Published today in the Federal Register were two notices from the FCC implementing November’s decision on the FCC’s ownership rules. First, a summary of the changes in the rules was published in the Federal Register. These changes particularly affect the local TV ownership rules (changes that we summarized here). Changes included, among other things, the elimination of the rule that required that there be 8 independent owners of TV stations in a market before any party can own two TV stations, elimination of ownership attribution for Joint Sales Agreements between television stations in the same market (meaning that such arrangements do not count in any analysis of compliance with the local TV ownership rules), and a plan to review proposals to combine two of the top 4 stations in any market on a case-by-case basis. These rule changes become effective on February 7.

Also published in the Federal Register was a summary of a different part of the order, one asking questions about how the FCC should structure an incubator program that would support diversity in the ownership of broadcast stations. In that Notice of Proposed Rulemaking, the FCC asks a series of questions as to how a program could be established in a way that would benefit minorities and other new broadcast entrants. As the usual discussion about such programs involves providing established broadcasters a waiver of an ownership rule or other incentive to assist the new entrant, one of the central issues is how to establish a program providing real benefits without creating a loophole in the ownership rules for the sponsoring broadcaster. Comments on the Notice of Proposed Rulemaking are due on March 9, with replies on April 9. Some of the questions asked by the FCC are summarized below.

These questions include:

  • Who should be eligible to benefit from the incubator program? Options include:
    • Any “new entrant” that does not have interests in other mass media properties – the same definition used to confer benefits in broadcast auctions;
    • A revenue-based definition, such as a small business definition under Small Business Administration rules;
    • A socially and economically disadvantaged group definition – a definition used by the SBA to include members of minority group and others who can show they are disadvantaged (the FCC noting that, in the past, they have not believed that they have sufficient data to support an explicitly race-based preference like this one);
    • A preference based on a showing that the entrant has Overcome Disadvantages (the FCC noting the difficulty in enforcing such a standard).
  • What would qualify as “incubation”? And to what extent would any established broadcaster have to supply support to qualify for any benefit from the program. Possible areas for incubation include:
    • Technical assistance;
    • Management assistance;
    • Financial assistance including loans or loan guarantees;
    • Station donations.
  • What would the established broadcaster get out of the incubation services that it provides?
    • If the benefit is to allow the established broadcaster to get some sort of ownership waiver, would it simply allow that broadcaster to own an interest in the incubated station, or could they get the right to own another station that they otherwise could not hold under the ownership rules?
    • If it is another station, would it have to be in the same market as the incubated station, or could it be in another market? Would the market have to be similarly sized – and how would that be defined?
    • How long would any waiver last? Would it be contingent on the success of the incubated station?
    • Should it apply only to radio or to TV as well?
  • Should the FCC establish standards for reviewing these incubation programs?
    • If the incubator is not set up as part of an application involving an assignment or transfer application that is to be reviewed by the FCC, should some other review mechanism be established?
    • Should the Commission require periodic reports on the success of the incubation after it is established?
    • What kinds of compliance measures should be adopted by the FCC in reviewing these programs?

As set out above, comments are due on March 9. Incubator programs are ones that just about everyone seems to think are a good idea, but determining exactly what such programs should entail are another matter –parties may have vastly different ideas of what kinds of services should be required and what kinds of benefits should be obtained from providing those services. Thus, comments before the March 9 deadline are very important.