[DOCID: f:sr334.110]
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110th Congress
2d Session SENATE Report
110-334
_______________________________________________________________________
Calendar No. 731
JOINT RESOLUTION DISAPPROVING THE RULE SUBMITTED BY THE FEDERAL
COMMUNICATIONS COMMISSION WITH RESPECT TO BROADCAST MEDIA OWNERSHIP
__________
R E P O R T
OF THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
on
S.J. Res. 28
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
May 8, 2008.--Ordered to be printed
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
one hundred tenth congress
second session
DANIEL K. INOUYE, Hawaii, Chairman
TED STEVENS, Alaska, Vice-Chairman
JOHN D. ROCKEFELLER IV, West JOHN McCAIN, Arizona
Virginia KAY BAILEY HUTCHISON, Texas
JOHN F. KERRY, Massachusetts OLYMPIA J. SNOWE, Maine
BYRON L. DORGAN, North Dakota GORDON H. SMITH, Oregon
BARBARA BOXER, California JOHN ENSIGN, Nevada
BILL NELSON, Florida JOHN E. SUNUNU, New Hampshire
MARIA CANTWELL, Washington JIM DeMINT, South Carolina
FRANK R. LAUTENBERG, New Jersey DAVID VITTER, Louisiana
MARK PRYOR, Arkansas JOHN THUNE, South Dakota
THOMAS CARPER, Delaware ROGER F. WICKER, Mississippi
CLAIRE McCASKILL, Missouri
AMY KLOBUCHAR, Minnesota
Margaret Cummisky, Staff Director and Chief Counsel
Lila Helms, Deputy Staff Director and Policy Director
Jean Toal Eisen, Senior Advisor and Deputy Policy Director
Christine Kurth, Republican Staff Director and General Counsel
Paul J. Nagle, Republican Chief Counsel
Mimi Braniff, Republican Deputy Chief Counsel
Calendar No. 731
110th Congress Report
SENATE
2d Session 110-334
======================================================================
JOINT RESOLUTION DISAPPROVING THE RULE SUBMITTED BY THE FEDERAL
COMMUNICATIONS COMMISSION WITH RESPECT TO BROADCAST MEDIA OWNERSHIP
_______
May 8, 2008.--Ordered to be printed
_______
Mr. Inouye, from the Committee on Commerce, Science, and
Transportation, submitted the following
REPORT
[To accompany S.J. Res. 28]
The Committee on Commerce, Science, and Transportation, to
which was referred the joint resolution (S.J. Res. 28),
disapproving the rule submitted by the Federal Communications
Commission with respect to broadcast media ownership, having
considered the same, reports favorably thereon without
amendment, and recommends that the joint resolution do pass.
Purpose of the Resolution
The purpose of S.J. Res. 28 is to disapprove, pursuant to the
Congressional Review Act (Public Law 104-121), a recently
adopted Federal Communications Commission (FCC) rule relaxing
the agency's prior prohibition on the cross-ownership of
newspapers and broadcast television and radio stations.
Background and Needs
For decades the FCC has sought to ensure that the allocation
of broadcast licenses serves the public interest and promotes
the core values of competition, diversity, and localism. As was
noted by the Supreme Court more than 50 years ago, the First
Amendment ``rests on the assumption that the widest possible
dissemination of information from diverse and antagonistic
sources is essential to the welfare of the public.'' Associated
Press v. United States, 326 U.S. 1 (1945).
The Communications Act of 1934 provides the FCC with the
authority to grant licenses for the use of broadcast
facilities, consistent with the ``public interest, convenience,
and necessity.'' The FCC views broadcasters as trustees of the
public airwaves and imposes restrictions and obligations on
broadcasters accordingly. The Supreme Court has upheld the
regulation of broadcasters pursuant to public trustee
constraints as constitutional since the Red Lion case was
decided (Red Lion Broadcasting Company v. FCC, 395 U.S. 367
(1969)). Pursuant to this authority, the FCC has policies
limiting both the national and local ownership of broadcast
licenses.
Initially, the FCC reviewed common ownership issues on a
case-by-case basis. As the industry developed, the FCC adopted
bright line rules addressing license ownership in national and
local media markets, consistent with the public interest. Among
other things, FCC rules limit the number of television stations
and radio stations a single company can own in one market. In
addition, the FCC's newspaper/broadcast cross-ownership rule
prohibits the ownership of a television or radio station and
the daily newspaper in the same market.
With the enactment of the Telecommunications Act of 1996
(1996 Act), Congress significantly loosened media ownership
limits. The 1996 Act eliminated limits on national radio
ownership and raised the cap on national television audience
reach from 25 to 35 percent. The 1996 Act also eased local
radio ownership limits by creating a sliding scale limit that
allowed for as many as eight co-owned radio stations in the
largest markets. The 1996 Act also mandated that the FCC review
its media ownership rules every two years to ``determine
whether any of such rules are necessary in the public interest
as the result of competition.''
2002 BIENNIAL REVIEW
In 2002, the FCC released a notice of proposed rulemaking
announcing that the agency would review its full range of
broadcast ownership rules. The public was asked to comment on
the continued viability of these rules, in light of changes in
the media marketplace and recent court decisions.\1\ On June 2,
2003, led by then-FCC Chairman Michael Powell, the agency
adopted its 2002 Biennial Review decision, relaxing many of the
FCC's media ownership rules.
---------------------------------------------------------------------------
\1\ See Sinclair Broad. Group, Inc. v. FCC, 284 F.3d 148 (D.C. Cir.
2002).
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The revised rules included a national television audience
reach cap of 45 percent. With respect to local television
ownership, the revised rules permitted one company to own two
stations in markets with five or more television stations and
three stations in markets with 18 or more television stations.
With respect to local radio ownership, the revised rule
retained existing caps, but adjusted the way stations are
counted. The revised rules combined the radio/television and
newspaper/broadcast cross-ownership restrictions into a single
new media cross-ownership rule. Under this proposed rule, in
markets with three or fewer television stations, no cross-
ownership was permitted among television stations, radio
stations, and daily newspapers in the same market. In markets
with four to eight television stations, combinations were
limited to one of the following: (1) a daily newspaper, one
television station, and up to half of the radio station limit
for that market; (2) a daily newspaper and up to the radio
station limit for that market; or (3) two television stations
and up to the radio station limit for that market. In markets
with nine or more television stations, any combination that
otherwise complies with the local television and local radio
ownership rules was permitted. As a result, in a large market,
one company could theoretically own as many as eight radio
stations, three television stations, a daily newspaper, and the
cable company.
The revised rules faced significant public criticism. In
response to the 2002 Biennial Review decision, more than three
million individuals complained to the FCC. Congress also voiced
its opposition. On September 16, 2003, the Senate voted 55-40
to support a ``resolution of disapproval'' of the FCC decision,
pursuant to the Congressional Review Act. In addition, in
omnibus appropriations legislation in 2004, Congress rolled
back the FCC's new national television ownership cap from 45 to
39 percent.
Appeals of the FCC's 2002 Biennial Review decision were
consolidated in the Third Circuit. On June 24, 2004, the Third
Circuit affirmed the FCC's general authority ``to regulate
media ownership'' but remanded to the FCC the bulk of its rule
changes in the 2002 Biennial Review decision for further
justification and record support.\2\ The court also largely
stayed the FCC's new rules from the 2002 Biennial Review
decision. As a result, the agency's previous rules continue to
govern media ownership in this country. On June 13, 2005, the
Supreme Court denied the petitions for the writ of certiorari
seeking review of Prometheus.
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\2\ See Prometheus Radio Project, et al. v. FCC, 373 F.3d 372 (3rd
Cir. 2004) (Prometheus).
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On June 21, 2006, the FCC adopted a notice of proposed
rulemaking seeking comment on the issues raised by the
Prometheus remand, pursuant to its duty under section 202(h) of
the 1996 Act which now requires the agency to review its media
ownership rules on a quadrennial basis.\3\ As part of its
efforts to seek public comment, the FCC held six public field
hearings across the United States. On November 13, 2007, FCC
Chairman Kevin Martin published an editorial in The New York
Times calling for the FCC to revise its media ownership rules
in order to permit newspaper/broadcast cross-ownership in the
top 20 markets. Subsequently, on December 13, 2007, the
Committee held a hearing on FCC oversight during which several
members requested the FCC take additional time to solicit
comment and consider its proposed changes to its media
ownership rules. Just a month after the Martin editorial, on
December 18, 2007, the FCC concluded its rulemaking by
approving revised ownership rules under which newspaper/
broadcast cross-ownership is presumptively permissible in the
top 20 markets. For other markets, the Commission determined
that it would review transactions on a case-by-case basis,
subject to a negative presumption, which may be overcome
through evaluating: the level of concentration in the market;
whether or not the combined entity will significantly increase
the amount of local news in the market; whether or not the
combined newspaper and broadcast outlets will continue to
employ their own editorial staff; and the financial condition
of the newspaper or broadcast station in the proposed
combination, or if the newspaper or broadcast station is in
financial distress, the proposed owner's commitment to invest
significantly in newsroom operations.
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\3\ 2006 Quadrennial Regulatory Review--Review of the Commission's
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section
202 of the Telecommunications Act of 1996, Further Notice of Proposed
Rule Making, 21 FCC Rcd 8834 (2006); see also 2006 Quadrennial
Regulatory Review--Review of the Commission's Broadcast Ownership Rules
and Other Rules Adopted Pursuant to Section 202 of the
Telecommunications Act of 1996, Second Further Notice of Proposed Rule
Making, 22 FCC Rcd 14215 (2007).
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INDUSTRY CONSOLIDATION
The decade leading up to the 2002 Biennial Review decision
was a period of significant change in the media marketplace. In
the broadcast television industry, the number of television
station owners decreased by approximately 40 percent between
1995 and 2003. According to studies recently conducted by the
FCC, these trends have continued, albeit at a slower pace.
Between 2002 and 2005, the number of commercial television
station owners decreased by about four percent and the number
of commercial radio station owners decreased by eight
percent.\4\ During the same period the number of television/
radio combinations increased by more than 20 percent.\5\ As a
result of this increase in concentration, there are fewer local
owners of radio and television broadcast stations. Studies
suggest that local owners of broadcast media provide more local
news programming.\6\
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\4\Media Ownership Study Two: Ownership Structure and Robustness of
Media by Kiran Duwadi, Scott Roberts, and Andrew Wise revised September
5, 2007 at 5-6.
\5\ Id. at 5.
\6\ See e.g. Alexander, Peter J. and Brown, Keith. ``Do Local
Owners Deliver More Localism? Some Evidence from Local Broadcast News''
FCC Working Paper (2004).
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Consolidation in the media marketplace has left women and
minorities with only limited ownership interest. According to a
recent Government Accountability Office (GAO) investigation,
``[w]hile there are no reliable government data on ownership by
women and minorities, ownership of broadcast outlets by these
groups appears limited. According to the industry stakeholders
and experts we interviewed, the level is limited, and recent
studies generally support this conclusion.\7\
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\7\ Letter from JayEtta Z. Hecker, GAO, to the Honorable Edward J.
Markey, dated December 14, 2007, at 9.
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In testimony before the Committee on November 8, 2007, Alex
Nogales, President of the National Hispanic Media Coalition,
stated ``[m]ore than a third of Americans are people of color.
Yet they own less than 3% of television stations and less than
8% of radio stations--and these numbers are going down, not
up.''
CONGRESSIONAL REVIEW OF FEDERAL AGENCY RULES
Pursuant to the Congressional Review Act (CRA), Congress may
review and disapprove virtually all federal agency rules. For
any rule, Congress may enact a joint resolution of disapproval,
in which case the rule is deemed not to have had any effect.
The resolution of disapproval on the 2003 FCC media ownership
rule changes is one of only three times that the Senate voted
to disapprove an agency rule. Only one joint resolution of
disapproval under the CRA has been passed by both the Senate
and the House and become law, Public Law 107-5, which dealt
with a rule submitted by the Department of Labor relating to
ergonomics.
Legislative History
On November 8, 2007, the Committee held a FCC oversight
hearing titled ``Localism, Diversity, and Media Ownership.''
Senator Dorgan introduced S. 2332 on the same day with Senators
Lott, Kerry, Bill Nelson, Cantwell, Snowe, Biden, Clinton,
Feinstein, and Obama as original cosponsors. The bill would
require the FCC to seek public comment on any proposed changes
to media ownership rules, to conduct a rulemaking to examine
the impact of media ownership on local programming, and to
solicit expert recommendations on how to increase minority and
female ownership of broadcast media. The bill, as modified by a
manager's amendment offered by Senator Dorgan, was approved by
voice vote at an executive session on December 4, 2007.
On December 13, 2007, the Committee held a hearing on FCC
oversight, during which several members spoke at length about
Chairman Martin's proposed rule changes, as described in his
editorial in The New York Times. On December 14, 2007, twenty-
six Senators signed a letter to Chairman Martin urging a
further period of comment on the Chairman's proposed rule
changes. On December 18, 2007, the FCC approved a revised set
of ownership rules under which newspaper/broadcast cross-
ownership is permissible in the top 20 markets.
On March 5, 2008, Senator Dorgan introduced S.J. Res. 28, a
joint resolution disapproving the FCC rule. On April 24, 2008,
the Committee held an executive session at which S.J. Res. 28
was considered. The resolution was approved by voice vote.
Estimated Costs
In accordance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1974, the Committee provides the
following cost estimate, prepared by the Congressional Budget
Office:
May 6, 2008.
Hon. Daniel K. Inouye,
Chairman, Committee on Commerce, Science, and Transportation,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S.J. Res. 28, a joint
resolution disapproving the rule submitted by the Federal
Communications Commission with respect to broadcast media
ownership.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Peter R. Orszag.
Enclosure.
S.J. Res. 28--A joint resolution disapproving the rule submitted by the
Federal Communications Commission with respect to broadcast
media ownership
S.J. Res. 28 would disapprove the rule adopted by the
Federal Communications Commission (FCC) on December 18, 2007,
ending a ban on common ownership of newspaper and broadcast
outlets in the same market (also known as cross-ownership). The
new rule generally allows a newspaper in any of the nation's 20
largest media markets to own one television station or one
radio station.
S.J. Res. 28 would invoke a legislative process established
by the Congressional Review Act (Public Law 104-121) to
disapprove the cross-ownership rule. If S.J. Res. 28 is
enacted, the published rule would have no force or effect.
Based on information from the FCC, CBO estimates that voiding
this rule would have no effect on the federal budget.
S.J. Res. 28 contains no intergovernmental mandates as
defined in the Unfunded Mandates Reform Act (UMRA) and would
not affect the budgets of state, local, or tribal governments.
By voiding the FCC's cross-ownership rule and reinstating
the ban on common ownership of newspaper and broadcast outlets,
the bill would impose a private-sector mandate on companies
that wish to own a newspaper and a television or radio station
in a single market area. By law, the FCC bases each decision to
grant a broadcast license on the determination of whether those
actions will serve the ``public interest'' among other
criteria. The cross-ownership rule changes the approval process
for obtaining broadcast licenses in some cases because it would
allow the FCC to presume that such mergers, under the
circumstances specified in the rule, are in the public
interest.
Under the ban of cross-media mergers that the legislation
would reinstate, companies could apply for a license for such a
merger as long as they make the case that waiving the ban was
in the public interest. According to some industry experts,
however, fewer such mergers are likely to occur under the ban
than would occur under the cross-ownership rule. The cost to
the private sector of the mandate would be the incremental cost
of applying for a license (because the waiver process is more
costly), plus any forgone net profit attributable to the cross-
media ban. CBO has no basis for estimating those costs. CBO,
therefore, cannot determine whether the cost of the mandate
would exceed the annual threshold established in UMRA for
private-sector mandates ($136 million in 2008, adjusted
annually for inflation).
The CBO staff contacts for this estimate are Susan Willie
(for federal costs), and Jacob Kuipers (for the private-sector
impact). This estimate was approved by Peter H. Fontaine,
Assistant Director for Budget Analysis.
Regulatory Impact Statement
In accordance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following evaluation of the regulatory impact of the
legislation, as reported:
NUMBER OF PERSONS COVERED
The number of persons covered by this legislation would be
consistent with current levels of individuals affected.
ECONOMIC IMPACT
S.J. Res. 28 would have a positive impact on the nation's
economy by overturning rules to allow consolidation in
ownership of media outlets. Thus, the bill could encourage more
diverse ownership of these outlets.
PRIVACY
S.J. Res. 28 is not expected to have an adverse effect on the
personal privacy of any individuals that will be impacted by
this legislation.
PAPERWORK
S.J. Res. 28 would have minimal impact on current paperwork
levels.
Congressionally Directed Spending
In compliance with paragraph 4(b) of rule XLIV of the
Standing Rules of the Senate, the Committee provides that no
provisions contained in the bill, as reported, meet the
definition of congressionally directed spending items under the
rule.
Section-by-Section Analysis
S.J. Res. 28 would disapprove the rule submitted by the FCC
relaxing the agency's media ownership rules with respect to
newspaper/broadcast cross-ownership.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the Standing
Rules of the Senate, the Committee states that the bill as
reported would make no change to existing law.
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