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 Federal  Communications  Commission  FCC  01-  262 
 Before  the 
 Federal  Communications  Commission 
 Washington,  D.  C.  20554 


 In  the  Matter  of 
 Cross-  Ownership  of  Broadcast  Stations  and 
 Newspapers 


 Newspaper/  Radio  Cross-  Ownership 
 Waiver  Policy 


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 MM  Docket  No.  01-  235 
 MM  Docket  No.  96-  197 


 ORDER  AND 
 NOTICE  OF  PROPOSED  RULE  MAKING 


 Adopted:  September  13,  2001  Released:  September  20,  2001 
 Comment  Date:  December  3,  2001 
 Reply  Comment  Date:  January  7,  2002 


 By  the  Commission:  Commissioner  Copps  issuing  a  statement. 


 INTRODUCTION 
 1.  The  Commission  committed  to  initiate  this  Notice  of  Proposed  Rulemaking  to  consider 
 revisions  to  its  newspaper/  broadcast  cross-  ownership  rule  in  the  June  2000  Biennial  Review  Report  on 
 broadcast  ownership  rules.  In  this  proceeding,  we  seek  comment  on  whether  and  to  what  extent  we  should 
 revise  our  cross-  ownership  rule  that  bars  common  ownership  of  a  broadcast  station  and  a  daily  newspaper 
 in  the  same  market.  The  rule  was  designed  to  promote  two  of  the  Commissions  longstanding  goals  in 
 broadcast  regulation    competition  and  diversity  of  information  sources.  The  Commission  first  adopted  the 
 rule  in  1975,  when  there  were  approximately  1,700  daily  newspapers,  7,500  radio  stations,  and  fewer  than 
 1,000  TV  stations.  Three  national  commercial  broadcast  networks  that  had  a  combined  prime  time 
 audience  share  of  95%.  1  Today,  the  multimedia  environment  in  which  broadcast  stations  and  newspapers 
 operate  is  significantly  different.  Although  there  are  now  fewer  than  1,500  daily  newspapers,  there  are  not 
 only  many  more  broadcast  stations,  but  also  wholly  new  programming  networks  and  distribution  platforms. 
 There  are  more  than  12,000  radio  stations,  and  more  than  1,600  full-  power  TV  stations.  Commercial  TV 
 stations  distribute  the  programming  of  seven  national  commercial  networks,  and  cable  television  systems 
 and  satellite  carriers  distribute  multiples  of  that  number.  In  the  current  2000-  2001  TV  season  just 
 completed,  the  four  largest  broadcast  networks  have  a  combined  prime  time  audience  share  of  50%,  and 
 basic  cable  networks  have  a  combined  prime  time  audience  share  of  42%.  2  This  proceeding  seeks  comment 
 on  the  relevance  of  the  various  changes  in  the  multimedia  environment  to  the  newspaper/  broadcast  cross- 


 1  Nielsen  Media  Research. 
 2  Id. 
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 Federal  Communications  Commission  FCC  01-  262 
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 ownership  rule.  We  note  that  currently  there  are  approximately  fifty  grandfathered  newspaper/  broadcast 
 combinations  and  4  permanent  waivers  of  the  cross-  ownership  rule.  We  urge  commenters  to  provide 
 specific  information  about  the  effects  these  combinations  have  had  in  their  markets.  This  data  will  enable 
 the  Commission  to  analyze  the  issues  based  on  a  solid  and  complete  factual  foundation  and  make  decisions 
 accordingly.  As  the  Commission  stated  when  it  adopted  the  rule,  [  t]  he  Commission  is  obliged  to  give 
 recognition  to  the  changes  which  have  taken  place  and  see  to  it  that  its  rules  adequately  reflect  the  situation 
 as  it  is,  not  was.  3 


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


 3.  In  adopting  its  rule,  the  Commission  had  not  only  prohibited  future  newspaper/  broadcast 
 combinations,  but  also  required  existing  combinations  in  highly  concentrated  markets  to  divest  holdings  to 
 come  into  compliance  within  five  years.  The  Commission  grandfathered  combinations  in  other  markets,  so 
 long  as  the  parties  to  the  combination  remained  the  same.  The  Commission,  however,  contemplated 
 waiving  the  rule,  for  existing  or  future  combinations,  if:  (1)  a  combination  could  not  sell  a  station;  (2)  a 
 combination  could  not  sell  a  station  except  at  an  artificially  depressed  price;  (3)  separate  ownership  and 


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


 4  47  C.  F.  R.    73.3555(  d).  For  AM  radio  stations,  the  service  contour  is  the  2mV/  m  contour,  id.    73.3555(  d)(  1); 


 for  FM  radio  stations,  the  service  contour  is  the  1mV/  m  contour,  id.    73.3555(  d)(  2);  for  TV  stations,  the  service 
 contour  is  the  Grade  A  contour,  id.    73.3555(  d)(  3).  A  daily  newspaper  is  defined  to  be  one  that  is  published  in 
 the  English  language  four  or  more  times  per  week.  Id.    73.3555  n.  6. 


 5  Second  Report  and  Order,  50  FCC  2d  at  1074. 


 6  Id. 
 7  Id.  at  1079-  1080. 
 8  FCC  v.  National  Citizens  Comm.  for  Broadcasting,  436  U.  S.  775,  796  (1978)  (NCCB). 
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 operation  of  a  newspaper  and  a  station  could  not  be  supported  in  a  locality;  or  (4)  for  whatever  reason,  the 
 purposes  of  the  rule  would  be  disserved.  9  In  upholding  the  rule,  the  Supreme  Court  noted  the  availability  of 
 waivers  to  underscore  the  reasonableness  of  the  rule.  10  The  Commission  has  granted  only  four  permanent 
 waivers  in  the  twenty-  six  years  since  it  adopted  the  rule.  11 


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


 5.  Following  the  changes  in  the  Commissions  appropriations  legislation  and  to  develop 
 issues  raised  by  the  merger  of  Capital  Cities/  ABC  and  The  Walt  Disney  Company,  15  the  Commission 


 9  Second  Report  &  Order,  50  FCC  2d  at  1085. 


 10  NCCB,  436  U.  S.  at  820  n.  20. 
 11  Kortes  Communications,  Inc.,  Memorandum  Opinion  &  Order,  15  FCC  Rcd  11846  (2000)  (allowing  co-ownership 
 of  newspaper  and  AM  station,  based  on  the  fact  that  the  station  was  financially  troubled  and  might  go 
 off  the  air,  and  was  a  small  participant  in  the  market);  Columbia  Montour  Broadcasting  Co.,  Memorandum 
 Opinion  &  Order,  13  FCC  Rcd  13007  (1998)  (allowing  co-  ownership  of  newspaper  and  small  station,  based  on 
 the  fact  that  the  AM  station  was  financially  troubled  and  could  not  be  sold,  and  was  a  small  participant  in  a 
 competitive,  diverse  market);  Fox  Television  Stations,  Inc.,  Declaratory  Ruling,  8  FCC  Rcd  5341  (1993) 
 (allowing  co-  ownership  of  newspaper  and  TV  station  in  large  market,  based  on  the  fact  that  the  TV  station  was 
 reacquiring  the  newspaper  such  that  the  combination  did  not  constitute  a  new  ownership  pattern,  and  the 
 newspaper  might  not  be  financially  viable  on  its  own),  affd  sub  nom.  Metropolitan  Council  of  NAACP  Branches 
 v.  FCC,  46  F.  3d  1154  (D.  C.  Cir.  1995);  Field  Communications  Corp.,  65  FCC  2d  959  (1977)  (allowing  co-ownership 
 of  two  newspapers  and  TV  station,  based  on  the  fact  that  the  newspapers  were  reacquiring  the  TV 
 station  such  that  the  combination  did  not  constitute  a  new  ownership  pattern,  and  the  TV  station  had  only 
 recently  become  financially  viable). 


 12  See,  e.  g.,  Departments  of  Commerce,  Justice,  &  State,  the  Judiciary,  &  Related  Agencies  Appropriations  Act, 


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


 13  Departments  of  Commerce,  Justice,  &  State,  the  Judiciary,  &  Related  Agencies  Appropriations  Act,  1994,  Pub. 


 L.  No.  103-  121,  107  Stat.  1153,  1167  (1993).  Congress  intended  to  permit  the  Commission  to  waive  the  rule  for 
 newspaper/  radio  combinations  only  in  the  top  25  markets  where  at  least  30  independent  broadcast  voices  would 
 remain  after  the  combination.  Id. 


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


 15  Capital  Cities/  ABC,  Inc.,  Memorandum  Opinion  &  Order,  11  FCC  Rcd  5841  (1996).  The  Commission 
 granted  the  applicants  temporary  waivers  of  the  rule,  and  committed  to  reexamining  its  waiver  policies  for 
 newspaper/  radio  combinations  in  a  subsequent  proceeding. 
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 issued  a  Notice  of  Inquiry  in  1996  to  seek  comment  on  possible  revisions  to  its  newspaper/  radio  cross-ownership 
 waiver  policies.  16  In  the  Newspaper/  Radio  NOI,  the  Commission  asked  whether  it  should  revise 
 its  waiver  policy  in  ways  that  might  make  it  less  stringent  and/  or  more  objective.  For  example,  it  asked 
 whether  the  Commission  should  adopt  a  policy  to  waive  the  rule  when  a  transaction  involves  parties  in  a 
 market  of  a  particular  rank  and/  or  a  certain  number  of  independently  owned  voices  would  remain  in  the 
 market  after  a  proposed  newspaper/  radio  combination.  17 


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


 7.  As  required  by  section  202(  h)  of  the  1996  Act,  the  Commission  examined  the 
 newspaper/  broadcast  cross-  ownership  policies  more  broadly  in  its  first  biennial  review  proceeding  on 


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


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


 17  Newspaper/  Radio  NOI,  11  FCC  Rcd  at  13009-  13010,    10. 


 18  Telecommunications  Act  of  1996,  Pub.  L.  No.  104-  104,  110  Stat.  56  (1996). 
 19  For  example,  sections  202(  a)-(  f)  instructed  the  Commission  to  eliminate  its  national  radio  ownership  rule,  and 
 to  revise  its  local  radio  ownership  rules,  national  TV  ownership  rule,  radio/  TV  cross-  ownership  waiver  policies, 
 dual  network  rule,  and  cable  system/  broadcast  network  cross-  ownership  rule. 


 20  141  Cong.  Rec.  E1571  (Aug.  1,  1995)  (indicating  that  Congressman  Stearns  had  proposed  an  amendment  to 


 repeal  the  newspaper/  broadcast  cross-  ownership  rule). 
 21  Last  year,  the  Commission  concluded  that,  while  the  Commission  now  has  the  authority  and  the  obligation  to 


 reevaluate  the  newspaper/  broadcast  cross-  ownership  rule,  and  its  policy  regarding  waivers  thereof,  there  is  no 
 explicit  Congressional  guidance  on  how  that  authority  should  be  exercised.  1998  Biennial  Regulatory  Review   
 Review  of  the  Commissions  Broadcast  Ownership  Rules  and  Other  Rules  Adopted  Pursuant  to  Section  202  of 
 the  Telecommunications  Act  of  1996,  MM  Docket  No.  98-  35,  Report,  15  FCC  Rcd  11058,  11102,    83  (2000) 
 (Biennial  Review  Report). 
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 broadcast  ownership  rules.  The  Commission  adopted  another  Notice  of  Inquiry  in  1998,  22  and  issued  a 
 report  last  year,  on  six  of  its  broadcast  ownership  rules,  including  the  newspaper/  broadcast  cross-ownership 
 rule.  The  Commission  concluded  that  the  newspaper/  broadcast  cross-  ownership  rule  continues 
 to  serve  the  public  interest  because  it  furthers  diversity,  and  therefore  should  be  retained.  23  However,  the 
 Commission  also  noted  that  the  rule  might  not  be  necessary  to  achieve  its  intended  public  interest  benefits 
 under  certain  circumstances.  More  specifically,  the  Commission  stated  that  [  t]  here  may  be  instances,  for 
 example,  in  which,  given  the  size  of  the  market  and  the  size  and  type  of  the  newspaper  and  broadcast  outlet 
 involved,  sufficient  diversity  and  competition  would  remain  if  a  newspaper/  broadcast  combination  were 
 allowed.  24  Thus,  the  Commission  committed  to  undertaking  a  rulemaking  proceeding  to  tailor  the  rule 
 accordingly.  25 


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


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


 23  Biennial  Review  Report,  15  FCC  Rcd  at  11105-  11108,    89-  93. 


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


 25  Biennial  Review  Report,  15  FCC  Rcd  at  11105,    88.  In  its  2000  biennial  regulatory  review  proceeding,  the 


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


 26  The  Commission  recently  engaged  in  a  similar  review  and  revision  process  with  its  local  TV  multiple 
 ownership  rules,  ultimately  amending  those  rules  to  permit  common  ownership  of  two  TV  stations  under  certain 
 circumstances,  and  at  least  one  TV  station  and  one  or  more  radio  stations,  within  the  same  area.  Review  of  the 
 Commissions  Regulations  Governing  Television  Broadcasting,  MM  Docket  No.  91-  221,  Report  and  Order,  14 
 FCC  Rcd  12903  (1999)  (Local  TV  Ownership  Report  &  Order).  Common  ownership  of  a  newspaper  and  even  a 
 single  broadcast  station  within  the  same  area,  however,  remains  prohibited. 
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 9.  Current  Status  of  the  Media  Marketplace.  The  number  of  local  media  outlets  has  grown 
 substantially  since  1975.  A  significant  portion  of  this  growth  has  occurred  within  the  broadcast  industry 
 itself.  A  total  of  7,785  radio  stations  were  on  the  air  as  of  January  1,  1975;  27  as  of  June  30,  2001,  the 
 Commission  had  licensed  12,932  radio  stations.  28  A  total  of  952  TV  stations  were  on  the  air  on  January  1, 
 1975;  29  as  of  June  30,  2001,  the  Commission  had  licensed  1,678  full  power  television  stations,  2,396  low 
 power  TV  stations,  and  232  Class  A  TV  stations.  30  In  1975,  there  were  three  national  commercial 
 broadcast  networks,  and  today  there  are  seven  such  networks.  Although  the  number  of  broadcast  networks 
 and  stations  has  increased,  however,  the  relative  viewership  of  them  has  declined.  The  prime  time  audience 
 share  of  the  affiliates  of  the  three  major  broadcast  networks  (ABC,  CBS,  NBC)  was  95%  in  1975;  today, 
 the  prime  time  audience  share  of  all  commercial  television  stations  (affiliates  of  ABC,  CBS,  Fox,  NBC, 
 PaxNet,  UPN,  WB,  and  independent  stations)  is  only  61%.  We  seek  comment  on  the  relevance  of  these 
 developments  to  our  newspaper/  broadcast  cross-  ownership  policies. 


 10.  Changes  in  the  newspaper  industry  since  1975  have  been  more  mixed.  Although  the 
 number  of  daily  newspapers  has  decreased  since  1975,  the  number  of  weekly  newspapers  has  increased. 
 The  number  of  daily  newspapers  has  declined  from  1,756  in  1975,  to  1,422  in  2000.  31  The  total  circulation 
 of  morning  and  evening  daily  newspapers  has  declined  by  about  8%  from  60.  6  million  in  1975  to  55.8 
 million  in  2000.  32  However,  the  combined  circulation  of  smaller,  more  targeted  newspapers,  often 
 published  weekly,  has  more  than  doubled:  7,612  weekly  newspapers  had  a  circulation  of  approximately 
 35.  9  million  in  1975,  whereas  7,915  such  newspapers  had  a  circulation  of  approximately  81.6  million  in 
 1996.  33  These  weekly  newspapers  are  often  the  source  of  local  information.  We  seek  comment  on  these 
 figures  and  their  significance  to  our  newspaper/  broadcast  cross-  ownership  rule,  as  well  as  any  other  data 
 we  should  consider. 


 11.  Besides  the  changes  in  the  broadcast  and  newspaper  industries,  there  has  been  a 
 proliferation  of  other  outlets  in  the  local  media  marketplace.  In  1975,  cable  television  systems  served  only 
 13%  of  TV  households.  34  By  June  2000,  they  served  67.4%  of  TV  households,  or  67.7  million  people.  35 
 There  are  over  200  video  programming  services  available  on  cable  systems.  36  In  October  2000,  99%  of  all 
 cable  customers  subscribed  to  systems  with  capacities  of  30  channels  or  more,  and  over  68%  subscribed  to 
 systems  with  capacities  of  54  of  more  channels.  37  More  than  6%  subscribed  to  systems  with  a  channel 


 27  Broadcasting  &  Cable  Yearbook  2000,  at  D-  718. 


 28  FCC  News  Release  Broadcast  Station  Totals  as  of  June  30,  2001,  July  13,  2001. 
 29  Broadcasting  &  Cable  Yearbook  2000,  supra  note  27,  at  B-  250. 
 30  FCC  News  Release  Broadcast  Station  Totals  as  of  June  30,  2001,  July  13,  2001. 
 31  SRDS,  Circulation  2001,  at  1038. 
 32  Id. 
 33  Newspaper  Assn  of  America,  Petition  for  Rulemaking,  at  24  (filed  Apr.  28,  1997)  (NAA  Petition). 
 34  National  Cable  Television  Association,  Cable  Television  Developments  at  2  (Fall  1996). 
 35  Annual  Assessment  of  the  Status  of  Competition  in  the  Market  for  the  Delivery  of  Video  Programming,  CS 
 Docket  No.  00-  132,  Seventh  Annual  Report,  16  FCC  Rcd  6005,  6017,    19  (2001)  (Seventh  Annual  Report). 
 36  Id.  at  Table  B-  5. 


 37  Id.  at  6018,    21. 
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 capacity  of  91  or  more  channels.  38  The  combined  audience  share  of  basic  and  premium  networks  is  48%.  39 
 Other  multichannel  programming  distributors  (MVPDs),  most  notably  direct  broadcast  satellite  (DBS) 
 providers,  now  compete  in  the  marketplace  but  were  nonexistent  in  1975.  DBS  has  grown  rapidly,  and  now 
 serves  nearly  13  million  subscribers,  or  over  15%  of  MVPD  households.  40  Other  MVPDs  serve  another 
 nearly  4  million  subscribers.  All  of  these  MVPDs  distribute  the  programming  of  many  networks.  Today, 
 almost  84%  of  all  TV  households  subscribe  to  an  MVPD.  41  We  seek  comment  on  the  impact  of  these 
 alternative  media  outlets  on  our  newspaper/  broadcast  cross-  ownership  policies. 


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


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


 14.  Diversity.  As  noted  above,  the  Commission  adopted  the  newspaper/  broadcast  cross-ownership 
 rule  largely  to  promote  and  protect  a  diversity  of  viewpoints.  46  The  Commission  has  sought  to 
 ensure  that  the  public  has  access  to  a  diversity  of  viewpoints  to  promote  First  Amendment  values.  In  the 


 38  Id. 


 39  Nielsen  Media  Research,  2000  Report  on  Television,  at  17. 
 40  Seventh  Annual  Report,  16  FCC  Rcd  at  6037,    61. 
 41  Id.  at  6008,    6. 
 42  Id.  at  6054,    107. 
 43  BIA  MasterAccess  Database,  Mar.  2001. 
 44  Broadcasting  &  Cable  Yearbook  1995,  at  A98-  A123. 
 45  BIA  MasterAccess  Database,  Mar.  2001. 
 46  See  supra    2. 
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 words  of  the  Supreme  Court,  [  t]  hat  Amendment  rests  of  the  assumption  that  the  widest  possible 
 dissemination  of  information  from  diverse  and  antagonistic  sources  is  essential  to  the  welfare  of  the  public. 
 .  .  .  47  The  Commission  historically  has  sought  to  promote  its  goal  of  viewpoint  diversity  indirectly  through 
 structural  regulation,  such  as  ownership  rules.  48  We  note  that  the  Commission  goal  of  diversity  of 
 viewpoint  has  been  particularly  important  in  the  context  of  newspaper/  broadcast  cross-  ownership,  given  the 
 reliance  the  public  has  placed  on  these  media  as  sources  of  local  news  and  information.  49 


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


 47  Associated  Press  v.  United  States,  326  U.  S.  1,  20  (1945)  (Associated  Press). 
 48  In  the  past,  the  Commission  also  used  direct  techniques  of  programming  regulation  to  achieve  its  goal.  See 
 Review  of  the  Commissions  Regulations  Governing  Television  Broadcasting,  MM  Docket  No.  91-  221,  Further 
 Notice  of  Proposed  Rulemaking,  10  FCC  Rcd  3524,  3547-  3549,    58-  59  (1995)  (TV  Further  Ownership  Notice). 


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


 50  Vernon  Stone,  News  Operations  at  U.  S.  TV  Stations,  available  at  <web.  missouri.  edu/~  jourvs/  gtvops.  html>. 


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


 52  Deborah  D.  McAdams,  Cable  News  Nets  Go  Small,  Broadcasting  &  Cable  at  42-  50  (Sept.  27,  1999). 


 Although  some  of  these  regional  cable  news  networks  are  new  independent  sources  of  information  within  their 
 service  areas,  many  are  not,  because  they  are  owned  and  operated  by  co-  located  broadcast  stations  or  newspapers. 


 53  Pew  Research  Center,  Investors  Now  Go  Online  for  Quotes,  Advice:  Internet  Sapping  Broadcast  News 


 Audience,  available  at  <www.  people-  press.  org/  media00rpt.  htm>. 
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 diverse  ideas  and  viewpoints?  54 
 16.  Although  the  number  of  media  outlets  has  increased,  the  Commission  traditionally  has 
 focused  on  the  number  of  different  owners,  as  opposed  to  the  number  of  media  outlets,  because  as  noted, 
 the  Commission  has  thought  that  diversity  in  ownership  promotes  diversity  in  viewpoint.  According  to  this 
 theory,  common  ownership  of  media  outlets  means  that  they  are  one  and  the  same  for  purposes  of 
 viewpoint  diversity.  Under  this  view,  the  growth  in  the  number  of  broadcast  outlets  is  counterbalanced  by 
 the  consolidation  in  ownership  of  them.  Accordingly,  the  development  of  regional  cable  news  networks 
 might  not  be  considered  especially  important  in  terms  of  diversity  analysis,  because  more  than  half  of  them 
 are  owned  by  co-  located  broadcast  stations  or  newspapers.  55  In  addition,  the  growth  of  news-  oriented 
 websites  likewise  might  not  be  considered  particularly  significant,  because  many  do  not  focus  on  local  news 
 and  information,  and  those  that  do  are  often  operated  by  existing  local  media,  such  as  broadcast  stations 
 and  newspapers.  56  We  seek  comment  on  the  level  of  independence  of  other  media,  including  the  Internet. 


 17.  The  relationship  between  ownership  diversity  and  viewpoint  diversity  is  the  subject  of 
 considerable  debate.  The  Commission  has  noted  the  argument  that  the  greater  the  concentration  of 
 ownership,  the  greater  the  opportunity  for  diversity  of  content.  57  Under  this  view,  competing  parties  in  a 
 market  have  a  commercial  incentive  to  air  greatest  common  denominator  programming,  while  a  single 
 party  that  owns  all  stations  in  a  market  has  a  commercial  incentive  to  air  more  diverse  programming  to 
 appeal  to  all  substantial  interests.  On  the  other  hand,  there  also  is  the  argument  that  the  existence  of 
 multiple  owners  competing  in  a  market  is  likely  to  provide  viewpoint  diversity    rather  than  content 
 diversity    providing  the  divergent  viewpoints  on  controversial  issues  which  the  Commission  has  stated  is 
 essential  to  democracy.  58  We  seek  comment  on  these  competing  theories  of  the  relationship  between 
 ownership  diversity  and  viewpoint  diversity.  Are  commercial  incentives  adequate  to  protect  the  publics 
 access  to  a  variety  of  viewpoints  from  commonly  owned  media?  Is  there  a  difference  between  the  relevance 
 of  the  competing  theories  in  terms  of  diversity  of  entertainment  programming  and  news  or  public  affairs 
 programming?  Or  as  applied  across  different  media?  We  note  that  the  Commission  has  suggested  that  the 
 theory  that  consolidation  promotes  diversity  in  content  might  apply  to  entertainment  programs  and  formats, 
 but  not  to  news  and  public  affairs  programming.  59  Should  the  Commission  give  greater  weight  to 
 viewpoint  diversity  in  the  latter  area  because  it  serves  core  First  Amendment  values  of  helping  to  ensure 
 robust  discussion  of  issues  of  public  concern?  60  Are  there  ways  that  the  Commission  can  attempt  to 
 promote  viewpoint  diversity  beyond  structural  regulation?  What  role  if  any  do  other  legal  requirements,  for 


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


 55  Deborah  D.  McAdams,  supra  note  52,  at  44-  50. 


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


 57  TV  Further  Ownership  Notice,  10  FCC  Rcd  at  3551,    63. 


 58  Second  Report  &  Order,  50  FCC  2d  at  1074. 
 59  Id. 
 60  See,  e.  g.,  Associated  Press,  326  U.  S.  at  20  (  The  First  Amendment  .  .  .  rests  on  the  assumption  that  the  widest 
 possible  dissemination  of  information  from  diverse  and  antagonistic  sources  is  essential  to  the  welfare  of  the 
 public.  .  .  .). 
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 Federal  Communications  Commission  FCC  01-  262 
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 example  those  that  require  broadcasters  to  provide  political  candidates  access  to  their  facilities  under 
 certain  conditions,  61  or  that  require  cable  systems  to  set  aside  channel  capacity  for  certain  uses  (e.  g.,  PEG, 
 leased  access),  62  play  in  promoting  diversity?  Historically,  broadcast  stations  and  newspapers  have  been 
 viewed  as  the  gatekeepers  in  the  local  marketplace  of  ideas.  Given  the  significant  changes  in  the  local  media 
 marketplace,  is  this  viewpoint  still  accurate? 


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


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


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


 62  47  U.  S.  C.    531,  532. 


 63  See,  e.  g.,  Biennial  Review  Report,  15  FCC  Rcd  at  11061,    5;  Local  TV  Ownership  Report  &  Order,  14  FCC 
 Rcd  at  12911-  12917,    17-  27. 
 64  See  Amendment  of  Section  73.658(  g)  of  the  Commissions  Rules    the  Dual  Network  Rule,  MM  Docket  No. 


 00-  108,  Report  &  Order,  16  FCC  Rcd  11114,  11122,  n.  44  (rel.  May  15,  2001)  (Dual  Network  Report  &  Order). 
 65  More  precisely,  advertisers  have  an  incentive  to  reach  customers  who  are  likely  to  buy  their  products.  They 


 thus  have  an  incentive  to  reach  the  widest  audience  possible  for  their  product  at  the  lowest  price. 
 66  Dual  Network  Report  &  Order,  16  FCC  Rcd  at  11122,  n.  44. 
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 Federal  Communications  Commission  FCC  01-  262 
 11 
 20.  Competition  analysis  requires  us  to  define  the  relevant  product  and  geographic  markets  in 
 which  broadcasters  and  newspapers  compete,  as  well  as  the  market  share  of  the  participants  within  the 
 relevant  market,  and  then  weigh  the  competitive  benefits  of  consolidation  (e.  g.,  economies  of  scale  and 
 scope  that  may  lead  to  lower  costs  and  prices  or  superior  products)  against  the  harms  (e.  g.,  the  exercise  of 
 market  power).  67  We  seek  information  that  would  help  us  conduct  our  analysis. 


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


 22.  Are  other  media  reasonable  substitutes  for  advertising  on  broadcast  stations,  newspapers 
 or  both,  such  that  these  other  media  should  be  considered  in  the  same  product  market?  Measured  on  an 
 aggregate  national  basis,  advertising  on  cable  now  accounts  for  nearly  4%  of  the  total  of  all  local 
 advertising  dollars.  73  Cable  systems  share  of  the  local  advertising  market  thus  appears  small  currently, 


 67  TV  Further  Ownership  Notice,  10  FCC  Rcd  at  3532,    16. 


 68  U.  S.  Advertising  Volume  2000-  2001,  prepared  for  Advertising  Age  by  Robert  J.  Coen,  Universal  McCann. 
 TV  networks  and  stations  have  a  much  higher  percentage  of  all  national  advertising  dollars. 
 69  See,  e.  g.,  Second  Report  &  Order,  50  FCC  2d  at  1056-  1057.  Compare  Robert  Ekelund,  George  Ford,  and 


 John  Jackson,  Is  Radio  Advertising  a  Distinct  Local  Market?  An  Empirical  Analysis,  14  Review  of  Industrial 
 Organization,  239  (1999)  (concluding  that  radio  advertising  constitutes  a  distinct  antitrust  market)  with  Barry 
 Seldon,  R.  Todd  Jewell,  Daniel  OBrien,  Media  Substitution  and  Economics  of  Scale  in  Advertising,  18  Intl 
 Journal  of  Industrial  Organization  1153  (2000)  (finding  a  high  degree  of  substitutability  at  the  national  level)  and 
 James  Ferguson,  Daily  Newspaper  Advertising  Rates,  Local  Media  Cross-  Ownership,  Newspaper  Chains,  and 
 Media  Competition,  26  Journal  of  Law  &  Economics  635  (1983)  (concluding  that  newspapers  and  TV 
 advertisements  are  substitutes). 


 70  Second  Report  &  Order,  50  FCC  2d  at  1056-  1057. 


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


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


 73  U.  S.  Advertising  Volume  2000-  2001,  supra  note  68. 
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 but  it  is  continuing  to  grow.  For  example,  cable  systems  share  of  the  local  advertising  market  was  only 
 1%  in  1990,  meaning  that  it  has  quadrupled  in  the  last  decade.  74  Does  the  availability  of  advertising  on 
 cable  systems  constrain  broadcast  stations  and  newspapers  ability  to  raise  their  advertising  prices?  Do 
 other  MVPDs  such  as  DBS  compete  with  broadcast  stations  and  newspapers  in  the  local  advertising 
 market?  Do  they  have  plans  to  do  so?  How  do  banner  ads  on  websites  affect  the  relevant  product  market? 
 How  substitutable  is  Internet  advertising  for  other  forms  of  media  advertising?  Are  there  other  media  that 
 should  be  included  in  the  relevant  market? 


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


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


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


 74  Id. 
 75  U.  S.  Dept  of  Justice  &  FTC,  1992  Horizontal  Merger  Guidelines,    1.21  (revised  1997). 
 76  Others  claimed,  however,  that  businesses  do  not  need  to  combine  to  realize  these  efficiencies  because  they 
 could  simply  form  a  joint  venture.  Independent  Free  Papers  Comments  at  2-  4. 
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 and  the  nature  and  magnitude  of  benefits  that  flow  through  to  advertisers  and  ultimately  to  consumers.  77 
 We  seek  evidence  that  newspaper/  broadcast  combinations  produce  efficiencies  that  flow  through  to 
 advertisers  and  consumers.  Studies  showing  that  advertising  rates  for  newspaper/  broadcast  combinations 
 are  significantly  lower  than  advertising  rates  for  separately  owned  newspapers  and  broadcast  stations 
 would  be  particularly  useful. 


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


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


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


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


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


 78  This  depends  on  how  advertisers  respond  to  higher  rates,  and  the  proportion  of  total  production  costs  that  are 


 accounted  for  by  advertising  expenditures. 
 79  Ferguson,  supra  note  69,  at  636. 
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 30.  How  have  combinations  affected  news?  Have  the  combinations  brought  additional  news 
 outlets  to  the  marketplace,  or  otherwise  enhanced  news  coverage?  We  note  that  commenters  in  our  1998 
 biennial  review  proceeding  stated  that  common  ownership  has  enabled  them  to  provide  more  news,  to 
 distribute  it  through  new  media  (such  as  cable  systems  and  websites),  and  to  treat  subjects  in  more  depth.  80 
 What  sorts  of  harms  have  the  combinations  produced?  Even  if  the  amount  or  quality  of  news  has 
 increased,  has  viewpoint  diversity  decreased? 


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


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


 33.  We  note  that  the  court  in  Time  Warner  held  that  the  Commission  could  not  rely  on  its 


 80  Belo  Comments  at  11-  13;  Chronicle  Comments  at  16;  Gannett  Comments  at  22;  Tribune  Comments  at  60-  65. 
 81  Time  Warner  Entertainment  v.  FCC,  240  F.  3d  1126  (D.  C.  Cir.  2001)  (Time  Warner). 
 82  47  C.  F.  R.    76.503. 
 83  Id.  at    76.504. 
 84  United  States  v.  OBrien,  391  U.  S.  367,  377  (1968). 
 85  Turner  Broadcasting  Sys.,  Inc.  v.  FCC,  512  U.  S.  622,  662-  63  (1994). 
 86  Time  Warner,  240  F.  3d  at  1130. 
 87  Id.  at  1133. 
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 diversity  goal  alone  to  support  the  horizontal  and  vertical  restraints  at  issue  in  that  case.  88  We  also  note, 
 however,  that  the  courts  holding  was  based  on  its  interpretation  of  the  specific  provision  of  the  Cable  Act 
 of  1992  authorizing  adoption  of  the  cable  limits,  which  focused  on  competition;  the  statutory  source  of  the 
 newspaper/  broadcast  cross-  ownership  policies,  on  the  other  hand,  is  the  broad  public  interest  standard  of 
 Title  III.  As  discussed  above,  the  Supreme  Court  upheld  the  Commissions  predominant  reliance  on  the 
 diversity  rationale  to  support  its  newspaper/  broadcast  cross-  ownership  policies.  89  We  seek  comment  on  the 
 impact  of  the  Time  Warner  case  on  our  diversity  analysis,  and  how  the  marketplace  changes  that  have 
 occurred  since  the  Supreme  Court  upheld  the  newspaper/  broadcast  cross-  ownership  rule  may  affect  the 
 First  Amendment  analysis. 


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


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


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


 37.  Redefining  the  Geographic  Area.  As  explained  above,  the  current  rule  prohibits  common 
 ownership  of  a  broadcast  station  and  a  newspaper  when  the  broadcast  stations  service  contour 
 encompasses  the  newspapers  city  of  publication.  We  seek  comment  on  whether  to  redefine  the  geographic 
 area  in  which  the  rule  operates  to  that  local  area  in  which  broadcast  stations  and  newspapers  compete, 
 without  regard  to  contour  overlap.  Under  this  approach,  combinations  would  be  permitted  so  long  as  the 
 broadcast  station  and  the  newspaper  are  in  different  markets.  This  change  could  be  made  on  its  own,  or  in 
 conjunction  with  other  modifications,  such  as  the  ones  set  forth  below.  We  seek  comment  on  defining  the 
 relevant  geographic  area.  In  particular,  we  seek  comment  on  how  to  define  the  market  in  which  a  particular 


 88  Id.  at  1135-  1136. 
 89  NCCB,  436  U.  S.  at  797. 
 90  Biennial  Review  Report,  15  FCC  Rcd  at  11105,    88. 
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 newspaper  competes.  We  have  recognized  that  the  commonly  accepted  geographic  market  for  TV  is  the 
 Designated  Market  Area,  or  DMA,  defined  by  Nielsen  Media  Research.  91  Does  a  newspaper  compete 
 throughout  a  DMA?  A  commonly  accepted  geographic  market  within  the  radio  industry  is  the  radio  metro, 
 defined  by  The  Arbitron  Company.  92  Does  a  newspaper  compete  throughout  a  radio  metro?  How  should 
 we  treat  radio  markets  that  are  not  located  in  a  radio  metro?  What  will  be  the  effect  of  any  proposed 
 changes  in  the  geographic  market  definition  on  competition  and  diversity? 


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


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


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


 41.  We  also  seek  comment  on  how  to  define  the  top  ranked  radio  stations  in  a  market.  We 
 note  that,  according  to  our  Mass  Media  Bureaus  most  recent  report  on  the  radio  industry,  [  t]  he  two 
 largest  radio  firms  in  each  radio  market  have,  on  average,  70  percent  of  the  markets  radio  advertising 
 revenue.  95  Would  it  therefore  be  appropriate  to  prohibit  combinations  between  the  two  largest  radio 
 station  owners,  or  radio  station  owners  with  stations  that  have  an  advertising  or  audience  share  that  exceeds 
 a  certain  limit,  and  the  largest  newspapers  in  the  same  market?  We  also  note,  however,  that  in  revising  its 


 91  Local  TV  Ownership  Report  &  Order,  14  FCC  Rcd  at  12926-  12929. 
 92  See,  e.  g.,  Definition  of  Radio  Markets,  MM  Docket  No.  00-  244,  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd 
 25077,  25081    10  (2000). 
 93  47  C.  F.  R.    73.3555(  b)(  2)(  i). 


 94  Local  TV  Ownership  Report  &  Order,  14  FCC  Rcd  at  12933,    66. 
 95  FCC  Mass  Media  Bureau,  Policy  &  Rules  Division,  Review  of  the  Radio  Industry,  2000,  at  2  (Jan.  2001). 
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 radio/  TV  cross-  ownership  rule,  the  Commission  treated  all  radio  stations  similarly,  and  thus  permitted  TV 
 stations  to  combine  with  radio  stations  up  to  a  voice-  dependent  numerical  limit,  without  regard  to  the  radio 
 stations  market  share.  Would  it  therefore  be  appropriate  not  to  restrict  the  type  of  radio  stations  that  can 
 combine  with  newspapers?  Regardless  of  whether  we  limit  the  kind  of  radio  station  that  a  newspaper  may 
 acquire,  should  we  limit  the  number  of  radio  stations  it  may  acquire?  How  many  radio  stations  should  we 
 permit  to  be  commonly  owned  with  a  newspaper?  Should  any  limit  depend  on  the  market  share  of  the  radio 
 station(  s)  involved?  Should  the  appropriate  number  depend  on  the  other  media  properties  attributed  to  the 
 radio  station  owner,  such  as  broadcast  TV  or  cable  systems?  We  seek  comment  on  the  mechanism  that  will 
 best  serve  the  public  interest. 


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


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


 96  47  C.  F.  R.    73.3555(  c)(  2). 


 97  See,  e.  g.,  Gannett  Comments  at  34-  38. 
 98  47  C.  F.  R.    73.3555(  c)(  3). 
 99  Id.    73.3555(  c)(  3)(  iii). 
 100  Local  TV  Ownership  Report  &  Order,  14  FCC  Rcd  at  12953,    113. 
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 market  presence  that  we  should  not  permit  them  to  combine  with  co-  located  broadcast  stations  that  also 
 have  a  significant  presence? 


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


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


 46.  Market  Concentration/  Voice  Count  Standard.  Another  option  for  modifying  the 
 newspaper/  broadcast  cross-  ownership  policies  would  be  to  combine  the  market  concentration  and  voice 
 count  standards.  Under  this  approach,  a  combination  would  be  permitted  so  long  as  both  parties  do  not 
 have  a  certain  market  share  (combined  or  individual),  and  so  long  as  a  minimum  number  of  voices  would 
 remain  in  the  market  post-  merger.  This  approach  would  be  consistent  with  the  recently  revised  TV  duopoly 
 rule,  which  permits  common  ownership  of  two  TV  stations  within  the  same  DMA  if  both  are  not  ranked 
 among  the  top  four  in  the  market,  and  at  least  eight  independently  owned  TV  stations  would  remain  in  the 
 DMA  post-  merger.  106  As  the  Commission  explained  when  it  revised  the  TV  duopoly  rule,  the  station  rank 


 101  Id. 


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


 103  Local  TV  Ownership  Report  &  Order,  14  FCC  Rcd  at  12954,    114. 


 104  Id. 
 105  Review  of  the  Commissions  Regulations  Governing  TV  Broadcasting,  Memorandum  Opinion  and  Second 
 Order  on  Reconsideration,  16  FCC  Rcd  1067,  1072-  1073,    16-  19  (2001). 
 106  47  C.  F.  R.    73.3555(  b)(  2). 
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 and  voice  criteria  are  designed  to  protect  both  our  competition  and  diversity  concerns.  107  As  the 
 Commission  further  explained,  the  combined  standard  permits  weaker  market  participants  to  combine  with 
 each  other,  or  with  a  larger  participant,  and  thereby  preserves  and  strengthens  their  ability  to  compete.  108 


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


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


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


 50.  Retention  Period.  When  the  Commission  adopted  the  newspaper/  broadcast  cross-ownership 
 rule,  the  Commission  had  to  grapple  with  the  issue  of  how  long  a  broadcast  licensee  could  retain 


 107  Local  TV  Ownership  Report  &  Order,  14  FCC  Rcd  at  12933,    65. 
 108  Id. 
 109  Second  Report  &  Order,  50  FCC  2d  at  1085. 
 110  47  C.  F.  R.    73.3555  note  7(  1). 
 111  Id.  at  note  7(  2). 
 112  Id.  at  note  7(  3). 
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 a  daily  newspaper  it  acquired  in  a  community  in  which  it  already  owned  a  broadcast  station.  It  resolved  this 
 issue  by  stating: 


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


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


 51.  Structural  Separation.  As  stated  above,  we  have  modeled  many  of  the  above  proposals 
 after  approaches  the  Commission  has  taken  in  amending  other  broadcast  cross-  ownership  rules,  such  as  the 
 TV  duopoly  rule  and  the  radio/  TV  cross-  ownership  rule.  Should  we,  however,  instead  allow  combinations 
 subject  to  certain  structural  separation  requirements?  We  note  that  the  Canadian  Radio-  television 
 Telecommunications  Commission  (CRTC)  recently  concluded  to  allow  common  ownership  of  newspapers 
 and  TV  stations,  but  required  the  combinations  to  maintain  separate  management  and  presentation 
 structures  for  the  news  operations  of  their  newspapers  and  TV  stations.  115  The  CRTC  noted  that  common 
 ownership  could  create  more  efficient  news  operations,  116  but  it  also  was  concerned  that  common 
 ownership  could  potentially  lead  to  the  complete  integration  of  the  owners  television  and  newspaper  news 
 operations.  This  integration  could  eventually  result  in  a  reduction  of  the  diversity  of  the  information 
 presented  to  the  public  and  of  the  diversity  of  distinct  editorial  voices  available  in  the  markets  served.  117 
 The  CRTC  thus  required  separation  of  news  management  functions,  but  not  newsgathering  activities.  118 
 Should  we  consider  an  approach  similar  to  that  of  the  CRTC?  We  note  that,  although  the  Commission 
 traditionally  has  not  promulgated  structural  separation  requirements  as  part  of  its  broadcast  ownership 


 113  Second  Report  &  Order,  50  FCC  2d  at  1076  n.  25. 
 114  Section  203  of  the  Telecom  Act,  codified  at  47  U.  S.  C    307(  c)(  1). 
 115  Canadian  Radio-  television  Telecommunications  Commission,  Decision  CRTC  2001-  457  (Aug.  2,  2001), 
 available  at  <www.  crtc.  gc.  ca/  archive/  ENG/  Decisions/  2001/  DB2001-  457.htm>  (visited  Aug.  6,  2001)  (CRTC 
 457);  Canadian  Radio-  television  Telecommunications  Commission,  Decision  CRTC  2001-  458  (Aug.  2,  2001), 
 available  at  www.  crtc.  gc.  ca/  archive/  ENG/  Decisions/  2001/  DB2001.458.htm  (visited  Aug.  6,  2001)  (CRTC  458). 


 116  CRTC  457  at    16;  CRTC  458  at    14,  117. 


 117  CRTC  457  at    95;  CRTC  458  at    107. 
 118  CRTC  457  at    113;  CRTC  458  at    122. 
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 rules,  it  has  in  other  contexts.  For  example,  in  order  to  approve  the  application  of  a  Bell  Operating 
 Company  (BOC)  to  provide  in-  region  long-  distance  service,  the  Commission  must  find  that  the  BOC  will 
 provide  the  service  through  a  separate  affiliate  that  satisfies  a  variety  of  statutory  criteria.  119  Would 
 structural  separation  requirements  both  allow  broadcast  stations  and  newspapers  to  realize  the  economic 
 benefits  of  combined  operations,  but  at  the  same  time  preserve  the  interest  of  the  public  in  having  access  to 
 distinct  editorial  viewpoints?  Have  grandfathered  combinations  been  able  to  realize  economic  efficiencies 
 from  consolidating  their  broadcast  and  newspaper  news  operations,  but  still  maintain  editorial 
 independence?  What  sort  of  protections  and  structural  separation  requirements  would  be  necessary  to 
 ensure  that  editorial  independence  would  not  be  compromised? 


 Elimination/  Retention  of  the  Rule 
 52.  Some  commenters  in  response  to  our  Biennial  Review  NOI  argued  that  the  Commission 
 should  either  completely  eliminate  or  retain  the  newspaper/  broadcast  cross-  ownership  rule  in  its  current 
 form.  Those  who  supported  retaining  the  rule  argued  that  many  of  the  new  media  outlets  do  not  add  to 
 viewpoint  diversity  on  the  local  level,  and  that  new  programs  by  the  same  broadcasters  do  not  add  to 
 viewpoint  diversity.  120  They  also  pointed  out  that  current  policies  already  allow  broadcast  stations  and 
 newspapers  to  realize  many  economic  efficiencies,  because  the  current  rule  permits  them  to  form  joint 
 ventures,  and  it  permits  broadcast  stations  to  merge  with  newspapers  when  the  broadcast  stations  service 
 contour  does  not  encompass  the  newspapers  city  of  publication.  121  Those  who  supported  eliminating  the 
 rule  argued  that  the  multimedia  markets  are  competitive  and  provide  a  wide  variety  of  information  sources.  122  They  also  contended  that  the  efficiencies  of  combinations  are  not  driven  by  consolidation  of 


 content  or  editorial  decisions,  and  have  enabled  grandfathered  combinations  to  air  more  extensive  news  and 
 public  affairs  programming  and  to  develop  new  media  ventures.  123  If  the  rule  were  eliminated, 
 newspaper/  broadcast  combinations  would  be  permitted,  subject  only  to  the  antitrust  laws  and  Commission 
 review  of  an  application  for  grant,  renewal,  or  transfer  of  a  particular  broadcast  license.  We  seek  comment 
 on  the  appropriateness  of  either  retaining  or  eliminating  entirely  our  newspaper/  broadcast  cross-  ownership 
 rule.  In  particular,  we  seek  comment  on  whether  prophylactic,  structural  regulation  remains  necessary  to 
 maintain  sufficiently  competitive  local  advertising  markets,  as  well  as  sufficiently  diverse  sources  of  local 
 information.  Are  the  antitrust  laws  sufficient  to  protect  our  competition  goals?  Is  the  rule  necessary  in  its 
 current  form  to  protect  our  diversity  goals? 


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


 119  47  U.  S.  C.    271(  d)(  3)(  B),  272. 
 120  Biennial  Review  Report,  15  FCC  Rcd  at  11104,    87. 
 121  Id.  at  11104-  11105,    87. 
 122  Id.  at  11103,    86. 
 123  Id.  at  11104,    86. 
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 CONCLUSION 
 54.  The  Commission  adopted  its  newspaper/  broadcast  cross-  ownership  rule  twenty-  five  years 
 ago,  when  the  local  media  marketplace  was  significantly  different  than  it  is  today.  Through  this 
 proceeding,  we  seek  to  examine  our  cross-  ownership  policies  in  the  context  of  the  current  realities  of 
 todays  local  media  marketplace,  in  order  to  ensure  that  our  rules  serve  the  public  interest  as  effectively  as 
 possible. 


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


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


 57.  Parties  who  choose  to  file  by  paper  must  file  an  original  and  four  copies  of  each  filing.  All 
 filings  must  be  sent  to  the  Commissions  Secretary,  Magalie  Roman  Salas,  Office  of  the  Secretary,  Federal 
 Communications  Commission,  445  Twelfth  Street  SW,  TW-  A325,  Washington,  DC  20554.  Parties  who 
 choose  to  file  by  paper  should  also  submit  comments  on  diskette.  These  diskettes  should  be  addressed  to: 
 Wanda  Hardy,  445  Twelfth  Street  SW,  2-  C221,  Washington,  DC  20554.  Such  a  submission  should  be  on 
 a  3.  5  inch  diskette  formatted  in  an  IBM  compatible  format  using  Word  97  or  compatible  software.  The 
 diskette  should  be  accompanied  by  a  cover  letter  and  should  be  submitted  in  read  only  mode.  The 
 diskette  should  be  clearly  labeled  with  the  commenters  name,  docket  number  of  the  proceeding,  type  of 
 pleading  (comment  or  reply  comment),  date  of  submission,  and  the  name  of  the  electronic  file  on  the 
 diskette.  The  label  should  also  include  the  following  phrase:  Disk  Copy    Not  an  Original.  Each 
 diskette  should  contain  only  one  partys  pleading,  preferably  in  a  single  electronic  file.  In  addition, 
 commenters  must  send  diskette  copies  to  the  Commissions  copy  contractor,  Qualex  International,  Portals 
 II,  445  12  th  Street  SW,  CY-  B402,  Washington,  DC  20554. 


 58.  The  full  text  of  this  document,  and  comments  and  reply  comments  filed  in  this  proceeding, 
 are  available  for  public  inspection  and  copying  during  regular  business  hours  at  the  FCC  Reference  Center, 
 Portals  II,  445  Twelfth  Street  SW,  Room  CY-  A257,  Washington,  DC  20554.  Persons  with  disabilities 
 who  need  assistance  in  the  FCC  Reference  Center  may  contact  Bill  Cline  at  (202)  418-  0270,  TTY  (202) 
 418-  2555,  or  bcline@  fcc.  gov.  Comments  and  reply  comments  are  available  electronically  in  ASCII  text, 
 Word  97,  and  Adobe  Acrobat.  The  full  text  of  this  document  may  also  be  purchased  from  the 
 Commissions  duplicating  contractor,  Qualex  International,  Portals  II,  445  12  th  Street  SW,  Room  CY-  B-402, 
 Washington,  DC  20554,  telephone  (202)  863-  2893,  facsimile  (202)  863-  2898,  or  via  email 
 qualexint@  aol.  com. 
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 Federal  Communications  Commission  FCC  01-  262 
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 59.  This  document  is  available  in  alternative  formats  (computer  diskette,  large  print,  audio 
 cassette,  and  Braille).  Persons  who  need  documents  in  such  formats  may  contact  Brian  Millin  at  (202) 
 418-  7426,  TTY  (202)  418-  7365,  or  bmillin@  fcc.  gov. 


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


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


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


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


 ORDERING  CLAUSES 
 64.  Accordingly,  IT  IS  ORDERED  that,  pursuant  to  the  authority  contained  in  sections  1, 
 2(  a),  4(  i),  303,  307,  309,  and  310  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151, 
 152(  a),  154(  i),  303,  307,  309,  and  310,  and  section  202(  h)  of  the  Telecommunications  Act  of  1996,  this 
 Notice  of  Proposed  Rulemaking  is  ADOPTED. 
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 Federal  Communications  Commission  FCC  01-  262 
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 65.  IT  IS  FURTHER  ORDERED  that  the  Commissions  Consumer  Information  Bureau, 
 Reference  Information  Center,  SHALL  SEND  a  copy  of  this  Notice,  including  the  Initial  Regulatory 
 Flexibility  Analysis,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business  Administration. 


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


 FEDERAL  COMMUNICATIONS  COMMISSION 


 Magalie  Roman  Salas 
 Secretary 
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 1 
 APPENDIX  A 
 INITIAL  REGULATORY  FLEXIBILITY  ANALYSIS 
 As  required  by  the  Regulatory  Flexibility  Act  of  1980,  as  amended  (RFA),  1  the  Commission  has 
 prepared  this  present  Initial  Regulatory  Flexibility  Analysis  (IRFA)  of  the  possible  significant 
 economic  impact  on  a  substantial  number  of  small  entities  the  policies  and  rules  proposed  in  this 
 Notice  of  Proposed  Rulemaking  (Notice).  Written  public  comments  are  requested  on  this  IRFA. 
 Comments  must  be  identified  as  responses  to  the  IRFA  and  must  be  filed  by  the  deadlines  for 
 comments  on  the  Notice  provided  above  in  paragraph  55.  The  Commission  will  send  a  copy  of  the 
 Notice,  including  this  IRFA,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business 
 Administration  (SBA).  See  5  U.  S.  C.    603(  a).  In  addition,  the  Notice  and  IRFA  (or  summaries 
 thereof)  will  be  published  in  the  Federal  Register.  See  id. 


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


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


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


 The  RFA  directs  agencies  to  provide  a  description  of,  and,  where  feasible,  an  estimate  of  the 
 number  of  small  entities  that  may  be  affected  by  the  proposed  rules,  if  adopted.  2  The  RFA  defines 
 the  term  small  entity  as  having  the  same  meaning  as  the  terms  small  business,  small 
 organization,  and  small  governmental  jurisdiction.  3  In  addition,  a  small  business  concern  is  one 
 which:  (1)  is  independently  owned  and  operated;  (2)  is  not  dominant  in  its  field  of  operation;  and 
 (3)  satisfies  any  additional  criteria  established  by  the  SBA.  4 


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


 2  5  U.  S.  C.    603(  b)(  3). 


 3  Id.  at    601(  6). 
 4  Small  Business  Act,  15  U.  S.  C.    632. 
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 Federal  Communications  Commission  FCC  01-  262 
 2 
 The  newspaper/  broadcast  cross-  ownership  rule  applies  to  daily  newspapers  and  broadcast  stations. 
 As  set  forth  in  the  Notice,  as  of  the  year  2000,  there  were  1,422  daily  newspapers  published.  5  The 
 SBA  defines  a  newspaper  publisher  with  less  than  500  employees  as  a  small  business.  6  According 
 to  the  1992  Economic  Census,  only  138  newspaper  publishers  had  less  than  500  or  more 
 employees.  The  data  does  not  distinguish  between  newspaper  publishers  that  publish  daily  and 
 those  that  publish  less  frequently,  and  the  latter  are  more  likely  to  be  small  businesses  than  the 
 former  because  of  the  greater  expense  to  publish  daily.  Thus,  since  the  newspaper/  broadcast 
 cross-  ownership  rule  applies  only  to  daily  newspapers,  it  is  likely  that  less  than  138  small 
 newspaper  publishers  would  be  affected  by  the  rule. 


 As  set  forth  in  the  Notice,  as  of  June  30,  2001,  the  Commission  had  licensed  1,678  full-  power  TV 
 stations,  2,396  low  power  TV  stations,  and  232  Class  A  TV  stations.  7  The  SBA  defines  television 
 broadcasting  establishments  that  have  $10.5  million  or  less  in  annual  receipts  as  a  small  business.  8 
 According  to  Commission  staff  review  of  the  BIA  Publications,  Inc.,  Master  Access  Television  Analyzer 
 Database  on  March  14,  2001,  fewer  than  800  commercial  television  broadcast  stations  have  revenues  of 
 $10.5  million  or  less.  We  note,  however,  that  under  SBAs  definition,  revenues  of  affiliates  that  are  not 
 television  stations  should  be  aggregated  with  the  television  station  revenues  in  determining  whether  a 
 concern  is  small.  Our  estimate,  therefore,  likely  overstates  the  number  of  small  entities  that  might  be 
 affected  by  any  changes  to  the  newspaper/  broadcast  cross-  ownership  rule,  because  the  revenue  figure  on 
 which  it  is  based  does  not  include  or  aggregate  revenues  from  non-  television  affiliated  companies. 


 As  set  forth  in  the  Notice,  as  of  June  30,  2001,  the  Commission  had  licensed  12,392  radio  stations.  9  The 
 SBA  defines  a  radio  station  that  has  $5  million  or  less  in  annual  receipts  as  a  small  business.  10 
 According  to  Commission  staff  review  of  BIA  Publications  Inc.  Master  Access  Radio  Analyzer 
 Database  on  March  14,  2001,  about  10,400  commercial  radio  stations  have  revenue  of  $5  million  or 
 less.  We  note,  however,  that  many  radio  stations  are  affiliated  with  much  larger  corporations  with  much 
 higher  revenue.  Our  estimate,  therefore,  likely  overstates  the  number  of  small  entities  that  might  be 
 affected  by  any  changes  to  the  newspaper/  broadcast  cross-  ownership  rule. 


 D.  Description  of  Projected  Recording,  Recordkeeping,  and  Other  Compliance  Requirements 
 We  anticipate  that  none  of  the  proposals  presented  in  the  Notice  will  result  in  an  increase  to  the  reporting 
 and  recordkeeping  requirements  of  broadcast  stations  or  newspapers. 


 5  See  Notice  at    10. 
 6  NAIC  Code  511110. 
 7  See  Notice  at    9. 
 8  NAIC  Code  513120. 
 9  See  Notice  at    9. 
 10  NAIC  Code  513112. 
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 3 
 E.  Steps  Taken  to  Minimize  Significant  Economic  Impact  on  Small  Entities,  and  Significant 
 Alternatives  Considered 


 The  RFA  requires  an  agency  to  describe  any  significant,  specifically  small  business,  alternatives  that  it 
 has  considered  in  reaching  its  proposed  approach,  which  may  include  the  following  four  alternatives 
 (among  others):  (1)  the  establishment  of  differing  compliance  or  reporting  requirements  or  timetables  that 
 take  into  account  the  resources  available  to  small  entities;  (2)  the  clarification,  consolidation,  or 
 simplification  of  compliance  or  reporting  requirements  under  the  rule  for  small  entities;  (3)  the  use  of 
 performance,  rather  than  design,  standards;  and  (4)  an  exemption  from  coverage  of  the  rule,  or  any  part 
 thereof,  for  small  entities.  11 


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


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


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


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


 11  5  U.  S.  C.    603(  c). 
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 Federal  Communications  Commission  FCC  01-  262 
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 F.  Federal  Rules  that  May  Duplicate,  Overlap,  or  Conflict  with  the  Proposed  Rules 
 The  rules  under  consideration  in  this  proceeding  do  not  overlap,  duplicate,  or  conflict  with  any  other 
 rules. 
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 Federal  Communications  Commission  FCC  01-  262 
 1 
 SEPARATE  STATEMENT 
 OF  COMMISSIONER  MICHAEL  J.  COPPS 
 ON  NEWSPAPER/  BROADCAST  NPRM 


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


 Broadcast  stations  and  newspapers  make  up  the  center  of  the  local  marketplace  of  ideas,  a 
 function  critical  to  a  democratic  society.  As  competing  purveyors  of  ideas,  they  have  the  potential 
 to  present  diverse  viewpoints  on  issues  important  to  their  communities.  As  the  Red  Lion  Court 
 stated  it  is  the  purpose  of  the  First  Amendment  to  preserve  an  uninhibited  marketplace  of  ideas  in 
 which  truth  will  ultimately  prevail,  rather  than  to  countenance  monopolization  of  that  market.  1  In 
 commencing  our  examination  of  the  Newspaper/  Broadcast  cross  ownership  rules  today,  we  must 
 keep  in  mind  the  importance  to  the  public  interest  of  preserving  diversity  in  the  local  marketplace 
 of  ideas. 


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


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


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


 1  Red  Lion  Broadcasting  Company  v.  Federal  Communications  Commission,  395  U.  S.  367,  390,  89 
 S.  Ct.  1794,  1806  (1969). 
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