Transformation: The 1996 Act Reshapes Radio

I. INTRODUCTION II. LICENSE RENEWALS III. LOCAL OWNERSHIP IV. NATIONAL OWNERSHIP V. IMPACT AND OUTLOOK I. INTRODUCTION While the Telecommunications Act of 1996 ("1996 Act") focused largely on updating common carrier policy, several provisions modified broadcast--especially radio--licensing and ownership. (1) Any change in media ownership policy soon generates hot debate in this era of ever-tighter consolidation across the economy, and these statutory changes and the proceedings they prompted were no exception. Critics have long lamented that media are controlled by too few big owners. (2) Persuaded that ownership diversity was vital to the public interest, for decades the Federal Communications Commission ("FCC") limited radio and television station ownership at both the local market and national levels. Various FCC policies sought to increase content diversity, economic competition, and ethnic minority entry and participation. (3) Such policies followed the presumption that ownership of print or electronic media outlets affected their content and that diverse editorial points of view are important in a democracy. (4) At the same time, control of advertising outlets (such as radio stations) has been one important factor in determining healthy competition at both market and national levels. (5) Taking these and other presumptions into account, broadcast ownership policy has traditionally questioned how many outlets (individual media, such as a radio station) may be controlled by any one ownership voice. (6) While the online world is changing the concept of a local marketplace, issues of ownership have typically focused more on market rather than national levels, as audiences select among those media outlets available to them. A New Yorker has little interest in what media are available to audiences in San Diego. Many factors contribute to the decision to acquire one or more media outlets, the potential for making a profit chief among them. If ownership of several media outlets in one market offers the option of greater return through increased efficiency, such as automation or shared resources, so much the better. In some cases, ownership of multiple media has been pursued to expand economic or political power--Hearst or Murdoch come to mind. Availability of investment capital and low interest rates are also important facilitators. Changing technology has often encouraged consolidation. And obviously, policy changes can affect ownership, as the 1996 Act's provisions have demonstrated over the past decade. IX. LICENSE RENEWALS While the 1996 Act increased radio station license terms from seven to eight years, the more important policy change affected license renewals. For decades, broadcasters had pressed both the FCC and Congress to establish some degree of "renewal expectancy" if a licensee provided acceptable service. While few licenses were ever challenged in so-called comparative renewals, and fewer still denied, the issue remained hotly controversial and kept legions of attorneys busy at a high cost to broadcasters even if licenses were nearly always renewed. One notable case involved fourteen licenses worth over one billion dollars, several of which were eventually reassigned. (8) While process seemed at times to overtake substance in these proceedings, the FCC had little choice given the statutory requirements in the 1934 Communications Act ("1934 Act"). (9) With a sweep of its legislative hand, Congress removed all this with a new subsection (k) added to Section 309 of the 1934 Act. It requires that a license be renewed if the licensee fulfills three requirements: (A) the station has served the public interest, convenience or necessity; (B) the licensee has not been found guilty of "serious violations" of the Act or FCC rules; and (C) the licensee has committed "no other violations" of the Act or FCC rules, "which, taken together, would constitute a pattern of abuse. …