    locally how much news to air, what stories are run, and when they
    are aired.[^158] To what extent are station owners or the local news
    departments responsible for those viewpoints expressed through local
    newscasts? What evidence is available on this point? Do station
    owners have formal or informal policies that determine the
    involvement of station owners in news coverage and reporting
    decisions? Commenters are requested to provide information bearing
    on the connection between editorial judgment or news selection and
    station ownership. If the record indicates a lack of connection
    between ownership and viewpoint expressed via local news
    programming, we seek comment on the weight that finding should be
    accorded in our determination of whether the local TV ownership rule
    continues to be supportable in its present form.

#### Program diversity 

82. The Commission previously has noted that a single owner of multiple
    outlets may have stronger incentives to provide diverse
    entertainment formats, programs, and content on its multiple outlets
    than would separate station owners.[^159] An entity that owns
    multiple stations in a market may have the incentive to target its
    programming to appeal to a variety of interests in an effort to
    maximize audiences, rather than program its multiple outlets with
    the same format or programming, thereby competing with itself. While
    acknowledging this viewpoint in the *TV Ownership FNPRM,* the
    Commission questioned whether this model would promote a variety of
    viewpoints with regard to news and public affairs programming, but
    sought comment on whether it may indeed promote diversity of
    entertainment formats and programs.[^160] We invite comment on
    whether, and if so how, common ownership leads to provision of more
    diverse programming with respect to both entertainment and news and
    public affairs programming in order to maximize audience share. If
    common ownership of multiple stations promotes program diversity,
    how does this affect the need for the current local TV ownership
    rule? Absent a rule, would market forces alone lead to increased
    program diversity on commonly-owned stations?

83. A second, more fundamental, issue regarding program diversity is
    raised by the dramatic advances in video delivery technology in the
    past quarter century. Cable television systems and DBS providers
    offer dozens, and often hundreds, of channels to subscribers. Entire
    channels are devoted to particular formats or specialized subjects.
    The increase in the variety of programming available to many
    American consumers today suggests that limits on TV station
    ownership may no longer be needed to promote program diversity in
    the video market. We seek comment on this analysis in connection
    with the local TV multiple ownership rule.

### Competition

84. In the *TV Ownership FNPRM,* issued in 1995, the Commission
    identified three product markets in which television broadcasters
    operate: the market for delivered programming; the advertising
    market; and the program production market.[^161] Further, the
    Commission segmented the advertising market into national, national
    spot, and local markets, based on the nature of the geographic area
    advertisers wish to reach.[^162] The Commission tentatively
    concluded that cable television directly competes with broadcast
    television stations in each of these markets, and that broadcast
    radio and newspapers compete with television in the local
    advertising market.[^163] The Commission sought comment on whether
    other suppliers of video programming (*e.g.,* multichannel
    multipoint distribution service[^164] and DBS compete with broadcast
    television stations. The Commission stated that it may not be
    appropriate to include them because their market penetration was so
    low that they were not relevant substitutes to a majority of
    Americans.[^165] The record compiled in the *1998 Biennial Report*
    suggested that this situation may have changed.[^166] We encourage
    comment on which types of firms compete in these markets today. Are
    there media outlets other than those discussed here, *e.g.,* the
    Internet, that should be considered to be competitors in these
    product markets? We seek information on the local market share of
    DBS and multichannel multipoint distribution service, as we
    generally only have aggregate national subscription data for these
    services. If broadcast TV competes with cable and other media, do
    our local broadcast ownership rules affect broadcasters' ability to
    effectively compete?

85. The Commission tentatively concluded in the *TV Ownership FNPRM*
    that the geographic market for delivered programming was local; the
    geographic markets for advertising were both national and local; and
    the geographic market for program production was
    national/international in scope. Local geographic markets are
    particularly difficult to define because the local footprint of a
    broadcast outlet is likely to be different than the geographic area
    covered by other media outlets, such as cable systems. We seek
    comment on how we should define the local geographic media market.
    Commenters are encouraged to submit data that we could use to
    identify relevant competitors within geographic markets.

#### Advertising Market 

86. For our competitive analysis of the local TV ownership rule, we seek
    comment on advertising markets.[^167] Advertising markets are both
    national and local in scope because of the differing geographic
    areas advertisers wish to reach. Certain advertisers wish to reach
    the entire nation at once with their advertisements and therefore
    seek out media outlets with a national footprint. The sources of
    media with a national footprint include broadcast television
    networks, program syndicators, cable television networks, DBS and
    possibly cable multiple system operators ("MSOs").[^168] Other
    advertisers are only interested in paying for advertisements that
    reach viewers in a specific, local area. These advertisers seek out
    media with a local footprint. These local media include individual
    broadcast television stations, individual cable system operators,
    individual broadcast radio stations, and local newspapers. The
    "national spot market" is a subset of the local advertising market.
    In this market, national advertisers buy advertising time on certain
    specific local media outlets in order to bring a specialized
    advertising message to only some regions of the country. Generally,
    the national advertisers work with national advertising
    representative firms to place these advertisements. With newer
    technology, however, the television networks are able to place
    national spot advertisements into their own feeds. We ask for
    comment on this analysis of advertising markets, and on the policy
    implications of this or other analyses for our ownership rules. Our
    goal is to ascertain whether the local TV ownership rule, as
    currently formulated, continues to be needed to promote competition
    in these advertising markets.

87. Broadcast television stations compete most directly in the local
    advertising market. We seek to identify the relevant competitors in
    this market. Has the consolidation of cable systems into local and
    regional clusters improved the ability of cable operators to compete
    with television broadcasters in the local advertising market? At a
    minimum, we expect that local cable operators that can offer an
    advertising product comparable to that of local television stations
    should be included in our analysis. If we conclude that cable
    operators do compete in the local television advertising market,
    that would suggest that the rule as currently structured may not be
    necessary to promote competition in local television advertising
    markets and that a more relaxed ownership limit may be appropriate.
    If we conclude that cable operators and television stations
    constitute the relevant market participants, we propose counting
    each outlet equally for purposes of assessing local advertising
    competition. We seek comment on this analysis, including whether a
    metric other than outlet counting is more appropriate in this area,
    and on the maximum level of concentration among these outlets that
    would ensure competition in local television advertising markets. We
    encourage commenters to submit empirical analyses of whether
    advertisers view different advertising media as substitutes for
    local television. Such data might include advertiser spending
    patterns or information from firms that purchase advertising for
    clients.

88. It is also possible that radio stations, daily newspapers, and/or
    direct mail may, for some advertisers, exert competitive pressure on
    local television advertising rates. If one or more of such media are
    substitutes for some advertisers but not for others, we seek comment
    on whether to include such other competing outlets in our
    advertising competition analysis. For instance, if daily local
    newspapers are substitutes with local television advertising for
    only some advertisers, including local newspapers as a fully
    competing outlet in our analysis might overstate the true
    competitive impact of newspapers on television advertising rates.
    Conversely, the exclusion of daily local newspapers from our
    analysis could result in a local television ownership rule that is
    unduly restrictive from a competitive perspective. We strongly
    encourage commenters to address this issue of how our local media
    ownership rules should account for this issue of partial
    substitutability.

#### Delivered Video Market

89. For our competitive analysis of the local TV ownership rule, we also
    seek comment on the market for delivered video programming. In the
    *TV Ownership FNPRM*, the Commission observed that the time
    Americans spent viewing television remained steady between 1970
    and 1988. The Commission concluded from this stability of television
    viewing over time that "delivered video programming" could be a
    relevant market.[^169] We wish to revisit the evidence on this
    issue, including updated data on Americans' television viewing. If
    such data shows comparable levels of television viewing from 1988 to
    the present, should we continue to define delivered video market
    programming as a relevant market? If delivered video programming is
    a relevant market, we must determine how to measure market
    concentration. The Commission has traditionally used the number of
    separately owned stations or outlets serving a market. We seek
    comment, however, on other potential measures of concentration, such
    as audience share.

90. Consumers have entertainment alternatives to watching television
    (*i.e.,* delivered video programming from broadcast TV, cable TV,
    and DBS). These options include video programming from VCRs/DVDs,
    movie theaters and the Internet, as well as non-video entertainment
    such as listening to audio programming, reading, and virtually any
    other activity that a large number of people find entertaining. To
    what extent do consumers find these entertainment alternatives to be
    good substitutes for television viewing? If there is substantial
    substitution between these alternatives and television viewing, this
    may suggest that the relevant market is broader than delivered video
    programming. How should this affect our analysis of the need for a
    local TV ownership rule or how such a rule should be drawn?

91. Assuming that the delivered video market is a relevant product
    market for our competition analysis, the Commission has tentatively
    included commercial broadcast television operators, public broadcast
    television station operators, and cable system operators to be
    economically relevant alternative suppliers of delivered video
    programming.[^170] The rapid growth of DBS since 1995 requires us to
    include DBS as a strong participant in the delivered video market.
    We seek comment on other media that should be included in the
    delivered video market. For example, in our *Eighth Annual MVPD
    Competition Report*, we detailed the status of additional potential
    competitors, including: wireless cable systems, SMATV systems, local
    exchange carriers, open video systems, Internet video, home video
    sales and rentals, electric utilities, and broadband service
    providers.[^171] Some of these media are not available in many
    markets and, thus, may not be relevant substitutes to a majority of
    Americans.[^172] Should a level of market penetration be deemed at
    which a non-broadcast video delivery media directly competes with
    broadcast television stations? How does the fact that there are no
    consumer fees for broadcast TV affect our analysis?

92. While some video delivery media may be considered good substitutes
    for entertainment programming, are the same media good substitutes
    for local news and public affairs programming? What measures should
    we use to determine whether consumers view different media as
    substitutes for entertainment programming or news programming?
    Although cable systems carry local broadcast stations and therefore
    may be considered good substitutes for both entertainment
    programming and local news and public affairs programming, DBS
    systems and other media may carry less local news and public affairs
    programming. To what extent, if any, should our analysis of
    competition in the market for delivered programming differ from our
    analysis of viewpoint and program diversity?

#### Video Program Production Market

93. Television stations, along with TV networks, cable networks, cable
    operators, DBS networks and DBS operators purchase or barter for
    video programming. The program production market could be affected
    if relaxation of the local TV ownership rule permits a broadcaster
    to exercise significant market power in the purchase of video
    programming. The result might be that suppliers of video programming
    would be forced to sell their product at below competitive market
    prices in order to gain access to the local market controlled by one
    or a few local group owners. The potential for the exercise of such
    market power, however, depends critically on the absence of a
    sufficient number of competitors. The ever-increasing number of
    alternative providers of delivered video programming in virtually
    every major market may mitigate the potential for distorting the
    prices of video programming by providing program producers with
    additional outlets for their product. We solicit comment on this
    point and evidence on the potential market power in the purchase of
    video programming if we were to relax the local ownership rule.

#### Innovation

94. We seek comment on the impact that the local TV ownership limits may
    have on innovation in the media marketplace. Does our current rule
    promote innovation? Would relaxation of the local TV ownership rule
    increase incentives or resources to provide innovative broadcast
    programming or new broadcast-based technologies or services? What
    effect, if any, would a relaxed local ownership rule have on the
    transition to digital television, or the provision of other services
    by a local TV station? Examples of innovations that have been
    withheld from the media marketplace as a direct result of local TV
    ownership limits would be particularly useful to our competitive
    analysis.

### Localism 

95. We seek comment on whether and if so, how the local TV ownership
    rule affects localism. Does the local TV ownership rule affect
    either the quantity or quality of local news and other programming
    of local interest produced and aired by local stations? Does it
    affect the local selection of news content that is aired? We request
    that commenters provide data on the impact that TV duopolies and
    Local Marketing Agreements ("LMAs")[^173] have had on the production
    of local programming by stations involved in such combinations or
    arrangements. According to testimony before Congress by the
    President and Chief Operating Officer of Viacom, Inc., after CBS'
    combination with Viacom, which resulted in six duopoly markets, CBS
    had, or planned to have, half-hour news spots or hourly updates on
    stations, in five different markets, that had not run such
    programming before.[^174] We invite comment on whether these
    assertions reflect industry-wide trends. We ask commenters to
    provide empirical data that demonstrates increased or decreased
    levels of local programming as a result of consolidation.

96. In the *1984 Multiple Ownership Order*, the Commission cited awards
    received by TV stations "from leading professional organizations and
    community organizations" as one relevant indicator of local news
    quality.[^175] If such awards are a reasonable barometer of news
    "quality," we request empirical analyses of whether these awards
    tend to be earned systematically more or less often by TV duopolies
    and/or LMAs.

97. Local TV newscasts and local public affairs shows are an important
    service provided by local television stations. The cost of producing
    those programs may represent a significant portion of a station's
    budget, particularly in small markets where the fixed costs of
    production are spread over a relatively small customer base. We seek
    comment on whether the current local TV ownership rule affects the
    viability of existing local newscasts and/or potential newscasts,
    particularly for small stations. Commenters asserting that a
    relaxation of the local TV ownership rule will result in more local
    news are requested to specifically address whether such greater
    output outweighs the potential loss of diverse voices among stations
    that previously had separate newscasts. Are there other factors or
    policy goals we should consider in determining whether to retain,
    modify or eliminate the local TV ownership rule?

## Radio/TV Cross-Ownership Rule 

98. The radio/TV cross-ownership rule limits the number of commercial
    radio and television stations one entity may own in a market. The
    rule allows common ownership of at least one television station and
    one radio station in a market. In larger markets, a single entity
    may own additional radio stations depending on the number of other
    voices in the market.[^176]

99. The original rule, which prohibited radio/TV cross-ownership, was
    adopted in 1970. In adopting the rule, the Commission stated
    explicitly that "the principal purpose of the proposed rules is to
    promote diversity of viewpoints in the same area ... \[W\]e think it
    clear that promoting diversity of ownership also promotes
    competition."[^177] The Commission adopted a presumptive waiver
    policy to permit certain radio/TV combinations in 1989, and relaxed
    the rule to its current form in 1999.[^178] The Commission relaxed
    the radio/TV cross-ownership rule to balance its traditional
    diversity and competition concerns with its desire to permit
    broadcasters and the public to realize the benefits of
    radio-television common ownership. The modifications were intended
    to ease administrative burdens and provide predictability to
    broadcasters in structuring their business transactions.[^179] In
    the *1998 Biennial Report,* the Commission concluded that no further
    changes were warranted because the radio/TV cross-ownership rule had
    been so recently relaxed, but it committed to monitor the market
    effects of our deregulatory actions to determine whether further
    changes are warranted.[^180]

100. We ask parties to comment on whether the radio/TV cross-ownership
     rule is necessary in the public interest as the result of
     competition. Does it continue to serve its original purposes of
     promoting economic competition and diversity, particularly
     viewpoint diversity? Does the rule promote the other goals we set
     forth above, including the various forms of diversity and localism?
     If the rule serves some of our purposes and disserves others, does
     the balance of its effects argue for keeping, revising, or
     abolishing the rule? In the following paragraphs, we explore these
     questions in more detail.

101. Some of the issues and requests for data contained in the preceding
     section on the local TV ownership rule overlap with our analysis of
     the radio/TV cross-ownership rule. For example, our request for
     comment on consumers' sources for news and information is directly
     relevant to both the local TV ownership rule and radio/TV
     cross-ownership rule. Issues of viewpoint diversity and localism,
     and issues of competition in the advertising market and innovation,
     are also relevant to both the local TV ownership rule and the
     radio/TV cross-ownership rule. Where appropriate, we will apply
     data and analysis from that section to our analysis of the radio/TV
     cross-ownership rule.

### Viewpoint Diversity

102. The current radio/TV cross-ownership rule counts as a media voice
     each independently owned and operating same-market full-power
     commercial and noncommercial broadcast television and radio
     station. It also counts certain types of daily newspapers and cable
     systems because "such media are an important source of news and
     information on issues of local concern and compete with radio and
     television, at least to some extent, as advertising outlets."[^181]
     Thus, the current rule implies that only these particular types of
     media contribute to viewpoint diversity.[^182] The rule does not
     account for news available on Internet web sites, DBS, cable
     overbuilds, magazines or weekly newspapers. In our 1984 review of
     the national TV ownership rule, however, we concluded that, with
     respect to viewpoint diversity, the market includes a wide variety
     of media types engaged in the dissemination of ideas, including not
     only television and radio outlets, but also "cable, other video
     media, and numerous print media as well."[^183] Should those media
     be counted in a new voice test for radio/TV cross-ownership, and if
     so, to what extent? Should we count each independently owned cable
     network carried by a cable system in a market as one voice? Does
     competition among these media render the current restriction
     unnecessary? Finally, we seek comment on any alternatives to a
     voice test.

### Localism

103. In 1989, the Commission concluded that the cost savings and
     aggregated resources of combined radio-television operations
     appeared to contribute to more news, public affairs and other
     non-entertainment programming. Based in part on that finding, the
     Commission adopted a new presumptive waiver policy allowing
     increased radio-television ownership in the top-25 television
     markets and in certain situations involving the acquisition of
     "failed" stations. It anticipated that this policy would lead to a
     limited number of additional radio-television combinations that
     would enable the Commission to obtain additional evidence regarding
     the advantages and disadvantages of maintaining the cross-ownership
     rule.[^184] We seek comment on the quantities of local news and
     public affairs programming provided by TV-radio combinations and
     stand-alone TV and radio stations in those same markets. Are
     combinations and stand-alone stations providing comparable
     quantities of such programming? If TV-radio combinations produce a
     greater quantity of news programming than non-combined stations,
     does that suggest that greater cross-ownership among TV and radio
     stations would produce more news and/or public affairs programming?
     If the quantity of news and public affairs is the same or less on
     cross-owned stations, does it suggest the opposite?

### Competition 

104. In analyzing the relationship of the radio/TV cross-ownership rule
     and our goal of competition, the key issue under our traditional
     competition framework is the extent to which radio and television
     stations compete with each other to attract advertising revenue.
     The stronger the competition between these two outlets, the more
     relevant a cross-ownership limit may be. Relaxation or elimination
     of the rule may not harm competition if the record shows that there
     is weak substitution between radio and television advertising. We
     welcome comment, as well as any empirical studies, on the
     substitution between radio and television advertising. We also wish
     to consider what bearing advertising substitution between radio,
     television, and other outlets, such as newspapers, magazines, and
     Internet websites, may have on this rule. Any empirical work
     demonstrating such advertising substitution is strongly encouraged.

105. We are also concerned with the impact that radio/TV cross-ownership
     limits may have on innovation in the media marketplace. Does our
     current rule promote innovation? Would relaxation of the radio/TV
     cross-ownership rule increase incentives to provide innovative
     broadcast programming or new broadcast-based technologies or
     services? Examples of innovations that have been withheld from the
     media marketplace as a direct result of radio/TV cross-ownership
     limits would be particularly useful to our competitive analysis.
     Are there other factors or policy goals we should consider in
     determining whether to retain, modify, or eliminate the radio/TV
     cross-ownership rule?

## Alternative Means to Achieve Goals

106. If the record demonstrates that the current ownership rules are no
     longer necessary to actually serve the stated goals and the public
     interest, we seek comment on the most appropriate means to achieve
     the stated goals. We see, at a minimum, three alternatives: (1)
     case-by-case approach; (2) outlet specific rules; and (3) a single
     local media ownership rule covering all outlets. Often, bright line
     structural regulations have the effect of being both over-inclusive
     and under-inclusive. That is, a prophylactic structural rule may
     prohibit a combination that poses little competitive or consumer
     harm, or entails substantial consumer benefits. Or, such a limit
     may allow anti-competitive combinations that nevertheless satisfy
     the rule. We ask whether our structural regulations should be
     replaced with a case-by-case review of transactions so that a
     fact-specific analysis of the impact on our policy goals can be
     conducted. In the alternative, or in conjunction with a
     case-by-case review, should the Commission rely solely on the
     unfettered marketplace to achieve its stated policy goals? If we
     decide to retain structural rules, should the Commission retain a
     set of outlet specific rules similar in form to our current rules?

107. We recognize that a pure case-by-case approach could create an
     unnecessary level of uncertainty among media firms. Such
     uncertainty could be mitigated by one or more "soft" ownership
     caps. A soft cap would identify a certain level of ownership
     concentration below which a transaction would be presumed lawful,
     and above which the transaction would be unlikely to be permitted,
     but would be reviewed by the Commission on a case-by-case basis. If
     we adopted one or more soft caps, we anticipate identifying the
     factors we would consider in evaluating proposed above-cap
     transactions. We seek comment on these matters.

108. If we decide to retain structural rules, should the Commission
     retain a set of outlet specific rules similar in form to our
     current rules? This type of ownership rule structure may permit the
     Commission to limit specific harms and promote specific benefits in
     a more targeted fashion than would case-by-case review. For
     example, if we found that two outlet types were both the undisputed
     leaders in contributing to viewpoint diversity and were the only
     two competitors in a particular advertising market, we would
     explore whether a cross‑ownership limitation was necessary to
     preserve viewpoint diversity and economic competition.

109. As suggested by this hypothetical, however, such an outlet specific
     method could require persuasive evidence that particular outlets
     are sufficiently unique that they merit treatment separate from
     other outlets. The *Sinclair* court held that we failed to justify
     applying disparate voice tests to broadcast television stations in
     the local TV multiple ownership and the radio/TV cross-ownership
     rules. For this reason, should the Commission adopt a local single
     media ownership rule that is applicable to all or some media
     outlets and dependent on the number of independent "voices" in any
     particular market? This single rule option is intended to address
     only those instances in which the ownership of multiple media
     outlets included a broadcast station. A single rule applicable to
     all media might help avoid the type of inconsistency criticized by
     the *Sinclair* court. The goal of a single rule would be to replace
     outlet specific rules that no longer may be justified by themselves
     but which, viewed collectively, may continue to be necessary in
     some form to promote competition, diversity and localism. We seek
     comment on these proposals.

110. A key factor in whether we pursue a single framework or more outlet
     specific policies, or other options, is the feasibility of
     synthesizing the results of our various inquiries. We have
     identified the promotion of diversity, competition, and localism as
     potential guiding principles in setting ownership policies. It is
     conceivable that certain media outlets are substitutes for
     diversity purposes, but are not substitutes from the perspective of
     advertisers or program producers. In that situation, one option
     might be to: (1) maintain same-outlet restrictions (*e.g.,* a limit
     on the number of commonly-owned radio stations per market), perhaps
     based on market size, in order to preserve economic competition
     among those outlets that directly compete with each other; and (2)
     eliminate the cross-ownership rules based on clear evidence that
     Americans today rely on a far wider array of media outlets than
     they did decades ago, when the cross-ownership rules were first
     adopted. Or, if the evidence supported a finding that certain
     different types of outlets were particularly important news
     sources, we might replace the cross-ownership limits with an
     overall per-market cap on media outlets. We seek comment on whether
     this type of ownership framework would be an appropriate response
     to a record that showed that the markets for advertising and
     viewpoint diversity are not coterminous. If we adopt such a
     framework, should we adopt grandfathering provisions, and if so,
     what limits should we set?

111. Another approach to setting a single ownership rule would be to
     focus on promoting viewpoint diversity. Such a rule might be
     appropriate if evidence in the record were to show that certain
     media constitute an \"essential class\" of news outlets for
     Americans today. If the evidence before us were to show, for
     example, that local television stations, local cable operators, and
     daily newspapers were a distinct group of influential news outlets,
     we might consider a local media ownership rule that permitted one
     entity to own up to a certain percentage of such outlets in a local
     market. Such a rule could limit the common ownership of cable
     systems and broadcast stations in a market. We seek comment on the
     implications of such a result. In setting the appropriate
     percentage cap, we would rely partly on the extent to which the
     evidence indicated that all other media \-- such as radio, the
     Internet, weekly newspapers, magazines, cable and DBS \-- were
     significant (though not \"essential\") outlets for Americans to
     obtain news and information. We seek comment on this option and, in
     particular, on whether such a rule aimed at promoting viewpoint
     diversity would effectively promote competition in local media
     markets as well. By limiting application of this rule to only those
     instances in which the ownership of multiple media outlets includes
     a broadcast station, would we impair broadcasters' ability to
     compete in today's media marketplace?

##  "Voice" or Other Test

112. We next address three subjects related to a so-called "voice test"
     to assure competition and diversity in a given market: (1) how to
     reformulate our mechanism for measuring diversity and competition
     in a market; (2) how to accord different weights to different media
     types to the extent that they are relied on by consumers
     differently; and (3) how to account for diversity and competition
     via MVPDs and the Internet in a revised voice test.

### Creating a New Metric

113. In this section, we explore how to reformulate our mechanism for
     measuring diversity and competition in a given market. All four of
     our existing local broadcast ownership rules are aimed at
     preserving diversity and competition. The radio/TV cross-ownership
     rule employs a voice test that allows varying levels of broadcast
     ownership based on the number of broadcast stations, major
     newspapers and cable systems in the market. Such market-specific
     mechanisms, properly implemented, represent an effective mechanism
     for addressing media ownership limits in widely divergent market
     conditions.

114. Thus, we initially explore whether to continue to use a voice test
     to guarantee a minimum level of diversity and competition in a
     given market. The two current voice tests collectively include
     television stations, cable systems, radio stations, and daily
     newspapers as \"voices.\"[^185] Other media that we could consider
     include Internet web sites (including video services and online
     radio stations), DARS, magazines, DBS operators, weekly newspapers,
     and national newspapers. We request comment, including empirical
     evidence, on whether each of these additional outlets should be
     counted in a revised voice test.

### Weighting the Voices 

115. If data show that consumers rely to varying degrees on different
     types of outlets for news and public affairs, we seek comment on
     how we might design a test that accords different weights to
     different outlet types. For example, it may be appropriate to
     consider using weights based on such factors as audience reach,
     ownership structure, the percent of programming or print content
     devoted to local news, and/or consumer use patterns. Such an
     approach could be a more accurate measure of diversity and
     competition than the binary "voice" model (*i.e.*, an outlet either
     is or is not a voice), but may be difficult to design and
     administer over time as industry conditions change. This raises the
     question of how to account for such changes in a manner that does
     not undermine certainty and predictability.

116. If we pursue a weighted approach to measuring diversity and
     competition in a given market, we would need a way to quantify the
     relative contributions of each type of outlet. We are uncertain
     whether traditional all-news programming should continue to be the
     only measure of an outlet\'s role in the market, or whether other
     types of information that people obtain from the media should count
     as well. Such quasi-news sources might include cable and DBS
     channels covering business or sports, and websites devoted to those
     subjects. In addition, some non-news programming on broadcast
     television, such as "60 Minutes," may be similar to news
     programming in certain respects. We seek comment on the relevance
     of these sources of news and information to a weighting system for
     various media outlets.

117. We also seek comment on the relevance of current MVPD and Internet
     penetration levels in considering the contributions of MVPDs and
     the Internet to diversity and competition. Broadcast television and
     radio are available to virtually all Americans who purchase a
     television or radio, but the Internet, DBS, and cable require
     monthly subscriptions. Does this fact support a difference in the
     treatment of these media, such as a rule that counts only broadcast
     television and radio? Or is the fact that some media are "free" and
     others require subscriptions immaterial to their impact on the
     American people? In the past decade, non-broadcast media have
     become widely available and have been subscribed to by the majority
     of American homes.[^186] Are they now ubiquitous? Do the Americans
     who still consume only broadcast television and radio have any
     distinguishing features, such as location or level of income or
     education?

118. Traditional voice tests do not consider the entire range of news
     sources available to the public. A vast majority of people may
     choose to receive news and information from a single source
     (*e.g.,* a local television broadcast). However, this fact does not
     necessarily imply that the public has limited access to many other
     sources of news and information (including the Internet, for
     example). In other words, a lack of diversity in the outlets that
     consumers typically view or listen to does not necessarily imply
     that consumers have limited access to diverse viewpoints or to
     multiple sources of news and information. We seek recommendations
     on how to accurately capture the vibrancy and variety of today's
     media market in a framework that is predictable, adaptable to
     future marketplace changes, and judicially sustainable.

### Accounting for Diversity and Competition Via MVPDs and the Internet

119. MVPDs and the Internet have posed unique challenges under past
     formulations of the voice test. Unlike TV and radio stations, MVPDs
     and the Internet are single outlets furnishing access to multiple
     news sources. In analyzing whether and how MVPDs, such as cable
     systems, should be counted as voices, we must examine not only how
     much content is available, but also who controls viewers' access to
     it. We decided in 1999, in the context of the radio/TV
     cross-ownership rule, to count a cable system as one voice because
     "most programming is either originated or selected by the cable
     system operator, who thereby ultimately controls the content of
     such programming."[^187] However, cable systems also give viewers
     access to much information on matters of public concern. For
     example, it appears that a typical household that subscribed to
     cable (or DBS) service could find -- on CNN, CNBC, MSNBC, Fox News,
     and C-SPAN -- at least as many sources of information about
     national issues as it would find on multiple broadcast TV and radio
     stations. It also appears, however, that most MVPDs carry largely
     the same all-news channels and other channels with specialized news
     and information such as business, sports, and weather. Thus, under
     one possible approach, we could choose to count CNN as one voice
     even if it were carried in a community by the largest cable
     operator, an overbuilder, and two or more DBS providers.

120. Another approach would be to count each independent owner as a
     voice, so that if one entity owned a broadcast station, a cable
     system and several channels on it, an Internet access service, and
     a web page in the same area, it would count as one voice instead of
     many. Although we have listed many sources of media programming and
     distribution, industry consolidation and the reduction in the
     number of owners could diminish diversity and competition across
     these outlets.

121. We invite comment on DBS's contribution to diversity and
     competition, and whether DBS should be considered a voice in any
     rule we adopt. At a minimum, DBS contributes to viewpoint diversity
     through its editorial control over channel selection. In addition,
     DBS systems are, like cable systems, platforms and outlets for far
     more channels and programs than can be presented by broadcasters.
     In the past we have not counted DBS as a voice because it did not
     then provide local programming.[^188] We invite comment as to
     whether that rationale is still valid today. Should we consider DBS
     a voice because of the range of programs and channels it provides?
     Do these systems contribute to diversity and competition regardless
     of the extent to which DBS provides local programming?

122. In addition, DBS operators' transmission of local broadcast
     channels has greatly increased since the enactment of the Satellite
     Home Viewer Improvement Act of 1999 ("SHVIA"), which permitted DBS
     operators to retransmit local broadcast signals into local
     markets.[^189] We ask whether, in light of SHVIA, DBS can fairly be
     classified as an outlet for the purpose of any new voice test. Does
     the local programming available on DBS merely reproduce the
     information obtainable via over-the-air television and cable? Does
     DBS provide a source of diversity and competition to consumers in
     rural areas that are not served by local TV stations or cable?

123. We request comment on whether the foregoing analysis of cable and
     DBS is correct. Based on that analysis, should we count these media
     as voices, and if so, how? For example, where there are two cable
     systems serving the same area, should we count each as a voice? Or,
     should we count, as independent voices, each independently owned
     source of news and public affairs programming that is made
     available to cable and DBS subscribers? When the same programming
     is made available in a community by more than one MVPD, *e.g*.*,*
     if each one provides CNN, should that count as one voice or more?
     How, if at all, should the same question be answered for broadcast
     stations in the same area that carry programs from the same source,
     such as a single news broadcast? On an AOL Time Warner cable
     system, for example, should CNN count as a voice independent of AOL
     Time Warner? Should we count each independently owned network
     carried by a cable system or DBS provider in a market as one voice?
     On cable television, do PEG channels carry enough information and
     viewpoints to count as one or more voices? How common are locally
     or regionally oriented cable offerings such as New England Cable
     News,[^190] the borough-specific cable channels in New York
     City,[^191] and NorthWest Cable News that serves Seattle and the
     Pacific Northwest?[^192] Finally, we seek comment on the ability of
     cable operators and DBS providers to act as content gatekeepers by
     choosing which programming is selected to fill the available
     channel capacity. Should their status as gatekeepers affect whether
     or how we count them as voices?

124. Like cable and DBS, the Internet also presents unique challenges in
     the context of diversity and competition. In 1999, we decided not
     to count the Internet as a voice, in part because "many still do
     not have access to this new medium."[^193] Is the Internet now so
     widely accessible that it should count as a voice? Are there
     characteristics of the acquisition of information on the Internet,
     such as the need to click a hyperlink or key in a website's
     Internet address, that make it different from broadcasting such
     that we should not count it? [^194] Or, should these
     characteristics of the Internet affect the significance we give the
     Internet? If so, should it count as one voice or many? On the
     Internet, how much news and how many viewpoints are original; that
     is, not merely re-purposed content that also is available from
     local and national media outlets, such as TV stations, networks,
     and newspapers? We assume that the Internet permits the user to
     access any news source having a presence on the World Wide Web. Is
     there any instance of an Internet service provider ("ISP") or other
     entity acting as an "Internet gatekeeper" by denying a subscriber
     access to a news source on the World Wide Web? Is the role of a
     gatekeeper different between the Internet and cable or DBS? We also
     assume that, unlike cable or DBS, the Internet has unlimited
     capacity such that there is no limit on the number of news sources
     that a user can reach. On the other hand, some ISPs feature
     particular news sources on their home pages.[^195] We seek comment
     on these assumptions and their relevance to our analysis of
     diversity and competition.

# National Ownership Rules

125. In this section we consider whether the national TV ownership
     rule[^196] and the dual network rule[^197] continue to meet the
     statutory standard.[^198] Unlike the local TV ownership rule and
     the radio/TV cross-ownership rule, these two rules do not directly
     limit local media ownership, although they may indirectly affect
     viewpoint diversity in a given local market by limiting network
     ownership across markets. As such, they appear to play a less
     direct role in our core policy concern of viewpoint diversity,
     although we invite comment on this issue.

## National TV Ownership Rule 

126. The national TV ownership rule prohibits an entity from owning
     television stations that collectively would reach more than 35% of
     U.S. television households. Reach is defined as the number of
     television households in the TV DMA to which each owned station is
     assigned.[^199] VHF stations are attributed with all TV households
     in the DMA; UHF stations are attributable with 50% of the DMA
     households (the "UHF discount").[^200]

127. The Commission first adopted national ownership restrictions for
     television broadcast stations in 1941 by imposing numerical caps on
     the number of stations that could be commonly-owned.[^201] The rule
     was amended a number of times thereafter to increase the cap on the
     number of television stations.[^202] In 1985, the station cap was
     raised from 7 to 12 and an audience reach limit of 25% was
     added.[^203] The stated purposes of these early national TV
     ownership limits were, in general, to balance several goals. On the
     one hand, the Commission wanted to promote competition and
     "diversification of program and service viewpoints."[^204] On the
     other hand, common ownership of stations in different areas allows
     efficiencies to be realized,[^205] and the Commission raised
     numerical limits as the number of television stations
     increased.[^206]

128. In the 1996 Act, Congress directed the Commission to eliminate the
     station cap and raise the national reach limit from 25% to
     35%.[^207] In the *1998 Biennial Report*, the Commission addressed
     the issue of whether or not to modify or eliminate the 35% national
     audience reach limit. The Commission determined that the changes
     made in 1999 to the local television ownership rule should be
     observed and assessed before making any further changes to the
     national limit. It also found that many group owners had acquired
     large numbers of stations nationwide, and that this trend needed
     further observation.[^208] The Commission stated that consolidation
     of ownership of television stations in the hands of a few national
     networks would not serve the pubic interest. The Commission
     reasoned that national networks have a strong economic interest in
     having their affiliates clear (that is, decide to broadcast) all
     network programming, and independently owned affiliates play a
     valuable counterbalancing role because they have the right to
     decide whether to clear network programming or to air instead
     programming from other sources that they believe better serves the
     needs and interests of the local communities to which they are
     licensed. It also said that independent ownership of stations
     increases the diversity of programming by providing an outlet for
     non-network programming.[^209] Additionally, the Commission
     referred to possible competitive problems in the national markets
     for advertising and program production.[^210] As discussed below,
     the court in *Fox Television* has remanded the Commission's
     decision in the *1998 Biennial Review* not to consider further
     changes in the national TV ownership rule. In this section, we
     invite comment on whether to retain, eliminate, or modify the
     national TV ownership rule.

129. We ask for comment about whether the current national TV ownership
     rule is necessary in the public interest as the result of
     competition. Does it continue to serve its original purposes of
     promoting competition and viewpoint and programming diversity? Does
     the rule promote the other goals in described Section IV above,
     including localism and the various other forms of diversity and
     competition? If the rule serves some of our purposes and disserves
     others, does the balance of its effects argue for keeping,
     revising, or abolishing the rule? In the following paragraphs, we
     explore these questions in more detail.

130. In addition, we invite comment on the relevance and continued
     efficacy of the UHF discount. The UHF discount is intended to
     recognize the deficiencies in over-the-air UHF reception in
     comparison to VHF reception. The Commission retained the 50% UHF
     discount in the *1998 Biennial Report*, concluding that the signal
     disparity between UHF and VHF had not yet been eliminated. Noting
     that the signal disparity should be rectified to some extent by
     digital television, however, the Commission stated in the *1998
     Biennial Report* that when the transition to digital television is
     near completion, we would issue a notice of proposed rulemaking
     proposing a phased-in elimination of the discount.[^211]

131. We ask the parties to comment on the extent of the UHF "handicap"
     in today's marketplace. In particular, over 86% of consumers
     receive video programming from MVPDs where UHF signal quality is
     largely equalized with that of VHF channels. In addition, cable has
     must carry obligations with respect to UHF stations and DBS
     operators carry UHF stations in any local market where they elect
     to carry at least one local broadcast signal. We seek comment on
     whether the UHF discount continues to be necessary in light of the
     effect of MVPDs on UHF signal issues.

### Diversity

132. In 1984, the Commission concluded that the relevant geographic
     market for considering viewpoint diversity is local, not national.
     Thus, in the *1984 Multiple Ownership Report and Order*, the
     Commission relaxed the national ownership restrictions. It raised
     the station cap from seven stations to twelve stations and said
     that the entire rule would be eliminated (or sunset) in six years.
     In explanation, the Commission stated that:

     A primary goal of the Commission in adopting the \[ownership
     restrictions\] was to encourage a diversity of independent
     viewpoints. . . . In brief, we conclude that a national rule is
     irrelevant to the number of diverse viewpoints in any particular
     community and that even if we believed that radio and television
     were the only media relevant to diversity of viewpoint, the
     phenomenal growth in both television and radio since the rule was
     adopted in 1953 provides sufficient basis for raising the
     \[ownership restrictions\].[^212]

     The Commission reasoned that the area from which consumers can
     select the relevant mass media alternatives is generally the local
     community in which they work and live, where radio and TV signals
     are available in discrete local markets, and other local media
     outlets are abundantly available. It determined that the lack of
     relevance of the rule to local viewpoint diversity "persuades us
     that elimination of the national ownership rule is unlikely to have
     an adverse impact on the number of independent viewpoints available
     to consumers."[^213] It also determined that elimination of the
     national TV ownership rule posed no threat to the diversity of
     independent viewpoints in the information and entertainment
     markets, because a wide range of media outlets existed and because
     the rule did not affect the number of viewpoints in the relevant
     local markets.[^214]

133. On reconsideration, the Commission added a 25% audience reach limit
     to the 12 station cap and eliminated the sunset provision adopted
     in the *1984 Multiple Ownership Order*, concluding that "the
     complete and abrupt elimination of our national multiple ownership
     rules might engender a precipitous and potentially disruptive
     restructuring of the broadcast industry."[^215] The Commission
     reiterated that diversity of viewpoint was determined at the local
     level. The Commission also affirmed that the 1984 decision:

     balanced the need for a presumptive rule equating ownership
     diversity at the national level with viewpoint diversity against
     the demonstrable benefits of group ownership. In the context of
     this balancing process, we found that national ownership diversity
     is not of primary relevance in promoting viewpoint diversity. In
     this regard we noted that the most important idea markets are local
     . . . \[N\]ational broadcast ownership limits, as opposed to local
     ownership limits, ordinarily are not pertinent to assuring a
     diversity of views to the constituent elements of the American
     public.[^216]

134. In the *1998 Biennial Report*, the Commission reconsidered its
     views regarding the relationship between the national TV ownership
     rule and viewpoint diversity. It asserted that independently-owned
     affiliates play a valuable role by "counterbalancing" the networks'
     strong economic incentive in clearing all network programming
     "because they have the right . . . to air instead" programming more
     responsive to local concerns.[^217] Thus, in determining not to
     modify or eliminate the rule, it noted that the "competitive
     concerns" of opponents of relaxing or eliminating the \[national TV
     ownership rule\], including the concern that the number of
     viewpoints expressed nationally would be reduced, were more
     convincing than the comments in support of relaxation or
     elimination.[^218]

135. In *Fox Television*, the D.C. Circuit remanded the decision in the
     *1998 Biennial Report* to retain the national TV ownership rule,
     holding that the decision to retain it was arbitrary and
     capricious. The court took note of the Commission's *1984 Multiple
     Ownership Order,* which concluded that the rule should be repealed
     because it focuses on national, rather than local, markets and thus
     has an insignificant effect on viewpoint diversity. It also took
     note of the Commission's 1984 assertion that it had no evidence
     suggesting that stations which are not group-owned better respond
     to community needs, or spend more of their revenues on local
     programming.[^219] When the Commission changed course by retaining
     the limit in the *1998 Biennial Report*, it failed to explain why
     it no longer considered the reasoning in its *1984 Multiple
     Ownership Order* to be persuasive. According to the court, the
     Commission's failure to explain this significant deviation from its
     earlier conclusions rendered its 1998 decision arbitrary and
     capricious.[^220]

136. It appears that the national TV ownership rule is not directly
     relevant, and perhaps not relevant at all, to the goal of promoting
     viewpoint diversity. Consumers generally do not travel to other
     cities to obtain viewpoints. Instead, they rely on outlets for news
     sources, such as TV, radio, newspapers, Internet, cable, DBS, and
     magazines that are available in their own cities. As a result, the
     expression of viewpoints by television stations in one city does
     not appear to affect in any meaningful way the viewpoints available
     to people located in other cities. We seek comment on this analysis
     as well as on the general question whether our national TV
     ownership rule is relevant to our goal of promoting viewpoint
     diversity on a local level. Is there a relationship between the
     national ownership rule and the dual network rule with regard to
     viewpoint diversity? For example, could we safely repeal the
     national ownership rule as long as we maintain the dual network
     rule because the latter renders more likely the preservation of at
     least four different newscasts in each market? Does, as the
     Commission concluded in the *1998 Biennial Report,* independent
     ownership of stations increase diversity of programming by
     providing outlets for non-network programming?[^221] Do commenters
     believe that the broadcast of non-network programming promotes our
     goal of source diversity?

137. We also seek comment on the role of independently owned and
     operated stations. In deciding not to relax the national ownership
     rule in the *1998 Biennial Report*, the Commission said:

> We do not believe that consolidation of ownership of all or most of
> the television stations in the country in the hands of a few national
> networks would serve the public interest. The national networks have a
> strong economic interest in clearing all network programs, and we
> believe that independently owned affiliates play a valuable
> counterbalancing role because they have the right to decide whether to
> clear network programming or to air instead programming from other
> sources that they believe better serves the needs and interest of the
> local communities to which they are licensed. Independent ownership of
> stations also increases the diversity of programming by providing an
> outlet for non-network programming.[^222]

In *Fox Television*, the court found our explanation to be a plausible
justification for the national ownership rule and consistent with the
requirements in section 202(h). The court stated, however, that the
Commission's conclusion was not adequately supported by the record:

> Although we do not agree with the networks that this reason is
> unresponsive to § 202(h) ... we must agree that the Commission's
> failure to address itself to the contrary views it expressed in the
> *1984 Report* effectively undermines its rationale. ... The \[*1998
> Biennial Report\]* does not indicate the Commission has since received
> such evidence or otherwise found reason to repudiate its prior
> decision.[^223]

We seek comment on whether independently owned, network-affiliated
stations offer more diverse programming and/or programming from more
diverse sources than affiliated stations that are owned and operated by
their network. We ask parties to provide evidence supporting their
comments on this issue. Are there other factors or policy goals we
should consider in determining whether to retain, modify, or eliminate
the national TV ownership rule?

### Competition 

138. We seek comment on how the national TV ownership rule affects the
     ability of TV station group owners to compete against other video
     providers. We are interested in the impact this rule may have on
     the program production market and the advertising market. We also
     ask whether examination of advertising competition is, or should
     be, relevant to this analysis. Commenters are asked to analyze the
     impact of the transaction costs and uncertainties associated with
     network-affiliate relationships as well as any pro-competitive
     benefits of the current national television ownership rule. We also
     seek comment on whether the national television ownership rule
     artificially constrains the largest group owners from employing
     their skills in additional markets, and whether and how this
     operates to the detriment of consumers in those markets.

#### Program Production Market

139. Broadcast television stations organize a schedule of video
     programming which they either produce themselves or purchase from
     others in a national market. The *TV Ownership FNPRM* expressed a
     competitive concern about the ability of large purchasers of video
     programming to exercise monopsony power and artificially restrict
     the price paid for programming.[^224] The market for program
     production appears to consist of firms that produce niche and
     general entertainment programming for sale to program packagers.
     Program packagers include cable networks, broadcast television
     networks, program syndicators, and individual owners of television
     stations (regardless of whether the station also carries network
     programming).

140. We seek comment on whether the national TV ownership rule promotes
     or hinders competition in the program production market. We ask
     commenters to address whether raising the national ownership cap
     would facilitate monopsony power. Our answer to this question
     depends significantly on the identification of market participants.
     For example, if program producers are constrained by the cost
     structure of their products to selling programming exclusively to
     broadcast television stations, that might suggest that raising the
     35% cap would harm program production -- and possibly program
     diversity -- by increasing the negotiating power of the remaining
     television group owners vis-à-vis program producers. But if the
     market for purchasing programming included not just local
     television stations, but also cable networks, we would be less
     concerned that raising the 35% cap would create or exacerbate
     monopsony power in the program acquisition market. Therefore, we
     encourage parties addressing the 35% cap issue to submit evidence
     of the relevant market participants and the likely impact of
     raising the national cap on program producers.

141. In addition, regulatory changes have occurred in the past six years
     that may have affected the program production market. Prior to the
     1996 increase in the national TV ownership cap, the Commission
     eliminated the financial interest and syndication rules ("fin-syn")
     and the prime time access rule ("PTAR").[^225] Can the effects of
     the 1996 change in the national ownership cap be separated from the
     effects of the repeal of the fin-syn and PTAR rules? If so, we ask
     commenters to identify those effects and to address whether the 35%
     cap continues to be necessary to promote a robust and diverse
     program production market.

#### Advertising Markets

142. We have considered national television advertising as a relevant
     market based on the different nature of advertisers seeking a
     national audience rather than ones purchasing time for local
     markets.[^226] More recently, we identified a strategic group among
     the programming networks that consisted of ABC, NBC, CBS, and
     Fox.[^227] This assessment was based on findings that: (1) the
     relatively few local stations available with which to affiliate
     constituted a meaningful entry barrier into the strategic group;
     and (2) prime time viewership ratings were significantly higher for
     the strategic group networks than for other broadcast television
     networks. If our prior identification of this strategic group
     continues to be accurate today, the existence of this group likely
     restrains competition for national advertising among the
     broadcasters.[^228]

143. We seek comment on whether this analysis continues to be an
     accurate characterization of the national advertising market and
     the participants in the market. First, we request comment on
     whether the key participants in the national television advertising
     market should be defined more broadly to include broadcast TV
     networks outside the strategic group. If so, what are the factors
     that should be considered in identifying the members of the
     strategic group? Should the participants in the national television
     advertising market also include other outlets such as non-broadcast
     television networks (ESPN, CNN, *etc.*)? Cable networks and the
     other broadcast networks such as The WB and UPN have national
     coverage and carry national advertising, which may suggest they
     serve as substitutes from the perspective of at least some
     advertisers.

144. Second, regardless of whether we also include non-broadcast
     networks in the national television advertising market, we seek
     information on the extent to which national spot advertisements
     and/or syndicated programming are fungible with network television
     advertising from the perspective of advertisers. If group owners
     compete in the national advertising market, it would appear that
     increasing the 35% ownership cap could diminish competition by
     allowing broadcast networks to acquire additional stations, thereby
     reducing the effectiveness of non-network group owners in the
     national advertising market. We request market share data and
     analysis on this important point. Technology changes in advertising
     delivery may also allow the broadcast television networks to
     effectively provide national spot advertising. That is, a national
     network may deliver different advertisements targeted to different
     regions of the country simultaneously. We seek comment on this
     development and its relevance, if any, to competition in the
     national advertising market. Third, a recent study suggests that
     the national advertisers do not readily substitute between
     alternative media.[^229] We seek comment on this analysis.

145. The national TV ownership rule does not appear to have a direct
     effect on the number of competitors in the local advertising
     market. The rule affects primarily the total number of national
     households one group owner can reach, not the number within a
     single market. Of course, we recognize that the 35% limit could
     inhibit the participation of a group owner in a particular local TV
     market and thereby affect competition in that market. In
     particular, we seek comment on whether additional scale economies
     could be realized by group owners and whether the current rule
     prevents especially skilled management from entering additional
     local markets. We seek comment on this general issue, and whether
     limiting the size of group owners nationally can have an impact on
     competition in the local advertising market.

#### Innovation

146. We are also concerned with the impact that the national TV
     ownership rule may have on innovation in the media marketplace.
     Does our current rule promote or hinder innovation? Does a
     traditional competition analysis adequately capture the beneficial
     effects of innovation? What effect, if any, would a relaxed
     national TV ownership rule have on the ability of a broadcast
     network to develop innovative programming or services, or to
     effectuate the transition to digital television? Does the answer
     depend on whether the group owner plans to provide purely high
     definition television or standard definition television plus
     ancillary services? Would relaxation of the national TV ownership
     rule increase the ability and incentives of market participants
     (the large group owners in particular) to develop innovative
     technologies and/or new types of video programming? Examples of
     innovations that have been withheld from the media marketplace as a
     direct result of national TV ownership limits would be particularly
     useful to our competitive analysis.

### Localism 

147. The Commission has said in the past that a national TV ownership
     rule strengthens localism by creating a class of non-network
     station owners that can decide whether to preempt network
     programming in favor of programming that would better serve the
     needs and interests of that station's community.[^230] In *Fox
     Television*, the court affirmed that localism is a potentially
     relevant consideration in deciding whether to retain, modify, or
     eliminate the national TV ownership rule.[^231] Given this
     statement by the court and fact that the national ownership rule
     may have the most direct impact of our rules on the attainment of
     localism, our evaluation of the continued need for this rule will
     rely heavily on our findings regarding its effectiveness in
     promoting localism.

148. The production of local news and public affairs programming may
     represent one form of localism. We seek to understand whether the
     national TV ownership rule, by preserving a class of affiliates,
     may have the effect of increasing or decreasing the quantity and/or
     quality of local news and public affairs programming. We would be
     particularly interested in any clear correlation between the status
     of stations as affiliates or network-owned and the quantity of
     local news and public affairs produced by those stations. We
     request that commenters submit evidence addressing the relative
     output of affiliates and networks in this regard and address the
     appropriate weight of such data in our evaluation of localism and
     the national ownership rule.

149. The national TV ownership rule may also promote localism by
     creating economic incentives for non-network station owners
     regarding the preemption of network-delivered programs with
     station-selected programming. Networks incur costs in producing or
     purchasing programming for distribution on their networks. Since
     the networks initially bear these costs, network-owned and operated
     stations may have a stronger economic incentive than affiliates,
     all else being equal, to distribute network programming rather than
     replacing it on a station-by-station basis in response to community
     interests. It is also possible, however, that the local programming
     preference in a particular instance may be sufficiently strong that
     even a network-owned station would find it profitable to replace
     its own programming with alternative programming. Parties
     commenting on this issue are asked to address specifically the
     allocation of advertising revenues between networks and affiliates
     on preempted programming. We seek comment on these observations and
     on any other economic incentives affecting the preemption of
     network programming by local stations.

150. In addition, television stations are obligated to serve the needs
     and interests of their local communities.[^232] We ask commenters
     to address the extent to which affiliates and/or network-owned
     stations could be expected to preempt network programming when it
     is not in their economic interest to do so. According to testimony
     before Congress by the President and Chief Operating Officer of
     Viacom, Inc., CBS' owned-and-operated stations "have complete
     freedom locally," even preempting primetime network programming to
     air, for example, an emergency weather newscast, a local telethon,
     and other events of local interest.[^233] If the principal category
     of such "unprofitable" preemption is breaking news or other
     emergency information, should we expect networks and affiliates to
     respond similarly with respect to such situations?

151. A key aspect of the argument that the national TV ownership rule
     promotes localism is that affiliates serve local needs more
     effectively than network station owners because affiliates are more
     likely to replace network programming with programming more suited
     to local needs. There are, however, significant portions of the
     American public that already receive broadcast programming through
     stations owned and operated by broadcast networks. Is there
     evidence that consumers served by network-owned stations have
     either benefited or been harmed by the lack of a non-network owner
     as a check on network-provided programming?

152. It is also possible that localism may be furthered by the national
     TV ownership rule by preserving a sufficiently large class of
     network affiliates that collectively can influence network
     programming decisions. This may be the case where networks plan to
     air a particular program that a large percentage of its affiliates
     disfavor. Negotiations between a sufficiently large group of
     affiliates may cause the network to revise its programming
     decision. By contrast, if the national television ownership cap
     were raised or eliminated, a smaller group of affiliates raising
     the same concern might be less able to persuade the network to
     alter is programming plans. We ask commenters to address the
     frequency and efficacy of such discussions, to the extent they
     occur in practice, and the value of this form of localism compared
     with station-by-station preemption issues discussed above.

153. We also seek comment on whether the national TV ownership rule
     continues to be necessary to preserve affiliate bargaining power
     regarding preemption. Would increasing the cap shift bargaining
     power to the networks such that "local" rights would be lost as a
     practical matter?

154. Separate from the selection of programming, our goal of promoting
     localism may be addressed through rules that promote the production
     of local news and public affairs programming The *1984 Multiple
     Ownership Order* relied on news ratings as an indicator of the
     quality of local news produced by group-owned stations versus that
     produced by stand-alone stations.[^234] The Commission reasoned
     that higher ratings indicated a greater responsiveness to local
     needs.[^235] Should we compare the quality of local news produced
     by network owned and operated stations and that of affiliates using
     ratings as a measure of quality? Are there alternative measures for
     this comparison?

### Audience Measurement 

155. The national TV ownership rule is calculated based on the number of
     television households a station can reach. The number of households
     reached nationwide is the sum of the number of households in each
     DMA in which a group owner owns a television station. The number of
     households in a DMA is halved for UHF stations. The national TV
     ownership rule is thus based on homes "passed," not homes actually
     viewing the stations of a group owner. This "potential audience"
     measure is at odds with the way we calculate a national ownership
     audience reach limit for cable television. A home is attributed to
     a multi-system cable operator only if that MSO actually serves the
     home, not simply because it is available to that home. We seek
     comment on which measurement method is appropriate given the policy
     objectives of the national TV ownership rule, and the differences
     between cable and broadcast television in the ease with which the
     potential service can be accessed (switching off and on channels
     versus subscription and installation). Is the current method of
     measuring the broadcast audience appropriate because broadcast is a
     non-subscription service? Is there an alternative measurement
     method that would be preferable to either of these existing
     approaches?

## Dual Network Rule 

156. The dual network rule currently provides: "A television broadcast
     station may affiliate with a person or entity that maintains two or
     more networks of television broadcast stations unless such dual or
     multiple networks are composed of two or more persons or entities
     that, on February 8, 1996, were 'networks' as defined in §
     73.3613(a)(1) of the Commission\'s regulations (that is, ABC, CBS,
     Fox, and NBC)."[^236] Thus, the rule in its current form permits
     broadcast networks to provide multiple program streams (program
     networks) simultaneously within local markets, and prohibits only a
     merger between or among these four networks.

157. The dual network rule was originally adopted over sixty years ago
     and flatly prohibited any entity from maintaining more than a
     single radio network.[^237] A few years later, the rule was
     extended to television networks.[^238] The Commission believed that
     an entity that operated more than one network might preclude new
     networks from developing and affiliating with desirable stations
     because those stations might already be tied up by the more
     powerful network entity. In addition, the Commission expressed
     concern that dual networking could give a network too much market
     power. The rule was therefore also intended to remove barriers that
     would inhibit the development of new networks, as well to serve the
     Commission\'s more general diversity and competition goals.[^239]

158. After Congress, in the 1996 Act, directed the Commission to amend
     the rule, the Commission amended the rule for the first time since
     it was adopted to permit a broadcast station to affiliate with a
     network organization that maintains more than one broadcast network
     unless the multiple network combination was created by a
     combination among ABC, CBS, Fox, or NBC, or a combination between
     one of these four networks and UPN or WB.[^240] In the *Dual
     Network Order* last year, the Commission further relaxed the rule
     to permit a "top four" network to merge with or acquire UPN or WB.
     The Commission found that: (1) competition in the national
     advertising market would not be harmed by this rule
     change;[^241] (2) greater vertical integration of the sort
     contemplated by this rule change was potentially an efficient,
     pro-competitive response to increasing competition in the video
     market;[^242] and (3) program diversity would not be harmed because
     the two combined networks would have strong economic incentives to
     diversify their program offerings.[^243] We ask for comment whether
     the relaxation of the dual network rule has had the effects that we
     foresaw in the *Dual Network Order*.

159. We ask for comment about whether the present dual network rule is
     necessary in the public interest as the result of competition. Does
     it promote the goals we set forth above -- diversity, competition,
     and localism? If the rule serves some of our purposes and disserves
     others, does the balance of its effects argue for keeping,
     revising, or abolishing the rule? In the following paragraphs, we
     explore these questions in more detail.

### Diversity

#### Program Diversity 

160. In the *Dual Network Order*, the Commission found that program
     diversity at the national level would not likely be harmed by the
     combination of an emerging network (*i.e.*, UPN or WB) with one of
     the four major networks. The Commission found it likely that their
     common owner would have strong incentives to produce a diverse
     schedule of programming for each set of local TV outlets in the
     same market.[^244] After the *Dual Network Order*, Viacom, parent
     of CBS, acquired UPN.[^245] Has the Commission's expectation proved
     correct? We also seek comment on the effect that consolidation
     between and among top four networks likely would have on program
     diversity. Additionally, we seek comment on whether, and if so how,
     the increased competition that television stations face from cable
     networks and other media affects the diversity of programming on
     all national program networks.

#### Viewpoint Diversity 

161. With respect to the combination of two or more top four networks,
     we see several potential viewpoint diversity issues. The first is
     the loss of an independently owned and produced local newscast in
     cities where the two networks each own local television
     stations.[^246] We seek comment on the impact of such a development
     on viewpoint diversity. Even if we were to eliminate the dual
     network rule entirely, that does not necessarily mean that the
     merged company could actually own all the stations previously owned
     by the two networks. The local TV ownership rule could limit the
     degree to which one entity, including a network, could own multiple
     TV stations in one market, assuming we retain that rule.[^247] We
     seek comment on whether we should address the loss of an
     independent local newscast as a result of a combination of two or
     more of the four major networks in the dual network rule, in the
     local TV ownership rule, or in some alternative new rule.

162. The second possible viewpoint diversity concern relating to the
     elimination of the dual network rule is the potential loss of one
     or more independent national television news operations. The
     primary focus of networks' national news operations appears to be
     on the nightly newscasts by ABC, CBS, and NBC. We ask for comment,
     in light of other sources of news and current public affairs,
     whether the loss of one or more of those nightly newscasts as an
     independent source of news would significantly reduce sources of
     news and current affairs and thus injure the public interest.
     Should the fact that the national broadcast networks alone reach
     virtually all households in the country affect our analysis? Would
     a reduction in the number of independently-owned national
     television networks give the remaining networks undue power and
     influence, such as during national elections?

163. Third, in the *Dual Network Order*, we noted evidence in the record
     from Network Affiliated Stations Alliance ("NASA") that eliminating
     the dual network prohibition against combinations of two of the top
     four major networks would increase the networks' economic leverage
     over their affiliates.[^248] NASA stated that the big four
     broadcast networks still had by far the largest concentration of
     viewers and economic power, undiminished by new media and audience
     fragmentations. We seek comment on how the combination of two top
     four networks would affect the balance of negotiating power between
     networks and affected affiliates. Commenters should identify with
     precision how any such leverage affects viewpoint diversity in
     terms of program selection. We also seek comment on whether
     combinations of major networks would affect the quantity or quality
     of diverse viewpoints on the merged company's owned and operated
     stations. Are there other factors or policy goals we should
     consider in determining whether to retain, modify or eliminate the
     dual network rule?

### Competition

164. The *Dual Network Order* did not resolve whether the dual network
     rule should be eliminated.[^249] We did note, however, that
     commenters were divided on whether a merger of two major networks
     would create or enhance market power.[^250] Some commenters pointed
     to new broadcast and non-broadcast competitors and argued that a
     merger of two major networks would not unduly affect the level of
     diversity and competition. Other commenters argued that major
     networks continue to have market power and relaxation of the rule
     would have an adverse impact on competition. We invite updates of
     these arguments. We also seek comment on whether the dual network
     rule promotes or retards innovation.

165. In the *Dual Network Order*, we found that the merger of an
     emerging network and a major network may benefit viewers and
     advertisers by lowering the risk associated with the creation of
     new network programming by giving one company a larger potential
     audience for the programming produced by the network.[^251] This
     spreads the fixed costs of program creation over a larger number of
     viewers, thereby lowering the per-viewer cost of producing the
     programming. If there are potential efficiencies of eliminating the
     rule for emerging networks, as we concluded last year, will
     comparable efficiencies accrue if two or more top four networks
     were permitted to merge?

166. In the *Dual Network Order*, we found that the combination of an
     emerging network and one of the four major networks would not harm
     the national television advertising market because the two networks
     would compete in different strategic groups.[^252] We now seek
     comment on the effect of mergers among the four major networks on
     the program production market. If the four major networks
     constitute a strategic group within the national advertising
     market, do they also operate as a strategic group within the
     program production market? We seek comment on how competition in
     the program production market and program diversity would be
     affected, if at all, by a merger among two or more of the four
     major networks.

167. We are also concerned with the impact that the dual network rule
     may have on innovation in the media marketplace. Does our current
     rule promote innovation? Would relaxation of the dual network rule
     increase incentives to provide innovative broadcast programming or
     new broadcast-based technologies or services? Examples of
     innovations that have been withheld from the media marketplace as a
     direct result of the dual network rule would be particularly useful
     to our competitive analysis.

### Localism 

168. The *Dual Network Order* did not address localism as a policy goal
     *per se*. It did address localism in the context of a discussion of
     diversity. Thus, it noted that retention of the then-existing dual
     network rule might affect the financial viability of the UPN
     network. If UPN were no longer viable, then some stations that had
     been affiliated with it might not be able to survive without the
     benefits of affiliation. That is, without network-obtained
     programming and a recognized brand, the affiliates might not be
     able to sustain the increases in the cost of programming that they
     would have to bear to attract viewers, which could result in the
     cessation of operations. This could have cascading adverse
     consequences on diversity at the local level.[^253] We seek to
     expand our understanding of the relationship between localism and
     the dual network rule. We invite comment as to whether the current
     rule promotes localism and, if so, whether, modification or
     elimination of the rule would have any effect. We also seek comment
     on whether combinations among major networks would affect the
     quantity or quality of local news provided by the merged company's
     owned and operated stations. Are there any other factors we should
     consider in determining whether to retain, modify, or eliminate the
     dual network rule?

# administrative matters 

## Procedural Provisions

### Notice and Comment Provisions

169. Pursuant to applicable procedures set forth in Sections 1.415 and
     1.419 of the Commission's rules,[^254] interested parties may file
     comments on this item on or before 60 days after Commission release
     of the Media Ownership Working Group studies, and reply comments on
     or before 90 days after Commission release of the Media Ownership
     Working Group studies.

170. Parties may submit their comments using the Commission's Electronic
     Comment Filing System ("ECFS") or by filing paper copies.[^255]
     Comments may be filed as an electronic file via the Internet at
     http://www.fcc.gov/e-file/ecfs.html. Generally, only one copy of an
     electronic submission must be filed. If multiple docket or
     rulemaking numbers appear in the caption of this proceeding,
     however, commenters must transmit one electronic copy of the
     comments to each docket or rulemaking number referenced in the
     caption. In completing the transmittal screen, commenters should
     include their full name, Postal Service mailing address, and the
     applicable docket or rulemaking number. Parties may also submit an
     electronic comment by Internet e-mail. To obtain 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. Additional information
     on ECFS is available at <http://www.fcc.gov/e-file/ecfs.html>.

171. Filings may also be sent by hand or messenger delivery, by
     commercial overnight courier, or by first-class or overnight U.S.
     Postal Service mail (although we continue to experience delays in
     receiving U.S. Postal Service mail). Parties who choose to file by
     paper must file an original and four copies of each filing. If more
     than one docket or rulemaking number appear in the caption of this
     proceeding, commenters must submit two additional copies for each
     additional docket or rulemaking number. The Commission's
     contractor, Vistronix, Inc., will receive hand-delivered or
     messenger-delivered paper filings for the Commission's Secretary at
     236 Massachusetts Avenue, N.E., Suite 110, Washington, D.C. 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
     12th Street, SW, Washington, D.C. 20554. All filings must be
     addressed to the Commission's Secretary, Office of the Secretary,
     Federal Communications Commission.

172. We also request that parties send two paper copies of each pleading
     to Qualex International, Portals II, 445 12^th^ Street, S.W., Room
     CY-B402, Washington, D.C. 20554, telephone (202)863-2893, facsimile
     (202)863-2898, or email at <qualexint@aol.com>. Parties must also
     send one electronic copy via email, plus eight paper copies of
     their filing, to Linda Senecal, Industry Analysis Division, Media
     Bureau, Federal Communications Commission, 445 12^th^ Street, S.W.,
     Room 2-C438, Washington, D.C. 20554, email <lsenecal@fcc.gov> .

### Ex Parte Provisions

173. Because this proceeding involves broad public policy issues, the
     proceeding will be treated as "permit but disclose" for purposes of
     the Commission's *ex parte* rules. *See generally* 47 C.F.R. §§
     1.1200-1.1216. *Ex parte* presentations will be governed by the
     procedures set forth in Section 1.1206 of the Commission's rules
     applicable to non-restricted proceedings.[^256] Should
     circumstances warrant, this proceeding or any related proceeding
     may be designated as restricted.

174. Parties making oral *ex parte* presentations are directed to the
     Commission's statement re-emphasizing the public's responsibility
     in permit-but-disclose proceedings and are reminded that memoranda
     summarizing the presentation must contain the presentation's
     substance and not merely list the subjects discussed.[^257] More
     than a one or two sentence description of the views and arguments
     presented is generally required. *See* 47 C.F.R. § 1.1206(b)(2), as
     revised. Other rules pertaining to oral and written presentations
     are set forth in Section 1.1206 (b) as well.

175. We urge persons submitting written *ex parte* presentations or
     summaries of oral *ex parte* presentations in this proceeding to
     use ECFS in accordance with the Commission rules. Parties using
     paper *ex parte* submissions must file an original and one copy
     with the Commission's Secretary, Marlene H. Dortch. As applicable,
     please follow the procedures set forth in the paragraphs above for
     sending your submission by mail, or for hand delivery of your
     submission to the Commission's filing location in downtown
     Washington, D.C.

176. In addition, we request that parties provide two paper copies of
     each *ex parte* submission to Qualex International, Portals II, 445
     12^th^ Street, S.W., Room CY-B402, Washington, D.C. 20554,
     telephone (202)863-2893, facsimile (202)863-2898, or email at
     <qualexint@aol.com>. We ask parties to serve one electronic copy
     via email, plus one paper copy of each *ex parte* submission,
     to (1) Linda Senecal, Industry Analysis Division, Media Bureau,
     Federal Communications Commission, 445 12^th^ Street, S.W., Room
     2-C438, Washington, D.C. 20554, email <lsenecal@fcc.gov> ; and (2)
     Mania Baghdadi, Industry Analysis Division, Media Bureau, Federal
     Communications Commission, 445 12^th^ Street, S.W., Room 2-C267,
     Washington, D.C. 20554, email <mbaghdad@fcc.gov>.

177. This document is available in alternative formats (computer
     diskette, large print, audio record, and Braille). Persons with
     disabilities who need documents in these formats may contact Brian
     Millin at (202)418-7426 (voice), (202)418-7365 (TTY), or via email
     at <bmillin@fcc.gov>.

178. The Media Bureau contacts for this proceeding are Paul Gallant,
     (202)418-2380, and Debra Sabourin, (202)418-2330. Press inquiries
     should be directed to Michelle Russo at (202)418-2358 (voice),
     (202)418-7365 (TTY) or (888)835-5322 (TTY).

## Initial Regulatory Flexibility Analysis 

179. As required by the Regulatory Flexibility Act,[^258] the Commission
     has prepared an Initial Regulatory Flexibility Analysis ("IRFA") of
     the possible significant economic impact on a substantial number of
     small entities of the proposals addressed in this *Notice*. The
     IRFA is set forth in Appendix A. Written public comments are
     requested on the IRFA. These comments must be filed in accordance
     with the same filing deadlines for comments on this *Notice*, and
     they should have a separate and distinct heading designating them
     as responses to the IRFA.

# ordering clauses 

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

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

     FEDERAL COMMUNICATIONS COMMISSION

     Marlene H. Dortch

> Secretary

**APPENDIX A**

**Initial Regulatory Flexibility Act**

As required by the Regulatory Flexibility Act ("RFA"),[^259] the
Commission has prepared this Initial Regulatory Flexibility Analysis
("IRFA") of the possible significant economic impact on small entities
by the policies and rules proposed in this Notice of Proposed Rulemaking
("*Notice*"), provided in sections IV, V and VI of the item. Written
public comments are requested on this IRFA. Comments must be identified
as responses to the IRFA and must be filed by the deadlines for comments
on the *Notice*. The Commission will send a copy of the *Notice*,
including this IRFA, to the Chief Counsel for Advocacy of the Small
Business Administration ("SBA").[^260] In addition, the *Notice* and the
IRFA (or summaries thereof) will be published in the Federal
Register.[^261]

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

Section 202(h) of the Telecommunications Act of 1996 ("1996 Act")
requires the Commission to review all of its broadcast ownership rules
every two years commencing in 1998, and to determine whether any of
these rules are necessary in the public interest as the result of
competition. The 1996 Act also requires the Commission to repeal or
modify any regulation it determines to be no longer in the public
interest. At the time these ownership rules were adopted, there were
fewer local media outlets and fewer types of media than there are today.
The ownership rules in their current form therefore may need revision to
ensure that they accurately reflect current media marketplace
conditions. The goal of this proceeding is to solicit comment on the
modification of the subject policies and rules.

In this *Notice*, we seek comment on both "local" and "national"
ownership rules. The local rules are the local TV multiple ownership
rule and the radio/TV cross-ownership rule. The national ownership rules
are the national TV multiple ownership rule and the dual network rule.
These four rules are described in Sections V and VI of this *Notice*.
Additionally, open proceedings concerning the newspaper/broadcast
cross-ownership rule and the local radio ownership rule are incorporated
into this proceeding.

Section 202(h) of the 1996 Telecommunications act directs the Commission
to re-examine its broadcast ownership rules every two years and either
repeal, retain or modify them. Additionally, two recent court decisions
by the U.S. Court of Appeals for the District of Columbia Circuit state
that section 202(h) carries with it a presumption in favor of repealing
or modifying the ownership rules. In the *Fox Television* case,
discussed in Section II of the item, the court vacated the
cable/broadcast cross-ownership rule and remanded for further
consideration the Commission's decision in its 1998 biennial review to
retain then national TV multiple ownership rule. In the *Sinclair* case,
discussed in Section II of the item, the same court invalidated the
Commission's definition of "voices" under the local TV ownership rule,
stating the Commission had failed to justify its decision to include
only TV broadcast stations as voices.

In light of the mandate in section 202(h) and these recent court
decisions, the Commission seeks comment from parties concerning
ownership rules discussed in the *Notice*. The Commission believes that
a broad range of comments must be received to ensure we fulfill our
mandate to further the public interest, convenience and necessity.

We are required under the Regulatory Flexibility Act to demonstrate a
flexible and responsive awareness of the interests of small business
entities that are subject to the rules under review in this *Notice*.
Accordingly, we solicit comment from all small businesses entities,
including minority-owned and women-owned small businesses. We especially
solicit comment on whether, and if so, how, the particular interests of
these small businesses may be affected by the rules.

**B. Legal Basis**

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

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

The RFA directs agencies to provide a description of, and, where
feasible, an estimate of the number of small entities that may be
affected by any proposed rules, if adopted.[^262] The RFA generally
defines the term "small entity" as having the same meaning as the terms
"small business," "small organization," and "small governmental entity"
under Section 3 of the Small Business Act.[^263] In addition, the term
"small business" has the same meaning as the term "small business
concern" under the Small Business Act.[^264] A small business concern is
one which: (1) is independently owned and operated; (2) is not dominant
in its field of operation; and (3) satisfies any additional criteria
established by the SBA.[^265]

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

**Television Broadcasting**. The Small Business Administration defines a
television broadcasting station that has no more than \$12 million in
annual receipts as a small business.[^266] Television broadcasting
consists of establishments primarily engaged in broadcasting images
together with sound, including the production or transmission of visual
programming which is broadcast to the public on a predetermined
schedule.[^267] Included in this industry are commercial, religious,
educational, and other television stations.[^268] Also included are
establishments primarily engaged in television broadcasting and which
produce programming in their own studios.[^269] Separate establishments
primarily engaged in producing programming are classified under other
NAICS numbers.[^270]

According to Commission staff review of the BIA Publications, Inc.,
Master Access Television Analyzer Database on August 22, 2002, about 870
(70%) of 1,250 commercial television broadcast stations have revenues of
\$12 million or less. We note, however, that under SBA's definition,
revenues of affiliates that are not television stations should be
aggregated with the television station revenues in determining whether a
concern is small. Our estimate, therefore, likely overstates the number
of small entities that might be affected by any changes to the ownership
rules, because the revenue figure on which it is based does not include
or aggregate revenues from non-television affiliated companies.

**Radio Broadcasting.** The SBA defines a radio station that has \$6
million or less in annual receipts as a small business.[^271] According
to Commission staff review of BIA Publications Inc. Master Access Radio
Analyzer Database on August 22, 2002, about 10,800 (96%) of 11,320
commercial radio stations have revenue of \$6 million or less. We note,
however, that many radio stations are affiliated with much larger
corporations with much higher revenue. Our estimate, therefore, likely
overstates the number of small entities that might be affected by any
changes to the ownership rules.[^272]

**Cable and Other Program Distribution.** The SBA has developed a small
business size standard for cable and other program distribution
services, which includes all such companies generating \$12.5 million or
less in revenue annually.[^273] This category includes, among others,
cable operators, direct broadcast satellite ("DBS") services, home
satellite dish ("HSD") services, multipoint distribution services
("MDS"), multichannel multipoint distribution service ("MMDS"),
Instructional Television Fixed Service ("ITFS"), local multipoint
distribution service ("LMDS"), satellite master antenna television
("SMATV") systems, and open video systems ("OVS"). According to the
Census Bureau data, there are 1,311 total cable and other pay television
service firms that operate throughout the year of which 1,180 have less
than \$10 million in revenue.[^274] We address below each service
individually to provide a more precise estimate of small entities.

**Cable Operators**. The Commission has developed, with SBA\'s approval,
our own definition of a small cable system operator for the purposes of
rate regulation. Under the Commission\'s rules, a \"small cable
company\" is one serving fewer than 400,000 subscribers
nationwide.[^275] We last estimated that there were 1,439 cable
operators that qualified as small cable companies.[^276] Since then,
some of those companies may have grown to serve over 400,000
subscribers, and others may have been involved in transactions that
caused them to be combined with other cable operators. Consequently, we
estimate that there are fewer than 1,439 small entity cable system
operators that may be affected by the decisions adopted in this
*Notice*.

The Communications Act, as amended, also contains a size standard for a
small cable system operator, which is \"a cable operator that, directly
or through an affiliate, serves in the aggregate fewer than 1% of all
subscribers in the United States and is not affiliated with any entity
or entities whose gross annual revenues in the aggregate exceed
\$250,000,000."[^277] The Commission has determined that there are
68,500,000 subscribers in the United States. Therefore, an operator
serving fewer than 685,000 subscribers shall be deemed a small operator
if its annual revenues, when combined with the total annual revenues of
all of its affiliates, do not exceed \$250 million in the
aggregate.[^278] Based on available data, we find that the number of
cable operators serving 685,000 subscribers or less totals approximately
1,450.[^279] Although it seems certain that some of these cable system
operators are affiliated with entities whose gross annual revenues
exceed \$250,000,000, we are unable at this time to estimate with
greater precision the number of cable system operators that would
qualify as small cable operators under the definition in the
Communications Act.

**DBS Service.** Because DBS provides subscription services, DBS falls
within the SBA-recognized definition of cable and other program
distribution services.[^280] This definition provides that a small
entity is one with \$12.5 million or less in annual receipts.[^281] The
Commission, however, does not collect annual revenue data for DBS and,
therefore, is unable to ascertain the number of small DBS licensees that
could be impacted by these proposed rules. DBS service requires a great
investment of capital for operation, and we acknowledge, despite the
absence of specific data on this point, that there are entrants in this
field that may not yet have generated \$12.5 million in annual receipts,
and therefore may be categorized as a small business, if independently
owned and operated.

**Home Satellite Dish ("HSD") Service**. Because HSD provides
subscription services, HSD falls within the SBA-recognized definition of
cable and other program distribution services.[^282] This definition
provides that a small entity is one with \$12.5 million or less in
annual receipts.[^283] The market for HSD service is difficult to
quantify. Indeed, the service itself bears little resemblance to other
MVPDs. HSD owners have access to more than 265 channels of programming
placed on C-band satellites by programmers for receipt and distribution
by MVPDs, of which 115 channels are scrambled and approximately 150 are
unscrambled.[^284] HSD owners can watch unscrambled channels without
paying a subscription fee. To receive scrambled channels, however, an
HSD owner must purchase an integrated receiver-decoder from an equipment
dealer and pay a subscription fee to an HSD programming package. Thus,
HSD users include: (1) viewers who subscribe to a packaged programming
service, which affords them access to most of the same programming
provided to subscribers of other MVPDs; (2) viewers who receive only
non- subscription programming; and (3) viewers who receive satellite
programming services illegally without subscribing. Because scrambled
packages of programming are most specifically intended for retail
consumers, these are the services most relevant to this
discussion.[^285]

**Multipoint Distribution Service ("MDS"), Multichannel Multipoint
Distribution Service ("MMDS"), Instructional Television Fixed Service
("ITFS") and Local Multipoint Distribution Service ("LMDS").** MMDS
systems, often referred to as "wireless cable," transmit video
programming to subscribers using the microwave frequencies of the MDS
and ITFS.[^286] LMDS is a fixed broadband point-to-multipoint microwave
service that provides for two-way video telecommunications.[^287]

In connection with the 1996 MDS auction, the Commission defined small
businesses as entities that had an annual average gross revenues of less
than \$40 million in the previous three calendar years.[^288] This
definition of a small entity in the context of MDS auctions has been
approved by the SBA.[^289] The MDS auctions resulted in 67 successful
bidders obtaining licensing opportunities for 493 Basic Trading Areas
("BTAs"). Of the 67 auction winners, 61 met the definition of a small
business. MDS also includes licensees of stations authorized prior to
the auction. As noted, the SBA has developed a definition of small
entities for pay television services, which includes all such companies
generating \$12.5 million or less in annual receipts.[^290] This
definition includes multipoint distribution services, and thus applies
to MDS licensees and wireless cable operators that did not participate
in the MDS auction. Information available to us indicates that there are
approximately 850 of these licensees and operators that do not generate
revenue in excess of \$12.5 million annually. Therefore, for purposes of
the IRFA, we find that there are approximately 850 small MDS providers
as defined by the SBA and the Commission's auction rules.

The SBA definition of small entities for cable and other program
distribution services, which includes such companies generating \$12.5
million in annual receipts, seems reasonably applicable to ITFS.[^291]
There are presently 2,032 ITFS licenses. All but 100 of these licenses
are held by educational institutions. Educational institutions are
included in the definition of a small business.[^292] However, we do not
collect annual revenue data for ITFS licensees, and are not able to
ascertain how many of the 100 non-educational licensees would be
categorized as small under the SBA definition. Thus, we tentatively
conclude that at least 1,932 licensees are small businesses.

Additionally, the auction of the 1,030 LMDS licenses began on February
18, 1998, and closed on March 25, 1998. The Commission defined "small
entity" for LMDS licenses as an entity that has average gross revenues
of less than \$40 million in the three previous calendar years.[^293] An
additional classification for "very small business" was added and is
defined as an entity that, together with its affiliates, has average
gross revenues of not more than \$15 million for the preceding calendar
years.[^294] These regulations defining "small entity" in the context of
LMDS auctions have been approved by the SBA.[^295] There were 93 winning
bidders that qualified as small entities in the LMDS auctions. A total
of 93 small and very small business bidders won approximately 277 A
Block licenses and 387 B Block licenses. On March 27, 1999, the
Commission re-auctioned 161 licenses; there were 40 winning bidders.
Based on this information, we conclude that the number of small LMDS
licenses will include the 93 winning bidders in the first auction and
the 40 winning bidders in the re-auction, for a total of 133 small
entity LMDS provides as defined by the SBA and the Commission's auction
rules.

In sum, there are approximately a total of 2,000 MDS/MMDS/LMDS stations
currently licensed. Of the approximate total of 2,000 stations, we
estimate that there are 1,595 MDS/MMDS/LMDS providers that are small
businesses as deemed by the SBA and the Commission's auction rules.

**Satellite Master Antenna Television (\"SMATV\") Systems.** The SBA
definition of small entities for cable and other program distribution
services includes SMATV services and, thus, small entities are defined
as all such companies generating \$12.5 million or less in annual
receipts.[^296] Industry sources estimate that approximately 5,200 SMATV
operators were providing service as of December 1995.[^297] Other
estimates indicate that SMATV operators serve approximately 1.5 million
residential subscribers as of July 2001.[^298] The best available
estimates indicate that the largest SMATV operators serve between 15,000
and 55,000 subscribers each. Most SMATV operators serve approximately
3,000-4,000 customers. Because these operators are not rate regulated,
they are not required to file financial data with the Commission.
Furthermore, we are not aware of any privately published financial
information regarding these operators. Based on the estimated number of
operators and the estimated number of units served by the largest ten
SMATVs, we believe that a substantial number of SMATV operators qualify
as small entities.

**Open Video Systems ("OVS").** Because OVS operators provide
subscription services,[^299] OVS falls within the SBA-recognized
definition of cable and other program distribution services.[^300] This
definition provides that a small entity is one with \$12.5 million or
less in annual receipts.[^301] The Commission has certified 25 OVS
operators with some now providing service. Affiliates of Residential
Communications Network, Inc. (\"RCN\") received approval to operate OVS
systems in New York City, Boston, Washington, D.C. and other areas. RCN
has sufficient revenues to assure us that they do not qualify as small
business entities. Little financial information is available for the
other entities authorized to provide OVS that are not yet operational.
Given that other entities have been authorized to provide OVS service
but have not yet begun to generate revenues, we conclude that at least
some of the OVS operators qualify as small entities.

**Daily newspapers.** The SBA defines a newspaper publisher with less
than 500 employees as a small business.[^302] According to the 1997
Economic Census, 8,620 of 8758 newspaper publishers had less than 500
employees.[^303] The data does not distinguish between newspaper
publishers that publish daily and those that publish less frequently,
and the latter are more likely to be small businesses than the former
because of the greater expense to publish daily. The newspaper/broadcast
cross-ownership rule applies only to daily newspapers. It is likely that
not all of the 8,620 small newspaper publishers are affected by the
current rule.

**D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements**

We anticipate that none of the proposals presented in the *Notice* will
result in an increase to the reporting and recordkeeping requirements of
broadcast stations, newspapers, or cable television stations. However,
one alternative available to the Commission in this *Notice* is
retention of the current rules.

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

The RFA requires an agency to describe any significant alternatives that
it has considered in reaching its proposed approach, which may include
the following four alternatives (among others): (1) the establishment of
differing compliance or reporting requirements or timetables that take
into account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use of
performance, rather than design, standards; and (4) an exemption from
coverage of the rule, or any part thereof, for small entities.[^304]

We are directed under law to consider alternatives, including
alternatives not explicitly listed above.[^305] This *Notice* invites
comment on a number of alternatives to retain, modify, or eliminate the
individual ownership rules. The Commission will also consider additional
significant alternatives developed in the record.

In this context, we highlight below certain aspects of this *Notice* in
which we have asked commenters to discuss alternative means of achieving
our goals. Parties' discussions of alternatives that are in their
submitted comments will be fully considered in our evaluation of whether
to retain, modify or eliminate our media ownership rules.

Our local ownership rules include the newspaper/broadcast
cross-ownership rule, the radio/TV cross-ownership rule, the local radio
ownership rule, and the local TV multiple ownership rule. These rules
are interrelated. Each is intended to foster competition and diversity
in the local media marketplace. One approach under consideration is to
consider these rules collectively and thus adopt a single rule that
would foster diversity, competition, and localism. An alternative option
is to retain the current regulatory scheme, in which we apply
individual, media-specific local ownership rules. We ask for comment on
how best to choose among these or other alternatives.

We also ask about alternative approaches to identifying and weighting
"voices" if the Commission adopts a new "voice" test. Should the
Commission develop a new "voice" test, according weights to different
outlet types, or considering factors such as audience reach, ownership
structure, percentage of programming or print content devoted to local
news, and/or consumer use patterns? Should the Commission consider an
alternative that would count, or not count, certain types of media
outlets as a "voice"?

In this *Notice*, the Commission explores the underpinnings of three
principles underlying the regulation of the broadcast industry, namely
diversity, competition and localism. These principles are of particular
import to small entities. Thus, we seek comment to promote on the
general advantages and disadvantages of relying on our current ownership
rules to promote the public interest versus developing a single local
ownership rule or conducting a case-by-case analysis.

In addition to seeking to foster the policy goals discussed above, the
Commission has historically used the ownership rules to foster ownership
by diverse groups, such as minorities, women and small businesses. In
the context of this comprehensive review of our ownership rules, we
invite comment on whether we should consider such diverse ownership as a
goal in this proceeding. If so, how should we accommodate or seek to
foster that goal? In addition, we invite comment as to our legal
authority to adopt measures to foster that goal.

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

None.

**CONCURRING STATEMENT OF COMMISSIONER MICHAEL J. COPPS**

*In the matter of 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,*

*MB Docket No. 02-277*

*Cross-Ownership of Broadcast Stations and Newspapers, MB Docket No.
01-235*

*Rules and Policies Concerning Multiple Ownership of Radio Broadcast
Stations in Local Markets,*

*MB Docket No. 01-317*

*Definition of Radio Markets, MB Docket No. 00-244*

Let me begin by saying that I don't know of any issue before the
Commission that is more fraught with serious consequences for the
American people than the media ownership rules. There is the potential
in the ultimate disposition of this issue to remake our entire media
landscape, for better or for worse. At stake is how radio and television
are going to look in the next generation and beyond. At stake are old
and honored values of localism, diversity, competition, and the
multiplicity of voices and choices that undergirds our American
democracy. At stake is equal opportunity writ large -- the opportunity
to hear and be heard; the opportunity to nourish the diversity that
makes this country great and which will determine its future; the
opportunity for jobs and careers in our media industries; and the
opportunity to make this country as open and diverse and creative as it
can possibly be.

The Nineties brought new rules permitting increased consolidation in the
broadcasting industry, on the premise that broadcasters needed more
flexibility in order to compete effectively. These rules paved the way
for tremendous consolidation in the industry -- going far beyond, I
think, what anyone expected at the time. These changes created
efficiencies that allowed some media companies to operate more
profitably and on a scale unimaginable just a few years ago. They may
even have kept some companies in business, allowing stations to remain
on the air when they otherwise might have gone dark. But they also raise
profound questions of public policy. How far should such combinations be
allowed to go? What is their impact on localism, diversity and the
availability of choices to consumers? Does consolidation always,
generally or only occasionally serve the interests of the citizenry? How
do we judge these things?

Answering these and many other questions requires more than just
personal impressions or philosophical ideas about government regulation
or deregulation. Among other things, it demands detailed information on
current realities in specific media markets, and far-ranging economic
and market structure surveys. It also compels a look at consumer
consumption habits. I commend Chairman Powell for putting together a
Media Ownership Task Force to study the many ramifications of this
issue. But I would emphasize that it's a lot to study, and doing it
right requires significant resources of labor and money and time. I hope
the Task Force will have the resources it needs to conduct studies that
must be both very broad and very deep. Then I hope we might even
consider, as a Commission, holding hearings here and around the country,
to speak with Americans and better gauge what the reality of particular
media markets is. I don't want to vote on final rules -- and I would be
reluctant to vote on final rules -- unless and until I feel comfortable
that we have the information and the analysis needed to inform our
votes. We need as many stakeholders as we can find to take part in this
proceeding. I want to hear more from industry, from labor, from
consumers, from academe, from artists and entertainers, from anybody who
has a stake in how this is resolved. And I think just about everyone, if
he or she stops to think about it, has an interest and a stake.

I also want to emphasize that commenters should not feel they have to
limit themselves to the questions posed in this item. The Commission
labors under no illusion that we have asked every possible question;
indeed, we may have overlooked some that cry out for response, so I urge
those who respond to look at every aspect of these issues that you deem
relevant to our decision-making process.

I will concur with this *Notice* both because it fulfills our statutory
mandate to review the ownership rules, and because it asks some
important questions that should help us to determine whether the public
interest continues to be served by these rules. However, though I would
have preferred to have this *Notice* be a truly clean slate for our
analysis, I have some concerns that the timing and tone of the *Notice*
may be seen as prejudging these very important issues. Indeed, some
analysts have already concluded that the ownership caps and limits are
history. Just yesterday, the Precursor Group issued a release predicting
that the result of our review in this proceeding will "likely permit the
convergence, vertical integration and consolidation of the media
sector," and that "\[o\]wnership caps and bars on cross ownership are
highly likely to be repealed . . ." At this stage of the process -- in
the absence of the hard information we need to make informed decisions
and in the absence of any finding that our rules no longer serve the
public interest -- I think such conclusions are, at the very least,
premature. They are also dangerous.

Our Media Ownership Working Group is engaged in a number of studies on a
variety of media issues related to or affected by the ownership rules.
These have not yet been completed. My preference was to move forward
with this review of our ownership rules only after those studies are
completed. That would have simplified life for our stakeholders and
probably saved folks the cost of filing more than one set of comments.
However, I believe the decision to link the comment periods for this
*Notice* and the studies mitigates the problem somewhat, and that it
will allow commenters to make use of the data that the studies produce
before they give us their final input.

Congress' mandated review of our media ownership rules insists that we
only eliminate such rules if doing so is in the "public interest." Some
still argue that "public interest" shouldn't count for much in our
ownership reviews, and that this is just about picking a number and
letting business build up to the limit. I think this Commission has
moved beyond any such narrow approach to the public interest and that
none of us embraces the concept that the public interest means anything
other than the traditional Commission public interest standard. Thus,
under the statute, even after *Fox Television*, we should change our
media ownership rules only if real evidence demonstrates that the public
interest continues to be served by doing so. And I believe that the
courts are still amenable to keeping most of our rules, ***if*** we
provide appropriate justification and evidence to support them. Some
observers act as though the court has decided to be rid of all our
rules. They have said nothing of the sort.

Because the stakes here are so incredibly high, it is far more important
that we get this done right than that we get it done quickly. I keep
coming back to the high stakes involved in what we are doing. Suppose
for a moment that the Commission decides to remove or significantly
change current limits on media ownership \-- and suppose our decision
turns out to be a mistake. How do we put the genie back in the bottle
then? No way.

Nevertheless, we are launched now on this fateful journey. Much hangs in
the balance. But if we approach these proceedings with an open mind,
with receptivity on all sides to hard facts and compelling evidence, and
if we reach out, really reach out, to stakeholders all across this land,
I believe the Commission can arrive at decisions that will serve the
public interest and build our own credibility in the process.

**SEPARATE STATEMENT OF COMMISSIONER KEVIN J. MARTIN**

**APPROVING IN PART, CONCURRING IN PART**

*Re: 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, MB Docket No. 02-277*

Today we begin the 2002 Biennial Review of our broadcast ownership
regulations. I support this Notice, and commend the Chairman for his
strong leadership in this area. With this action today, we begin the
most comprehensive review of our broadcast ownership regulations that I
believe the Commission has ever conducted. We will examine the goals our
rules are intended to achieve, the current marketplace in which they
operate, and -- pursuant to our statutory mandate -- the extent to which
each rule continues to be "necessary in the public interest as the
result of competition." We also consider whether a different regulatory
framework might better serve the Commission's policy goals in today's
marketplace. While this task will be challenging, I am hopeful that we
will end this process with a clear, reasoned and justified approach to
ownership restrictions that will withstand judicial scrutiny.

I think it is important to note that the media landscape has changed
dramatically since our ownership rules were adopted. These rules are,
frankly speaking, old. Our long-standing goals of competition,
diversity, and localism, however, do not lose their importance with age.
These goals remain critical. But the import of these goals does not
relieve us of our statutory obligation to review our rules. We therefore
embark on this biennial review to ensure that whatever ownership rules
we retain or adopt, they fulfill these goals in a manner that reflects
the current marketplace.

I write separately to express a few concerns. First, I am troubled by
the Notice's articulation of the legal standard inherent in section
202(h) of the Telecommunications Act of 1996 (the basis for this
biennial review). That provision instructs the Commission to review its
broadcast ownership rules every two years to determine whether they are
"necessary in the public interest as the result of competition," and to
"repeal or modify any regulation it determines to be no longer in the
public interest."[^306] This Notice "invite\[s\] comment" on the
standard the Commission should apply in determining whether to modify,
repeal, or retain our rules pursuant to this provision. Yet, the Notice
also notes that the "Commission" already articulated an interpretation
of this standard before the D.C. Circuit, arguing in its rehearing
petition in *Fox Television* that "necessary in the public interest" in
§202(h) means merely "useful" or "appropriate." As I have said
previously, I disagree with this interpretation. I believe interpreting
"necessary in the public interest" as meaning merely "in the public
interest" inappropriately reads the critical word "necessary" out of the
statute. Congress included the term, and I believe we must give it more
significance. "Necessary in the public interest" must mean more than
"useful" or "appropriate." I believe the term "necessary" should be read
in accordance with its plain meaning to mean something closer to
"essential." Accordingly, I concur in the Notice's discussion of the
legal standard of section 202(h).

I also would have preferred that this Notice provide more guidance to
industries and consumers regarding our direction. For instance, I
believe we could have provided more guidance on newspaper/broadcast
cross-ownership. Unlike every other one of our major broadcast ownership
regulations, the newspaper/broadcast cross-ownership rule has not been
modified since its adoption in 1970s. Today, newspapers are treated
differently from all other forms of business that disperse information
(including broadcast television stations, which generally are permitted
to combine in large markets). In short, only newspapers remain caught in
a 1970s atmosphere.

Almost seven years ago, the Commission expressed its belief that the
newspaper/broadcast cross-ownership rule needed to be reviewed, and
possibly revised, to reflect marketplace changes since the 1970s. The
Commission committed to "commence an appropriate proceeding to obtain a
fully informed record in this area and to complete that proceeding
expeditiously."[^307] The then-Chairman emphasized that:

> there is no reason to wait -- especially when there is reason to
> believe that . . . the newspaper/broadcast cross-ownership rule is
> right now impairing the future prospects of an important source of
> education and information: the newspaper industry.[^308]

Unfortunately, despite this rhetoric, the Commission followed that
decision not with a rulemaking, but merely with a Notice of Inquiry into
the waiver policy for newspaper/radio combinations. And the Commission
has never completed this proceeding.

In its 1998 biennial report, the Commission again concluded that the
newspaper/broadcast cross-ownership rule should be modified: "We
recognize that there may be situations in which the rule may not be
necessary to protect the public interest in diversity and
competition."[^309] Again the Commission promised to initiate a
rulemaking proceeding to begin this process.

For a third time in the 2000 biennial report, the Commission again
committed, this time:

> in the near future, \[to\] issue a notice of proposed rulemaking
> seeking comment on whether we need to modify the daily
> newspaper/broadcast cross-ownership rule in order to address
> contemporary market conditions.[^310]

Thanks to Chairman Powell's leadership, the current Commission finally
complied last September, issuing another Notice. We now have a full
record on the extent to which the newspaper/broadcast rule should be
retained, modified or eliminated, and we have had almost a year to
review the record. Regardless of what the Commission concludes is the
appropriate action to take, the affected parties deserve to be spared
further delay in knowing that answer. I believe we could have concluded
this proceeding by the end of the year.[^311]

In light of this history, I would have preferred we go further in
explaining our direction with regard to the newspaper/broadcast rule.
For instance, while there may be disagreement on what steps the
Commission should take in smaller markets, I believe there is less
disagreement regarding whether some change might be appropriate in the
largest markets. I would have preferred to tentatively conclude that
some change was warranted. We also could have provided some form of
interim relief, at least until this rulemaking is complete. For example,
we could have provided broadcast stations and newspapers the same
opportunity to combine that two television stations have in the largest
markets, as long as a significant number of independent voices remain in
the marketplace.

Accordingly, for the reasons discussed above, I approve in part and
concur in part on this Notice.

[^1]: 47 U.S.C. §§ 307, 308, 309(a), 310(d).

[^2]: Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
    (1996).

[^3]: By "broadcasters" we refer to UHF and VHF television and AM and FM
    radio licensees, and not to cable operators, Direct Broadcast
    Satellite ("DBS") operators, or satellite Digital Audio Radio
    Service operators.

[^4]: 47 C.F.R. § 73.3555(e). The national TV ownership rule prohibits
    any entity from controlling television stations the combined
    audience reach of which exceeds 35% of the television households in
    the United States.

[^5]: 47 C.F.R. § 73.3555(b). The local TV ownership rule allows the
    combination of two television stations in the same Designated Market
    Area ("DMA," as determined by Nielsen Media Research or any
    successor entity), provided: (1) the Grade B contours of the
    stations do not overlap; or (2) (a) at least one of the stations is
    not among the four highest-ranked stations in the market, and (b) at
    least eight independently owned and operating full power commercial
    and noncommercial television stations would remain in that market
    after the combination. For this rule, a "voice" includes only
    broadcast television stations in the market.

[^6]: 47 C.F.R. § 73.3555(c). The radio/TV cross-ownership rule
    generally allows common ownership of one or two TV stations and up
    to six radio stations in any market where at least twenty
    independent "voices" would remain post-combination; two TV stations
    and up to four radio stations in a market where at least ten
    independent "voices" would remain post-combination; and one TV and
    one radio station notwithstanding the number of independent "voices"
    in the market. If permitted under the local radio ownership rules,
    where an entity may own two commercial TV stations and six
    commercial radio stations, it may own one commercial TV station and
    seven commercial radio stations. For this rule, a "voice" includes
    independently owned and operating same-market, commercial and
    noncommercial broadcast TV, radio stations, independently owned
    daily newspapers of a certain circulation, and cable systems
    providing generally available service to television households in a
    DMA, provided that all cable systems within the DMA are counted as a
    single voice.

[^7]: 47 C.F.R. § 73.658(g). The dual network rule permits a television
    broadcast station to affiliate with a network that maintains more
    than one broadcast network, unless the dual or multiple networks are
    created by a combination between ABC, CBS, Fox, or NBC.

[^8]: *Fox Television Stations, Inc. v. FCC*, 280 F.3d 1027 ("*Fox
    Television"*), *rehearing granted*, 293 F.3d 537 (D.C. Cir. 2002)
    (*"Fox Television Re-Hearing"*), addressed the national TV ownership
    rule. *Sinclair Broadcast Group, Inc. v. FCC,* 284 F.3d 148 (D.C.
    Cir. 2002) (*"Sinclair"*), rehearing denied Aug. 13, 2002, addressed
    the local TV ownership rule.

[^9]: *Rules and Policies Concerning Multiple Ownership of Radio
    Broadcast Stations in Local Markets,* MM Docket No. 01-317,
    *Definition of Radio Markets*, 16 FCC Rcd 19861 (2001) (*"Local
    Radio Ownership NPRM"*). Comments and replies in this proceeding
    were due, respectively, on March 27, 2002 and May 8, 2002.

[^10]: *Cross-Ownership of Broadcast Stations and Newspapers*, MM Docket
    No. 01-235, *Newspaper/Radio Cross-Ownership Waiver Policy*, MM
    Docket No. 96-197, Order and Notice of Proposed Rule Making, 16 FCC
    Rcd 17283 (2001) (*"Newspaper/Broadcast Cross-Ownership NPRM"*).
    Comments and replies in this proceeding were due, respectively, on
    December 3, 2001 and February 15, 2002.

[^11]: 47 C.F.R. § 73.3555(a). The rule was amended to comply with
    Section 202(b) of the 1996 Act.

[^12]: 47 C.F.R. § 73.3555(d).

[^13]: We do not contemplate a change in the broadcast attribution
    rules, except to the extent that the single majority shareholder
    exemption is under consideration in the cable proceeding.
    *Implementation of Section 11 of the Cable Television Consumer
    Protection and Competition Act of 1992; Implementation of Cable Act
    Reform Provisions of the Telecommunications Act of 1996,* CS Docket
    No. 98-82, Further Notice of Proposed Rulemaking, 16 FCC Rcd 17,312
    (2001). We note in this regard that the attribution rules do not
    themselves prohibit or restrict ownership of interests in any
    entity, but rather determine what interests are cognizable under
    those ownership rules. Furthermore, the focus of the biennial review
    process is whether the ownership rules \"are necessary in the public
    interest as the result of competition.\" The media attribution
    limits are set at the level the Commission believes conveys
    influence over the affairs of the company in which the interest is
    held. This level is not related to any changes in competitive
    forces, and hence the limits are not reviewed on a biennial basis.

[^14]: 47 C.F.R. § 73.3555(d).

[^15]: 47 C.F.R. § 73.3555(b).

[^16]: 47 C.F.R. § 73.3555(c).

[^17]: 47 C.F.R. § 73.3555(a).

[^18]: 1996 Act, § 202(h). Section 11 of the Communications Act of 1934,
    as amended ("the 1934 Act"), provides for the biennial review of
    regulations that apply to the operations or activities of any
    provider of telecommunications services. Pursuant to section 11, the
    Commission \"shall determine whether any such regulation is no
    longer necessary in the public interest as a result of meaningful
    economic competition.\" Section 11 further requires that the
    Commission \"shall repeal or modify any regulation it determines to
    be no longer necessary in the public interest.\" 47 U.S.C. § 161.

[^19]: The 1996 Act repealed former § 613(b), which prohibited a common
    carrier from providing video programming directly to subscribers in
    its telephone service area.  *See* 1996 Act, § 302(b)(1). Section
    652 of the Act (47 U.S.C. § 572) now contains the prohibition of
    buyouts vis-a-vis cable systems and local exchange carriers.

[^20]: 1996 Act, § 202(f)(1).

[^21]: 1996 Act, §202(a), (b).

[^22]: 1996 Act, §202(e).

[^23]: 1996 Act, §202(c)(1)(A).

[^24]: 1996 Act, §202(c)(1)(B).

[^25]: *Fox Television*, 280 F.3d at 1033.

[^26]: *Amendment of Section 73.658(G) of the Commission's Rules -- The
    Dual Network Rule,* 16 FCC Rcd 11114, 11131 (2001) ¶ 37 ("*Dual
    Network Order*").

[^27]: *Elimination of Experimental Broadcast Ownership Restrictions*,
    16 FCC Rcd 7457 (2001).

[^28]: *1998 Biennial Regulatory Review -- Review of the Commission's
    Broadcast Ownership Rules and Other Rules Adopted Pursuant to
    Section 202 of the Telecommunications Act of 1996*, 15 FCC Rcd
    11058, 11099-109 (2000) ¶¶ 79-95 ("*1998 Biennial Report*");
    *Newspaper/Broadcast Cross-Ownership NPRM, supra* note 10.

[^29]: 47 C.F.R. § 73.3555(a); *1998 Biennial Report*, 15 FCC Rcd at
    11086-87, ¶ 50.

[^30]: 47 C.F.R. § 73.3555(e); *1998 Biennial Report*, 15 FCC Rcd at
    11072, 11078, ¶¶ 25, 35.

[^31]: 47 C.F.R. § 76.501(a); *1998 Biennial Report*, 15 FCC Rcd at
    11114, ¶ 102. As discussed below, the cable/broadcast
    cross-ownership rule has been vacated by the Court of Appeals in
    *Fox Television*. The Commission will implement the court's order in
    a separate order.

[^32]: *See Review of the Commission's Regulations Governing Television
    Broadcasting*, *Television Satellite Stations Review of Policy and
    Rules*, 14 FCC Rcd 12903 (1999) (*"Local TV Ownership Report and
    Order"*), *clarified in* Memorandum Opinion and Second Order on
    Reconsideration, 16 FCC Rcd 1067 (2001) (*"Local TV Ownership
    Reconsideration Order"*), *on appeal, Sinclair, supra* note 8*.*

[^33]: *Biennial Regulatory Review 2000,* 16 FCC Rcd 1207 (2001).

[^34]: *Fox Television,* *supra* note 8.

[^35]: *Fox Television,* 280 F.3d at 1048, 1053.

[^36]: *Id.* at 1042.

[^37]: *Id* at 1043.

[^38]: *Id.* at 1043-45.

[^39]: *Id.*, 280 F.3d at 1042, 1048.

[^40]: *Fox Television,* 280 F.3d at 1043*, quoting* *Amendment of
    Section 73.3555, \[formerly Sections 73.35, 73.240, and 73.636\] of
    the Commission's Rules Relating to Multiple Ownership of AM, FM and
    Television Broadcast Stations*, 100 F.C.C.2d 17, 35 (1984) ¶ 53
    ("*1984 Multiple Ownership Order"*).

[^41]: *Fox Television,* 280 F.3d at 1048-49.

[^42]: *Id* at 1049.

[^43]: *Id.* at 1047.

[^44]: *Id.* at 1042.

[^45]: *Id.* at 1047.

[^46]: *Amendment of Part 76, Subpart J, Section 76.501 of the
    Commission's Rules and Regulations to Eliminate the Prohibition on
    Common Ownership of Cable Television Systems and National Television
    Networks,* 7 FCC Rcd 6156 (1992).

[^47]: *Fox Television*, 280 F.3d at 1053.

[^48]: *Id.* at 1050.

[^49]: *Fox Television Re-Hearing*, 293 F.3d at 540. The court also
    rejected the petitions for rehearing of intervenors National
    Affiliated Stations Alliance and National Association of
    Broadcasters, which argued that the court erred in failing to defer
    to the decision of Congress to set the national TV ownership rule at
    35% and in vacating rather than remanding the cable/broadcast
    cross-ownership rule. *Id.* at 540-41.

[^50]: *See supra* note 8.

[^51]: In *Sinclair*, the court reviewed challenges to the local TV
    ownership rule as well as to grandfathering provisions related to
    local marketing agreements.

[^52]: 47 C.F.R. § 73.3555(b)(2)(i).

[^53]: *Id.* at § 73.3555(b)(2)(ii).

[^54]: *Sinclair,* 284 F.3d at 160.

[^55]: *Id.* at 167-69 ("the only question is whether the *Local TV
    Ownership Report and Order* is rationally connected to its goals of
    ensuring a diversity of voices and adequate competition in
    television broadcasting").

[^56]: 47 C.F.R. § 73.3555(c)(iii, iv).

[^57]: *Sinclair,* 284 F.3d at 162.

[^58]: Commission Petition for Rehearing or Rehearing En Banc at 4-13,
    filed Apr. 19, 2002, in *Fox Television*, *supra* note 8.

[^59]: *Cf.* *Fox Television*, 280 F.3d at 1048.

[^60]: *Fox Television,* 280 F.3d at 1048; *Sinclair,* 284 F.3d at 159.

[^61]: *Fox Television*, 280 F.3d at 1041-44; *Sinclair*, 284 F.3d at
    163 (pointing to an "evidentiary gap" in the Commission's
    reasoning).

[^62]: In the *1998 Biennial Report*, the Commission did apply the
    *O'Brien* or intermediate scrutiny test to the newspaper/broadcast
    cross-ownership rule, 15 FCC Rcd at 11121, ¶¶ 116-18 (applying
    *United States v. O'Brien,* 391 U.S. 367 (1968) ("*O'Brien*")).
    Also, in considering the application of the First Amendment to the
    newspaper/broadcast cross-ownership rule, in the
    *Newspaper/Broadcast NPRM*, supra note 10, which was released before
    the *Fox Television* and *Sinclair* cases, we asked about the
    significance of *Time Warner Entertainment Co. v. FCC*, 240 F.3d
    1126 (D.C. Cir.), *cert. denied*, 122 S. Ct. 644 (2001) ("*Time
    Warner II*"), in which intermediate scrutiny was applied to cable
    regulations. *Newspaper/Radio Cross-Ownership NPRM,* 16 FCC Rcd at
    17296-97, ¶¶ 31-33.

[^63]: *Fox Television,* 280 F.3d at 1045-47.

[^64]: *Sinclair*, 284 F.2d at 166-69.

[^65]: *Id.* at 167-68; *Fox Television,* 280 F.3d at 1045-46.

[^66]: *Sinclair,* 284 F.3d at 168 (citing *FCC v. National Citizens
    Committee for Broadcasting,* 436 U.S. 775, 795-97 (1978)("*NCCB*")).

[^67]: *See* supra note 62.

[^68]: *Time Warner Entertainment Co. v. United States*, 211 F.3d 1313,
    1316-22 (D.C. Cir. 2000) (*"Time Warner I"*), *cert. denied*, 121 S.
    Ct. 1167 (2001); *Satellite Broadcasting & Commun. Ass'n v. FCC*,
    275 F.3d 337, 346, 355 (4^th^ Cir. 2001), *cert. denied*, 122 S. Ct.
    2588 (2002).

[^69]: *Turner Broadcasting System v. FCC*, 520 U.S. 180, 185-86 (1997)
    ("*Turner II*") (citing *O\'Brien,* 391 U.S. at 377-78).

[^70]: *Turner Broadcasting System, Inc. v. FCC,* 512 U.S. 622, 662
    (1994) ("*Turner I*") (quotation marks omitted)).

[^71]: *Id.* at 663.

[^72]: *Id*. (citing *O\'Brien*, 391 U.S., at 377); *Turner II*, 520
    U.S. at 190. On the other hand, the Commission may not burden cable
    operators' speech with "illimitable restrictions in the name of
    diversity." *Time Warner II*, 240 F.3d at 1136. In *Time Warner II*,
    the D.C. Circuit held that the Commission could not rely on its
    diversity goal alone to support the horizontal and vertical
    restraints at issue in that case because of a specific limitation on
    the Commission's statutory authority for those restraints. *Time
    Warner II,* 240 F.3d at 1135-1136.

[^73]: *See, e.g., NCCB*, 436 U.S. at 798-802 (rational-basis test
    applied to broadcast-newspaper rule); *Fox Television*, 280 F.3d at
    1045-46 (rational-basis test applied to television-cable
    cross-ownership ban).

[^74]: *Fox Television,* 480 F.3d at 1041-42.

[^75]: *U.S. Television Household Estimates*, Nielsen Media Research
    (Sept. 2002).

[^76]: A Class A television license is available to a low power
    television station licensee meeting the qualifications set forth in
    the Commission's rules in Part 73, Subpart J ("Class A Television
    Broadcast Stations"). A Class A station is subject to the same
    license terms and renewal standards as a full-power station, and is
    accorded primary status as long as it continues to meet the
    requirements for a qualifying low-power station.

[^77]: FCC Press Release, *Broadcast Station Totals as of June 30, 2002*
    (issued Aug. 26, 2002).

[^78]: BIA Financial Network Inc., MEDIA Access Pro data base (Mar.
    2002).

[^79]: *Annual Assessment of the Status of Competition in the Market for
    the Delivery of Video Programming*, 17 FCC Rcd 1244, 1254-55 (2002)
    ¶ 17 ("*Eighth Annual MVPD Competition Report*") ("Based on data
    from Paul Kagan Associates, homes passed as a percentage of TV
    households was estimated to be 97.1 percent as of June 2001. ...
    \[The National Rural Telecommunications Cooperative\] suggests that
    the number of homes passed as a percentage of TV households could be
    as low as 81 percent."), 1330 App. B, Table B-1 (Kagan data showing
    that as of June 2001, cable television was subscribed to by 64% of
    homes that had at least one television).

[^80]: *Eighth Annual MVPD Competition Report,* 17 FCC Rcd at 1330, App.
    B, Table B-1.

[^81]: National Cable Telecommun. Ass'n, *Cable Developments 2002*, at
    27-194.

[^82]: Sky Report, http://www.skyreport.com/dth_counts.htm (visited
    Sept. 10, 2002).

[^83]: *Eighth Annual MVPD Competition Report*, 17 FCC Rcd at 1338, App.
    C, Table C-1.

[^84]: FCC Press Release, *Broadcast Station Totals as of June 30, 2002*
    (Aug. 26, 2002).

[^85]: BIA Financial Network Inc., MEDIA Access Pro data base (May
    2002).

[^86]: XM Satellite Radio, *Second Quarter Report* ending June 30, 2002,
    shows XM with 136,718 subscribers. Sirius Satellite Radio, *Second
    Quarter Report* ending June 30, 2002, shows Sirius with 3,347
    subscribers.

[^87]: Newspaper Association of America, *Facts About Newspapers 2002*,
    at 14.

[^88]: *Id.* at 13.

[^89]: *Id.* at 14.

[^90]: *Id.* at 8.

[^91]: *Eighth Annual MVPD Competition Report*, 17 FCC Rcd at 1285-86, ¶
    89.

[^92]: *Id.* at 1288, ¶ 95.

[^93]: *Id.* 1288-89, ¶ 96.

[^94]: *Id.* 1290, ¶ 98.

[^95]: *NCCB*, 436 U.S. at 795-97; *Metro Broadcasting, Inc. v. FCC*,
    497 U.S. 547, 571 at n.16 (1990), *overruled on other grounds,
    Adarand Constructors, Inc. v. Pena*, 515 U.S. 200 (1995);
    *Sinclair*, 284 F.3d at 160; *Fox Television*, 280 F.3d at 1042,
    1053.

[^96]: *Turner II,* 520 U.S. at 190 (quoting *Turner I,* 512 U.S. at
    662-63 ("governmental purpose of the highest order in ensuring
    public access to a multiplicity of information sources); *Turner I,*
    512 U.S. at 662 (this purpose is unrelated to the "suppression of
    free expression").

[^97]: *NCCB,* 436 U.S. at 797.

[^98]: *Sinclair,* 284 F.3d at 160.

[^99]: *Associated Press v. United States*, 326 U.S. 1, 20 (1945)
    ("*Associated Press*").

[^100]: *Amendment of Sections 73.35, 73.240, and 73.636 of the
    Commission's Rules Relating to Multiple Ownership of Standard, FM
    and Television Broadcast Stations*, 45 F.C.C. 1476, 1477 (1964) ¶ 3.

[^101]: *Local Radio Ownership NPRM*, 16 FCC Rcd at 19874, ¶ 30; *Report
    and Statement of Policy Re: Commission en banc* *Programming
    Inquiry* ("*1960 Programming Policy Statement*"), 44 F.C.C. 2303
    (1960).

[^102]: *1998 Biennial Regulatory Review -- Review of the Commission's
    Broadcast Ownership Rules and Other Rules Adopted Pursuant to
    Section 202 of the Telecommunications Act of 1996*, 13 FCC Rcd
    11276, 11278 (1998) ("*1998 Biennial NOI*") ¶ 6.

[^103]: *Review of the Commission's Regulations Governing Television
    Broadcasting* ("*TV Ownership FNPRM*"), 10 FCC Rcd 3524, 3549 (1995)
    ¶ 60.

[^104]: *1998 Biennial NOI*, 13 FCC Rcd at 11278, ¶ 6. For example, if
    many stations create their broadcast news by gathering their news
    from the same information source, there is outlet diversity, but no
    source diversity.

[^105]: *See, e.g.*, *Turner I*, 512 U.S. at 663 (\"\[I\]t has long been
    a basic tenet of national communications policy\" that \"the widest
    dissemination of information from diverse and antagonistic sources
    is essential to the welfare of the public,"; 47 U.S.C. § 257 (one of
    the \"policies and purposes\" of the Communications Act favors a
    \"diversity of media voices\"); *Fox Television*, 280 F.3d at 1042
    (In the context of broadcasting, "the public interest" has
    historically embraced diversity").

[^106]: *Turner Broadcasting System, Inc. v. FCC*, 512 U.S. 622, 663-64
    (1994) (internal quotation marks omitted) (quoting *United States v.
    Midwest Video Corp*., 406 U.S. 649, 668 n.27 (1972) (plurality
    opinion) (quoting *Associated Press, supra note* 99)).

[^107]: *See* Richard D. Brown, *Early American Origins of the
    Information Age* in Alfred D. Chandler, Jr., and James W. Cortada,
    Eds., [A Nation Transformed by Information: How Information Has
    Shaped the United States from Colonial Times to the
    Present]{.smallcaps} (Oxford Univ. Press, New York NY, 2000) at
    44-49 *passim* ("Because people widely believed that republican
    government required an informed citizenry, they scrambled to make
    sure that they, and often their neighbors, were properly
    informed.").

[^108]: *NCCB*, 436 U.S. at 795 (quoting *Associated Press*, *supra*
    note 99).

[^109]: *Sinclair*, 284 F.3d at 160 (Court upheld the Commission finding
    that "diversification of ownership would enhance the possibility of
    achieving greater diversity of viewpoint"); *see also Fox
    Television*, 280 F.3d at 1047 (not irrational to relate diversity of
    ownership to diversity of programming).

[^110]: *NCCB*, 436 U.S. at 796-97.

[^111]: *See, e.g., Review of the Prime Time Access Rules, Section
    73.658(K) of the Commission's Rules*, 11 FCC Rcd 546 (1995)
    (repealing the Prime Time Access Rule, which generally prohibited
    network-affiliated television stations in the top 50 television
    markets from broadcasting more than three hours of network programs
    during prime time).

[^112]: 47 U.S.C. § 611 (carriage of public, educational and
    governmental programming), 47 U.S.C. § 612 (cable systems requires
    to lease channels to unaffiliated entities); 47 U.S.C. § 335 (DBS
    operators required to reserve four percent of their channel capacity
    exclusively for use by qualified programmers for noncommercial
    programming of an educational or informational nature); 47 U.S.C. §
    533(f)(1)(B) (Commission required to "prescribe rules and
    regulations establishing reasonable limits on the number of channels
    on a cable system that can be occupied by a video programmer in
    which a cable operator has an attributable interest").

[^113]: See, *e.g.,* *1960 Programming Policy Statement*, 44 F.C.C. at
    2314:

    > "\[t\]he 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."

    *The 1960 Programming Policy Statement* has not formally been
    superseded, but in recent decades the Commission has relied more on
    competition and marketplace mechanisms to determine the mix of
    programs available to viewers. See, *e.g.,* Erwin G. Krasnow & Jack
    N. Goodman, *The "Public Interest" Standard: The Search for the Holy
    Grail*, 50 [Fed. Comm. L.J.]{.smallcaps} 605, 615-19 (describing the
    history of the *1960 Programming Policy Statement* and more recent
    decisions).

[^114]: *See, e.g.,* *FCC v. WNCN Listeners Guild*, 540 U.S. 582 (1981)
    (upholding, against challenges under the 1934 Act and the First
    Amendment, Commission policy that public interest is best served by
    promoting program diversity through market forces, and not by
    considering station formats in ruling on applications for license
    renewal or transfer); *Committee to Save WEAM v. FCC*, 808 F.2d 113,
    117-18 (D.C. Cir. 1986) (finding that the Commission had reasonably
    articulated its policy).

[^115]: *Dual Network Order*, 16 FCC Rcd at 11131, ¶ 37 (footnote
    omitted).

[^116]: *TV Ownership FNPRM*, 10 FCC Rcd at 3549-50, ¶ 61 ("The indirect
    technique for encouraging viewpoint diversity (*i.e*., structural
    rules) fosters two other kinds of diversity that the Commission has
    regarded as integral to the ultimate goal of providing the public
    with a variety of viewpoints. First, certain of the Commission\'s
    structural rules, such as the ownership limits, promote 'outlet'
    diversity, which refers to a variety of delivery services (*e.g*.,
    broadcast stations) that select and present programming directly to
    the public. Second, other Commission behavioral rules, such as the
    Prime Time Access Rule and the Financial Interest and Syndication
    Rule, were designed to foster 'source' diversity, which refers to
    ensuring a variety of program producers and owners. The Commission
    has felt that without a diversity of outlets, there would be no real
    viewpoint diversity \-- if all programming passed through the same
    filter, the material and views presented to the public would not be
    diverse. Similarly, the Commission has felt that without diversity
    of sources, the variety of views would necessarily be
    circumscribed.") *followed in* *Amendment of Section 73.658(G) of
    the Commission's Rules -- The Dual Network Rule* ("*Dual Network
    NPRM"*), 15 FCC Rcd 11253, 11265 n.37 (2000) ("Both outlet and
    source diversity provide the means for promoting viewpoint
    diversity. Outlet diversity refers to a variety of delivery services
    (*e.g*., broadcast stations) that select and present programming
    directly to the public; source diversity refers to a variety of
    program producers and owners. Both outlet and source diversity are
    integral to the ultimate goal of providing the public with a variety
    of viewpoints . . .") (internal quotation marks and citations
    omitted) and *Local TV* *Ownership Report and Order*, 14 FCC Rcd at
    12910-11 n.29 (1999) ¶ 17.

[^117]: *Rules and Policies Concerning Multiple Ownership of Radio
    Broadcast Stations in Local Markets*, 16 FCC Rcd 19861, 19877 (2001)
    ¶ 37, quoting *Amendment of Sections 73.34, 73.240 and 73.636 of the
    Commission's Rules Relating to Multiple Ownership of Standard, FM,
    and Television Broadcast Stations,* 50 F.C.C. 2d 1046, 1074 (1975)
    at ¶ 99.

[^118]: *See, e.g.*, *NCCB*, 436 U.S. at 796-97 (holding that the
    Commission, in limiting the common ownership of newspapers and
    broadcast stations in the same community, "acted rationally in
    finding that diversification of ownership would enhance the
    possibility of achieving greater diversity of viewpoints").

[^119]: *See Fox Television,* 280 F.3d at 1041-44; *Sinclair,* 284 F.3d
    at 163.

[^120]: 47 U.S.C. § 312(a)(7) (authorizing the Commission to revoke a
    broadcaster\'s license for failure to provide legally qualified
    candidates for federal office access to its facilities); 47 U.S.C. §
    315(a) (requiring a licensee to provide equal opportunities to all
    legally qualified candidates for a political office to use its
    facilities).

[^121]: *See, e.g.*, 47 U.S.C. § 531 (local franchise authority may
    require cable company to provide one or more channels for PEG use).

[^122]: When the Commission awarded broadcasting licenses by comparative
    hearing, it awarded applicants a "minority enhancement credit" for
    their minority origin. *See, e.g.*, *Rivertown Commun. Co.*, 8 FCC
    Rcd 7928, 7938 (ALJ 1993) ¶ 110. In 1984, when the Commission
    established a 12 TV station limit, it also established a minority
    \"bubble,\" which increased the limit to 14 for minorities. Persons
    acquiring cognizable interests in minority owned and controlled
    broadcast stations were also entitled to this higher limit, and the
    aggregate reach of TV stations was raised to 30% of the national
    audience, provided that at least 5% of that reach was contributed by
    minority controlled stations. *Amendment of Section 73.3555,
    \[formerly Sections 73.35, 73.240, and 73.636\] of the Commission's
    Rules Relating to Multiple Ownership of AM, FM and Television
    Broadcast Stations*, 100 F.C.C.2d 74, 94-95, 97-98 (1985) ¶¶ 45, 53
    ("*1985 Multiple Ownership Reconsideration Order*"). Also, the
    Commission has given tax certificates, which are a preferential tax
    treatment available upon the sale of broadcast stations and cable
    systems to minorities. *See, e.g.*, Office of the Chairman, *Studies
    Indicate Need to Promote Wireless & Broadcast License Ownership by
    Small, Women- and Minority-Owned Businesses,* Press Release, Dec.
    12, 2000, available at 2000 WL 1808326 (F.C.C.). Finally, the
    Commission has applied a "distress sale policy," permitting a
    licensee whose license has been designated for revocation hearing,
    or whose renewal application has been designated for hearing on
    basic qualifications issues, to assign its license prior to
    commencement of the hearing to a minority controlled entity. *Martin
    W. Hoffman,* 15 FCC Rcd 22086, 22087 (2000) ¶3.

[^123]: *See Adarand Constructors Inc. v. Pena*, 515 U.S. 200 (1995);
    *MD/DC/DE Broadcasters Ass'n v. FCC*, 236 F.3d 13, *rehearing
    denied*, 253 F.3d 732 (D.C. Cir. 2001), *cert. denied*, 122 S. Ct.
    920 (2002); *Lutheran Church-Missouri Synod v. FCC*, 141 F.3d 344,
    *rehearing denied*, 154 F.3d 487, *rehearing en banc denied*, 154
    F.3d 494 (D.C. Cir. 1998).

[^124]: *See* F. M. Scherer and David Ross, *[Industrial Market
    Structure and Economic Performance]{.smallcaps}*, (3d ed.) at 19-28
    (Houghton Mifflin Co., Boston MA, 1990).

[^125]: *Compare Revision of Radio Rules and Policies,* MM Docket No.
    91-140, Report and Order, 7 FCC Rcd 2755, 2758 (1992) ¶ 5 *with*
    Commission Press Release,
    http://www.fcc.gov/Bureaus/Mas­sMedia/News_Releases/2001/
    nrmm0112.txt, visited July 31, 2002.

[^126]: Nielsen Media Research reports that the broadcast television
    networks' share of the national audience slid to 50.1% in May 2002
    from 85% in 1981, while cable networks' share has increased to
    46.0%. Nielsen's numbers for May 2002 are reported in Allison
    Romano, *Nibbling Away at Broadcast*, [Broadcasting &
    Cable]{.smallcaps} (June 3, 2002) at 11. The figure for 1981 is from
    Nielsen Media Research, *Primetime Network Rating and Shares* (Apr.
    17, 2001).

[^127]: *1984 Multiple Ownership Order,* 100 F.C.C. at 38, ¶ 64.

[^128]: *Local Radio Ownership NPRM,* 16 FCC Rcd at 19878, ¶ 40.

[^129]: *Hillco Commun., Inc.,* MB Docket No. 02-236, Hearing
    Designation Order FCC 02-236 at ¶ 13 (rel. Sept. 5, 2002), available
    at 2002 WL 2030952; *Local Radio Ownership NPRM,* 16 FCC Rcd at
    19865-66, ¶ 9.

[^130]: UCLA Center for Communication Policy, *Surveying the Digital
    Future*, [The UCLA Internet Report]{.smallcaps} 2001 at 32,
    available at http://www.ccp.ucla.edu/pages/internet-paper.asp
    (visited on Sept. 11, 2002).

[^131]: *Amendment of Section 73.3555 of the Commission\'s Rules, the
    Broadcast Multiple Ownership Rules*, 4 FCC Rcd 1723, 1727, 1732 &
    n.42 (1989) ("commercial radio stations have begun to face
    significant competition from local cable television systems which
    sell advertising on an 'interconnected' basis under which the same
    ad would appear on numerous local cable systems"; "\[t\]he
    'products' involved in competition analysis of broadcast media are
    the listening or viewing audiences, which are in effect sold by
    radio and television stations to advertisers. . . . The relevant
    product market is thus measured by the substitutability of different
    media (*i.e*., radio, . . .) for the purposes of purchasing
    advertising."); *1984 Multiple Ownership Order*, 100 F.C.C.2d at
    39-40 ¶¶ 66-69 ("While we question whether the product market should
    exclude all other advertising media . . . , for purposes of
    analyzing the effects of eliminating the Seven Station Rule we will
    . . . treat the TV and radio advertising markets as separate product
    markets.").

[^132]: Nielsen Media Research reports that the broadcast television
    networks' share of the national audience slid to 50.1% in May 2002
    from 85% in 1981, while cable networks' share has increased to 46.0%
    Nielsen's numbers for May 2002 are reported in Allison Romano,
    Nibbling Away at Broadcast, Broadcasting & Cable (June 3, 2002) at
    11. The figure for 1981 is from Nielsen Media Research, *Primetime
    Network Rating and Shares* (Apr. 17, 2001).

[^133]: Universal McCann, *Estimated U.S. Annual Advertising Volume
    1980-2001*.

[^134]: David S. Evans and Richard Schmalensee, *Some Economic Aspects
    of Antitrust Analysis in Dynamically Competitive Industries*,
    National Bureau of Economic Research (May 2001), available at
    <http://papers.nber/org/papers/w8268.pdf> (visited July 10, 2002).

[^135]: "It shall be the policy of the United States to encourage the
    provision of new technologies and services to the public." 47 U.S.C.
    § 157. The preamble to the Telecommunications Act of 1996 states "AN
    ACT To promote competition and reduce regulation in order to secure
    lower prices and higher quality services for American
    telecommunications consumers and encourage the rapid deployment of
    new telecommunications technologies."

[^136]: 47 U.S.C. § 307(b).

[^137]: Pub. L. 102-385, §§ 2(a) (10), Oct. 5, 1992, 106 Stat. 1460.

[^138]: *See, e.g.*, [Annual Report of the Federal Radio Commission to
    the Congress of the United States for the Year Ended June 30,
    1927]{.smallcaps}, at 8-9 ("the commission found it possible to
    reassign the stations to frequencies which would . . . serve as a
    basis for the development of good broadcasting to all sections of
    the country . . . ."; "New York City and Chicago stations were not
    allowed to dominate the situation"; [Second Annual Report of the
    Federal Radio Commission to the Congress of the United States for
    the Year Ended June 30, 1928]{.smallcaps}, at 9-14 *passim*
    (describing preliminary enforcement of the Davis Amendment, ch. 263,
    § 5, 45 Stat. 373 (1928), repealed, Act of June 5, 1936, ch. 511, §
    1, 49 Stat. 1475, which, as amended, survives today in the form of
    47 U.S.C. § 307(b)).

[^139]: *Revision of Programming and Commercialization Policies,
    Ascertainment Requirements, and Program Log Requirements for
    Commercial Television Stations*, 98 F.C.C.2d 1075, 1091-92 (1984) ¶
    32, *reconsideration denied*, 104 F.C.C.2d 357, *affirmed in part
    and reversed in part on other grounds*, *Action for Children's
    Television v. FCC*, 821 F.2d 741 (D.C. Cir. 1987); *Deregulation of
    Radio*, 84 F.C.C.2d 968, 982 (1981) ¶ 34 , *reconsideration denied
    in part*, 87 F.C.C.2d 797 (1981), *affirmed in part and remanded in
    part on other grounds*, *Office of Communication of the United
    Church of Christ v. FCC*, 707 F.2d 1413 (D.C. Cir. 1983); *Amendment
    of Section 3.606 of the Commission's Rules and Regulations*,
    *Amendment of the Commission's Rules, Regulations and Engineering
    Standards Concerning the Television Broadcast Service*, *Utilization
    of Frequencies in the Band 470 to 890 Mcs. For Television
    Broadcasting*, 41 F.C.C. 148, 172 (1952) ¶ 79.

[^140]: *Fox Television*, 280 F.3d at 1036.

[^141]: Cable operators must carry local channels; some cable operators
    have developed regional news and public affairs programming. For
    example, Comcast has stated that it runs "Comcast Local Edition," a
    five-minute program delivered every half-hour on its Washington,
    D.C., area cable system that includes interviews with local
    government officials and discussions of local and regional issues,
    among other things; and local franchise authorities often require
    that cable operators carry locally originated programming on PEG
    channels. *Applications for Consent to the Transfer of Control of
    Licenses, Comcast Corp. and AT&T Corp., Transferor, to AT&T Comcast
    Corp., Transferee*, MB Docket No. 02-70, Applications and Public
    Interest Statement ("*AT&T Comcast Public Interest Statement*") at
    43-44 (filed Feb. 28, 2002).

[^142]: 47 C.F.R. § 73.3555(b); *Local TV Ownership Report and Order,*
    14 FCC Rcd at 12907-08, ¶ 8.

[^143]: *Local TV Ownership Reconsideration Order*, 16 FCC Rcd at
    1072-73, ¶¶ 16-18.

[^144]: *Amendment of Sections 73.35, 73.240, and 73.636 of the
    Commission's Rules Relating to Multiple Ownership of Standard, FM
    and Television Broadcast Stations,* 45 F.C.C. 1476 (1964).

[^145]: *Genessee Radio Corp.,* 5 F.C.C. 183 (1939).

[^146]: 1996 Act, § 202(c)(2).

[^147]: *Local TV Ownership Report and Order,* 14 FCC Rcd at 12930-31,
    ¶¶ 57-58.

[^148]: *Id.* at 12903, ¶ 1.

[^149]: *See Local TV Ownership Reconsideration Order, supra* note 32*.*

[^150]: *Sinclair,* 284 F.3d at 160. *See* Section V for a more detailed
    discussion of *Sinclair*.

[^151]: *Id.* at 162.

[^152]: *Local TV Ownership Report and Order*, 14 FCC Rcd at 12910-11, ¶
    15.

[^153]: *Id.* at 12933, ¶ 66.

[^154]: *Id.*

[^155]: *See* Comments of News Corporation Limited and Fox Television
    Holdings, Inc., at 18 (citing *1998 Biennial Report,* 15 FCC Rcd at
    11149 (Separate Statement of Comm'r Powell) ("Local news programs
    rarely editorialize, or pick political candidates, or take stands on
    major issues . . . .")); Doug Halonen, *TV Editorials Merit
    Endangered Status,* [Electronic Media]{.smallcaps}, June 8, 1998, at
    3 (noting that "\[general\] managers feared they (editorials) could
    offend viewers, and that in this clicker world, they'll be gone").
    *See also* Comments of Media General, Inc., at 31-34 (asserting that
    commonly-owned broadcast stations, even in the same market, may take
    different editorial stances to maximize the stations' overall
    audience share), MM Docket Nos. 01-235 and 96-197, filed Dec. 3,
    2001.

[^156]: *See, e.g.,* *FCC v. WNCN Listeners Guild*, 540 U.S. 582 (1981)
    (upholding, against challenges under the 1934 Act and the First
    Amendment, Commission policy that public interest is best served by
    promoting program diversity through market forces, and not by
    considering station formats in ruling on applications for license
    renewal or transfer); *Dual Network Order,* 16 FCC Rcd at 11131, ¶
    37.

[^157]: *1984 Multiple Ownership* Order, 100 F.C.C.2d at 34, ¶ 52.

[^158]: Testimony of Mel Karmazin, president and chief operating
    officer, Viacom Inc., Before the Senate Committee on Commerce,
    Science and Transportation (July 17, 2001), 2001 WL 808306 at 7
    (F.D.C.H.) (*"Karmazin Testimony"*) ("Our stations' news directors
    have complete freedom locally. This is a fundamental CBS policy. And
    it is good business.").

[^159]: *TV Ownership FNPRM*, 10 FCC Rcd at 3550-51, ¶¶ 62-63 ("While
    this model may, indeed, promote diversity of entertainment formats
    and programs, we question whether it would act similarly with regard
    to news and public affairs programming.") The argument that a
    monopoly broadcaster might deliver more diversity than broadcasters
    in a competitive market originates with Peter Steiner, *Program
    Patterns and Preferences and the Workability of Competition in Radio
    Broadcasting*, 66(2) [Q.J. Econ. 194 (]{.smallcaps}1952). Steiner's
    result does not hold under other specifications. He assumes that
    viewers prefer only one type of programming. Allowing viewers to
    have lesser preferred substitutes leads to a different result.
    Competition maximizes diversity and welfare as long as channel space
    is unlimited. *See* Jack Beebe, *Institutional Structure and Program
    Choices in Television Markets*, 91(1) [Q.J. Econ. 15
    (1977).]{.smallcaps} More recent work suggests that incorporating
    advertising may also change Steiner's outcome. *See* Simon Anderson
    & Steve Coate, *Market Provision of Public Goods: The Case of
    Broadcasting*, 2001 Working Paper, Univ. of Virginia and Cornell
    Univ.

[^160]: *TV Ownership FNPRM*, 10 FCC Rcd at 3550-51, ¶ 63.

[^161]: Product markets are identified through examining the extent of
    substitutability among various products. A standard method for
    defining the boundaries of the product market a particular firm
    operates in is to ask: if a hypothetical monopolist raised the price
    of its product, to what degree would consumers continue to purchase
    that product or turn to products of other firms? If consumers
    readily turn to other firms' products, then those products are
    substitutes for the first firm's products, and all are in the same
    product market*. See* *U.S. Dep\'t of Justice and FTC, 1992
    Horizontal Merger Guidelines*, § 1.11, 57 Fed. Reg. 41552 (dated
    Apr. 2, 1992, as revised, Apr. 8, 1997). In applying antitrust law,
    DOJ and FTC define a product market by postulating demand-side
    responses to a "small but significant and nontransitory" increase in
    price by a "hypothetical monopolist."

[^162]: See *TV Ownership FNPRM*, 10 FCC Rcd at 3541, ¶ 35. *See also*
    B. M. Owen and S. S. Wildman, [Video Economics]{.smallcaps} at 11-13
    (Harv. Univ. Press, Cambridge MA, 1992).

[^163]: In the *Local TV Ownership Report and Order,* the Commission
    concluded that the evidentiary record supported the general
    conclusion that there may be some intermedia substitutability in the
    markets served by broadcasters. The evidence, however, was
    insufficient to characterize generally the degree of the
    substitutability of different media. *See Local TV Ownership Report
    and Order,* 14 FCC Rcd at 12919-20, ¶ 33. In our competitive
    analysis of recent radio transactions, we have presumed that the
    relevant product market is radio advertising. However, we have asked
    whether we should continue focusing on the radio advertising market
    as a separate media market. *Local Radio Ownership NPRM,* 16 FCC Rcd
    at 19895, ¶ 86.

[^164]: The predominant use of the 2500-2690 MHZ band is by the Fixed
    Service for Multipoint Distribution Service ("MDS"), Multichannel
    Multipoint Distribution Service ("MMDS"), and Instructional
    Television Fixed Service. Traditionally, MMDS spectrum has been used
    to deliver multichannel video programming (known as wireless cable
    service) to residential customers. In 1998, however, the Commission
    released the Two-Way Order permitting MMDS licensees to construct
    digital two-way systems that could provide high-speed, high-capacity
    broadband service, including two-way Internet service via
    cellularized communication systems. *In Amendment of Parts 21 and 74
    to Enable Multipoint Distribution Service and Instructional
    Television Fixed Service Licensees to Engage in Fixed Two-Way
    Transmissions,* 13 FCC Rcd 19112 (1998), *recon.,* 14 FCC Rcd 12764
    (1999), *further recon.,* 15 FCC Rcd 14566 (2000).

[^165]: *TV Ownership FNPRM*, 10 FCC Rcd at 3538, ¶ 29.

[^166]: *1998 Biennial Report*, 15 FCC Rcd at 11112-13, ¶ 100.

[^167]: We ask whether examination of advertising competition is, or
    should be, relevant to our analysis of the ownership rules in
    Section IV of this *Notice*.

[^168]: AT&T and Comcast state in their license transfer applications
    that their combination will enable them to reach viewers in 8 of the
    top 10 DMAs and thereby become the first cable multiple system
    operator that can viably compete with broadcast and cable networks
    for national advertising dollars. *AT&T Comcast Public Interest
    Statement, supra* note 141, at 45-46.

[^169]: *TV Ownership FNPRM,* 10 FCC Rcd at 3536, ¶ 24.

[^170]: *Id*. at 3538, ¶ 29.

[^171]: *Eighth Annual MVPD Competition Report*, 17 FCC Rcd at 1271-97,
    ¶¶ 55-115. Local telephone companies may provide video programming
    services in their telephone service areas through radio
    communications, as a cable system, or by means of an open video
    system. In addition, telephone companies may provide transmission of
    video programming on a common carrier basis. Electric utilities
    possess characteristics, such as ownership of fiber optic networks
    and access to public rights-of-way, that could make them
    distributors of multichannel video programming.

[^172]: While competitive satellite alternatives to the incumbent
    wireline MVPDs are developing and attracting an increasing
    proportion of MVPD subscribers, most consumers have limited choices
    among video distributors. A relatively small percentage of consumers
    have a second wireline alternative, such as an OVS or overbuild
    cable system. Among the several wireless technologies used to
    provide video programming service, DBS is the only wireless
    technology currently available to a majority of subscribers
    nationwide. *Eighth Annual MVPD Competition Report,* 17 FCC Rcd at
    1298, ¶ 119.

[^173]: An LMA or a time brokerage agreement is a type of contract that
    generally involves the sale by a licensee of discrete blocks of time
    to a broker that then supplies the programming to fill that time and
    sells the commercial spot advertisements that support the
    programming. *Local TV Ownership Report and Order*, 14 FCC Rcd at
    12958, ¶ 126.

[^174]: *Karmazin Testimony, supra,* note 158, at 9.

[^175]: *1984 Multiple Ownership Order,* 100 F.C.C.2d at 32-33, ¶¶
    48-50.

[^176]: 47 C.F.R. § 73.3555(c). The radio/TV cross-ownership rule
    generally allows common ownership of one or two TV stations and up
    to six radio stations in any market where at least twenty
    independent "voices" would remain post-combination; two TV stations
    and up to four radio stations in a market where at least ten
    independent "voices" would remain post-combination; and one TV and
    one radio station notwithstanding the number of independent "voices"
    in the market. If permitted under the local radio ownership rules,
    where an entity may own two commercial TV stations and six
    commercial radio stations, it may own one commercial TV station and
    seven commercial radio stations. For this rule, a "voice" includes
    independently owned and operating same-market, commercial and
    noncommercial broadcast TV, radio stations, independently owned
    daily newspapers of a certain circulation, and cable systems
    providing generally available service to television households in a
    DMA, provided that all cable systems within the DMA are counted as a
    single voice. *Local TV Ownership Report and Order,* 14 FCC Rcd at
    12950-52, ¶ 111.

[^177]: *Amendment of Sections 73.35, 73.240 and 73.636 of the
    Commission's Rules Relating to Multiple Ownership of Standard, FM
    and Television Broadcast Stations,* 22 F.C.C.2d 306, 313 (1970) ¶
    25, *recon. granted in part*, 28 F.C.C.2d 662 (1971).

[^178]: The presumptive waiver policy originally applied in the top 25
    television markets.

[^179]: *Local TV Ownership Report and Order*, 14 FCC Rcd at 12948, ¶¶
    102-03.

[^180]: *1998 Biennial Report,* 15 FCC Rcd at 11073, ¶ 26.

[^181]: *Local TV Ownership Report and Order,* 14 FCC Rcd at 12953,
    ¶113.

[^182]: The rule also excludes non-English language daily newspapers --
    for example, *El Diario La Prensa* in New York City and *La Opinion*
    in Los Angeles -- notwithstanding that the rule counts
    Spanish-language or other non-English-language radio and television
    stations.

[^183]: *1984 Multiple Ownership Order,* 100 F.C.C.2d at 25, ¶ 25.

[^184]: *Amendment of Section 73.3555 of the Commission's Rules, the
    Broadcast Multiple Ownership Rules*, 4 FCC Rcd 1741 (1989).

[^185]: For a description of the two current voice tests, *see supra*
    Section V.

[^186]: *Eighth Annual MVPD Competition Report,* 17 FCC Rcd at 1254-55,
    ¶ 17 (between 80% and 97% of homes are passed by cable systems),
    1330 App. B, Table B-1 (subscription to cable service is 64%), 1338
    App. C, Table C-1 (DBS subscription is 16% and rising). Narrowband
    Internet access is now almost universally available, *see* *Inquiry
    Concerning the Deployment of Advanced Telecommunications Capability
    to All Americans in a Reasonable and Timely Fashion, and Possible
    Steps to Accelerate Such Deployment Pursuant to Section 706 of the
    Telecommunications Act of 1996*, 14 FCC Rcd 2398, 2432 (1999) ¶ 64.
    About 60% of American homes subscribe to Internet access. *Eighth
    Annual MVPD Competition Report,* 17 FCC Rcd at 1285-86, ¶ 89.
    Broadband Internet access is widely available and more than 10% of
    homes subscribe*. Inquiry Concerning High-Speed Access to the
    Internet Over Cable and Other Facilities, Internet Over Cable
    Declaratory Ruling*, *Appropriate Regulatory Treatment for Broadband
    Access to the Internet Over Cable Facilities*, 17 FCC Rcd 4798, 4803
    (2002) ¶ 9 & n.24, *appeal pending sub nom.* *Brand X Internet
    Services v. FCC*, 9th Cir. No. 02-70518 (and consolidated cases)
    (filed Mar. 22, 2002).

[^187]: *Local TV Ownership Report and Order,* 14 FCC Rcd at 12953, ¶
    113.

[^188]: *Id.* at 12954, ¶ 114.

[^189]: Pub. L. No. 106-113, 113 Stat. 1501, app. I at 1501A-523 and
    544; 17 U.S.C. § 122; 47 U.S.C. § 338. At present, EchoStar and
    DirecTV each provide local-into-local service to approximately 40 of
    210 DMAs. *See, e.g.*, Dish Network DirecTv Satellite TV,
    http://satellite-dish.virtualave.net/local-networks.htm (visited
    July 10, 2002).

[^190]: *See* New England Cable News, http://www.necn.com (visited July
    10, 2002).

[^191]: *See* NY1 News, http://www.ny1.com/Boroughs/bronx.html (visited
    July 10, 2002).

[^192]: *See* NWCN, http://www.nwcn.com, (visited July 10, 2002). *See
    generally* Non-Stop News, http://www.
    rtnda.org/resources/nonstopnews/index.html (visited July 10, 2002).

[^193]: *Local TV Ownership Report and Order,* 14 FCC Rcd at 12953, ¶
    114.

[^194]: *See* Bruce M. Owen, [The Internet Challenge to
    Television]{.smallcaps} at 8 ("Internet television requires that one
    pay close attention. There is nothing passive about it. Like a video
    game, highly interactive programs on Internet TV require as much
    focused attention as work or active sports.") (Harvard Univ. Press,
    Cambridge MA, 1999).

[^195]: For example, Comcast's broadband Internet access first page
    includes Associated Press news stories. *See* Comcast High-Speed
    Internet, http://www.comcast.net/comcast.html (visited Aug. 6,
    2002).

[^196]: 47 C.F.R. § 73.3555(e).

[^197]: 47 C.F.R. § 73.658(g).

[^198]: 1996 Act, § 202(h).

[^199]: 47 C.F.R. § 73.3555(e)(1). In the *1999 National Television
    Ownership Report and Order,* the Commission clarified that no market
    will be counted more than once when calculating the 35% cap. DMAs,
    rather than Arbitron's Areas of Dominant Influence, are used to
    define a station's market for the purpose of calculating national
    audience reach. *Broadcast Television National Ownership Rules,
    Review of the Commission's Regulations Governing Television
    Broadcasting, Television Satellite Stations Review of Policy and
    Rules,* 15 FCC Rcd 20743 (1999).

[^200]: 47 C.F.R. § 73.3555(e)(2). Section 73.3555(e)(2) explains that
    "national audience reach" is based on the number of television
    households in DMAs, and that UHF television stations are credited
    with reaching only 50% of the television households in the DMA.

[^201]: *Broadcast Services Other Than Standard Broadcast*, 6 Fed. Reg.
    2282, 2284-85 (May 6, 1941).

[^202]: *Rules Governing Broadcast Services Other Than Standard
    Broadcast*, 9 Fed. Reg. 5442 (May 23, 1944) (raising the ownership
    limit from three to five stations); *Amendment of Multiple Ownership
    Rules,* 43 F.C.C. 2797, 2801-02 (1954) ¶ 14 (raising the ownership
    limit from five to seven stations); *1984 Multiple Ownership Order,*
    100 F.C.C.2d at 18, ¶ 5 (establishing a six-year transitional period
    during which common ownership of up to twelve stations would be
    permitted).

[^203]: *See 1985 Multiple Ownership Reconsideration Order*, 100
    F.C.C.2d at 88-92, ¶¶ 34-41 ("The audience reach cap was defined as
    25% of the national audience, calculated as a percentage of all
    Arbitron ADI television households.").

[^204]: *See 1985 Multiple Ownership Reconsideration Order,* 100
    F.C.C.2d at 97 ¶¶ 50-52; *1984 Multiple Ownership Order,* 100
    F.C.C.2d at 21-23 & nn.8-10, 17, ¶¶ 13-17; *Amendment of Sections
    73.35, 73.240, and 73.636 of the Commission\'s Rules Relating to
    Multiple Ownership of AM, FM and Television Broadcast Stations,* 95
    F.C.C.2d 360, 361-62 & nn.7-9, 366 & nn.24-25 (1983) ¶¶ 3, 11.

[^205]: *Amendment of Multiple Ownership Rules,* 43 F.C.C. at 2801-02, ¶
    14.

[^206]: *1984 Multiple Ownership Order,* 100 F.C.C.2d at 19, ¶7.

[^207]: 1996 Act, § 202(c)(1).

[^208]: *1998 Biennial Report,* 15 FCC Rcd at 11072-75, ¶¶ 25-30.

[^209]: *Id.* at 11075, ¶ 30.

[^210]: *Id.* at 11073, ¶ 26 n.78.

[^211]: *Id.* at 11079-80, ¶ 38.

[^212]: *1984 Multiple Ownership Order*, 100 F.C.C.2d at 24-25, ¶ 24.

[^213]: *Id.* at 27, ¶¶ 31-32.

[^214]: *Id.* at 30-31, ¶ 43.

[^215]: *1985 Multiple Ownership Reconsideration Order*, 100 F.C.C.2d at
    76, ¶ 3.

[^216]: *Id.* at 81-82, ¶ 18 (footnote omitted) (citing *1984 Multiple
    Ownership Order*, 100 F.C.C.2d at 38, ¶ 62 ).

[^217]: *1998 Biennial Report,* 15 FCC Rcd at 11075, ¶ 30.

[^218]: *Id.* at 11073, ¶ 26 n.78. The arguments raised by the parties
    in support of retaining the rule were that the bargaining power of
    networks over their affiliates would increase, the number of
    viewpoints expressed nationally would be reduced, concentration in
    the national advertising market would increase, and the potential
    for monopsony power in the program production market would be
    enlarged.

[^219]: *Fox Television*, 280 F.3d at 1043.

[^220]: *Id.* at 1043-44.

[^221]: *See 1998 Biennial Report,* 15 FCC Rcd at 11,074-75, ¶ 30.

[^222]: *Id.*

[^223]: *Fox Television,* 280 F.3d at 1043.

[^224]: *TV Ownership FNPRM,* 10 FCC Rcd at 3544, ¶ 46.

[^225]: *See Review of the Prime Time Access Rule, Section 73.658 (k) of
    the Commission's Rules,* 11 FCC Rcd 546 (1995) (repealing the Prime
    Time Access Rule, which, in order to stimulate the production of
    programs by producers independent of networks, had generally
    prohibited network-affiliated television stations in the top 50
    television markets from broadcasting more than three hours of
    network programs during prime time); *Review of the Syndication and
    Financial Interest Rules, Sections 73.659 -- 73.663 of the
    Commission's Rules,* 10 FCC Rcd 12165 (1995).

[^226]: *See, e.g., Amendment of Sections 73.35, 73.240, and 73.636 of
    the Commission's Rules Relating to Multiple Ownership of AM, FM, and
    Television Broadcast Stations,* 95 F.C.C.2d 360, 386 (1983) ¶ 43
    ("In this regard, as to economic concentration the traditional
    Commission approach to national ownership requires that the relevant
    market be a national broadcast market for viewers and listeners (who
    are the products in an advertiser-supported system).").

[^227]: *See Dual Network Order*, 16 FCC Rcd at 11122-23, ¶ 20. A
    strategic group refers to a cluster of independent firms within an
    industry that pursue similar business strategies. For example, the
    major networks supply programming to their affiliated local stations
    that is intended to attract mass audiences and advertisers that want
    to reach such large, nationwide audiences. By contrast, the emerging
    networks target more specialized, niche audiences similar to cable
    television networks. The conceptual basis for a strategic group is
    developed in R. E. Caves and M. E. Porter, *From Entry Barriers to
    Mobility Barriers: Conjectural Decisions and Contrived Deterrence to
    New Competition*, 91 [Q.J. Econ.]{.smallcaps} 241 (May 1977). *See
    also* Michael E. Porter, [Competitive Strategy: Techniques for
    Analyzing Industries and Competition]{.smallcaps} at ch. 7 (The Free
    Press, New York NY, 1980). For additional references on the
    application of the strategic group concept, see F. M. Scherer and
    David Ross, [Industrial Market Structure and Economic Performance
    (]{.smallcaps}3^rd^ ed.) at 284-85 (Houghton Mifflin, Boston MA,
    1990). When properly applied, the concept of a strategic group
    ordinarily implies that only a relatively few firms will be included
    within its boundaries so that competitive rivalry will be
    oligopolistic in nature, although the number of firms actually
    populating the industry aggregated over all strategic groups may be
    quite numerous.

[^228]: *Dual Network NPRM,* 15 FCC Rcd at 11261-62, ¶¶ 22-24.

[^229]: Alvin Silk, Lisa Klein, & Ernst Berndt, *Intermedia
    Substitutability and Market Demand By National Advertisers*, [Review
    of Industrial Organization (]{.smallcaps}2002). The national
    advertising categories studied are: magazine, network TV, outdoor,
    spot radio, network radio, spot TV, newspapers and direct mail.

[^230]: *See, e.g., 1998 Biennial Report,* 15 FCC Rcd at 11074-75, ¶ 30.

[^231]: *Fox Television*, 280 F.3d at 1043.

[^232]: *Revision of Programming and Commercialization Policies,
    Ascertainment Requirements, and Program Log Requirements for
    Commercial Television Stations*, 98 F.C.C. 2d, 1075, 1091-1092
    (1984).

[^233]: *Karmazin Testimony, supra* note 158, at 8-9 (stating that
    WVCC-TV in Minneapolis preempted three hours of primetime network
    programming in May 2001 to run an emergency weather newscast; WBZ in
    Boston has preempted primetime network shows annually for the past
    20 years to air the Boston Children's Hospital Telethon, and
    preempted daytime programming to air "complete" coverage of
    Congressman Joe Moakley's funeral.).

[^234]: *1984 Multiple Ownership Order,* 100 F.C.C.2d at 31, ¶ 44. Also
    relevant is whether repeal of the rule would remove barriers to the
    flow of information. This might be true if group‑owned stations
    provide a different mix of programming that better matches consumer
    preferences. A study by Professor Parkman shows that local news
    programming of group‑owned stations have higher ratings, suggesting
    that group‑owned stations are more responsive to viewer demand for
    news. Parkman, *The Effects of Television Station Ownership on Local
    News Ratings*, 64 [Rev. Econ. & Stats.]{.smallcaps} 289 (1982).

[^235]: *1984 Multiple Ownership Order,* 100 F.C.C.2d at 31, ¶ 44.

[^236]: 47 C.F.R. § 73.658(g).

[^237]: *Dual Network Order*, 16 FCC Rcd at 11114, ¶ 2.

[^238]: *Id.*

[^239]: *1998 Biennial Report*, 15 FCC Rcd at 11095-96, ¶ 70.

[^240]: *Dual Network Order*, 16 FCC Rcd at 11115, ¶ 4.

[^241]: *Id.* at 11125, ¶ 25.

[^242]: *Id.* at 11124-25, ¶ 24.

[^243]: *Id.* at 11131, ¶ 37.

[^244]: *Id.* at 11131, ¶ 37.

[^245]: *Shareholders of CBS Corp. and Viacom, Inc., for Transfer of
    Control of CBS Corporation and Certain Subsidiaries, Licensees of
    KCBS-TV, Los Angeles, CA, et al*., 15 FCC Rcd 8230 (2000).

[^246]: In the *Dual Network* Order, we found that eliminating the
    emerging network portion of the rule would not adversely affect the
    provision of news and public affairs programming because emerging
    networks typically do not carry local news and public affairs
    programming. We noted statements of Viacom that emerging networks
    have not yet been in a position to absorb the full costs of
    developing news departments offering regularly scheduled news
    programming. Thus, we concluded, a combination of a top four network
    and an emerging network would not cause a reduction of diversity in
    news or public affairs programming. *Dual Network Order*, 16 FCC Rcd
    at 11131-32, ¶ 38.

[^247]: For example, if a network owned the maximum number of stations
    in any market, our local TV ownership rule would prohibit it from
    purchasing a station owned by another network in the market.

[^248]: *Dual Network Order*, 16 FCC Rcd at 11126, ¶ 28. The Commission
    did not address the arguments because the issue of eliminating the
    dual network rule in its entirety was not before the Commission at
    that point.

[^249]: *Id.* at 11126-27, ¶ 29 ("The questions presented in the
    *Notice* related solely to the emerging networks portion of the dual
    network rule; the question of eliminating the rule in its entirety
    was not squarely presented to this Commission for review. Therefore,
    we will not address that issue in this proceeding.") (footnote
    omitted).

[^250]: *Id.* at 11125-27, ¶¶ 26-29.

[^251]: *Id.* at 11124-25, ¶ 24.

[^252]: We ask whether examination of advertising competition is, or
    should be, relevant to our analysis of the ownership rules in
    Section IV of this *Notice*.

[^253]: *Dual Network Order,* 16 FCC Rcd*.*at 11128-29, ¶¶ 33-35.

[^254]: 47 C.F.R. §§ 1.415, 1.419.

[^255]: *See Electronic filing of Documents in Rulemaking Proceedings,*
    63 Fed. Reg. 24121 (1998).

[^256]: An *ex parte* presentation is any communication (spoken or
    written) directed to the merits or outcome of a proceeding made to a
    Commissioner, a Commissioner's assistant, or other decision-making
    staff member, that, if written, is not served on other parties to
    the proceeding or, if oral, is made without an opportunity for all
    parties to be present. 47 C.F.R. § 1.1201.

[^257]: *See Commission Emphasizes the Public's Responsibilities in
    Permit-But-Disclose Proceedings*, 15 FCC Rcd 19945 (2000).

[^258]: *See* 5 U.S.C. § 603. The RFA, 5 U.S.C. § 601 *et. seq.,* has
    been amended by the *Small Business Regulatory Enforcement Fairness
    Act of 1996*, Pub. L. No. 104-121, Title II, 110 Stat. 847 (1996).

[^259]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et seq.*,
    has been amended by the Small Business Regulatory Enforcement
    Fairness Act of 1996 ("SBREFA"), Pub. L. No. 104-121, 110 Stat. 847
    (1996).

[^260]: *See* 5 U.S.C. § 603(a).

[^261]: *See id.*

[^262]: 5 U.S.C. § 603(b)(3).

[^263]: *Id*. § 601(3) (incorporating by reference the definition of
    "small business concern" in 15 U.S.C. § 632). Pursuant to the RFA,
    the statutory definition of a small business applies, "unless an
    agency, after consultation with the Office of Advocacy of the SBA
    and after opportunity for public comment, establishes one or more
    definitions of the term where appropriate to the activities of the
    agency and publishes the definition(s) in the Federal Register."

[^264]: *Id.*

[^265]: 15 U.S.C. § 632.

[^266]: 13 C.F.R. § 121.201 (North American Industry Classification
    System ("NAICS") Code 513120).

[^267]: Economics and Statistics Administration, Bureau of Census, U.S.
    Department of Commerce, 1997 Economic Census, Subject Series --
    Source of Receipts, Information Section 51, App. B at B-7-8 (2000).

[^268]: *Id. See* Executive Office of the President, Office of
    Management and Budget, Standard Industrial Classification Manual
    (1987), at 283, which describes "Television Broadcasting Stations
    (SIC Code 4833)" as:

    > Establishments primarily engaged in broadcasting visual programs
    > by television to the public, except cable and other pay television
    > services. Included in this industry are commercial, religious,
    > educational and other television stations. Also included here are
    > establishments primarily engaged in television broadcasting and
    > which produce taped television program materials.

    NAICS Code 513120, by its terms, supercedes the former SIC Code
    4833, but incorporates the foregoing inclusive definitions of
    different types of television stations. *See* Economics and
    Statistics Administration, Bureau of Census, U.S. Department of
    Commerce, 1997 Economic Census, Subject Series -- Source of
    Receipts, Information Section 51, App. B at B-7-8 (2000).

[^269]: Economics and Statistics Administration, Bureau of Census, U.S.
    Department of Commerce, 1997 Economic Census, Subject Series --
    Source of Receipts, Information Sector 51, App. B at B-7 (2000).

[^270]: NAICS Code 512110 (Motion Picture and Video Production); NAICS
    Code 512120 (Motion Picture and Video Distribution); NAICS Code
    512191 (Teleproduction and Other Post-Production Services); NAICS
    Code 512199 (Other Motion Picture and Video Industries).

[^271]: NAICS Code 513112.

[^272]: *Id.*

[^273]: 13 C.F.R. § 121.201 (NAICS Code 513220). This NAICS Code applies
    to all services listed in this paragraph.

[^274]: Economics and Statistics Administration, Bureau of Census, U.S.
    Department of Commerce, 1997 Economic Census, Subject Series --
    Establishment and Firm Size, Information Sector 51, Table 4 at 50
    (2000). The amount of \$10 million was used to estimate the number
    of small business firms because the relevant Census categories
    stopped at \$9,999,999 and began at \$10,000,000. No category for
    \$12.5 million existed. Thus, the number is as accurate as it is
    possible to calculate with the available information.

[^275]: 47 C.F.R. § 76.901(e). The Commission developed this definition
    based on its determinations that a small cable system operator is
    one with annual revenues of \$100 million or less. *Sixth Report and
    Order and Eleventh Order on Reconsideration,* 10 FCC Rcd. 7393
    (1995).

[^276]: Paul Kagan Associates, Inc., [Cable TV Investor]{.smallcaps},
    Feb. 29, 1996 (based on figures for Dec. 30, 1995).

[^277]: 47 U.S.C. § 543(m)(2).

[^278]: 47 C.F.R. § 76.1403(b).

[^279]: Paul Kagan Associates, Inc., [Cable TV Investor]{.smallcaps},
    Feb. 29, 1996 (based on figures for Dec. 30, 1995).

[^280]: 13 C.F.R. § 121.201 (NAICS Code 513220).

[^281]: *Id.*

[^282]: *Id.*

[^283]: *Id.*

[^284]: *Annual Assessment of the Status of Competition in Markets for
    the Delivery of Video Programming*, 12 FCC Rcd 4358, 4385 (1996).

[^285]: *Id*. at 4385.

[^286]: *Amendment of Parts 21 and 74 of the Commission's Rules with
    Regard to Filing Procedures in the Multipoint Distribution Service
    and in the Instructional Television Fixed Service and Implementation
    of Section 309(j) of the Communications Act -- Competitive Bidding,*
    10 FCC Rcd 9589, 9593 (1995)(*"ITFS Order").*

[^287]: *See Local Multipoint Distribution Service,* 12 FCC Rcd 12545
    (1997)(*"LMDS Order")*.

[^288]: 47 C.F.R. § 21.961 (b)(1).

[^289]: *See ITFS Order,* 10 FCC Rcd at 9589.

[^290]: 13 C.F.R. § 121.201 (NAICS Code 513220).

[^291]: *Id.*

[^292]: SBREFA also applies to nonprofit organizations and governmental
    organizations such as cities, counties, towns, townships, villages,
    school districts, or special districts, with populations of less
    than 50,000. 5 U.S.C. § 601 (5).

[^293]: *See LMDS Order,* 12 FCC Rcd at 4403-4.

[^294]: *Id.*

[^295]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau (FCC) from A. Alvarez, Administrator, SBA
    (January 6, 1998).

[^296]: 13 C.F.R. § 121.201 (NAICS Code 513220).

[^297]: *See Third Annual Report,* 12 FCC Rcd at 4403-4.

[^298]: *See Annual Assessment of the Status of Competition in Markets
    for the Delivery of Video Programming,* 17 FCC Rcd 1244, 1281
    (2001).

[^299]: *See* 47 U.S.C. § 573.

[^300]: 13 C.F.R. § 121.201 (NAICS Code 513220).

[^301]: *Id.*

[^302]: NAIC Code 511110.

[^303]: http://www.census.gov/prod/ec97/97m5111a.pdf, visited 9/12/02.

[^304]: 5 U.S.C. § 603(c)(1)-(c)(4).

[^305]: 5 U.S.C. § 603(b).

[^306]: Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat.
    56 (196), §202(h).

[^307]: Capital Cities/ABC, Inc., *Memorandum Opinion & Order*, 11 FCC
    Rcd 5841, ¶87 (1996).

[^308]: *Id.* at Separate Statement of Chairman Reed E. Hundt.

[^309]: 1998 Biennial Regulatory Review ‑ Review of the Commission\'s
    Broadcast Ownership Rules and Other Rules Adopted Pursuant to
    Section 202 of the Telecommunications Act of 1996, MM Docket No.
    98‑35, *Report*, 15 FCC Rcd 11058, ¶95 (2000).

[^310]: 2000 Biennial Regulatory Review, CC Docket No. 00‑175, *Report*,
    16 FCC Rcd 1207, ¶32 (2001).

[^311]: Contrary to claims that acting on this one rule would be unfair
    to other relevant industries, the Commission long ago gave an
    advantage to other licensees by relaxing their local ownership
    restrictions. Since 1996, the TV/radio cross-ownership rule was
    relaxed, the TV duopoly rule was relaxed, the dual network ban was
    relaxed, the national radio cap was eliminated, the cable/network
    cross-ownership ban was eliminated, and the local radio caps were
    increased. As a result, the number of radio and television licenses
    one entity could own in a local market was significantly increased
    ... as long as the entity did not also own a newspaper. Indeed, it
    is the newspaper industry that has been prejudiced by the
    Commission's failure to act on the 1998 and 2000 Biennial Review
    Reports' conclusions that this rule should be reviewed and likely
    modified. Moreover, I do not believe that addressing the
    newspaper-broadcast rule separately would prejudice the outcome of
    this proceeding. Broadcasters and newspapers would still be
    considered "voices" in a local media marketplace, and the Commission
    could still regulate ownership of these entities as deemed
    appropriate in this rulemaking.