Pai Announces Monthly Deregulation Effort; No Specifics on Ownership Rules
AUSTIN -- Chairman Ajit Pai promised at the Radio Show that the FCC will tackle deregulation of its media “underbrush” though a series of monthly NPRMs, going forward. He offered few specifics about rollback of ownership rules that Connoisseur Media CEO Jeff Warshaw said on a panel earlier Wednesday is “required” for radio’s “survival.” Radio needs “the rope cut from our hands,” Warshaw said. Lack of specifics about ownership deregulation didn’t appear to faze attendees, who gave Pai a standing ovation. Several told us they had little doubt the FCC would roll back ownership rules governing radio. “I’m hopeful that it’ll come soon,” said John Zimmer, CEO of Zimmer Radio.
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Pai said the FCC would in September examine a proposal to eliminate a requirement that broadcasters keep a hard copy of FCC rules in their facilities, relax technical rules for AM directional antennas as expected (see 1709050079), and also take action later in the fall to eliminate the main studio rule. Pai said in an interview that the FCC still is examining the issue of AM/FM subcaps and declined to offer specifics about when the commission would take on an expected broadcast ownership reconsideration order. The order was anticipated for either September or October (see 1708220058).
Since Pai didn’t unveil it Wednesday, attorneys told us October or later is likely. “That’s a pretty good indication,” Pillsbury Winthrop broadcast attorney Scott Flick told us. Pai has indicated the FCC would pursue ownership deregulation before the end of the year, said Fletcher Heald's Frank Jazzo.
The agency will release an NPRM every month on eliminating or updating an outdated rule, Pai said. He conceded that the first such item, on eliminating a rule requiring broadcasters to keep a physical book of FCC rules in their facilities, “is hardly the biggest deal,” a sentiment echoed by broadcasters and attorneys. The proceeding only recently closed and there likely hasn’t been time for the staff to target a more substantive outdated rule, an attorney said. Lawyers believe bigger rule changes would eventually flow from the deregulation effort. Pai said he supports eliminating the main studio rule, but said a draft item doing so would be circulated “this fall” -- it's not expected to be part of the Sept. 26 commissioners' meeting. “I’ve reached the conclusion that it is time for the rule to go,” Pai said.
Pai trumpeted FCC pro-radio accomplishments, such as halting pirate radio and translator windows. The windows have led to over 2,100 applications for translators “or nearly half of all licensed AM stations nationwide,” he said. The FCC increased pressure on pirate radio operators, he said. “The FCC is substantially stepping up its enforcement efforts against pirate radio stations,” Pai said, crediting Commissioner Mike O’Rielly with pushing for stiffer enforcement. Since Pai took the helm, the Enforcement Bureau has issued 55 notices of unlicensed operation, several notices of apparent liability, and six forfeiture orders, he said. “We will not just continue, but intensify this effort in the months to come.”
The September commissioners’ meeting also will include a draft item that would “relax certain technical rules applicable to AM broadcasters operating directional antenna arrays” to ease their regulatory and financial burdens, Pai said. Raised by the AM revitalization order, the item is expected to involve changes to the way the contours of AM stations are calculated, Womble Carlyle radio lawyer John Garziglia told us. The item is expected to be largely noncontroversial, he said.
Big Changes Sought
At an earlier panel, radio executives said smaller rule changes don’t do enough to help radio.
Rule changes are helpful “subjectively,” Neuhoff Communications CEO Beth Neuhoff said. Removing the main studio rule might matter to some broadcasters but would do little for Neuhoff's company, she said. Relaxing main studio rules or doing away with some of the filing requirements that may be targeted in the media deregulation proceeding isn’t “transformational” in the way that removing the subcaps or rolling back media ownership rules would be, said Benjamin Media Investments President David Benjamin. Broadcast attorneys said they expect action on the subcaps would be part of the 2018 quadrennial review rather than an expected upcoming media ownership reconsideration order. Without relaxed ownership rules and especially the removal of the AM/FM subcaps, terrestrial radio will face severe challenges in the next 10 years, Warshaw said.
Giving radio broadcasters freedom to consolidate and grow in FM is important for the industry’s future, Warshaw said. Though he conceded that removing the subcaps likely would harm AM radio, there aren’t enough resources for “everybody to get what they want” and save AM, Warshaw said. Cox Media Group President Kim Guthrie has little faith that AM will be able to remain viable: “That ship has almost sailed and we have bigger fish to fry.”
Removing regulatory barriers to ownership could coincide with restructuring industry leaders Cumulus and iHeartRadio, possibly spurring more deals in the “tepid” industry (see 1709010060), panelists said. The debt load carried by the two companies has been a cloud over the industry and deterred investment, said Capital One Managing Director-Technology, Media and Telecom Robert Malone. “The balance sheet situations at Cumulus and iHeart have limited the investable universe of radio,” said Wells Fargo analyst Davis Hebert.
Entercom CEO David Field took the opposite tack after receiving a National Radio Award Wednesday. Denouncing “naysayers” who spin “false narratives," he said radio needs to “go on offense” and increase investment in advocacy for the industry. The combined Entercom/CBS Radio will do so after the deal's approved, he said. “Radio is the most undervalued industry.”
Attendees praised that speech. Salem Radio CEO Edward Atsinger told us he agreed with every one of Field’s points. The radio executive panel before his speech also praised Field, and said Entercom/CBS could present a more favorable front to investors after the combination is approved. Cumulus and iHeartRadio are likely to restructure in 2018, Malone said, and could combine with media deregulation and the stabilizing influence of a successful Entercom/CBS Radio to spur industry growth.