U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1

19–010

" SENATE ! 108TH CONGRESS

1st Session

REPORT

2003

108–141

Calendar No. 270

PRESERVATION OF LOCALISM, PROGRAM 

DIVERSITY, AND COMPETITION IN TELEVISION BROADCAST SERVICES ACT OF 

2003

REPORT

OF THE

COMMITTEE ON COMMERCE, SCIENCE, AND 

TRANSPORTATION

ON

S. 1046

together with

ADDITIONAL VIEWS

SEPTEMBER 3, 2003.—Ordered to be printed


E:\Seals\Congress.#13
(II)

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

JOHN MCCAIN, Arizona, Chairman

TED STEVENS, Alaska 

CONRAD BURNS, Montana 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

SAM BROWNBACK, Kansas 

GORDON SMITH, Oregon 

PETER G. FITZGERALD, Illinois 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

JOHN E. SUNUNU, New Hampshire 

ERNEST F. HOLLINGS, South Carolina 

DANIEL K. INOUYE, Hawaii 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

JOHN B. BREAUX, Louisiana 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

BARBARA BOXER, California 

BILL NELSON, Florida 

MARIA CANTWELL, Washington 

FRANK LAUTENBERG, New Jersey 

JEANNE BUMPUS, Staff Director and General Counsel

ANN BEGEMAN, Deputy Staff Director

ROBERT W. CHAMBERLIN, Chief Counsel

KEVIN D. KAYES, Democratic Staff Director and Chief Counsel

GREGG ELIAS, Democratic General Counsel

19–010

Calendar No. 270

108TH CONGRESS REPORT " SENATE ! 1st Session 108–141

PRESERVATION OF LOCALISM, PROGRAM DIVERSITY, AND 

COMPETITION IN TELEVISION BROADCAST SERVICES 

ACT OF 2003

SEPTEMBER 3, 2003.—Ordered to be printed 

Mr. MCCAIN, from the Committee on Commerce, Science, and 

Transportation, submitted the following 

R E P O R T 

together with 

ADDITIONAL VIEWS 

[To accompany S. 1046]

The Committee on Commerce, Science, and Transportation, to 

which was referred the bill (S. 1046) to amend the Communications 

Act of 1934 to preserve localism, to foster and promote the diversity 

of television programming, to foster and promote competition, and 

to prevent excessive concentration of ownership of the nation’s television broadcast stations, having considered the same, reports favorably thereon with an amendment and recommends that the bill 

as amended do pass. 

PURPOSE OF THE BILL

The purpose of this legislation is to prevent any one entity from 

owning, operating, controlling, or having a cognizable interest in 

broadcast television stations that have an aggregate national audience reach exceeding 35 percent. The legislation also would require 

entities that own, operate, control, or have a cognizable interest in 

broadcast television stations that have an aggregate national audience reach exceeding 35 percent to divest such stations within one 

year after the date of enactment of this legislation. Further, this 

legislation would change the standard used by the Federal Communications Commission (FCC or Commission) to review its media 

ownership rules; require broadcast radio station group owners that 

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exceed local ownership limits to divest such stations within one 

year after the date of enactment of this legislation; reinstate the 

FCC’s broadcast-newspaper and radio-television cross ownership 

bans; require the Commission to hold five public hearings in different areas in the United States before it renders any decision in 

conjunction with its mandated review of media ownership rules; 

and provide a small market exemption from the Commission’s 

broadcast-newspaper cross ownership ban. 

BACKGROUND AND NEEDS

For over seventy years, the FCC’s regulation of broadcast service 

has sought to ensure that the allocation of broadcast licenses 

serves the public interest and promotes the core values of competition, diversity, and localism that are essential to the fabric of 

American democracy. Indeed, as was noted by the Supreme Court 

over 50 years ago, our 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.’’ Associated Press v. United States, 326 U.S. 1 (1945). 

In the earliest days of broadcast regulation, the FCC reviewed 

common ownership issues on a case by case basis and denied proposed combinations that would result in one owner holding multiple licenses in a local market as inconsistent with the ‘‘public interest, convenience, and necessity.’’ Over time, the FCC has also 

sought to protect the public interest through the adoption of bright 

line rules that limit license ownership and guard against the accumulation of market power in national and local media markets. 

Such limits have included restrictions on the total numbers of radio 

stations and television stations that a single entity could own in 

local and national markets. However, with the passage of the Telecommunications Act of 1996 (‘‘1996 Act’’), Congress significantly 

loosened media ownership limits, and established a requirement 

that the FCC review these limits every two years. The Act itself 

repealed the prohibition on telephone-cable cross ownership; 

overrode the remaining regulatory limits upon cable-broadcast 

cross ownership; eliminated the national radio ownership cap; relaxed restrictions on local radio ownership; and eased the ‘‘dual 

network’’ rule. The 1996 Act also mandated that the FCC review 

its media ownership rules biennially to ‘‘determine whether any of 

such rules are necessary in the public interest as the result of competition.’’ On June 2, 2003, the FCC completed its 2002 biennial review of 

its media ownership rules as required by section 202(h) of the 1996 

Act. In its recent decision, the FCC increased the national ownership limits affecting the number of broadcast television stations 

that one entity may own, operate, control or in which an entity 

may hold a cognizable interest to 45 percent. It also relaxed its 

cross ownership rules, which limit the ability of one entity to own 

a daily newspaper and multiple radio and television stations in the 

same market. 

There has been significant consolidation in the media marketplace over the last decade. In the broadcast television industry, the 

number of television station owners has dropped 40 percent since 

1995. In radio, the number of commercial radio station owners has 

declined by 34 percent since 1996, and the top station group has 

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increased its size from a total of 39 stations with annual revenues 

of $495 million, to over 1200 stations with annual revenues of almost $3.2 billion. Similarly, media consolidation has resulted in 

substantial changes to the broadcast television programming market. One recent study by Tom Wolzien of Bernstein Research, notes 

that five media conglomerates control ‘‘about a 75 percent share of 

prime-time viewing’’ and are on pace to soon control roughly ‘‘the 

same percentage of TV households in prime time as the three networks did 40 years ago.’’ Accordingly, while technology has provided a number of new media outlets, these outlets are largely controlled by the same large media conglomerates. This increasing influence over programming and distribution outlets has generated 

an outpouring of concern among many groups and private citizens 

who believe that robust structural safeguards are needed to protect 

the public interest and to promote competition, diversity, and localism in broadcasting. 

Moreover, increased media consolidation has also fueled public 

concern about efforts to relax the commission’s cross-ownership restriction. Changes that would allow a single entity to own or control a variety of media properties in local markets (e.g. a newspaper, television and radio stations, cable systems, Internet web 

sites) raise significant concerns about the preservation of diverse 

and antagonistic sources of news and information in local markets. 

I. THE NATIONAL TELEVISION OWNERSHIP CAP

For several decades, the FCC’s national television ownership limits focused on restricting the number of television stations an entity could own. Then, in 1985, the FCC adopted an additional ownership limit based on audience reach. This rule allowed entities to acquire interests in television stations as long as the combined reach 

of those stations did not exceed 25 percent of the national audience 

determined by market rankings. See Memorandum Opinion and 

Order, Gen. Docket No. 83–1009, FCC 84–638 (adopted Dec. 19, 

1984). 

Under section 202 of the 1996 Act, Congress directed the FCC to 

eliminate the restriction on the total number of television stations 

that an entity could own (which at the time prohibited common 

ownership of more than 12 television stations), and increased the 

national audience cap from 25 percent to 35 percent. See Telecommunications Act of 1996, Pub. L. No. 104–104, 110 Stat. 56 

(1996). In its 1998 Biennial Review, the FCC decided to retain the 

35 percent cap so it could: (1) observe the effects of recent changes 

in the rules required by the 1996 Act; (2) observe the effects of the 

national ownership cap having been raised to 35 percent; and (3) 

preserve the power of local affiliates to bargain with their networks 

in order to promote diversity of programming. 1998 Biennial Regulatory Review, Biennial Review Report, 15 FCC Rcd 11058 (adopted 

May 26, 2000). 

After the 1998 Biennial Review was released, three of the national networks, FOX, NBC, and CBS, challenged the FCC’s decision to retain the 35 percent cap. The D.C. Circuit, while rejecting 

the networks’ constitutional challenges, held that the FCC’s decision to retain the 35 percent cap was arbitrary and capricious, finding the FCC had provided ‘‘no valid reason to think the [national 

TV ownership rule] is necessary to safeguard competition’’ or ‘‘to 

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advance diversity.’’ Furthermore, the court determined the FCC 

had failed to comply with the review required by 202(h) by providing ‘‘no analysis on the state of competition in the television industry to justify its decision’’. Fox Television Stations, Inc. v. FCC, 

280 F.3d 1027, rehearing granted, 293 F.3d 537 (D.C. Cir. 2002); 

Sinclair Broadcast Group, Inc. v. FCC, 284 F.3d 148 (D.C. Cir. 

2002), rehearing denied Aug. 13, 2002.

While the networks asked the court to vacate the 35 percent cap, 

the D.C. Circuit expressly declined this invitation. Instead the 

court chose to remand the rule to the Commission for further consideration. As the court explained,

‘‘Although the Commission’s decision to retain the rule 

was, as written, arbitrary and capricious and contrary to 

202(h), we cannot say with confidence that the Rule is 

likely irredeemable . . . . We note that although the Commission in its 1998 Report failed to develop any affirmative justification for the rule based on competitive concerns, it did, albeit, somewhat cryptically, advert to possible competitive problems in the national markets for advertising and program production . . . . In sum, we cannot 

say it is unlikely that the Commission will be able to justify a future decision to retain the Rule. Fox, 293 F.3d at 

1048–49.’’

As a result of the Court’s directive, the Commission invited comment on whether to retain, eliminate, or modify the 35 percent national ownership rule as part of its 2002 Biennial Review of the 

Commission’s media ownership rules. 

FCC Decision. In its June 2, 2003 decision, the Commission 

found that although evidence in the record before it supported the 

retention of a national ownership cap, it did not support a cap of 

35 percent. Therefore the FCC raised the cap on the number of 

broadcast television stations one party may own from stations constituting 35 percent of the national audience share to station constituting 45 percent of the national audience share. The national 

audience share is calculated by adding the number of TV households in each market in which a company owns a station divided 

by the total number of United States television households. 

The Commission found that a national television cap serves the 

policy goal of localism by preserving a balance of power between 

the networks and their affiliates serving local needs and interests 

by ensuring that affiliates can play a meaningful role in selecting 

programming suitable for their communities. The Commission also 

found that a modest relaxation of the cap would help networks 

compete more effectively with cable and DBS operators and would 

promote free, over-the-air television by deterring migration of expensive programming to cable networks. 

Independent stations affiliated with the networks argue that retention of the 35 percent cap is essential to the preservation of localism and diversity over the airwaves. Affiliates argue that raising 

the cap above 35 percent could potentially silence the voices of local 

independently-owned and operated outlets and cause a flurry of 

media mergers and further consolidation of national networks. 

They also argue that the national ownership cap ensures that proVerDate Jan 31 2003 22:22 Sep 04, 2003 Jkt 019010 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\SR141.XXX SR141
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gramming decisions remain in the hands of local broadcasters, not 

in the hands of national networks. 

II. RULES PROHIBITING CROSS OWNERSHIP

Local Radio/TV Cross Ownership. In 1970, the FCC adopted 

rules limiting the common ownership of local radio and television 

broadcast stations (‘‘Local Radio/TV Cross Ownership Rule’’) in a 

single market. In 1989, the FCC adopted a presumptive waiver policy to permit certain radio/TV combinations. The Commission then 

relaxed the rule in 1999 to balance the FCC’s diversity and competition concerns with its desire to permit broadcasters and the 

public to realize the economic efficiencies enjoyed by common ownership of radio and television stations. Prior to the FCC’s recent action, its rules allowed the common ownership of: 

2 television stations and up to 6 radio stations in any market 

where at least 20 independent ‘‘voices’’ would remain post-combination or 1 television station and up to 7 radio station (where 

such entity could own 2 television stations and 6 radio stations); 

2 television stations and up to 4 radio stations in any market 

where at least 10 independent ‘‘voices’’ would remain post-combination; 

1 television station and 1 radio station no matter the number of independent ‘‘voices’’ that would remain post-combination. See 47 C.F.R. § 73.3555(c). 

—‘‘Voices’’ included local broadcast television stations, 

cable systems, radio stations, and daily newspapers of a 

certain circulation. 

Newspaper/Broadcast Cross Ownership. In 1975, the FCC adopted a rule prohibiting the common ownership of a full-service broadcast station and a daily newspaper when the broadcast station’s 

service contour encompasses the newspaper’s city of publication 

(‘‘Newspaper/Broadcast Cross Ownership Rule’’). See 47 C.F.R. §

73.3555(d). When the Commission adopted the rule, it grandfathered newspaper/broadcast combinations in many markets (so 

long as the ownership of the combination remained the same), but 

required divestiture of properties in highly concentrated markets. 

Currently, more than 70 ‘‘grandfathered’’ newspaper/broadcast 

combinations exist. 

FCC Decision. In its June 2, 2003, decision, the FCC concluded 

that neither the Local Radio/TV Cross Ownership Rule nor the 

Newspaper/Broadcast Cross Ownership Rule could be justified for 

larger markets, finding that citizens rely on an abundance of 

sources for news. Additionally, the FCC found these rules did not 

promote competition because radio, TV, and newspapers generally 

compete in different economic markets. The FCC found that greater participation by newspaper publishers in the television and 

radio business would improve the quality and quantity of news 

available to the public. 

As a result, the FCC replaced the cross ownership rules with a 

new set of cross-media limits. In establishing these new restrictions, the FCC developed a Diversity Index to measure the presence of key media outlets in markets of various sizes. According to 

the Commission, the index suggested that there were three types 

of markets in terms of ‘‘viewpoint diversity’’ concentration, each 

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warranting different regulatory treatment. The Commission replaced the newspaper/broadcast and the local radio/TV cross ownership rules with the following cross-media limits for the three market types: 

In markets with three or fewer TV stations, no cross ownership is permitted among TV, radio, and newspapers. A company may obtain a waiver of that ban if it can show that the 

television station does not serve the area served by the crossowned property (i.e. the radio station or the newspaper). 

In markets with between four and eight TV stations, combinations are limited to one of the following: 

—(A) A daily newspaper; one TV station; and up to half 

of the radio station limit for that market (i.e. if the radio 

limit in the market is six, the company can only own 

three); 

—(B) A daily newspaper; and up to the radio station 

limit for that market (i.e. no TV stations); or 

—(C) Two TV stations (if permissible under local TV 

ownership rule); up to the radio station limit for that market (i.e. no daily newspapers). 

In markets with nine or more TV stations, the FCC eliminated the newspaper/broadcast cross ownership ban and the 

local radio/TV cross ownership ban. 

Significant concerns have been raised before the Committee that 

the FCC’s new rules allowing greater media cross ownership will 

permit excessive consolidation in local markets, which could threaten the diversity of viewpoints offered to a local community, stifle 

democracy, and reduce competition among media outlets to put 

forth the best news product. Some critics believe the prohibition on 

cross ownership is also necessary to protect advertisers that substitute between newspapers, broadcast television, and broadcast 

radio. Without robust competition for advertising dollars, many 

small businesses will be forced to pay higher advertising rates, 

which may result in consumers paying more for products in a market with commonly owned newspapers and broadcast stations as 

such costs are passed on to them. 

Cross-ownership threatens localism as well, according to the concerned parties. When one entity is allowed to own more than one 

media outlet in a community, critics fear large corporations will 

buy several media outlets there and ‘‘pipe in’’ news and programming feeds from a central distribution facility, rather than airing 

locally-originated news and programming. Such consolidation may 

also decrease the number of opinions and viewpoints that are provided to a community by its media outlets if a consolidated media 

company, for example, only has one editorial board instead of an 

editorial board for each media property. 

III. THE LOCAL RADIO OWNERSHIP CAP

The origins of local radio ownership limits can be traced back to 

1938. At that time, the FCC denied an application for a new AM 

station based on the fact that the parties who controlled the applicant also controlled another AM station in the same community. 

The FCC believed that two stations in the same community owned 

by the same party would not compete with each other, and thereby 

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the ‘‘public convenience, interest and necessity’’ would not be 

served. Genesee Radio Corp., 5 FCC 183 (1938).

In the 1950s, the FCC placed this policy decision in its rules stating, ‘‘AM licensees are prohibited from owning another AM station 

that would provide ‘primary service’ to a ‘substantial portion’ of the 

‘primary service area’ of a commonly owned AM station, except 

where the public interest would be served by multiple ownership’’. 

See Amendment of sections 3.35, 3.240 and 3.636 of the Rules and 

Regulations Relating to Multiple Ownership of AM, FM and Television Broadcast Stations, Report and Order, 18 FCC 288 at 295–

296 (1953). FM licensees were similarly restricted. From 1940 to 

1964, the FCC enforced this rule on a case-by-case basis. 

In 1964, the FCC developed a new local ownership rule using a 

signal contour-based definition that only looked at the overlap of 

the radio stations’ signals, rather than using a ‘‘primary service 

area’’ definition. The new rule prohibited common ownership of 

same service stations when any overlap of signal contours occurred. 

The rule was designed to ‘‘promote maximum diversification of program and service viewpoints and to prevent undue concentration of 

economic power contrary to the public interest’’. See Amendment of 

sections 73.35, 73.240 and 73.636 of the Commission’s Rules, First 

Report and Order, 22 F. C. C. 2d 339, 344 (1970). 

In 1992, the FCC found that the increasing number of media outlets (TV, radio, cable, etc.) justified a relaxation of its local radio 

ownership rule. Therefore, the FCC changed its rules to allow a 

single party to own multiple stations in the same local market. 

Specifically, for markets with more than 15 radio stations, a single 

licensee was permitted to own up to two AM Stations and two FM 

stations, provided that the combined audience share of the stations 

did not exceed 25 percent. For stations in markets with fewer than 

15 radio stations, a single licensee was permitted to own up to 

three stations, (of which no more than two could be AM or FM stations), provided that the owned stations represented less than 50 

percent of the total number of radio stations in the market. 

Shortly thereafter, the most profound change in local radio ownership limits occurred with the enactment of the Telecommunications Act of 1996, which eliminated the national ownership limit 

(then prohibiting a single entity from owning more than 40 radio 

stations nationwide) and directed the FCC to further revise its 

local ownership rule by allowing the following combinations: 

—In local radio markets with 45 or more radio stations, a 

company may own 8 stations, only 5 of which may be in one 

class, AM or FM; 

—In local radio markets with 30–44 radio stations, a company may own 7 stations, only 4 of which may be in one class, 

AM or FM; 

—In local radio markets with 15–29 radio stations, a company may own 6 stations, only 4 of which may be in one class, 

AM or FM; and 

—In local radio markets with 14 or fewer radio stations, a 

company may own 5 stations, only 3 of which may be in one 

class, AM or FM, except that a party may not own, operate, or 

control more than 50 percent of the stations in such market. 

See 47 U.S.C. 202(b). 

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FCC Decision. In its June 2, 2003, decision, the Commission 

found that local limits on radio ownership remained necessary to 

further the public interest. However, it changed its methodology for 

implementing the local radio ownership rule. 

As noted above, the FCC previously used a signal contour methodology to define a ‘‘local radio market’’ for purposes of determining 

whether a station owner was in compliance with the local ownership limits. This methodology led to some anomalous results that 

appeared to frustrate the local ownership limits in the 1996 Act. 

The most commonly cited example is Minot, North Dakota, where 

one entity owns six of the seven commercial stations that directly 

serve the Minot area. In its recent decision, the Commission eliminated the use of the signal contour methodology and replaced it 

with a geographic market methodology. Under this new methodology, all radio stations licensed to communities in an Arbitron 

Metro market are counted as being in that ‘‘local radio market’’ regardless of their signal reach. Under the new market definition, 

certain station groups will exceed the limits on local radio ownership. The FCC decided to ‘‘grandfather’’ these existing clusters 

under its news rules, rather than requiring the owners to come into 

compliance with the limits under the new market definition. 

LEGISLATIVE HISTORY

Senators Stevens, Hollings, Burns, Lott, Dorgan, and Wyden introduced S. 1046 on May 13, 2003. The Committee held hearings 

regarding media ownership on January 30, May 6, May 13, May 

22, and June 4, 2003. All five FCC Commissioners attended the 

hearing on June 4, 2003, during which the participants discussed 

the FCC’s new rules. 

On June 19, 2003, the Senate Commerce, Science, and Transportation Committee held an executive session at which S. 1046 was 

considered. The bill was approved by voice vote and was ordered 

reported with amendments including: an amendment by Senator 

McCain to clarify Congressional intent with respect to the media 

ownership rules review standard to be used by the FCC; an amendment by Senator McCain to vitiate the FCC’s grandfathering of 

radio broadcast station ownership under the new local radio ownership rules; an amendment offered by Senators Dorgan, Hollings, 

Hutchinson, Snowe, Wyden, and Cantwell to restore the cross ownership media rules to their pre-June 2, 2003, status, as well as a 

second degree amendment by Senator Stevens providing small 

markets with an exemption to the newspaper/broadcast cross ownership rule under certain circumstances; and an amendment by 

Senator Boxer to require the FCC to hold five geographically diverse public hearings before concluding its media ownership rules 

review. 

ESTIMATED COSTS

In accordance with paragraph 11(a) of rule XXVI of the Standing 

Rules of the Senate and section 403 of the Congressional Budget 

Act of 1974, the Committee provides the following cost estimate, 

prepared by the Congressional Budget Office:

9

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, July 25, 2003. 

Hon. JOHN MCCAIN, 

Chairman, Committee on Commerce, Science, and Transportation, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 1046, the Preservation of 

Localism, Program Diversity, and Competition in Television Broadcast Service Act of 2003. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Melissa E. Zimmerman (for federal costs): Theresa Gullo (for the state and local impact); and Jean Talarico (for the impact on the private sector). 

Sincerely, 

ROBERT A. SUNSHINE

(For Douglas Holtz-Eakin, Director.) 

Enclosure.

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

S. 1046—Preservation of Localism, Program Diversity, and Competition in Television Broadcast Service Act of 2003

Summary: S. 1046 would change current law and existing regulations concerning ownership of television, radio, and newspapers. 

The bill also would clarify the frequency and nature of the Federal 

Communication Commission’s (FCC’s) reviews of those regulations. 

CBO estimates that implementing S. 1046 would cost the FCC less 

than $500,000 over the 2004–2008 period. 

S. 1046 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would not affect 

the budgets of state, local, or tribal governments. 

S. 1046 would impose private-sector mandates on the owners of 

radio stations, television stations, and newspapers. The most costly 

mandate would be imposed on the owners of radio stations. Based 

on information from several industry experts, CBO expects that the 

cost of all the private-sector mandates in the bill would exceed the 

annual threshold for such mandates established by UMRA ($117 

million in 2003, adjusted annually for inflation). 

Estimated cost to the Federal Government: S. 1046 would void 

regulations issued by the FCC on June 2, 2003, pertaining to the 

ownership of television stations, radio stations, and newspapers. 

The bill would reinstate the regulations concerning ownership of 

multiple media outlets that were in effect before that date. S. 1046 

also would direct the FCC not to grant or transfer a television license if that act would result in an entity owning or controlling television stations that reach an aggregate national audience of more 

than 35 percent. CBO estimates that those changes would not have 

a significant effect on federal spending. 

In addition, sections 5 and 6 of the bill would clarify existing law 

regarding how the FCC reviews its regulations on broadcast ownership. Under the bill, the FCC would have to review its regulations 

every two years and hold at least five public hearings in different 

areas of the United States in conjunction with each review. Based 

on information provided by the FCC, CBO estimates that those 

10

provisions would cost less than $500,000 each year over the 2004– 2008 period, subject to the availability of appropriated funds. 

Estimated impact on state, local, and tribal governments: S. 1046 

contains no intergovernmental mandates as defined in UMRA and 

would not affect the budgets of state, local, or tribal governments. 

Estimated impact on the private sector: S. 1046 would impose 

private-sector mandates as defined in UMRA on the owners of 

radio stations, television stations, and newspapers. The most costly 

mandate would be imposed on the owners of radio stations. Based 

on information from several industry experts, CBO expects that the 

cost of all mandates in the bill would exceed the annual threshold 

for private-sector mandates established by UMRA ($117 million in 

2003, adjusted annually for inflation). 

Ownership of Radio Stations 

The FCC adopted a Report and Order on media ownership on 

June 2, 2003. That decision would maintain the current limitation 

on radio ownership. At the same time, however, the FCC’s decision 

would change the methodology for defining local radio markets to 

a market-based approach using Arbitron Metro rating boundaries. 

That change would reduce the number of stations a company may 

own in a local market. Consequently, many owners of radio stations would exceed the ownership limit if the FCC’s new rules become effective. To avoid requiring those owners to sell their stations, the FCC’s June 2 decision included a ‘‘grandfather’’ provision 

that would exclude those owners from the new ownership limit. 

Section 4 of this bill would revoke that ‘‘grandfather’’ provision. As 

a result, those owners of radio stations not in compliance with the 

local market caps under the new market definitions would be required to sell some properties within one year after enactment of 

this bill. 

The cost of this mandate on owners of radio stations would be 

incurred in the form of diminished value for the stations they 

would be required to sell. Based on information from industry 

sources, CBO estimates that the cost would exceed the annual 

threshold for private-sector mandates. Bear, Stearns & Company 

estimates that owners of radio stations would be required to sell 

over 200 stations to comply with the removal of the ‘‘grandfather’’

provision. The consensus of industry experts is that the owners of 

those stations would be able to sell them only at prices considerably below recently recorded market prices. Two reasons are cited. 

First, the bill’s mandate would create a buyer’s market in which 

many stations would be on the market at the same time. The bargaining power of potential buyers would grow as the deadline approached for the owner of stations to meet the ownership limitations. Second, in some instances, current owners enjoy economic 

advantages in operating and marketing the clusters of stations that 

they own; potential new owners of some of those stations would be 

unlikely to capture such benefits and thus would not account for 

them in their offers. 

Ownership of Commercial Television Broadcast Stations 

Currently, a broadcast network can own and operate local broadcast stations that reach up to 35 percent of households nationwide. 

The FCC increased the ownership cap to 45 percent in its June 2 

11

decision, and that new cap is likely to become effective within a few 

months. Section 3 of S. 1046 would restore the current national television ownership cap of 35 percent. The bill also would require 

any party that holds licenses for commercial television broadcast 

stations that exceed the 35 percent limit to sell some of their stations to comply with this limit within one year from the date of enactment. 

According to the FCC, two companies would exceed the cap: 

Viacom Inc. (the owner of CBS) and News Corps. (the owner of 

Fox). Based on information from government and industry sources, 

CBO estimate that Viacom, Inc. and News Corps. would likely be 

able to sell their stations at a fair market value. Therefore, the cost 

of this mandate would be only the transaction cost involved in the 

sale. 

Cross-Ownership of Media Outlets 

Prior to June 2, 2003, the FCC prohibited companies from owning a television station and newspaper in a single market and limited the combined number of radio and television stations that companies could own in a single market. The FCC’s June 2 decision relaxed those restrictions. As a result, under current law, companies 

will be able to request approval from the FCC to own additional 

cross-media properties. Section 7 of S. 1046 would reinstate the 

more restrictive broadcast-newspaper and radio-television crossownership rules that were in effect on June 1, 2003, retroactively 

to June 2, 2003. The costs to the private-sector of reinstating the 

cross-ownership rules would be the loss in profits that would otherwise be earned by those who would purchase additional media 

properties under the relaxed restrictions. CBO has no basis for estimating that loss. 

Further, if media owners purchase properties during the period 

that the FCC’s relaxed restrictions are in effect that are not in 

compliance with the requirements of S. 1046, those owners would 

be required to sell such properties. Given the strong possibility that 

the more restrictive cross-media rules will be reinstated, it is very 

unlikely that any parties would apply for or receive licenses under 

the relaxed rules prior to enactment of this legislation. 

Estimate prepared by: Federal Costs: Melissa E. Zimmerman; 

impact on state, local, and tribal governments: Theresa Gullo; impact on the private sector: Jean Talarico. 

Estimate approved by: Robert A. Sunshine, Assistant Director for 

Budget Analysis.

REGULATORY IMPACT STATEMENT

In accordance with paragraph 11(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee provides the following evaluation of the regulatory impact of the legislation, as reported: 

NUMBER OF PERSONS COVERED

S. 1046 would restore the FCC’s 35 percent national broadcast 

television ownership cap and its cross ownership rules, and would 

make other changes to the Communications Act of 1934. The number of persons covered by this legislation should be consistent with 

current levels of individuals affected. 

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ECONOMIC IMPACT

S. 1046 would restrict consolidation of media companies in the 

United States. Although the legislation may have an adverse economic impact on those companies, it is expected to help ensure an 

environment conducive to economic opportunity for diverse, local 

programming and advertising. 

PRIVACY

S. 1046 is not expected to have an adverse effect on the personal 

privacy of any individuals that will be impacted by this legislation. 

PAPERWORK

S. 1046 is expected to have a minimal impact on current paperwork levels. 

SECTION-BY-SECTION ANALYSIS

Section 1. Short title 

This section would provide that the legislation may be cited as 

the ‘‘Preservation of Localism, Program Diversity, and Competition 

in Television Broadcast Service Act of 2003’’. 

Sec. 2. Congressional findings and purposes 

This section states that the principle of localism has been the 

‘‘pole star’’ for regulation of the broadcast industry by the FCC for 

nearly 70 years, and that any increase in the national television 

multiple ownership cap may harm this principle. In addition, this 

section states that retaining the national television multiple ownership cap at 35 percent would prevent further national concentration that may occur, the pernicious effects of which may be difficult 

to eradicate once begun, and would ensure the independence of 

non-network owned stations from becoming passive conduits for 

network transmissions. 

Sec. 3. National television multiple ownership limitations 

This section would eliminate Section 202(c)(1)(B) of the 1996 Act, 

which directs the Commission to modify its rules for multiple ownership to increase the national television multiple ownership cap to 

35 percent. In its place, the bill would codify the 35 percent cap by 

adding a new Section 340 to the Communications Act of 1934. Section 340 would prevent any license for a commercial broadcast television station to be granted, transferred or assigned to a party if 

it would result in a party owning, operating, controlling or having 

a cognizable interest in television stations having an aggregate national audience reach exceeding 35 percent. 

The bill would define ‘‘audience reach’’ using the same terms that 

the Commission set forth in 47 C.F.R. § 73.3555, except this definition would allow the Commission to substitute any successor definition it may adopt to delineate television markets for the purpose 

of imposing the 35 percent cap. The bill would define ‘‘cognizable 

interest’’ using the same terms as the Commission has set forth in 

47 C.F.R. § 73.3555. 

This section would also require divestiture of broadcast stations 

by any party whose holdings exceed the 35 percent cap. Section 

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340(b) would require this divestiture to take place within one year 

after the date of the enactment of this bill. Currently, two networks 

are over the 35 percent cap and would be required to divest— Viacom/CBS at just over 39 percent and FOX/News Corp. at 37.8 

percent. 

Lastly, Section 340(c) would prevent the FCC from using its forbearance authority in Section 10 of the Communications Act of 

1934 to prevent this new Section 340 from taking effect. 

Sec. 4. No grandfathering 

This section would prevent the FCC from grandfathering owners 

of existing radio station clusters that exceed the local radio ownership cap under the FCC’s new market definition. As a result, those 

owners with station clusters in excess of the local limits would be 

required to come into compliance within one year after the date of 

enactment of the Act. 

Sec. 5. Clarification of Congressional intent with respect to ownership rules review 

This section would modify Section 202(h) to specifically allow the 

FCC to repeal, strengthen, limit, or retain its media ownership 

rules during its next 202(h) review if it determines such changes 

to be in the public interest. Courts have interpreted Section 202(h) 

to carry ‘‘with it a presumption in favor of repealing or modifying 

ownership rules’’ as part of ‘‘a process of deregulation’’ set in place 

by the Telecommunication Act 1996 Act. Fox Television Stations 

Inc. v. FCC, 280 F.3d 1027, 1048 (D.C. Cir. 2002); Sinclair Broad. 

Group, Inc. v. FCC, 284 F.3d 148, 152 (D.C. Cir. 2002). When the 

FCC Commissioners appeared before the Committee on June 4, 

2003, several Commissioners agreed that section 202(h) allows the 

FCC to strengthen or repeal its broadcast ownership rules, but requested clarification from Congress. This section would provide 

such clarification. 

Sec. 6. Public hearing requirement 

This section would require the Commission to hold five public 

hearings in different areas of the United States before it renders 

any decision in conjunction with its media ownership review pursuant to 202(h) of the Communications Act of 1934.

Sec. 7. Restoration of cross ownership rules 

This section would reinstate the Commission’s Newspaper/Broadcast and Local Radio/TV Cross Ownership Rules that were in place 

on June 1, 2003. 

This section would also provide an exemption to the Newspaper/

Broadcast Cross Ownership Rule under certain conditions for small 

markets with a Designated Market Area (DMA) of 150 or higher. 

If a broadcast station and a newspaper in such a community wish 

to come under common ownership, the potential common owner 

could petition the public utility commission in the community’s 

State or States for a recommendation approving the transaction. If 

a respective public utility commission finds that such a transaction 

would enhance the community’s local news and information, promote the financial stability of the newspaper or broadcast station 

or generally promote the public interest, then the public utility 

14

commission may refer the transaction to the FCC which may grant 

a waiver of compliance with the cross ownership rules. The FCC 

may grant the waiver approving the transaction within 60 days 

after the FCC receives it unless the Commission finds there is compelling evidence that the transaction would be contrary to the public interest. If approved, the newspaper and the broadcast station 

covered by the waiver must maintain separate editorial boards. Additionally, if the broadcast station or the newspaper issues an editorial viewpoint via broadcast or print, respectively, the other commonly owned media outlet should broadcast or print their respective viewpoint if one has been established.

ROLLCALL VOTES IN COMMITTEE 

In accordance with paragraph 7(c) of rule XXVI of the Standing 

Rules of the Senate, the Committee provides the following description of the record votes during its consideration of S. 1239: 

Senator Sununu (for himself and Senator Breaux) offered an 

amendment to provide conditional grandfathering of licenses granted in excess of the national audience reach limitation that would 

be imposed by new section 340 of the Communications Act of 1936. 

By rollcall vote of 7 yeas and 16 nays as follows, the amendment 

was defeated:

YEAS—7 NAYS—16

Mr. Brownback Mr. Stevens 1

Mr. Smith 1 Mr. Burns 

Mr. Fitzgerald 1 Mr. Lott 

Mr. Ensign Mrs. Hutchison 1

Mr. Allen 1 Ms. Snowe 

Mr. Sununu Mr. Hollings 

Mr. Breaux Mr. Inouye 1

Mr. Rockefeller 1

Mr. Kerry 1

Mr. Dorgan 

Mr. Wyden 

Mrs. Boxer 

Mr. Nelson 

Ms. Cantwell 

Mr. Lautenberg 1

Mr. McCain 1 By proxy

15

Mr. Stevens offered a second degree amendment to the amendment offered by Mr. Dorgan to provide for a small market exemption from the cross ownership rules. By rollcall vote of 14 yeas and 

9 nays as follows, the amendment was adopted:

YEAS—14 NAYS—9

Mr. Stevens Mr. Lott 

Mr. Burns Ms. Snowe 

Mrs. Hutchison Mr. Rockefeller 

Mr. Brownback Mr. Kerry 1

Mr. Smith Mr. Dorgan 

Mr. Fitzgerald 1 Mr. Wyden 

Mr. Ensign 1 Mr. Nelson 

Mr. Allen Ms. Cantwell 

Mr. Sununu Mr. McCain 

Mr. Hollings 

Mr. Inouye 1

Mr. Breaux 

Mrs. Boxer 

Mr. Lautenberg

1 By proxy

Mr. McCain offered an amendment to vitiate the Commission’s 

grandfathering of radio broadcasting station ownership under its 

new broadcast media ownership rules. By rollcall vote of 12 yeas 

and 11 nays as follows, the amendment was adopted:

YEAS—12 NAYS—11

Mr. Stevens 1 Mr. Burns 

Ms. Snowe Mr. Lott 

Mr. Hollings Mrs. Hutchison 1

Mr. Inouye 1 Mr. Brownback 

Mr. Kerry 1 Mr. Smith 1

Mr. Dorgan Mr. Fitzgerald 1

Mr. Wyden Mr. Ensign 

Mrs. Boxer Mr. Allen 1

Mr. Nelson Mr. Sununu 

Ms. Cantwell Mr. Rockefeller 1

Mr. Lautenberg Mr. Breaux 

Mr. McCain

1 By proxy

(16)

1 Analysis of June 2nd FCC Order, ‘‘Mass Deregulation of Media Threatens to Undermine Democracy,’’ Consumer Federation of America and Consumers Union, June 2, 2003. 

ADDITIONAL VIEWS 

ADDITIONAL VIEWS OF SENATORS DORGAN, HUTCHISON, HOLLINGS, 

SNOWE, INOUYE, LOTT, BOXER, AND LAUTENBERG

During the Executive Session on June 19, 2003, several issues 

were raised during the consideration of S. 1046. As drafted, S. 1046 

would maintain the current national television ownership limit at 

35 percent. However, the Committee also adopted by voice vote a 

Dorgan/Snowe/Hutchison/Hollings amendment to restore the newspaper-broadcast cross ownership ban in most major markets. We 

are providing these additional remarks to explain why the Committee took this action. 

One of the things the FCC did in its June 2nd Report and Order 

on media ownership was to largely eliminate the ban on new newspaper-broadcast cross ownership combinations. We disagree with 

that decision because we fear the negative impact that additional 

newspaper-broadcast combinations will have on localism, diversity, 

and competition in those markets. Inevitably the merging of broadcasters and newspapers reduces the number of voices in individual 

markets and threatens to place too much control over local news 

and information in the hands of too few companies. 

The Committee received testimony and statistical evidence underscoring the dangers inherent in the FCC’s order lifting the cross 

ownership ban. If the FCC order lifting the ban were allowed to remain, broadcast-newspaper mergers could occur in nearly 200 markets, meaning that 98 percent of the American public could effectively lose many of the most relied upon independent voices in 

their community. 

This would allow almost two-thirds of the markets in the country 

to have only four local news sources (from television stations and 

newspapers). And, it would make it possible for individual markets 

to be dominated by a single newspaper/TV conglomerate which 

could control well over half the news audience and two-thirds of 

the reporters in a given local market.1 Clearly, this would be devastating for local competition and diversity in local news. 

Numerous witnesses before the Committee demonstrated that 

new technologies, such as the Internet and cable television, have—

so far—failed to replace local broadcast and newspapers as the 

major sources of news and information for citizens. The FCC’s own 

studies show that 80 percent of consumers still rely upon television 

and newspapers for their local and national news, and when asked, 

(in comparison to broadcast television and newspapers) consumers 

do not cite the Internet or cable television as a significant source 

17

2 Nielsen Media Research, Consumer Survey On Media Usage (FCC Media Ownership Working Group Study No. 8, September 2002). 3FCC v. National Citizens Comm. for Broadcasting, 436 US 775, 802 (1978) 

4Frank Blethen, Testimony before the Senate Commerce Committee, ‘‘Media Ownership 

(Broadcast),’’ May 13, 2003. 

of local news.2 As a result, the growth of the Internet and other 

new technologies has not created a significant enough change in 

consumer behavior to warrant relaxation of the cross ownership 

ban. 

The Federal courts have previously acknowledged that this cross 

ownership ban reflects an appropriate legislative and regulatory 

tool to promote competition and diversity of ownership,3 yet the 

FCC’s proposed relaxation of this rule is likely to undermine these 

democratic principles. Furthermore, as Frank Blethen, Publisher of 

the Seattle Times testified to this Committee, ‘‘There is no business 

justification that I’m aware of—other than monopolization—for lifting any of the current rules or for allowing any entity to engage 

in cross-media ownership.’’ 4

Recognizing the significant role broadcast stations and newspapers still play in local communities, we know of no better tool to 

ensure that the public airwaves are used to promote the important 

principles of localism, diversity, and competition. Therefore, the 

committee agreed that it is imperative to reinstate the FCC’s previous ban on newspaper-broadcast cross ownership in the same 

communities.

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the bill, as 

reported, are shown as follows (existing law proposed to be omitted 

is enclosed in black brackets, new material is printed in italic, existing law in which no change is proposed is shown in roman):

COMMUNICATIONS ACT OF 1934

TITLE III—PROVISIONS RELATING TO RADIO

PART I. GENERAL PROVISIONS

SEC. 340. NATIONAL TELEVISION MULTIPLE OWNERSHIP LIMITATIONS. 

(a) NATIONAL AUDIENCE REACH LIMITATION.—The Commission 

shall not permit any license for a commercial television broadcast 

station to be granted, transferred, or assigned to any party (including all parties under common control) if the grant, transfer, or assignment of such license would result in such party or any of its 

stockholders, partners, or members, officers, or directors, directly or 

indirectly, owning, operating or controlling, or having a cognizable 

interest in television stations which have an aggregate national audience reach exceeding 35 percent. 

(b) NO GRANDFATHERING.—The Commission shall require any 

party (including all parties under common control) that holds licenses for commercial television broadcast stations in excess of the 

limitation contained in subsection (a) to divest itself of such licenses 

18

as may be necessary to come into compliance with such limitation 

within one year after the date of enactment of this section. 

(c) SECTION NOT SUBJECT TO FORBEARANCE.—Section 10 of this 

Act shall not apply to the requirements of this section. 

(d) DEFINITIONS.— (1) NATIONAL AUDIENCE REACH.—The term ‘national audience 

reach’ means— (A) the total number of television households in the 

Nielsen Designated Market Area (DMA) markets in which 

the relevant stations are located, or as determined under a 

successor measure adopted by the Commission to delineate 

television markets for purposes of this section; divided by 

(B) the total national television households as measured 

by such DMA data (or such successor measure) at the time 

of a grant, transfer, or assignment of a license. 

No market shall be counted more than once in making this calculation. 

(2) COGNIZABLE INTEREST.—Except as may otherwise be provided by regulation by the Commission, the term ‘cognizable interest’ means any partnership or direct ownership interest and 

any voting stock interest amounting to 5 percent or more of the 

outstanding voting stock of a licensee.

TELECOMMUNICATIONS ACT OF 1996

SEC. 202. BROADCAST OWNERSHIP. 

(a) NATIONAL RADIO STATION OWNERSHIP RULE CHANGES RE- QUIRED.—The Commission shall modify section 73.3555 of its regulations (47 C.F.R. 73.3555) by eliminating any provisions limiting 

the number of AM or FM broadcast stations which may be owned 

or controlled by one entity nationally. 

(b) LOCAL RADIO DIVERSITY.— (1) APPLICABLE CAPS.—The Commission shall revise section 

73.3555(a) of its regulations (47 C.F.R. 73.3555) to provide 

that—(A) in a radio market with 45 or more commercial radio 

stations, a party may own, operate, or control up to 8 commercial radio stations, not more than 5 of which are in the 

same service (AM or FM); 

(B) in a radio market with between 30 and 44 (inclusive) 

commercial radio stations, a party may own, operate, or 

control up to 7 commercial radio stations, not more than 

4 of which are in the same service (AM or FM); 

(C) in a radio market with between 15 and 29 (inclusive) 

commercial radio stations, a party may own, operate, or 

control up to 6 commercial radio stations, not more than 

4 of which are in the same service (AM or FM); and 

(D) in a radio market with 14 or fewer commercial radio 

stations, a party may own, operate, or control up to 5 commercial radio stations, not more than 3 of which are in the 

same service (AM or FM), except that a party may not 

own, operate, or control more than 50 percent of the stations in such market. 

(2) EXCEPTION.—Notwithstanding any limitation authorized 

by this subsection, the Commission may permit a person or enVerDate Jan 31 2003 22:22 Sep 04, 2003 Jkt 019010 PO 00000 Frm 00020 Fmt 6604 Sfmt 6602 E:\HR\OC\SR141.XXX SR141
19

tity to own, operate, or control, or have a cognizable interest 

in, radio broadcast stations if the Commission determines that 

such ownership, operation, control, or interest will result in an 

increase in the number of radio broadcast stations in operation. 

(c) TELEVISION OWNERSHIP LIMITATIONS.—

(1) NATIONAL OWNERSHIP LIMITATIONS.—The Commission 

shall modify its rules for multiple ownership set forth in section 73.3555 of øits regulations (47 C.F.R. 73.3555)—

(A) by eliminating¿ its regulations (47 CFR 73.3555) by 

eliminating the restrictions on the number of television 

stations that a person or entity may directly or indirectly 

own, operate, or control, or have a cognizable interest in, 

nationwideø; and¿ . 

ø(B) by increasing the national audience reach limitation 

for television stations to 35 percent.¿

(2) LOCAL OWNERSHIP LIMITATIONS.—The Commission shall 

conduct a rulemaking proceeding to determine whether to retain, modify, or eliminate its limitations on the number of television stations that a person or entity may own, operate, or 

control, or have a cognizable interest in, within the same television market. 

(d) RELAXATION OF ONE-TO-A-MARKET.—With respect to its enforcement of its one-to-a-market ownership rules under section 

73.3555 of its regulations, the Commission shall extend its waiver 

policy to any of the top 50 markets, consistent with the public interest, convenience, and necessity. 

(e) DUAL NETWORK CHANGES.—The Commission shall revise section 73.658(g) of its regulations (47 C.F.R. 658(g)) to permit a television broadcast station to affiliate with a person or entity that 

maintains 2 or more networks of television broadcast stations unless such dual or multiple networks are composed of—

(1) two or more persons or entities that, on the date of enactment of the Telecommunications Act of 1996, are ‘‘networks’’ as 

defined in section 73.3613(a)(1) of the Commission’s regulations (47 C.F.R. 73.3613(a)(1)); or 

(2) any network described in paragraph (1) and an Englishlanguage program distribution service that, on such date, provides 4 or more hours of programming per week on a national 

basis pursuant to network affiliation arrangements with local 

television broadcast stations in markets reaching more than 75 

percent of television homes (as measured by a national ratings 

service). 

(f) CABLE CROSS OWNERSHIP.—

(1) ELIMINATION OF RESTRICTIONS.—The Commission shall 

revise section 76.501 of its regulations (47 C.F.R. 76.501) to 

permit a person or entity to own or control a network of broadcast stations and a cable system. 

(2) SAFEGUARDS AGAINST DISCRIMINATION.—The Commission 

shall revise such regulations if necessary to ensure carriage, 

channel positioning, and nondiscriminatory treatment of nonaffiliated broadcast stations by a cable system described in 

paragraph (1). 

20

(g) LOCAL MARKETING AGREEMENTS.—Nothing in this section 

shall be construed to prohibit the origination, continuation, or renewal of any television local marketing agreement that is in compliance with the regulations of the Commission. 

ø(h) FURTHER COMMISSION REVIEW.—The Commission shall review its rules adopted pursuant to this section and all of its ownership rules biennially as part of its regulatory reform review under 

section 11 of the Communications Act of 1934 and shall determine 

whether any of such rules are necessary in the public interest as 

the result of competition. The Commission shall repeal or modify 

any regulation it determines to be no longer in the public interest.¿

(h) FURTHER COMMISSION REVIEW.— (1) IN GENERAL.—The Commission shall review its rules 

adopted pursuant to this section, and all of its ownership rules 

biennially as part of its regulatory reform review under section 

11 of the Communications Act of 1934 and shall determine 

whether—

(A) any rule requires strengthening or broadening; 

(B) any rule requires limiting or narrowing; 

(C) any rule should be repealed; or 

(D) any rule should be retained. 

(2) CHANGE, REPEAL, OR RETAIN.—The Commission shall 

change, repeal, or retain such rules pursuant to its review 

under paragraph (1) as it determines to be in the public interest. 

Before making any determination under this subsection concerning 

an ownership rule or regulation, the Commission shall hold no less 

than 5 public hearings in different areas of the United States with 

respect to that rule or regulation.

(i) ELIMINATION OF STATUTORY RESTRICTION.—Section 613(a) (47 

U.S.C. 533(a)) is amended— (1) by striking paragraph (1); 

(2) by redesignating paragraph (2) as subsection (a); 

(3) by redesignating subparagraphs (A) and (B) as paragraphs (1) and (2), respectively; 

(4) by striking ‘‘and’’ at the end of paragraph (1) (as so redesignated); 

(5) by striking the period at the end of paragraph (2) (as so 

redesignated) and inserting ‘‘; and’’; and 

(6) by adding at the end the following new paragraph: 

‘‘(3) shall not apply the requirements of this subsection to 

any cable operator in any franchise area in which a cable operator is subject to effective competition as determined under 

section 623(l)’’.

Æ