Hey FCC, It’s Not The 1960s Anymore

Harry Jessell

It’s 2024 … except at the FCC where it’s still 1964 and regulating broadcasting is all the rage.

Drawing on the prevailing belief of that time that broadcasting was too powerful and concentrated not to be constrained and managed by the federal government, the agency — by a vote of its three-person Democratic majority — last week bucked the decades-long trend of loosening TV regs by affirming and tightening its Top-Four TV duopoly rule.

The rule says that broadcasters can’t own and operate more than one ABC, CBS, Fox or NBC affiliate in a market. In recent years, with the tacit blessing of the FCC staff, broadcasters have been able to circumvent the rule, mostly in 100-plus markets, by airing one or more stations on an LPTV station or multicast channel.

No more. The rule stays and the “loophole” is closed, the FCC Chair Jessica Rosenworcel and other FCC Dems proclaimed. Existing so-called virtual duopolies will be grandfathered, but they can’t be sold to another broadcaster without official FCC dispensation, which will cause all kinds of M&A complications.

The FCC says it will continue to consider Top-Four duopolies on a case-by-case basis, but we learned that’s a tease earlier this year when the FCC killed a proposed combo of two affils in Fargo, N.D., through one of Rosenworcel’s favorite tactics, bureaucratic indifference. Like the parties involved, I could see nothing wrong with the deal when I plugged in the FCC’s own criteria for granting them.

The ruling is a blow to broadcasters who see ownership of multiple affiliates as an effective way of achieving news economies of scale and preserving, and sometimes expanding, local news in the market.

It’s also a loss for the NAB, which argued for relief. Cable and satellite operators, organized under the banner of the American TV Alliance, pushed long and hard for keeping the lid on Top-Four duopolies, contending they gave broadcasters undue leverage in retrans negotiations that would result in higher fees for cable subs.

“We applaud the FCC’s efforts to help consumers by closing loopholes in its broadcast ownership rules,” the ATVA said in a statement following the vote. “For too long, these loopholes have allowed broadcasters to control distribution of two, three, or even all four major networks in markets throughout the country…. Today’s action promises some long-awaited relief for consumers and their pocketbooks.”

The FCC order swallows the ATVA argument whole, saying the tougher duopoly rule advances its long-standing goal of ensuring robust competition not only in retrans negotiations, but also in the local advertising market.

“Promoting competition among local television stations prevents local broadcasters from demanding higher retransmission consent fees and charging higher rates for local businesses seeking to purchase advertising time on local stations, costs that may be passed on to consumers,” the order says.

I concede that the ATVA had the higher ground in the battle since rising retrans fees no doubt put upward pressure on what consumers (i.e., constituents) have to pay for cable and satellite service. However, NAB should be able to fight uphill and win. The scores of cable networks that also demand fees from operators also drive up consumer prices.

In addition to preserving competition, the FCC also cites its long-standing goals of ensuring local programming (localism) and diversity of viewpoints or voices (separately owned stations) in justifying the duopoly rule. On paper, these are laudable, but they no longer make sense in today’s media ecosystem where there are literally hundreds of TV channels vying for attention and dollars, not to mention traditional media like newspapers as well as other relative newcomers like social media.

The FCC’s misguided obsession with broadcasters’ competitive clout may be detrimental to localism. Broadcasters need retrans dollars, as many as they can get, if they are to maintain and expand their news and offer other local programming. As I have argued here many times before, the FCC needs to get out of the way and let the market set the retrans fees.

And, of course, broadcasters also need advertising dollars to fuel their newsrooms. Is it really the job of the FCC to structure markets so that auto dealers, PI lawyers and home improvement outfits don’t pay too much for spots and pass the cost on to their customers and clients?

For the record, TV stations’ share of the local ad market shouldn’t sound alarms. According to BIA Advisory Services’ forecast, stations will reap just 13% of the $175.6 billion in local advertising spending this year, a presidential election year in which stations’ share is greater than in other years.

Intense competition, by the way, is not necessarily the path to better journalism. In fact, less of it can enhance it, producing fat profits and extra resources for newsrooms. I would say the Golden Age of Newspapers stretched from 1970 to the early 2000s when single papers emerged to dominate markets and did great things. The Times in Los Angeles, the Tribune in Chicago, the Globe in Boston, the Post in Washington all come to mind.

Newspaper publishing offers another lesson. Hundreds have withered or died over the past two decades from the onslaught of digital media. TV stations have been suffering from the same heat. That they have been holding their own so far does not mean they will continue to do so. Think what would happen if political media buyers discover a better way to reach likely voters.

Yes, the FCC is right to be concerned about the loss of a voice in the market, which is the natural consequence of duopolies, but losing a voice is better than losing an entire news operation because of regulatory hobbles.

Some markets simply can’t sustain three or four independent news operations anymore. Last spring, Sinclair shut down its local news operations in five small markets. (Here in Pittsburgh, DMA 28, where I live, Sinclair doesn’t even bother with producing its own news, although it carries newscasts of Cox’s crosstown WPXI.)

Broadcasters may be able to overturn the FCC action in the courts, but that is a long, costly and laborious process with no guarantees. Their best hope now for relief is the return of a Republican chairperson, one with faith in the marketplace and a belief that regulation is not the default, but the last resort.

Both FCC Republicans, Brendan Carr and Nathan Simington, voted against the measure. “The FCC has every reason to update this outdated set of broadcast radio and television rules,” said Carr in his dissenting statement. “The law compels us to do so. The facts tell us to do so. And the public interest in promoting local news and information counsel in favor of doing so. Yet the rules will remain in place — impervious to those compelling forces.”

I should caution that a Republican FCC might come with a lot of baggage, namely Donald Trump. He is no friend of news media that criticize him, and the FCC is a perfect tool to punish any outlet under its jurisdiction that does.

Carr, a likely FCC chairman in a Trump second term, is just the guy to wield that tool on Trump’s behalf. In May 2020, after Twitter tagged one of his posts as possibly misleading, Trump urged the FCC to look into regulating social media just as it used to regulate broadcasting via the Fairness Doctrine. Carr enthusiastically embraced the idea, First Amendment be damned. As far as I know, he is still a member of the Trump politicult.

The FCC needs a major attitude adjustment. It has to stop thinking of TV as indestructible and dominating players that must be controlled by wise heads in Washington, lest the broadcasters turn their newsroom over to AI-driven avatars, crush local economies with incessant spot increases and spawn a cable-deprived underclass.

If the FCC is truly interested in broadcast localism, the FCC needs to get its head out of ’60s and into the ’20s. I can suggest a few ways: give stations the right to negotiate directly with vMVPDs rather than having to rely on the sticky-fingered networks; facilitate ATSC 3.0 where it can; and, most important, lighten up, don’t tighten up, on the duopoly rule and other anachronistic structural regulations.

Harry A. Jessell is editor at large of TVNewsCheck. He can be contacted here. You can read earlier columns here.