FCC Approves Incubator Program 3-1, Allows Transferable Waivers
Commissioners approved a radio incubator order 3-1 Thursday, with Commissioner Jessica Rosenworcel dissenting and calling the item “modest” and muddled. “There is nothing bold here,” she said. “I fail to see how it will make a material difference in the diversity of media ownership.” The final version of the order adhered to NAB’s positions on comparable markets and that ownership waivers be transferable, as expected (see 1807310072).
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Those stances were objected to by members of the FCC Advisory Committee on Diversity and Digital Empowerment (ACDDE). The incubator program is necessary because of the “anemic” level of diverse ownership in broadcasting, said Commissioner Mike O’Rielly, which he said stems from “longstanding, archaic media ownership rules.”
Chairman Ajit Pai chided the previous FCC and Rosenworcel for not acting on diversity and on an incubator program that he proposed as a commissioner in 2014. “The prior commission talked a lot about supporting diversity but did nothing,” Pai said, blaming the previous regime for allowing a diversity committee to lapse. “Talk doesn’t get the job done,” he said. Rosenworcel said in a news conference later that Pai’s original incubator proposal merited consideration, but the new rule is meaningless because “we no longer have rules to even waive.” Rosenworcel said there was a great deal of “back and forth” about the item.
Though the order's final text wasn't released by evening, commissioners and Media Bureau staff said it grants waivers of the local radio ownership rule and AM/FM subcaps for broadcasters that incubate new entrants meeting a revenue-based definition of an eligible entity. Those waivers can be applied in “comparable markets” to those of the incubated station, and bureau staff said they will be permanent and transferable to new owners as long as the station purchased under the waiver remains part of the same cluster. The item contains language nodding to a future incubator program for TV, bureau Chief Michelle Carey told us in Q&A.
“Preventing the reward waiver from being freely transferable would harm participation rates and undermines sound policy,” said O’Rielly. Allowing transferability was a request from his office and its inclusion demonstrates “significant edits can still occur prior to our final approval of the items” even though they’re made public before the meeting, O’Rielly said. Limiting the markets that could be considered comparable as requested by the ACDDE members would restrict participation in the program, he said.
In its comments on the program, the ACDDE pushed for a tax certificate and on visits to the FCC requested that language asking Congress to create a tax certificate incentive for the incubator program be included in the item. “Such an edit would do nothing but cause extensive delay and a further continuation of the tragically low diversity ownership rate in the broadcast space,” O’Rielly said.
The incubator item is unlikely to satisfy the 3rd U.S. Circuit Court of Appeals weighing the FCC’s media ownership reconsideration order, Rosenworcel said. That echoes the argument of anti-media consolidation groups, which said since the item includes no data collection on diversity of ownership and doesn’t affect the TV stations that were the focus of the recon order, it doesn’t meet the court’s requirements. “The FCC once again failed to respond to the mandate of the Third Circuit and has adopted an incubator program that will not promote diversity and will increase consolidation,” said Cheryl Leanza, of the United Church of Christ Office of Communication. The agency has until Aug. 6 to give the court a report on the incubator program. Pai declined to comment on how the incubator order would be received.
It’s “stupid and cynical” to oppose the incubator program because it might help the FCC in court, tweeted NAB General Counsel Rick Kaplan. “All it will incubate is more media consolidation,” tweeted former Commissioner Michael Copps. Incubators “are key to breaking down financial and operational barriers to entry for underrepresented communities interested in media ownership,” an NAB spokesman said. “NAB encourages the FCC to extend this initiative to local TV station ownership as well.”
Also at the meeting, rules to ease pole attachments and make it harder for localities to slow down communications tower projects were approved on a party-line commissioner vote: 1808020034; and two 5G items, including for a pair of auctions, were unanimously OK'd: 1808020025. As covered in the Notebook section at end of 1808020034, all members voted to move forward on reimbursing a variety of broadcasters affected by post-incentive auction channel moves; a telehealth pilot program notice of inquiry was approved 4-0; commissioners said work remains pending on auction software, prompting some concerns; and commissioners said little about Sinclair/Tribune despite numerous questions from reporters.