Incubator Program Should Be 'Abandoned,' Public Interest Groups Say; NAB Objects
NAB and some public interest groups disagree on nearly every aspect of an FCC-proposed broadcast ownership incubator program (see 1711160054), in comments in docket 17-289. NAB supports a program that would include incentives such as ownership rule waivers for participating broadcasters. Groups including the Communications Workers of America, United Church of Christ Communication Office and Prometheus Radio Project said the program wouldn’t accomplish its goals.
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“No incubator program, no matter how well intended and designed, will lead to diverse media ownership,” said those groups, including many that challenged the media ownership order on reconsideration that's the basis of the incubator proposal (see 1802070053). “Abandon its proposal to adopt an incubator program,” they said. An incubator program “may result in fewer voices in the market at the ownership level,” REC Networks said. Be “highly skeptical” of the groups’ stance, NAB said. “Their goal is solely to keep the same regime in place, despite the fact that it has only led to a decrease in minority and female ownership.” Evidence that minority ownership “has languished” since the minority tax credit was eliminated is “more than apocryphal,” said broadcaster Skip Finley, saying the tax credit was the key to his becoming a station owner.
Under NAB’s proposal, the incubator broadcaster would own some interest in the incubated entity, and the incubator would receive incentives in the form of waivers of local ownership rules. The incubating broadcaster also would receive such a waiver when the incubated broadcaster “graduates” by becoming an independent broadcaster. “Such incentives were the keys to success in the now-defunct minority tax certificate program, which notably increased minority ownership,” NAB said. By requiring the incubating broadcaster to have a stake in the incubated, the FCC “will be creating the necessary incentives for the incubator to train and support the incubated entity to help ensure the station’s success,” NAB said.
Free Press and other so-called public interest groups said those sorts of incentives could act as loopholes in ownership rules. “These kinds of sharing agreements and rights to acquire the sharing ‘partner’ represent a form of covert consolidation,” Free Press said. “The FCC must stop issuing monopolies under the premise of helping minority ownership,” said broadcaster Ravi Kapur, president of Major Market Broadcasting of North Dakota. Since relaxed ownership rules encourage consolidation, the incubator program could leave new entrants with no stations to buy, Free Press said. Since the media ownership recon order relaxed most local ownership rules, broadcasters won’t have any incentive to incubate new entrants even with ownership waivers, said the public interest groups' joint filing. “For the incubating entity, whether to incubate a new entrant is largely a business decision, so providing a meaningful economic incentive not otherwise available is paramount,” NAB said.
The public interest groups disagreed with the FCC proposal’s possible use of a revenue based eligible entity standard for deciding who's eligible to be incubated. That definition of an eligible entity is a key sticking point in the challenges to the media recon order and the 2014 quadrennial ownership rule review in the 3rd U.S. Circuit Court of Appeals and the D.C. Circuit. The 3rd Circuit ruled there’s no evidence a revenue-based standard would encourage ownership opportunities for minorities and women, the joint filing said. “The Commission does not mention even once, much less discuss, minority and female media ownership in the ReconOrder/NPRM.” NAB supports the eligible entry standard, saying using standards based on the race or gender of new entrants would be difficult to defend from constitutional challenges: “Although an eligibility standard invoking race or gender could very well be the most effective approach, meeting the applicable legal standards may be particularly challenging.” It’s also difficult to assess any incubator program because the FCC hasn’t collected ownership data as ordered by the 3rd Circuit, the public interest groups said.
NAB said the program should permit potential parties as incubated entities that have “attributable interests in no more than three broadcast stations nationwide,” not counting the station incubated. REC disagreed, saying the program should “be about training and mentoring new talent, not about financially supporting failing stations.”