In House testimony Wednesday, FCC Chairman Ajit Pai unveiled his dereg plan that would allow broadcasters to own two TV stations, possibly two network affiliates, in any market regardless of size, and operate still more stations in the same market through JSAs and SSAs. The current restrictions are outdated, he says. They presume that the market is still defined by “pulp and rabbit ears.” A full draft of his proposal is due out Thursday.
FCC Chairman Ajit Pai today revealed at a House oversight hearing that his proposal for relaxing the local broadcast ownership rules would allow a broadcaster to own two TV stations in any market, regardless of size, and, in some cases, both stations could be Big Four network affiliates.
In his testimony before the House Communications Subcommittee, Pai framed the proposal in First Amendment terms. “If you believe as I do that the federal government has no business intervening in the news, then we must stop the federal government from intervening in the news business.”
Pai said the FCC will release a draft of the entire deregulatory proposal tomorrow in advance of the FCC’s Nov. 16 open meeting, at which the Republican majority is likely to adopt it.
The rules currently prohibit ownership of two stations in markets with fewer than eight independently owned stations — that is, small markets. They also ban ownership of two top-four-rated stations, typically the Big Four affiliates, in all markets, regardless of size.
In his testimony before the House Communications Subcommittee, Pai said the so-called eight-voice test would go and that the FCC would consider allowing combos of top-four-rated stations on a case-by-case basis.
If a broadcaster brings a “compelling case” that owning two top-four-rated stations in a market would be in the public interest, Pai explained, “we will take a look; otherwise, the prohibition applies.”
Pai also said that the proposal will say that joint sales agreement do not count against the local two-to-a-market cap.
That will have the effect of allowing broadcasters to use joint sales agreements, often in tandem with shared services agreements, to operate — but not own — a third or fourth station in a market.
The proposal would also eliminate the broadcast-newspaper and radio-TV crossownership rules, Pai said.
The current rules are simply outdated, Pai argued in defense of the proposal, reports of which have already drawn criticism from Democrats.
“The marketplace is nothing like it was in 1975,” Pai said. “Newspapers are shutting down. Many radio and TV stations are struggling, especially in smaller and rural markets.
“Online competition for the collection and distribution of news is greater than it ever was, and only two internet companies [Google and Facebook] claim 100% of recent online advertising growth. Indeed, their digital advertising revenue alone this year will be greater than the market cap of the entire broadcasting industry.
“And, yet, the FCC rules still presume that the market is defined entirely by pulp and rabbit ears,” he said. “If this order is adopted, the FCC will belatedly recognize reality and match our rules to the modern marketplace.”