CONCURRING STATEMENT OF COMMISSIONER MICHAEL POWELL
Re: Applications of Shareholders of AMFM, Inc. (Transferor) and Clear Channel Communications, Inc. (Transferee) for Consent to the Transfer of Control of AMFM Texas Licenses Limited Partnership, et al., File Nos. BTC/BTCH/BTCFTB/BTCFT-19991116AJP-BDH, File Nos. BAL/BALH/BALFTB-20000328ACQ-AHJ, BAL-20000606ABT, BAL/BALH-20000407AAY-ABK, BAL/BALH-20000427AAT-ABD
I support the Commission's decision to grant the transfer of licenses from AMFM, Inc. to Clear Channel Communications, Inc. I write separately, however, to reiterate my continuing concern about the manner in which my colleagues apply our public interest authority in cases such as this. The approach is unnecessarily complex, redundant and ill-suited to meet the needs of the fast-paced, innovation-driven communications marketplace.
The Commission is required to examine a license transfer (often in the context of a merger) and determine if it is in the public interest. (1)
If it is, it will be approved. The public interest standard is exceedingly broad, offering very little to guide the Commission's examination. One can discern, however, three main concerns that the Commission has focused on in its public interest analysis. First, it considers whether the transaction would squarely violate the Communications Act. Second, it considers the effect of further concentration in the market and whether undue market power or other anticompetitive effects will result. Third, it considers how the transaction will affect diversity in the market.
In the context of mass media transactions, the Commission's analysis should be simplified by the extensive structural ownership rules Congress and the Commission have promulgated. For example, there are limits on the number of radio and television stations that can be owned in a local market. (2)
There is a national television ownership cap. (3)
There are rules against cross-ownership of different media. (4)
And, there are cable horizontal ownership rules. (5)
All of these rules have been developed to effectuate the twin goals of limiting the effect of market power and promoting diversity of viewpoints in the market. (6)
The benefits of prophylactic rules--whether you agree or disagree with their content--arethat they are clear and provide some certainty to marketplace participants. Additionally, these rules are touted as having the benefit of administrative efficiency in reviewing combinations.
In other areas, Congress and the Commission have not set out strict structural rules. As a result, the Commission reviews these transactions in a more ad hoc, case-specific manner. This is the case with telephone mergers. In this area, there are no rules on the number of lines or central offices that a company may own. Indeed, the Commission has been criticized for arbitrary, ad hoc decisions on such mergers, for there were not clearly articulated rules, principles or standards to guide our review. Partially in response to this criticism, the Commission developed a four-prong standard to guide its review in such mergers. (7)
In this case, one is left uncertain as to the applicability of the four-prong standard to broadcast mergers. (8)
Nevertheless, under its purported analytical framework, the Commission reviewed the merger to determine if it would "otherwise serve the public interest," (9)
even where clear structural rules apply and the applicants comply. Though the Commission has not reached a decision that differs from what the rule would require, the Order clearly has placed a marker down for the proposition that the Commission could override the result of the rule if it chose, based potentially on the vague four-prong standard or some other ambiguous standard of acceptable diversity and concentration. I reject this approach and lament the confusing and laborious course being set.
The extensive rulemaking proceedings used to develop our structural rules take full account of the Commission's diversity goals and concentration concerns, based on a very comprehensive record. By their very nature, such rules will always be both over-inclusive and under-inclusive. Yet, those marginal misapplications are thought to be balanced by the benefits of clarity and efficiency. All such benefits are eviscerated, however, if after applying the rule we then embark on an ad hoc review under the public interest standard with the real possibility of reaching a completely different result. I believe broadcasters are left to wonder what showing they must make to ensure a proposed license transfer will be approved. At a time when the Commission is being hotly criticized for taking too long to review mergers, I fail to see the wisdom of extending our review, applying two bodies of law designed to achieve the same basic objectives.
The four-prong test is hardly precise and indeed, in some parts, may be no more useful than the venerable "public interest" phrase itself. (10)
I would adhere to a structural rule where applicable and not cloud its application with the specter of a decidedly more subjective review. (11)
I am particularly perplexed by this new-found commitment to case-specific review, especially by a Commission that touts the benefits of clarity and predictability in defense of its refusal to yield much on the structural rules when they are reviewed biennially.
I am troubled by the suggestion that the Commission might discount the effect of its own rules in a license transfer review using the four-prong test, but I am more deeply bothered by the growing view that it might disregard or discount fairly specific statutory provisions. For example, Congress established quite plainly the number of radio stations that could be commonly owned in a local market. (12)
Yet, the Commission seems to be increasingly of the view that it could stop transactions that would not run afoul of these statutory limits on both concentration grounds (too much market power) and on diversity grounds (too few distinct voices left in the market). (13) If both of these bases are legitimate, what possibly did Congress mean by setting specific numbers of stations in a market? Congress' pronouncement must reflect either its comfort with that level of concentration, or its comfort with the level of remaining diversity. (The latter, in my view, being the case.) My colleagues seem to think these provisions are merely "suggestions."
In short, where there are clearly applicable structural rules, reflecting the Commission's or Congress' diversity and concentration judgments, I would find a license transfer to be in the public interest if the parties satisfied the rule. I would not engage in an additional, more subjective, evaluation to determine if the transfer would "otherwise serve the public interest," using the four-prong standard or some other ambiguous standard. This additional burden places more weight on a review process that is already laboring under the demands of a fast-moving market and an impatient Congress.
1. Section 310(d) of the Communications Act provides, in pertinent part, that the Commission may only grant a proposed license transfer if it determines that "the public interest, convenience, and necessity will be served thereby." 47 U.S.C. § 310(d).
2. For example, Section 202 directed the Commission, inter alia, to eliminate its restriction on the number of radio stations a single entity can own or control nationally, and to increase the number of radio stations that a single entity can own or control in a local market. See Section 202(a) & (b), Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56, 110-11 (1996) (broadcast ownership); 47 C.F.R. § 73.3555(a) (1999) (same). See also 47 C.F.R. § 73.3555(b) (1999) (local television multiple ownership).
3. See Section 202(c)(1); 47 C.F.R. § 73.3555(e) (1999).
4. See 47 C.F.R. § 73.3555(c) & (d) (1999).
5. See 47 C.F.R. § 76.503 (1999).
6. See, e.g., In the Matter of Review of the Commission's Regulations Governing Television Broadcasting, Television Satellite Stations Review of Policy and Rules, MM Docket Nos. 91-221, 87-8, FCC 99-209, Report and Order, 14 FCC Rcd 12903, ¶¶ 1, 15 (1999) ("ultimate objectives of [the Commission's] ownership rules are to promote diversity and to foster economic competition. . ."); In the Matter of 1998 Biennial Regulatory Review--Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, MM Docket No. 98-35, FCC 00-191, Biennial Review Report, 15 FCC Rcd 11058, ¶¶ 5-6 (2000); Time Warner Entertainment Co. v. United States, 211 F.3d 1313, 1320 (D.C. Cir. 2000) (government responded "the promotion of diversity in ideas and speech, as well as the preservation of competition, are important governmental interests. . .").
7. The standard, first articulated in the SBC/Ameritech merger, considers the following factors: 1) Whether the transaction would result in a violation of the Communications Act or any other applicable statutory provision;
2) Whether the transaction would result in a violation of Commission rules; 3) Whether the transaction would substantially frustrate or impair the Commission's implementation or enforcement of the Communications Act, or would interfere with the objectives of the Communications Act or other statutes; and, 4) Whether the merger promises to yield affirmative public interest benefits. See Applications of Ameritech Corp., Transferor, and SBC Communications Inc., Transferee, for Consent to Transfer Control of Corporations Holding Commission Licenses and Lines Pursuant to Section 214 and Section 310(d) of the Communications Act and Parts 5, 22, 24, 25, 63, 90, 95, and 101 of the Commission's Rules, CC Docket No. 98-141, FCC 99-279, Memorandum Opinion and Order, 14 FCC Rcd 14712 (1999).
8. The Order is quite confusing as to whether the four-prong standard actually applies to broadcasting mergers. See Order, ¶ 11. Since, for example, the public interest "benefits" of the merger are not discussed, I assume that the test has not been applied. I, along with future applicants, could possibly assume that the test could be used to scrutinize mass media transactions prospectively, but it is not clear at all.
9. See id (emphasis added).
10. According to the test, the Commission will evaluate, in part, whether an applicant has met its burden of proof that the transfer will advance the public interest by considering "[w]hether the transaction would substantially frustrate or impair the Commission's implementation or enforcement of the Communications Act, or would interfere with the objectives of the Communications Act or other statutes." Admittedly, I am left wondering what the prong means exactly. As my colleague Commissioner Furchtgott-Roth criticized in the AT&T/MediaOne proceeding, the prongs "are phrased at such a level of bureaucratic generality that it is, [as] an initial matter, difficult to grasp what they actually mean." See Applications for Consent to the Transfer of Control of Licenses and Section 214 Authorizations from MediaOne Group, Inc., Transferor, to AT&T Corp. Transferee, CS Docket No. 99-251, FCC 00-202, Memorandum Opinion & Order, 15 FCC Rcd 9816, 9910 (2000) (Separate Statement of Harold W. Furchtgott-Roth, Commissioner, Federal Communications Commission).
11. The Commission cannot suggest that it must apply the four-prong test in order to fulfill its duty to determine that the public interest is served. It is sufficient to discharge this duty by faithfully applying our structural rules. In fact, in the CBS/Viacom merger the Commission only applied its rules. As a consequence, it discharged its review promptly and efficiently and was able to make a public interest conclusion. See In The Matter Of The Applications Of Shareholders Of CBS Corporation, Transferor, And Viacom, Inc., Transferee, For Transfer Of Control Of CBS Corporation And Certain Subsidiaries, FCC 00-155, Memorandum Opinion & Order, 15 FCC Rcd. 8230 (2000).
12. See Section 202(b), Telecommunications Act of 1996.
13. I note that the Department of Justice ("DOJ") maintains that it could block a radio transaction under the Sherman or Clayton Act that would not run afoul of the Communications Act. See, e.g., Statement of Joel Klein, Assistant Attorney General, Antitrust Division, U.S. Department of Justice, Before the House Committee on the Judiciary Concerning Consolidation in the Telecommunications Industry at 6 (June 24, 1998); U.S. v. Capstar Broadcasting Corp., 1999 WL 1455759, 1999-2 Trade Cases ¶ 72,717 (D.D.C. June 11, 1999) (NO. CIV. A. 99-0993); U.S. v. American Radio Sys. Corp., 1997 WL 226227, 1997-1 Trade Cases ¶ 71,747 (D.D.C. Jan. 31, 1997) (NO. CIV.A. 96-2459). DOJ's view, which I believe is correct, is that Congress did not modify the antitrust statutes. The Commission, however, is laying claim to its authority from the Communications Act.