Report No. DC 95-38                                               ACTION IN DOCKET CASE        March 7, 1995
     
     
                    TWO RESTRICTIONS ON NETWORKS ELIMINATED
                               (MM Docket 91-221)
     
     
         Today, as part of its continuing efforts to review its rules and to eliminate
     unnecessary regulations, the FCC determined that two of its rules for networks are no
     longer necessary. The FCC repealed the "network station ownership rule" that
     prohibited a network organization from owning a television broadcast station in a
     small market if such ownership would "substantially restrain[ ]" competition and the
     "secondary affiliation rule," which provided that in markets where two stations are
     affiliated with two of the three major networks, the third major network seeking an
     affiliate in the market must offer its programming first to an independent station.
     
         The network station ownership rule (Section 73.658(f)) was adopted for
     television in 1946.  At that time, there were only six television stations in the United
     States.  It was originally intended to prevent domination of smaller markets by
     television networks and to encourage the creation of new networks by preventing
     existing networks from "bottling up" the best facilities.  It has only been raised six
     times on the record in almost 50 years, and it has never blocked a network purchase
     of a station.
     
         Since adoption of the network station ownership rule, the television market has
     undergone enormous change.  Chief among these has been the growth in the number
     of television stations from six in 1946, to 1,523 in 1994.  As a result, today only 38
     small markets, representing 2.7 percent of all television households, are affected by
     the rule.  The Commission found that in light of extensive competition faced by
     television stations and the broadcast networks from alternative media, permitting
     network station ownership in a small market would not have an adverse effect on the
     ability of viewers to receive a variety of programming.  Further, it found that
     network ownership of a station in a small market does not adversely affect the
     emergence of new networks.  For all these reasons, the Commission concluded that
     this rule was unnecessary. 
     
         
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         The secondary affiliation rule (Section 73.658(l)) was adopted in 1971.  This
     rule was intended to promote the development of UHF television by impeding VHF
     affiliates of the three major networks from obtaining secondary affiliations with a
     network in cases where there would remain an independent station (usually a UHF
     station) in the market.  It was intended to channel further network affiliations,
     especially in small markets, to UHF stations, making them stronger competitors.
     
         With respect to the secondary affiliation rule, the Commission found that
     technical changes and changes in the marketplace have made this rule unnecessary. 
     Because all television sets are now required to receive both UHF and VHF channels,
     and because of other advances in television design, many of the technical
     disadvantages faced by UHF have been alleviated.  Moreover, independent stations
     can look to a number of alternative program sources, including new networks, should
     they be denied an affiliation with one of the three traditional networks.  For these
     reasons, the Commission concluded the rule was obsolete and should be repealed.
     
         Action by the Commission March 7, 1995, by Report & Order (FCC 95-97). 
     Chairman Hundt, Commissioners Quello, Barrett, Ness and Chong.
     
     
                                    - FCC -
     
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