Draft Ownership Cap NPRM Has No Tentative Conclusions, Not Seen Leading to FCC Action
A draft NPRM on the national broadcast ownership cap contains no tentative conclusions, seeks comment on broad questions about altering the cap and is seen as unlikely to lead to concrete agency action, FCC and industry officials said in interviews Tuesday. Both FCC Democrats issued statements Tuesday opposing proposed alterations to the cap, and Commissioner Mike O’Rielly appeared to reaffirm his previous comments that the agency doesn’t have authority to alter the cap, though expressing support for the NPRM. “While I have outlined my thoughts on the authority to alter the cap and UHF discount, I support the Commission asking these questions and look forward to seeing the issue be litigated out,” he said.
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Industry officials expect O’Rielly to vote yes on the proposal. He’s seen unlikely to support action to alter the cap, which would leave Chairman Ajit Pai without enough votes. The record gathered under the item slated for the Dec. 14 commissioners’ meeting is likely to “end up in the freezer,” a broadcast industry official said.
The agency is looking at the cap and the UHF discount “the right way,” Pai said. “Any review of one component of the rule must include a review of the other.” He said the NPRM would “seek public input on whether to modify, retain, or eliminate the 39 percent national cap on audience reach by an owner as well as the UHF discount.”
The proposal “asks what authority the Commission has to eliminate or modify the ownership cap and the answer is simple: there is none,” said Commissioner Jessica Rosenworcel. That argument runs counter to the text of the 2016 order repealing the UHF discount, which Rosenworcel supported as part of the then-majority (see 1609070046). “We conclude that the Commission has the authority to modify the national audience reach cap, including the authority to revise or eliminate the UHF discount,” that order said. “No statute” bars the FCC from revisiting the cap or the UHF discount, the order said. “Commissioner Rosenworcel’s vote was to eliminate the outdated UHF discount,” her policy adviser, Kate Black, said of the 2016 item. Commissioner Mignon Clyburn, who also voted for the 2016 order, said the announcement of the agenda amounted to a “Pre-Holiday News Dump” and a “#Thanksgivingfail.”
Though the current projected vote count means rule changes are considered unlikely, the creation of a record on altering the 39 percent ownership cap makes it possible for the FCC to eventually take action in that direction, an official said. Broadcasters widely support FCC action to relax the cap, said Davis Wright communications lawyer Christopher Cook. Though broadcasters want the cap changed, they are unpacking recent FCC action on media ownership and ATSC 3.0 (see 1711160054), said Fletcher Heald broadcast attorney Frank Montero. After those large actions and a draft order on net neutrality (see 1711210020), it makes sense the agency would take its time on the national cap, he said.
It’s “pretty clear” the FCC doesn’t have the authority to alter the national cap, said United Church of Christ Communications Office attorney Cheryl Leanza. “The UHF discount is completely inappropriate.” The NPRM is intended to legitimize the earlier action to resurrect the discount, she said. Leanza is part of a legal challenge of reinstatement of the discount in the U.S. Court of Appeals for the D.C. Circuit by groups including Free Press and Common Cause. Broadcast attorneys said the draft NPRM may undercut arguments in court that the FCC violated procedure by conditioning reinstatement of the discount on results of a future holistic review of the national cap. “Changing this limit should require congressional action, but Pai doesn't care,” said Free Press CEO Craig Aaron. “He’ll do whatever it takes to clear the way for Sinclair to swallow up stations. ... Unless Pai’s stopped, Rupert Murdoch and a few other moguls will go on their own buying sprees.” The FCC didn’t comment.
House Democrats, including Minority Leader Nancy Pelosi, D-Calif., said the FCC doesn’t have authority to allow stations to ignore the cap. It's “prohibited from allowing any single company to own broadcast stations that break the national ownership cap,” the Democrats' wrote the commissioners Monday. “To comply with the law, the Commission is required to order divestitures in any transaction in which a company -- including Sinclair ... attempts to acquire stations that reach more than 39% of the national broadcast audience.” Commerce Committee ranking member Frank Pallone, D-N.J., and Subcommittee on Communications and Technology ranking member Mike Doyle, D-Pa., signed. Clyburn tweeted in support of the letter: “Complying w/ the #law means @FCC cannot raise national ownership cap."