FCC Rules Are Barrier to Diversity, Critics Say

Friday, 28 Mar 2014 04:51 PM

By Jennifer G. Hickey

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The Federal Communications Commission is allowing political motives to drive proposed regulations of radio and television stations that could force some stations to close down, critics charge.

Much of the criticism is coming from minority voices who say the FCC's actions are harming both racial and "viewpoint" diversity in the ownership of stations.

In a recent opinion piece in The Wall Street Journal, commentator and author Juan Williams expressed his suspicion that "liberals at the FCC who claim to be interested in promoting diverse broadcast ownership" really want "diversity but not of the political kind."

At issue is the FCC's proposed rule to eliminate joint service arrangements (JSA) and shared service agreements (SSA), which permit television and radio stations to control more than one station in an individual market without owning the station outright. The FCC prohibits an owner of one of the four most-viewed stations from owning another top station.

The FCC, which contends the joint service arrangements are an "end run" around those limits, has proposed a rule stipulating that if the owner of one station in a market sells 15 percent or more of the advertising time for a competing station, it would be considered to have ownership interest in that station.

Conservative radio host and political commentator Armstrong Williams told Newsmax that without joint services agreements, small stations like those he owns in Pennsylvania and in Myrtle Beach, S.C., could be forced to close down. His company has a JSA with a larger broadcast company with stations in those markets.

"The FCC is under the impression that joint service agreements skirt the ownership rules, but without shared service agreements, people like myself will completely disappear from broadcasting ownership. The viewpoint diversity, which these agreements are designed to protect, will suffer dramatically," said Williams.

The National Association of Black Owned Broadcasters (NABOB), which once opposed JSAs, has voiced its support, asserting the arrangements can be mechanisms to achieve racial diversity.

In its March 3 newsletter, the NABOB noted that none of the 17 stations previously owned by Inner City Broadcasting, which had been founded by African Americans, were sold to black-owned companies.

"The refusal of station owners to sell to African American buyers continues to wreak havoc upon the African-American community," the group said.

The development "reflects a lack of concern" by station-sellers to "keep ownership of stations previously owned by African-Americans in the African-American community. It also reflects a lack of policies in place at the FCC to encourage station sellers to sell stations to companies owned by African-Americans," the group said.

They assert that JSAs and SSAs could be used as "mechanism for promoting minority ownership" and without such agreements "the decline of minority ownership in the broadcast industry will continue."

"Less than 10 years ago there were 21 full-power commercial television stations licensed to African-American controlled companies in the United States, and today there are only three," NABOB said. "The fact that there are so few African-American owned television stations is a sad commentary on the state of diversity in the broadcast industry and calls for action on the part of the commission to improve this abysmal ownership situation.

"Given the precipitous fall-off of African-American television ownership in the past few years, and the accelerating pace of consolidation that has roiled the television industry in recent months, there is no reason to be optimistic that the number of African-American owned television stations is going to appreciably increase in the near future without some serious rethinking of the commission's policies."

The National Association of Broadcasters also criticized the FCC's proposal as stifling diversity.

NAB President Gordon Smith said in a statement that the JSAs "lead to more local news and provide robust competition to giant pay TV providers," and that eliminating them would only benefit large cable companies and wireless companies "who support punitive FCC actions that drive more TV stations into spectrum auctions" to compete for bandwidth.

Armstrong Williams believes the FCC has set its sights on the radio stations' spectrum space.

"As the recent experience with the Netflix-Time Warner-Comcast bandwidth battle reveals, content creators are going to be increasingly held up by cable companies who also own Internet companies," Williams wrote in a recent column. "The bottom line is that cable companies want the spectrum that has been allocated to broadcast television, and they are competing fiercely in the political arena to obtain it."

According to the Pew Research Center, joint service agreements of one kind or another now exist in at least 94 markets, almost half of the 210 local TV markets nationwide, and up from 55 in 2011.

In February, the Justice Department stated in a filing with the FCC that JSAs "often confer influence or control of one broadcast competitor over another." The FCC, in turn, has cited Justice's filing as the basis for its new rule.

Concerned about the impact the rule might have on diversity, the House Energy and Commerce Committee has taken action to limit the FCC's authority to change the policy.

In response to the initial announcement of the rule, Committee Chairman Fred Upton, R-Mich., and Communications and Technology Subcommittee Chairman Greg Walden, R-Ore., expressed their concern with both the rule and the process of promulgating the rule, calling it an "end-run around the full commission" and " a step back for transparency and reform, and sadly, consumers are the ones who stand to lose the most."

On March 25, Walden's subcommittee voted to send legislation reauthorizing the Satellite Television Extension and Localism Act to the full committee, including a provision preventing the FCC from taking action on JSAs.

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