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The rules adopted herein have been analyzed with respect to the Paperwork Reduction Act of  !c1995 and found to contain no new or modified form, information collection and/or record keeping,  !glabeling, disclosure or record retention requirements. These rules will not increase or decrease burden hours imposed on the public.  S('Regulatory Flexibility Analysis  S' !p $37. Pursuant to the Regulatory Flexibility Act of 1980, as amended, 5 U.S.C.  601 et seq., the  S'Commission's Final Regulatory Flexibility Analysis in this Report and Order is attached as Appendix B.  S`'Ordering Clauses  S ' !g %38. Accordingly, IT IS ORDERED that, pursuant to Sections 4(i) and 303(r), 47 U.S.C.  154(i) and 303(r), Part 73 of the Commission's Rules is amended as set forth in Appendix A, below.  S"' ! &39. IT IS FURTHER ORDERED that, pursuant to the Contract with America Advancement Act of  !Z1996, the amendment set forth in Appendix A SHALL BE EFFECTIVE 60 days after publication in the  SH$'Federal Register. "H$ X=,-(-(ZZ#"Ԍ S' !ԙ '40. IT IS FURTHER ORDERED that the Commission's Office of Public Affairs, Reference  S' !Operations Division, SHALL SEND a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.   Sb' (41. IT IS FURTHER ORDERED that this proceeding IS TERMINATED.  S'Additional Information  S' ! )42. For additional information concerning this proceeding, please contact Paul Gordon, Mass Media Bureau, (202) 4182130. ` `  ,hh]FEDERAL COMMUNICATIONS COMMISSION ` `  ,hh]Magalie Roman Salas ` `  ,hh]Secretary  S2'  S ' "  =,-(-(ZZ}"  S'y APPENDIX A   S'm  RULE CHANGES  c Part 73 of Title 47 of the U.S. Code of Federal Regulations is amended to read as follows: PART 73 RADIO BROADCAST SERVICES 1. The authority citation for Part 73 continues to read as follows: AUTHORITY: 47 U.S.C. 154, 303, 334, 336 2. Section 73.3555 is amended by revising paragraph (e)(2) and Note 5 to read as follows:  73.3555 Multiple ownership. * * * * * (e) * * * (2) * * *  S' ! (i) National audience reach means the total number of television households in the Nielsen  !3Designated Market Area (DMA) markets in which the relevant stations are located divided by the total  !national television households as measured by DMA data at the time of a grant, transfer, or assignment  !of a license. For purposes of making this calculation, UHF television stations shall be attributed with 50 percent of the television households in their DMA market. (ii) No market shall be counted more than once in making this calculation. * * * * *  S' !Z Note 5: Paragraphs (a) through (d) of this section will not be applied to cases involving television stations that are "satellite" operations. * * * * * * * *"=,-(-(ZZ"  S'z APPENDIX B Đc  S'  FINAL REGULATORY FLEXIBILITY ANALYSIS ă  S`' ! As required by the Regulatory Flexibility Act (RFA),>X`r yO' ! #]\  PC/P#э See 5 U.S.C.  603. The RFA, see 5 U.S.C.  601 et. seq.#x6X@K{X@##]\  PC/P#, has been amended by the Contract With America  !t Advancement Act of 1996, Pub. L. No. 104121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). an Initial Regulatory Flexibility Analysis  S8' !(IRFA) was incorporated in the Notice of Proposed Rule Making in this proceeding.l?8r yO '#]\  PC/P#э 11 FCC Rcd 19949, 1996367.l The Commission  S' !Msought written public comment on the proposals in the Notice, including comment on the IRFA. This  S'Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.o@xr yO '#]\  PC/P#э See 5 U.S.C.  604. o  S' I. Need For and Objectives of the National TV Ownership R&O:  Sp'  SH ' ! The Report and Order modifies the method by which the Commission determines a group television  !station owner's national aggregate audience reach for compliance with the national television ownership  !Irule. The modifications are necessary to reflect changes in the underlying national ownership limit adopted pursuant to the Telecommunications Act of 1996.  S ' II. Summary of Significant Issues Raised by the Public in Response to the Initial Analysis:  S0' !D No comments were received specifically in response to the IRFA contained in the Notice of Proposed  S' !ZRule Making. However, some comments addressed issues relating to small businesses and businesses  !Zcontrolled by minorities and women, some of which may be small entities. Several commenters made  !general assertions that broadcast station ownership has consolidated since passage of the 1996 Act, and  !^that the Commission should take businesses controlled by minorities and women into account in all of our  Sh' !pending broadcast ownership proceedings.Ahr yO' ! #C\  P6Q/P#э BET Comments at 12; BET Reply Comments at iiivi; PostNewsweek Comments at 9; Cook Inlet Region, Inc. Comments at 12. CBS argued that the ownership rules were not designed to  S@'foster minority ownership in the broadcast industry, and that this goal should be pursued by other means.cB@` r yO@'#C\  P6Q/P#э CBS Comments at 9.c  !g Turning to the specific rules that are the subject of this rule making proceeding, BET argued that if  !}both a parent and a samemarket satellite are allocated a second 6 MHz for DTV purposes, then the  !7satellite station audience should be counted towards the 35% national ownership cap because the licensee  !tof such a station will have increased its broadcasting power at least fourfold. It claims that incumbent  !broadcasters' market power will increase sufficiently to create insurmountable entry barriers against"P B,-(-(ZZ"  S' !competing stations.cCr yOh'#C\  P6Q/P#э BET Comments at 3.c However, the Report and Order concludes that such concerns involve competition and diversity on a local, not a national, scale and are not the focus of the national ownership rule.  !3 BET asserted that retention of the satellite exemption for separatemarket satellites would "squeeze  !Qout" entrepreneurs and new entrants by enabling large group owners to transfer costs among stations and  S8' !xeliminate competition from small operators.bD8Xr yO0'#C\  P6Q/P#э Id. at 23.b However, the Report and Order adopts a rule whereby such separatemarket satellite stations shall be attributed for the purposes of the national ownership rule.  S' III. Description and Estimate of the Number of Small Entities to Which the Rules Will Apply:  !_ The amended rules will affect entities that have attributable interests in numerous full power  !"commercial television stations reaching a substantial portion of the national viewing public. These multiple station owners are not likely to be small businesses. 1. Definition of a "Small Business"  xUnder the RFA, small entities may include small organizations, small businesses, and small  !governmental jurisdictions. 5 U.S.C.  601(6). The RFA, 5 U.S.C.  601(3), generally defines the term  !I"small business" as having the same meaning as the term "small business concern" under the Small  !Business Act, 15 U.S.C.  632. A small business concern is one which: (1) is independently owned and  !operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established  S' !gby the Small Business Administration ("SBA"). According to the SBA's regulations, entities engaged in  !television broadcasting Standard Industrial Classification ("SIC") Code 4833 Television Broadcasting  !Stations, may have a maximum of $10.5 million in annual receipts in order to qualify as a small business  S@' !concern.EB@r yO' ! #C\  P6Q/P#э This revenue cap appears to apply to noncommercial educational television stations, as well as to commercial  {O' !x television stations. See Executive Office of the President, Office of Management and Budget, Standard Industrial Classification Manual (1987), at 283, which describes "Television Broadcasting Stations (SIC Code 4833)" as:  J XEstablishments primarily engaged in broadcasting visual programs by television to the public,  h except cable and other pay television services. Included in this industry are commercial, religious,   educational and other television stations. Also included here are establishments primarily engaged in television broadcasting and which produce taped television program materials. ƕ This standard also applies in determining whether an entity is a small business for purposes of the RFA.  xhPursuant to 5 U.S.C.  601(3), the statutory definition of a small business applies "unless an  !Iagency after consultation with the Office of Advocacy of the SBA and after opportunity for public  !comment, establishes one or more definitions of such term which are appropriate to the activities of the  ! agency and publishes such definition(s) in the Federal Register." While we tentatively believe that the  !gforegoing definition of "small business" greatly overstates the number of radio and television broadcast  !stations that are small businesses and is not suitable for purposes of determining the impact of the new  !}rules on small television and radio stations, and auxiliary services, we did not propose an alternative" E,-(-(ZZ"  S' !definition in the IRFA. Accordingly, for purposes of this Report and Order, we utilize the SBA's  !xdefinition in determining the number of small businesses to which the rules apply, but we reserve the right  !*to adopt a more suitable definition of "small business" as applied to radio and television broadcast stations  !and to consider further the issue of the number of small entities that are radio and television broadcasters  !in the future. Further, in this FRFA, we will identify the different classes of small television stations that  S:'may be impacted by the rules adopted in this Report and Order.  2. Issues in Applying the Definition of a "Small Business"  xAs discussed below, we could not precisely apply the foregoing definition of "small business" in  !developing our estimates of the number of small entities to which the rules will apply. Our estimates reflect our best judgments based on the data available to us.  xAn element of the definition of "small business" is that the entity not be dominant in its field of  !operation. We are unable at this time to define or quantify the criteria that would establish whether a  !specific television or radio station is dominant in its field of operation. Accordingly, the following  ! estimates of small businesses to which the new rules will apply do not exclude any television or radio  !station from the definition of a small business on this basis and are therefore overinclusive to that extent.  !An additional element of the definition of "small business" is that the entity must be independently owned  !}and operated. We attempted to factor in this element by looking at revenue statistics for owners of  !television stations. However, as discussed further below, we could not fully apply this criterion, and our  !estimates of small businesses to which the rules may apply may be overinclusive to this extent. The  !kSBA's general size standards are developed taking into account these two statutory criteria. This does not  !preclude us from taking these factors into account in making our estimates of the numbers of small entities.  S' x With respect to applying the revenue cap, the SBA has defined "annual receipts" specifically in  !13 C.F.R  121.104, and its calculations include an averaging process. We do not currently require  !submission of financial data from licensees that we could use in applying the SBA's definition of a small  !business. Thus, for purposes of estimating the number of small entities to which the rules apply, we are  !limited to considering the revenue data that are publicly available, and the revenue data on which we rely may not correspond completely with the SBA definition of annual receipts.  xUnder SBA criteria for determining annual receipts, if a concern has acquired an affiliate or been  !acquired as an affiliate during the applicable averaging period for determining annual receipts, the annual  !greceipts in determining size status include the receipts of both firms. 13 C.F.R.  121.104(d)(1). The  !SBA defines affiliation in 13 C.F.R.  121.103. In this context, the SBA's definition of affiliate is  !analogous to our attribution rules. Generally, under the SBA's definition, concerns are affiliates of each  !other when one concern controls or has the power to control the other, or a third party or parties controls  !Vor has the power to control both. 13 C.F.R.  121.103(a)(1). The SBA considers factors such as  !ownership, management, previous relationships with or ties to another concern, and contractual  !relationships, in determining whether affiliation exists. 13 C.F.R.  121.103(a)(2). Instead of making an  !independent determination of whether radio and television stations were affiliated based on SBA's definitions, we relied on the data bases available to us to provide us with that information. 3. Estimates Based on Census Data "&E,-(-(ZZ`%"Ԍ S' xAThe rules amended by this Report and Order will apply to full power commercial broadcast television licensees, permittees, and potential licensees.  S' xThere were 1,509 television stations operating in the nation in 1992.sFXr yO' ! #C\  P6Q/P#э FCC News Release No. 31327, Jan. 13, 1993; Economics and Statistics Administration, Bureau of Census,  !* U.S. Department of Commerce, 1992 CENSUS OF TRANSPORTATION, COMMUNICATIONS AND UTILITIES, ESTABLISHMENT AND FIRM SIZE, Series UC92S1, Appendix A9 (1995).s That number has remained  !gfairly constant as indicated by the approximately 1,594 operating television broadcasting stations in the  S:' !nation as of June, 1999.G:r yO '#C\  P6Q/P#э FCC News Release Broadcast Station Totals as of June 30, 1999 (released July 19,1999). For 1992KH:xr {OR ' ! #C\  P6Q/P#э Census for communications establishments are performed every five years ending with a "2" or "7". See  {O 'Economics and Statistics Administration, Bureau of Census, U.S. Department of Commerce, supra, note 31.K the number of television stations that produced less than $10.0  S'million in revenue was 1,155 establishments.IXr yO' ! #C\  P6Q/P##C\  P6Q/P#э The amount of $10 million was used to estimate the number of small business establishments because the  !x relevant Census categories stopped at $9,999,999 and began at $10,000,000. No category for $10.5 million existed. Thus, the number is as accurate as it is possible to calculate with the available information.  xThus, the rule changes will affect approximately 1,594 television stations, approximately 77% (or  S' !1,227) of which are considered small businesses.%J r yO.' ! #C\  P6Q/P#э We use the 77 percent figure of TV stations operating at less than $10 million for 1992 and apply it to the 1999 total of 1,594 TV stations to arrive at 1,227 stations categorized as small businesses.% These estimates may overstate the number of small  !xentities since the revenue figures on which they are based do not include or aggregate revenues from nontelevision affiliated companies.  xRWe recognize that the rule changes may also affect minority and womenowned stations, some  !of which may be small entities. In 1995, minorities owned and controlled 37 (3.0 percent) of 1,221  S ' !commercial television stations in the United States.K L r {O' ! #C\  P6Q/P#э Minority Commercial Broadcast Ownership in the United States, U.S. Department of Commerce, National  ! Telecommunications and Information Administration, The Minority Telecommunications Development Program  ! ("MTDP") (April 1996). MTDP considers minority ownership as ownership of more than 50 percent of a broadcast  !Z corporation's stock, voting control in a broadcast partnership, or ownership of a broadcasting property as an  {O' ! individual proprietor. Id. The minority groups included in this report are Black, Hispanic, Asian, and Native American. According to the U.S. Bureau of the Census, in  !*1987 women owned and controlled 27 (1.9 percent) of 1,342 commercial and noncommercial television  SZ'stations in the United States.EL$Zr {O"' ! #C\  P6Q/P#э See Comments of American Women in Radio and Television, Inc. in MM Docket No 94149 and MM  {O#' ! Docket No. 91140, at 4, n. 4 (filed May 17, 1995), citing Economic Censuses, WomenOwned Business, WB871,  ! U.S. Department of Commerce, Bureau of the Census, August 1990 (based on 1987 Census). After the 1987 Census  !o report, the Census Bureau did not provide data by particular communications services (fourdigit Standard Industrial  ! Classification (SIC) Code), but rather by the general twodigit SIC Code for communications (#48). Consequently,  ! since 1987, the U.S. Census Bureau has not updated data on ownership of broadcast facilities by women, nor does"&K,-(-(&"  ! the FCC collect such data. However, we sought comment on whether the Annual Ownership Report Form 323  {OX' ! should be amended to include information on the gender and race of broadcast license owners. Policies and Rules  {O"' ! Regarding Minority and Female Ownership of Mass Media Facilities, Notice of Proposed Rulemaking, 10 FCC Rcd 2788, 2797 (1995). E"ZL,-(-(ZZ"Ԍ S'ԙ IV. Projected Compliance Requirements of the Rule: No new recording, recordkeeping or other compliance requirements are adopted.  S`' !  V. Steps Taken to Minimize Significant Economic Impact on Small Entities and Significant  S8'Alternatives Considered:  ! The modified rules would apply to full power broadcast television licensees, permittees, and potential  !3licensees. No entity that is near the 35% national aggregate audience reach limit can be classified as a  S' !@"small entity." As a result, the counting methodology adopted in this Report and Order will not have a direct effect on any small entity.  ! We have decided not to doublecount LMAs or commonly owned stations in the same market for the  S ' !purpose of calculating a licensee's national audience reach. See  SAME-MKT START10שSAME-MKT END14, LMA DISCUSSION28, above. We also eliminate  !&the satellite exemption for licensees that operate a satellite station in a separate market from the parent  S ' !station. See  SEP-MKT START20שSEP-MKT END23, above. In addition, we have decided to use A.C. Nielsen's Designated Market  !Areas (DMAs) rather than Arbitron's Areas of Dominant Influence to calculate national audience reach.  SX' !3A.C. Nielsen, like Arbitron, is another commercial ratings service. They are analytically similar. See   S0' !k DMA34 , above. In each of these cases, we have determined that to do otherwise would not be consistent with  !the objective of the national television ownership rule as modified by the 1996 Act: to promote  !Mcompetition and diversity on a national level by limiting an entity's national audience reach. We expect  !that such additional competition and diversity will benefit commercial television entities, including small entities.  Sh'  S@'Report to Congress  S' ! The Commission will send a copy of the National TV Ownership R&O, including this FRFA, in a  !report to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, codified  S' !at 5 U.S.C.  801(a)(1)(A). In addition, the Commission will send a copy of the National TV Ownership  Sx' !R&O, including this FRFA, to the Chief Counsel for Advocacy of the Small Business Administration.  SP' !A copy of the National TV Ownership R&O and FRFA (or summaries thereof) will also be published in  S('the Federal Register. See 5 U.S.C.  604(b)."(L,-(-(ZZq"  X4 #XP\  P6QCXP# August 5, 1999  X'    X'_Separate Statement #C\  P6Q/P##XP\  P6QCXP# of  Xv'E~Commissioner Susan Ness  X_4endnote textc#XP\  P6QCXP#  V 4XcRe:#C\  P6Q/P##XP\  P6QCXP#Review of the Commission's Regulations Governing Television Broadcasting, MM Docket No. 91221; Television Satellite Stations Review of Policy and Rules, MM Docket No. 878; Review of the Commission's Regulations Governing Attribution of Broadcast and Cable/MDS Interests, MM Docket No. 94150; Review of the Commission's Regulations and Policies Affecting Investment in the Broadcast Industry, MM Docket No. 9251; Reexamination of the Commission's CrossInterest Policy, MM Docket No. 87154; Broadcast Television National Ownership Rules, MM Docket No.  Vy496222.  (# I welcome today's longoverdue revision and clarification of the Commission's broadcast ownership and attribution rules. The decision today takes its direction largely from the Telecommunications Act of 1996, in which Congress decided to allow significantly increased concentration of ownership in the broadcast marketplace. It also takes into account recent, dramatic changes in the communications marketplace, as well as insights gained from experience with our previous rules. The result is a forwardlooking regime that provides increased flexibility and clarity, while still avoiding the dangers of undue concentration of ownership of vital sources of news and information. The media landscape has changed enormously since I joined the Commission in 1994. There was the Telecommunications Act of 1996 which set the stage for significant consolidation of ownership, especially in radio. There is the nowsignificant presence of DBS, which was just being launched a few years ago but now has over 10 million subscribers. There is the continued growth of cable, with system clustering rapidly replacing the crazy quilt ownrship patterns of the last twenty years in major metropolitan areas. The financial interest and syndication and prime time access rules are gone. TV broadcasters are beginning their conversion to digital broadcasting. The Internet is experiencing explosive growth. These and other changes make it timely (at best!) for us to conclude our longpending ownership and attribution proceedings. I believe our rules and policies must be based on the present and future characteristics of broadcasting, not our perceptions of the medium as it existed 50 or even five years ago. ":&L,-(-(ZZO$" At the same time, broadcasting remains a distinctly special service with unique privileges and unique responsibilities. Broadcasting continues to be the primary source of news and information for the American public. It is free and ubiquitous. No preexisting hookup or bottleneck provider stands between speaker and listener. Diversity of media ownership is fundamental to the  Xv4preservation of our democratic values.#":footnote reference##XP\  P6QCXP#X1Í.X01ÍÍ Llv& yO' x #C\  P6Q/P#эThis is widely recognized. As Peter Jennings has observed, The fewer large organizations there are  ! owning more media ! in very general terms ! the potential for that being worse for the media and not better is just  !U obvious. Because when you have a lot of media owned by a lot of people, there is an obvious opportunity for much  ! more free expression. John Malone put it this way, I think that what protects our free society is the fact that no  ! one power broker can control enough of the media in any market, let alone the national market, to basically get  yO 'away with compressing or slanting or distorting the news.#XP\  P6QCXP#l X01ÍÍ X01ÍÍ   The public benefits greatly from "diverse and antagonistic" voices in the broadcast marketplace. The special characteristics of broadcasting have been recognized by Congress, the courts, and this Commission. It wasn't so long ago that broadcasters were limited to owning no more than 12 AM, 12 FM, and 12 TV stations, nationwide, with no more than two AM, two FM, and one TV station in any market. Yet today, some radio groups encompass several hundred stations, with as many as eight in a single market, and perhaps a TV station and an LMA as well. I have long felt that our rules were susceptible to "gaming." We have been too willing to permit through the back door what we would not countenance through the front. We have beentoo willing to grant conditional waivers while we dithered about what the rules should be. As a consequence, we have penalized those who most diligently followed the letter and spirit of our rules, and rewarded those who "pushed the envelope" most aggressively. Today's decision should put us on a more defensible and sustainable course. Greater clarity in the rules and less subjectivity will promote fairness among market participants. It will also provide greater certainty to investors. And it should lead to more expeditious decisions by the Commission. I am pleased that we are eliminating the worst anomalies of the old regime. Who can explain why LMAs are considered attributable interests when they involve radio stations, but not when they involve TV? Many LMAs have produced demonstrable programming and other public interest benefits for their communities. Others have not. I welcome our decision to attribute LMAs, as well as our decision to grandfather those that were entered into before November 5, 1996 the date when all parties were clearly on notice of our intention to move in this direction. Those that meet our goingforward rules may continue, and we are giving those that are grandfathered generous relief. "@,-(-(ZZ^"ԌI have previously raised concerns about the potential for an investor with a 49 percent ownership interest to exert "influence" over the affairs of a broadcast licensee, even in a corporation with a single majority shareholder. I support the compromise we have reached to adopt an "equity/debt plus" concept of attribution that limits the single majority shareholder exemption in situations involving a major program supplier or samemarket media entity. These are the entities whose incentive to influence a broadcaster weighs most heavily in favor of attribution. Our targeted approach embodied in the "equity/debt plus" concept balances our competing concerns of maximizing the precision of our attribution rules, avoiding undue disruption of the flow of capital, and establishing a brightline test that affords certainty to those planning transactions. There are a few narrow areas where I would have preferred to go a different way from the majority, for reasons that have less to do with ownership concentration than with concerns about fundamental fairness. I believe that we have been too lenient in grandfathering situations that were previously allowed under conditional waivers waivers that were supposed to expire at the outcome of these proceedings. We started down the conditional waiver path because of a desire temporarily to accommodate major acquisitions, permitting them to close without awaiting a resolution of our broadcast ownership dockets. Everyone recognized when the conditional waivers were granted that the licensee would have to conform to the new rules, with six months to divest any nonconforming properties. This accommodation became an albatross around our necks. And now we are perpetuating the waivers, creating a special class of broadcasters who, for as long as they own the stations, can own more properties in a market than their competitors. This isn't fair. It isn't good precedent. And it undermines our credibility in considering future conditional waiver requests in other contexts. I also would have preferred a somewhat different result with respect to our revised onetoamarket rule. In determining compliance with the voice test, I would count only independent radio and TV voices in the market. These are the media encompassed by this crossservice rule, and I believe it makes most sense to compare the number of radio and TV voices held jointly in a market only to the number of independent radio and TV voices remaining in that market. Today's item goes further, however, and also considers as voices daily newspapers and cable TV. I disagree with the inclusion of these media in the voice count. Once we include newspapers and cable, it becomes difficult if not impossible to validly distinguish them from other media that arguably serve as a source of competition and diversity in the market, such as MDS, the Internet, cable overbuilds, and OVS systems. Rather than make arbitrary decisions on whether to include these media as "voices," it would be far simpler and administratively easier to count only radio and TV and, if necessary, to adjust the voice count accordingly. However, as the decision was made to include newspapers and cable, I do agree with the decision to limit those newspapers counted to those":&,-(-(ZZB$" published and widely circulated in the market. I also agree that, if we must count cable, it  X4should count as only one voice. hh] But, despite these misgivings as well as a more generalized concern that we have not adequately analyzed the cumulative effect of all the changes that have occurred as a result of the 1996 Act I support these orders as a compromise that I believe will provide a much stronger foundation for the future. As Senators Hollings and Dorgan observed in a letter to Chairman Kennard, It is imperative . . . that the Commission remain mindful of the careful balancing struck in [the Telecommunications Act] between updating the rules to reflect changes in the marketplace and maintaining the robust diversity of voices, localism, and competition in the broadcast industry that was evident at the time of enactment. I believe  X 4that we have done so. , " ,-(-(ZZ "   `:(#August 5, 1999  X' STATEMENT OF COMMISSIONER GLORIA TRISTANI  X'3/ON BROADCAST OWNERSHIP ă  Vv4In the Matters of: Review of the Commission's Regulations Governing Television lBroadcasting (MM Docket No. 91221), Television Satellite Stations Review of Policy and +Rules (MM Docket No. 878), Broadcast Television National Ownership Rules (MM Docket No. 96222), Review of the Commission's Regulations Governing Attribution of Broadcast and Cable/MDS Interests (MM Docket No. 94150), Review of the Commission's Regulations and APolicies Affecting Investment in the Broadcast Industry (MM Docket No. 9251), and  V 4oReexamination of the Commission's CrossInterest Policy (MM Docket No. 87154). c I had two goals for these proceedings: (1) to eliminate the fictions and subterfuges that have plagued our broadcast ownership rules; and (2) to strike the appropriate balance between the potential public interest benefits and the potential harms of increased consolidation. For the most part, as discussed below, I believe we have hit the mark.  X44Eliminating Fictions One of the disturbing characteristics of our broadcast ownership rules was the gap between the rules as they were written and the rules as they were enforced. For instance, duopolies were strictly prohibited under the rules, but station owners were able to use the LMA artifice to control the programming decisions of a second station in the market without that station being attributable. Similarly, our onetoamarket rule was effectively eviscerated by a Commission waiver process that became, in practice, a rubber stamp. Today's decisions largely put an end to these and other fictions. LMAs are now attributable. The onetoamarket waiver process will be tightened. Debt is now recognized as a factor that can bestow influence. Eliminating these fictions often has meant relaxing the underlying substantive rule involved. But I would much rather relax the underlying rule to reflect reality than to keep a rule on the books that is meaningless. Today's decisions should not only promote respect for the Commission's rules and processes, but should also help level the playing field between Washington insiders and those outside the beltway who still believe that our rules mean what they say. As for LMAs in particular, although the subterfuge is over and they are now attributable, this Order does not outlaw them. Nevertheless, I hope and expect that there will  Xh$4be few, if any, new LMAs, since their regulatory raison d'etre has been eliminated and the duopoly rule has been relaxed. I do not believe it is appropriate for control of a station's programming to be divorced from control of a station's license. The licensee is the one responsible for programming its station to serve the local community; that responsibility"%',-(-(ZZ%" should not be delegated to a third party. The sharp drop in new radio LMAs after the Commission found them attributable gives me every reason to expect that television LMAs will suffer the same fate. If this proves incorrect, I would revisit the LMA issue. One rule change that is expessly intended to bring our rules in line with reality is the narrowing of the duopoly rule to permit common ownership of television stations in different DMAs, regardless of contour overlap. According to the Order, DMAs "are a better measure of actual television viewing patterns" than a signal contour test, "and thus serve as a good measure of the economic marketplace in which broadcasters, program suppliers and advertisers buy and sell their services and products." I could not agree more. Indeed, I have made this very point on several occasions in the context of our local radio ownership rules, which still rely exclusively on signal contours to define the relevant "market." I look forward to changing our radio ownership rules to reflect reality as we have done for our television rules. Unfortunately, there is one fiction that the Commission chose to retain: the single majority shareholder rule. Under this rule, as long as a single shareholder owns more than 50% of a licensee's voting stock, no other interests are attributable. That means, for example, that someone could own 49.9% of the voting stock, own the studio and transmission facilities, and provide all of the station's debt, and still be deemed unable to exert significant influence over that station's decisionmaking. I realize that the scope of the single majority shareholder rule has been narrowed somewhat by the adoption of the equity/debt plus rule, but the EDP rule only applies to programming suppliers and samemarket media entities. The attribution  X4rules, however, should identify any relationship that permits an entity to exert significant influence over another. If, for policy reasons, we wish to permit certain entities to obtain ownership interests notwithstanding their ability to influence the licensee, we should do so directly and not through the fiction of claiming that such influence does not exist. I therefore dissent from that part of the Attribution Report and Order.  Xg4Finding the Public Interest This has been a difficult decision to reach. Making decisions about diversity is never easy. In the end, I did not agree to relax our broadcast ownership rules because I believe we have "enough" diversity or because the growth in new media outlets means that diversity is no longer a concern, but because I believe that the diversity benefits of the relaxed ownership rules we adopt today outweigh the potential harms. Let me explain this apparent paradox. For those of us who care about diversity, the easy answer would have been to insist on a maximum number of independent owners the Commission's traditional proxy for maximizing the number of different "voices" in a community. And generally, I still believe that this proxy is a good one. Those television licensees who can stand alone and provide a real local voice should be required to do so. As the Order notes, it is at the local level that our diversity concerns are most acute. But I became convinced through the course of this proceeding that separate ownership at least in the fullpower television context does not"%',-(-(ZZ%" necessarily translate into a meaningful local "voice." That is, if a licensee's low market share does not give it the resources to originate any local programming, such as news or public affairs, the community may have an additional owner but no meaningful additional voice. In those cases in which a licensee is unlikely to contribute to local diversity, I believe the public interest may be better served by permitting that station to combine with a stronger station in the market. With the efficiencies of consolidation, for instance, the weaker station may be able to change from running only infomercials and reruns, or simply passing through a satellitedelivered signal, to a station that is able to provide local news. Or maybe the stronger station will use the weaker station as some broadcast networks use their cable channels as a forum for more indepth news pieces or to stay with breaking stories rather than returning to the network feed. Either way, it is not clear to me that the public is better off with a separate owner with no local content than with a duopoly that permits one owner to provide more and better local content. But make no mistake: this is not an exact science. We could have drawn the line in a different place, and there may be situations in which a viable local voice is removed from the marketplace under the new rules. Overall, however, I believe that we have struck the appropriate balance and that the new rules will do more good than ill for meaningful local diversity and for serving the public interest.