August 5, 1999
In the Matter of the Commission's Regulations Governing Attribution of Broadcast and Cable/MDS Interests, MM Docket No. 94-150; Review of the Commission's Regulations and Policies Affecting Investment in the Broadcast Industry, MM Docket No. 92-51; Reexamination of the Commission's Cross-Interest Policy, MM Docket No. 87-154.
I support the Commission's decision in the matter of Reexamination of the Commission's Cross-Interest Policy to repeal the cross-interest rules. I thus join in Part III.D of this Report & Order. I disagree, however, with the decisions reached in the matter of the Commission's Regulations Governing Attribution of Broadcast and Cable/MDS Interests and in the Review of the Commission's Regulations and Policies Affecting Investment in the Broadcast Industry. I thus dissent from the rest of the item. I do so for the reasons expressed below.
The biggest problem with our attribution rules -- these new ones included -- is that it is next to impossible to say what sorts of counting rules one should fashion for broadcast interests if one is unable coherently to articulate the need for counting interests. In other words, the purpose of the broadcast ownership rules must be clearly identified before one can know how to craft implementing regulations, such as attribution standards. For instance, if one were concerned with antitrust matters (assuming authority to do so), notions of "control" might be tied to market power and the ability to discipline markets. If, on the other hand, one were concerned with programming content (assuming this were constitutional, which it is presumptively not), notions of "control" would go to the ability to buy or sell programming to stations. This is not to say that we should not aim to harmonize our various attribution rules to the greatest extent possible, but that without a clear sense of why to count, it is hard to know how to count.
As I argue in the broadcast ownership rulemaking, the Commission has not answered this threshold question -- the purpose of the ownership rules -- with the rigor and clarity necessary to the task. See Dissenting Statement of Commissioner Harold W. Furchtgott-Roth, In the Matter of Review of the Commission's Regulations Governing Television Broadcasting, MM Docket No. 91-221; and in the Matter of Television Satellite Stations Review of Policy and Rules, MM Docket No. 87-8. Not only is the legitimacy of the broadcast ownership rules themselves thus diminished, but corollary rules such as the attribution rules suffer from the same frailty. I, of course, would not have structural ownership regulation, and thus do not see the need for attribution rules. But if there are going to be structural rules, their purpose should be clearly defined so that meaningful attribution rules can be crafted.
I also disagree with the very premise of the Attribution Further Notice issued in this proceeding: namely, that the relaxation of ownership limits in the Telecommunications Act of 1996 required reexamination of broadcast attribution standards. See 11 FCC Rcd 19895 (1996). Nothing in the text of the statutory mandates revising ownership limits suggests that the changes should have any impact whatsoever upon the attribution rules. Presumably Congress was aware of the existing attribution regulations when it passed the ownership changes and knew that the new limits would work in conjunction with those regulations. This is not to say that the Commission cannot change the attribution rules if necessary , it can, but that the deregulation of ownership has no necessary connection to changing the attribution standards -- unless, of course, one is looking for ways to counter, limit, or mitigate the effects of Congress' decision to deregulate ownership.
Although the items disclaims any intent to tighten the attribution rules in the wake of the 1996 Act, see supra at para. 35, these rules are not simply more precise than the old ones. They work to capture more interests than the old rules, thus making more properties attributable for ownership purposes. If it were precision that the Commission sought to achieve, we would just have simplified the structure of the existing rules. But, unfortunately, we did not do so. Instead, this Commission has once again tightened underlying or related rules in order to avoid as much deregulation as Congress intended.
In this regard, the Commission is much like Penelope in Homer's Odyssey. Waiting for Odysseus to return from war, but pressed by the chiefs of her land to marry again, she invents stratagems to put them off. She says she cannot remarry until she finishes needlepointing a pall for the hero Laertes. All day long, she works on her web, but at night she unpicks each and every stitch by torchlight. Looking outwardly somewhat deregulatory in the broadcast local ownership proceeding, the Commission undoes here much of the relief it provided there.
On the merits of the attribution decision, I do not think that we should extend attribution rules into the area of pure debt instruments, as does this Report & Order. I would not count debt for attribution purposes. When one ventures into the area of pure debt, one encounters an administrative hornets' nest. Almost all companies have some debt and, given the variety of instruments and agreements, this debt fluctuates in terms of value and sometimes, if transferrable, even in terms of possession. As a practical matter, debt is a concept that is nigh impossible to measure with reliable precision, even if there is support for the theory in academic literature. For these reasons, I disagree with the decision to extend attribution rules into the area of pure debt.
I also believe that the EDP test itself is misguided. Instead of clarifying or perhaps even simplifying current broadcast attribution standards, this Report & Order heaps yet another regulatory board on top of the existing gangplank of attribution rules. Now, in addition to wading through existing attribution rules, regulatees and their lawyers must also apply the EDP test to determine whether the interests that they have just ascertained are not attributable under the old rules are nonetheless attributable under the EDP rule. Yet, in order to know whether the EDP rule even applies, the entity, if a potential "major program supplier," must assess the percentage of program supplied to a particular station at some particular point in time. Like debt, this is in all likelihood an ever-changing number, difficult to pin down and costly to ascertain. And if a potential "same market media entity," the company must ask whether any other of its interests are attributable such that it might be a "media entity," bringing it full circle to the original attribution rules; the daisy chain effect of these regulations regarding attribution is, apparently, limitless. Then, after figuring out whether one falls under the subject headers of the EDP rule, major program supplier and same market media entity, one must then apply the operative sections of the rule, no mean task.
Finally, absent a drastic simplification of existing attribution rules, I would have retained the single majority shareholder attribution exemption in full. The certainty this rule gives against the backdrop of the existing rules affords at least some relief and clarity to certain entities, in terms of understanding and assessing the attributable nature of their interests, and should be preserved.
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Stepping back to survey the newly-designed landscape of attribution rules, I am reminded of Justice Frankfurter's description of a gerry-mandered voting district as "an uncouth twenty-eight-sided figure." Gomillion v. Lightfoot, 364 U.S. 339, 340 (1960). These attribution rules are as many, if not more-sided. I regret that, instead of taking this opportunity to simplify the attribution rules, the Commission has only further complicated them by extending the existing rules to encompass pure debt interests; by adoption of the EDP test; and by limitation of the single majority shareholder exemption.