Trump Deregulatory Fever Is Griping The FCC

The changing of the guard at the FCC triggered by Trump’s election is proceeding as most figured it would, raising many broadcasters’ hopes that the FCC will finally bring them some overdue regulatory relief.

Democratic Commissioner Jessica Rosenworcel is out at the end of the year, having failed to finagle another term though some congressional maneuvering, and Democratic Chairman Tom Wheeler confirmed yesterday that he will step down on Inauguration Day as is traditionally done when a new administration from the opposing party comes in.

With Wheeler’s departure, the Republicans will suddenly have a two-one majority, a three-person quorum necessary to do business and the power to set the agenda that comes with the chairmanship.

If things continue to proceed as most figure it will, soon after the inauguration Trump will designate one of the two sitting Republicans — Ajit Pai or Michael O’Rielly — as the interim chairman while he considers a permanent one.

Right now, the consensus among broadcasters is that Ajit Pai, the senior of two, will get the interim nod. That would suit broadcasters fine. He has been in their corner for the most part and while he has not been able to block Wheeler’s regulatory agenda, he has challenged him every step of the way.

Trump could decide to  make the interim chairman permanent. But given his obsessive interest in media and the media-savvy players like Steve Bannon at his side, I don’t see why he would. My guess is that he would want his own man (or woman) in the post, a loyalist who will do his bidding if pressed.

Four outsiders have emerged so far as possible chairs. Three constitute the FCC transition team — Jeffrey Eisenach, Mark Jamison and Roslyn Layton. All are deregulatory-minded economists with substantial experience in telecommunications policy.

As an economist for hire, Eisenach has done work for Disney and NAB, providing some academic heft to their pleadings on retransmission consent, cable channel bundling and the ownership rules. He has also advised the Expanding Opportunities for Broadcasters Coalition, a now-defunct group of broadcast spectrum sellers on how to bend the incentive auction rules to their advantage.

The fourth candidate, according to Politico, is Brandt Herschman, a favorite of Vice President-Elect Mike Pence. Herschman is an Indiana state senator who, according to Politico, authored a law a decade aog that deregulated telecommunications in the state, stripping municipalities of their power over cable systems and banning them from offering public broadband services.

Pence could be the FCC kingmaker or, I should say, chairmanmaker. He made his name as a conservative political talk show (“Rush Limbaugh on decaf” is how is billed himself) on a network of Indiana radio stations in the 1990s, including Emmis Communications’ WIBC Indianapolis. So, he knows broadcasting from the inside, although he wasn’t active on communications as a member of the House in the 2000s.

I expect many more names to surface before Trump makes his call.

I should remind you here that Trump now has two seats to fill. One will be a third Republican, probably the new chairman. By law, the other has to go to a non-Republican.

Traditionally, Hill Democrats would have a lot of say on who gets that job, and there has been some speculation that they may try to bring back the tried-and-true Rosenworcel.

However, tradition doesn’t seem to matter much anymore. With the Republicans in firm control of the Senate, Trump might try to ram through another supporter of the chairman who is, as they say, “a Democrat in name only.”

However it shakes out, broadcasters figure they will be in much better shape that they have been with Wheeler, who provided no relief on the out-of-date ownership restriction. In fact, in 2014 he tried to ban joint sales agreements that many broadcasters were using to circumvent the local ownership rules and operate duopolies in small and medium markets.

At the NAB’s urging, Congress partially countermanded that action, saying broadcasters could keep their JSAs, but couldn’t sell them. The NAB is now in court seeing if it can knock on the no-sell provision.

If Trump opts for a fresh face as chairman, it will take several months to get him or her through the vetting and the congressional confirmation process. That means the interim chair could be more than a caretaker. With a bow to the transition team, he might be able to get the deregulatory ball rolling.

Broadcasters have given him two opportunities. Following the election, the NAB petitioned the FCC to reconsider Wheeler FCC’s decision not to lift or relax the ownership rules. And Ion Media and Trinity Christian Center are asking for a second look at the decision to lock in the national ownership cap at 39% of TV homes and not to allow transfer of grandfathered groups (like Ion) that now exceed that cap.

So, broadcasters should be able to look forward to a healthy dose of ownership deregulation at the Trump FCC.

But allow me a couple of caveats.

Not every broadcaster favors wholesale ownership deregulation that would suddenly transform the broadcasting business. It can be too much of a good thing. For instance, Stan Hubbard, the only broadcaster to openly and financially back Trump, has long been opposed to groups poking holes in the local ownership rules with JSA and SSAs.

And I continue to have concerns about Trump when it comes to media matters. During the campaign, he said a lot of terrible things about the news media and reporters and he continues to display no respect for the First Amendment prerogatives of the press — or individuals for that matter. Shortly after the election, he tweeted that flag burners ought to be thrown in jail.

If he wants to turn some of his anti-media rhetoric into action, the FCC is a great place to do it. Acting through the chairman, he could reward his media allies and punish his media foes in countless ways.

Given his reckless talk, the burden of proof is on him to demonstrate that he will not abuse the agency and respect its independence. That will take some time.

Supporters of Trump, who seem to be multiplying (or simply coming out of the closet), tell me I should just ignore all that crazy stuff he says and focus on what he does.

That I will.