The FCC announced on Friday that it will be hosting a symposium on the state of the broadcast industry on November 21. On that day, there will be a panel in the morning on the state of the radio industry and one in the afternoon on television. The Public Notice released Friday lists a diverse group of panelists, but says little beyond the fact that the forum will be occurring. What could be behind the Commission’s decision to host this session?
The FCC is working on its Quadrennial Review of its ownership rules (see our articles here and here). There were many who expected that review to be completed either late this year or early next, with relaxation of the radio ownership rules thought to be one of the possible outcomes. Of course, quick action may have been derailed by the decision of the Third Circuit Court of the Appeals to vacate and remand the Commission’s 2017 ownership order. The court’s decision unwinds the FCC’s 2017 order which included abolition of the broadcast newspaper cross-ownership rule and the rule that limited one owner from owning two TV stations in the same market unless there were 8 independent television operators in that market – see our article here on the 2017 decision and our article here on the Third Circuit’s decision. The basis of the Third Circuit decision was that the FCC did not have sufficient information to assess the impact of its rule changes on minority ownership and other potential new entrants into broadcast ownership. If the FCC did not have enough information to justify the 2017 decisions, many believe any further changes in its rules are on hold until the FCC can either satisfy the court’s desire for more information on minority ownership or until there is a successful appeal of that decision. Even though FCC changes to its ownership rules may be in abeyance, the November 21 forum can shed light on the current state of the industry and why changes in ownership rules may be justified.
As we wrote here, the Department of Justice a few months ago held its own listening session on the impact of digital media on broadcasting – specifically TV. Almost all of the participants in that session testified that digital advertising was competing with television, though there was disagreement on the severity of the impact of digital on the television industry. But even with this widespread agreement on the existence of competition from digital advertising, in approving the acquisition of the Tribune Company stations by Nexstar, the DOJ continued to treat broadcasting and digital media as operating in separate product markets, finding that television offered unique benefits to advertisers (see the complaint filed following that review here at paragraphs 37-38).
The FCC’s November 21 session may look at some of these issues so that the FCC, when it next reviews the ownership rules, can make an independent assessment as the expert agency on communications matters of the impact that digital has had on radio and television. In comments filed in the Quadrennial Review assessing potential changes to the radio ownership rules, a group of radio owners with whom I worked submitted expert statements to show that digital advertising comprises more than 50% of local advertising in every local market. One expert stated that local advertisers are now inundated with advertising choices and are unsure of what kind of advertising really works, so they are testing all different forms of advertising – essentially seeing digital as interchangeable with traditional broadcast and print media advertising. With the explosion of media outlets of all kinds in the last 20 years, advertisers are trying to figure out what works – and exploring all media in doing so. Economist Mark Fratrik of BIA/Kelsey, who provided evidence on the impact of digital on broadcasting in the NAB’s comments filed in the Quadrennial Review proceeding, will be on the panel discussing radio issues at the FCC’s November symposium.
Assessing the impact of digital competition on traditional media is fundamental to understanding today’s media marketplace, and the regulation of that marketplace. In recent decisions, the FCC has looked to digital media in assessing the degree of effective competition with cable to determine when relaxation of cable rate regulation was appropriate. This same analysis needs to occur with broadcasting in assessing the regulatory approach best suited to the industry. While some have called for more regulation of digital media, that approach may well lead to unintended consequences when one does not understand the impact of regulation on industries currently subject to it (see, for instance, our article on the call to impose political advertising regulations on Facebook). This November 21 forum may be a good start in the FCC’s development of a real understanding of the state of the media marketplace. Of course, a single symposium lasting but a few hours cannot provide a full understanding of all of the dynamics of the media marketplace, but it is certainly a welcome addition to that process.