The FCC is expanding its pending radio multiple ownership rulemaking
proceeding to include a comprehensive examination of all aspects of the
FCC's local ownership rules. Among the issues about which the
Commission has sought comment are the following:
Congressional authority to regulate. Does the public interest
standard of the Communications Act authorize the Commission to conduct
competitive and diversity analyses of radio transactions which
otherwise comply with the numerical limits on local radio station
ownership adopted by Congress in 1996?
What aspects of diversity and competition are important? If
the Commission has the authority to go beyond these limits, what should
it consider? The FCC has focused on diversity and competition in
assessing the impact of proposed transactions. The Commission wants to
know what aspects of diversity and competition it should examine.
Defining markets in which stations compete. A starting point
in the FCC's competition analysis is the definition of the relevant
product and geographic markets in which radio stations compete. If
advertising is the focus, is radio advertising separate from other
media advertising? As for the relevant geographic market, the FCC has
tentatively concluded that that market is local. But the Commission
asks, is the current market definition, based upon mutually overlapping
signal contours, the appropriate measure? If not, what other definition
should be used?
Measuring market share of stations. Consideration of market
share requires a workable mechanism for measuring it. Accordingly, the
Commission is seeking comment on how to measure the market share of
station groups in a market. According to the Commission, information on
advertising revenue or audience share in a market can be obtained from
reporting services such as BIA for stations located in Arbitron
markets. But once it has those numbers, how should it analyze them?
Should the FCC focus on the combined market shares of market
participants, as it does in evaluating pending acquisitions via its
50%/70% screen (discussed below), or should it use the
Herfindahl-Hirschman Index (HHI) — an index commonly used in
antitrust analysis — as a method of comparing pre-acquisition
concentration and post-acquisition concentration?
Benefits and harms of consolidation. The FCC also seeks
empirical evidence on the economic benefits and harms of permitting
greater consolidation in local radio station markets. It wants to know
the benefits to stations, advertisers, and the public. It asks what
harm to advertisers and consumers consolidation might bring.
Numerical limits vs. analyzing each acquisition individually.
The Commission has invited comment on how it should analyze radio
acquisitions. Should the FCC look to compliance with numerical limits,
should it analyze each acquisition individually without regard to
compliance with numerical limits, or should it continue to do both?
If numerical limits are to remain a factor, should the FCC retain
the current numerical limits and modify its market definition, or
should it modify the numerical limits, and if modification of the
limits is in order, what should the new limits be? As one alternative
along these lines, the Commission suggests that it could require the
presence of at least three competitive independent broadcasters in the
Interim application processing procedures. Prior to the
completion of the rulemaking, the FCC will examine the competitive
effects of radio transactions. In doing so, it will continue to use its
50%/70% screen to determine which applications to examine in detail.
Under that screening process, an application that proposes a radio
station combination that will give one group 50% or two groups 70%, of
the radio advertising revenue of the relevant Arbitron metro market, as
reported by BIA, will be flagged for close examination. The flag will
be included on the public notice announcing the acceptance of the
application for filing.
For applications below the 50%/70% screen, the staff will not
conduct a further competitive analysis unless a petition to deny
raising competitive issues is filed, at which time a preliminary
competitive analysis will be made. The staff may then grant
applications that it finds consistent with the public interest and
which propose a level of concentration the staff has authority to
grant. Applications for which the staff does not have authority to
grant will be forwarded to the full Commission with a draft order
recommending that the application be either granted or designated for
Filing comments. The FCC encourages all interested parties to
comment on the issues it raises. Such comments will be due February 11,
Harry Martin is an attorney with Fletcher, Heald & Hildreth,
PLC., Arlington, VA. E-mail firstname.lastname@example.org.
On or before January 10, 2002, all stations were required to place
in their public files copies of their issues and programs lists for the
fourth quarter of 2001. The next required issues/programs list filing
date, covering the period January 1 to March 31, 2002, will be April