NAB Tells Congress Ownership Rules “Increasingly Outdated”

WASHINGTON—The current broadcast ownership rules are out of touch with the reality of today’s media marketplace, NAB Executive Vice President and General Counsel Jane Mago told lawmakers recently.

During a House subcommittee hearing on the FCC’s media ownership rules, according to prepared testimony, Mago said: The current rules “distort competition. Cable, satellite and Internet-based media outlets — who operate without these cumbersome regulations — continue to proliferate and take both audience share and advertising revenues.”

NAB has long wanted the commission to relax the ban against one company owning either a radio or television station and a newspaper in the same market.

Today, Mago told lawmakers the commission seems to recognize the rule is “overly broad,” yet notes it’s still on the books.

NAB has challenged the FCC’s decision to fold its 2010 media ownership review into 2014, which would mean the review would not likely be completed until mid-2016 at the earliest; the trade group is also challenging the commission’s new restrictions on television JSAs.

“Consideration of the broadcast ownership rules must be based on real evidence, not speculation,” noted Mago. That is why NAB is asking lawmakers to review how the FCC’s administration of its ownership rules “has stifled investment and opportunity in broadcasting,” saying the “increasingly outdated” media ownership rules “have significant, harmful consequences” on local media.

Here is Mago’s complete testimony as provided by NAB.

Good morning. My name is Jane Mago, and I am Executive Vice President and General Counsel of the National Association of Broadcasters.

Let me begin by putting this debate in context for you. In 1975, I was starting law school, watching a black and white television with no remote control and like everyone else I only had three broadcast networks to choose from. Cable wasn't available to me and satellite was not available to me and the only satellite television was going to huge earth stations owned by cable companies. That was the world when some of these broadcast ownership regulations were created. Since then, we have cable, satellite, and telecommunications companies all offering video services. The Internet and the massive proliferation of news outlets have absolutely revolutionized the way we consume media. Yet time has seemingly stood still at the FCC.

The current broadcast ownership rules are simply out of touch with the reality of today’s media marketplace. They distort competition. Cable, satellite and Internet-based media outlets — who operate without these cumbersome regulations — continue to proliferate and take both audience share and advertising revenues.

The local television rule, for example, which generally prohibits the ownership of two television stations in the same market, assumes that television broadcasters operate in a bubble, only competing against other television broadcasters. That is almost laughable in today's marketplace. One only need look at the growing cable practice of selling local advertising across hundreds of cable programs to understand that there is direct and real competition between broadcast and cable.

The FCC has recently decided to effectively prohibit two broadcast TV stations from engaging in the joint sale of advertising. But the large cable operators, along with satellite companies and AT&T and Verizon, have been unimpeded as they joined forces to create a single source that jointly sells local TV advertising. It is increasingly difficult for broadcasters to compete in a marketplace so skewed by disparate regulation.

The 1975 newspaper/broadcast cross-ownership rule is another rule that relies on assumptions of a media landscape from a bygone era. The FCC itself has previously said that the prohibition against newspaper/broadcast cross-ownership “is not necessary to advance its localism and competition goals.” And, it has recognized that the rule is “overly broad” as related to its alleged goal of promoting viewpoint diversity, particularly with regard to radio. Yet, this outdated rule is still on the books.

To maintain the ability to provide quality local service and compete with newer technologies, broadcasters need a more level playing field with our competitors.

That leads to my second point; broadcast ownership rules must keep pace with market changes. Congress wisely required the FCC to take a fresh look at ownership rules on a regular basis in light of competition — and repeal or modify those no longer in the public interest. But, the FCC has failed to follow your direction. The last review was done in 2007 — seven years ago. And rather than complete the most recent quadrennial review as required by statute, the commission rolled its 2010 review into 2014, and then announced that it would not likely complete this review until at least mid-2016.

NAB is challenging this most recent FCC decision in court, not just because the FCC has failed to live up to its statutory obligation, but also because the commission is imposing new restrictions on joint sales agreements among local television stations – despite the fact that these arrangements produce tangible public interest benefits. NAB has shown these agreements produce more local news, more foreign language television and other community focused programming. Amazingly, the new rules will force broadcasters to unwind agreements that the commission had previously approved.

Finally, consideration of the broadcast ownership rules must be based on real evidence, not speculation. To address this, NAB asks Congress to undertake an examination of how the FCC’s administration of the broadcast ownership rules has stifled investment and opportunity in broadcasting. In this time of intense consolidation in other parts of the communications industry, these ownership rules are increasingly outdated and have significant, harmful consequences on local media.

Regulatory policies that starve local media of capital investment are a proven failure. They serve no one – not current broadcasters, not interested new entrants, and most importantly, not the American people.

In sum, NAB is asking for you to ensure timely and fair revision of the broadcast ownership rules. Maintaining the status quo, creating new restrictions or even just kicking the can down the road is a disservice to the American people. Thank you and I'm happy to answer any questions.